Expanding to a fellow small business, is this a good idea?

So I've got a fairly established small business upcycling toy and Hobby items. I buy write offs and returns from larger places that can't sell them thru a third party distribution center. Currently I'm set up getting large orders of open box items that I test, clean, repair, and rebox as refurbished and new respectively.

I have a client who owns a small home based business closer to larger cities and centrals. He also deals in Hobby items but on the higher end end of the scale and mostly in used items.

He says he is willing to do the work and will throw me a kickback for all the sakes he makes from them. We have yet to work out the details but I'm hesitant as my selection is limited from my one distributor and I worry sending half of the inventory to another location will spread me too thin and I will end up losing money in lost sales.

Any thoughts on the matter?

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