All businesses that sell products (as opposed to those that sell services) have one thing in common: they have to possess items before they can sell them. Businesses might acquire their items by purchasing them with the intent to resell them, or they must make the items using raw materials, which must be purchased as well. Either way, the businesses have to acquire products in order to make money. Inventories don’t just appear out of thin air. Fruit smoothie stands can’t sell their delicious drinks without a blend of raw fruit; clothing retailers can’t sell shirts unless they either buy the shirts from a wholesaler or buy material from a cloth maker and convert the material into fashionable shirts.

You can usually cut costs and boost profits by buying your needed items in bulk rather than in the smaller quantities that you might be accustomed to purchasing. Suppliers want to sell their products just as much as retailers do, so suppliers are usually willing to give discounts to retailers who buy their supplies in bulk. In a bulk-buying arrangement, the supplier benefits by selling more items in a shorter amount of time, and the purchaser benefits by paying a lower price per unit.