If you are a small business owner offering a unique product, then you will be happy to know that wholesale merchants make serious cash on Amazon. Selling wholesale on Amazon is one more way to grow a successful e-commerce business. With the variety of business models to choose from, the sellers on Amazon tend to follow one of three primary business models – private label, retail arbitrage, and wholesale. Private label and retail arbitrage are the two most popular approaches of the three that most sellers decide to go with, as there is an immense amount of educational content available on them. Wholesale, on the other hand, is nascent. There is little to no information on selling wholesale in Amazon, but then as with business tactics that don’t get much consideration, there is a prospect.
For starters, selling wholesale in Amazon is essentially re-selling. That is, you buy bulk products directly from the manufacturer at reasonable rates and then re-sell them to the buyers at a higher price to make a profit
Selling wholesale may appear like a simple way to influence the already existing brands, but there are many components that must be brought into line in order to see success.
If you are considering selling wholesale in Amazon and want to learn more about this business model, you have come to the right place.
In today’s post, we will be discussing everything you need to know about wholesaling including sourcing the products to listing the products, and selling the product among others.
Let’s dive in…
Amazon Wholesale Model: How does it work?
Before getting too deep into the nitty-gritty of selling wholesale in Amazon, let’s start with understanding how exactly the wholesale model works when selling on the world’s biggest marketplace.
In Amazon’s wholesale model, the Amazon seller purchases bulk products directly from the manufacturer at a wholesale price and then re-sell it to the customers on Amazon. Plenty of sellers are approaching Amazon wholesale model, many of whom are selling the same product as you. So, you are not the lone vendor offering this specific product in the Amazon marketplace.
What are the benefits of selling wholesale in Amazon?
There are plenty of potential benefits when it comes to selling wholesale in Amazon. Some of them include:
- Dependable and Well-organized Inventory Sourcing Under the wholesale model, as long as the manufacturer is producing the product, you will be able to source it. So, unlike retail arbitrage, where the seller is a slave to different pricing practices of retailers, you can rest assured that your inventory will never go out of stock (in a positive way!).
- Established Customer BaseOne of the prominent benefits of selling wholesale in Amazon is that you get an already established customer base. Selling wholesale means, you get an existing customer base that the brand has established. In the majority of the cases, customers know about the product you are selling; hence, you won’t have to waste much of your time attracting your target audience. All you have to do is sell.
- Scalability If the product you are selling is performing greatly, you always have the option to easily and quickly increase your inventory to carry on with the customer demand.
- Lower RiskAs compared to retail arbitrage and private label, the wholesale model is somewhat less risky. For starters, you aren’t the brand owner, so you don’t have the liability, responsibility regarding the manufacturing and branding of the product, and ultimately, you don’t carry any risk. Instead, you are peddling products that have proven reputations.
- Amazon Brand ApprovalWhen you have Amazon brand approval, there will be reduced competition for Buy Box.
Read More About Amazon Selling:
- Ultimate Guide to Creating Unique Private Label Products to Sell on Amazon
- How to Skyrocket Amazon FBA sales Using YouTube Marketing
Wholesale Sourcing: wholesaling best practices
If you have finally decided to try out Amazon’s wholesale model, here are some of the best methods to set you on the path to success.
#1 Research the Right Products
Choosing your Amazon Wholesale product could be a daunting task because there are plenty of recognizable and known brands to choose from. So, when searching for the right product, you need to stick with the ones that generally:
- Are likely to stay in production for some time
- Are not seasonal products (have the potential for high sales every month)
- Aren’t being sold by Amazon itself
- Are made by recognizable and known brands
The best place to look for product ideas is Amazon itself. First of all, find your niche or category that you want to sell on. It is important. Dig into the categories that you find interesting and take note – whether there are any prominent brands or products missing?
The idea is to look at the bestselling products on Amazon.
Determine whether there are any products that are performing exceptionally well that you could claim some equity in.
It is advised to at least have 2-3 products in the run for wholesaling before you figure out the best product. To determine which one’s better out of your chosen products, you necessarily need to estimate their monthly sales. This will help you learn which product is in demand.
On the other hand, you can rely on online tools like Product Spy Pro product research tool among others to conduct your product research.
Apart from these, if you want to go deep into product research, you can:
- Go to trade shows as it will allow you to have a lot of head-on conversations with brand owners, where you can find new products that might do well on Amazon.
- Research using brand websites and product packaging. There are products that are new on Amazon or yet to be sold on the marketplace. If you think that such a product has the potential to perform well on Amazon, you can track down more information about the product through product packaging or brand’s website.
If you are new to wholesaling, we recommend you start off with at least $1000 capital.
Wholesale accounts are generally a more significant investment compared to other selling models on Amazon. The products usually come with minimum orders and case-packed.
#2 Finding the Wholesale Distributor
If you know what products you need for wholesale selling on Amazon, it becomes easier to find a wholesale supplier. After you have figured out what you want to sell, here are the ways using which you can find a wholesale supplier for your Amazon business.
- Recognize your industry’s distribution mediums as it will allow you to determine where you fit in the supply chain, leading you towards the right wholesale distributor. There are different types of wholesalers who work differently. They include:
- Manufacturer- you can buy directly from the manufacturer
- Exclusive distributer/Importer- some companies boast sole rights to distribute products
- Regional Distributor/Wholesaler- they take deliveries of boxcar-sized lots, break them and sell a truckload of boxes to local wholesalers
- If possible, always contact the manufacturer first, especially when you are selling branded products. Depending on the manufacturer’s minimum order requirements, they might be willing to do business with you. This saves you the hassle of dealing with more entities. The fewer the bodies you have to deal with, the lower your cost will be.
- In case, if you are going with the wholesale supplier, ensure to have a productive first contact. The manufacturer will provide you with a list of their wholesale distributors. Take that list and start contacting everyone. What you are doing here is looking for their wholesale unit prices and what their minimum order requirements are.
#3 Contacting and Negotiating with Manufacturers: what to do
A simple Google search will land you to the manufacturer. After that, you need to get approved up with the manufacturer. When you are contacting or trying to negotiate with the manufacturer, try the following tips:
- First and foremost, you need to show them how you can add value to their brand and products
- You can point out the problems most customers are having with their product
- Offer them ways using which you can make their products perform well on the marketplace
- Let the manufacturer know that you are not as strict as any e-commerce platform and that you will be easier to work with
- It is critical to let them know whether you can add any additional benefits, when it comes to product marketing or packaging like product photography, etc.
- Keep negotiating even if they say ‘no.’ You will have to come up with a solid business strategy to make them believe you
Negotiating with manufacturers is easy as they are always concerned with global marketing initiatives, patents, and new product development among others. So, you have an excellent opportunity to crack a deal with the manufacturer.
When you are negotiating with the manufacturer, let them know that you will be only promoting their brand by extending their reach and increasing their sales.
#4 Mistakes to Avoid When Starting
Every rookie wholesale seller makes a few common mistakes. They are easy to fix, given that you understand them beforehand.
Properly managing the inventory is an essential aspect of selling wholesale products on Amazon. You need to find a solution for picking and packing along with a way to analyze your levels as your products sell. Here are a few common mistakes that you need to avoid making.
- Placing too small or large of an initial order:The fact is; if you order too much, you will spend most of your time figuring out where to house them until they sell. On the other hand, if you order too little, you will lose out on sales. So, before ordering, you need to determine how many units you can sell in a month. For this, you need to assess the demand for the product. We recommend before placing bulk orders, place a test order, say 25-50 units. See how the product performs. If they are sold quickly, it means you are safe to place bulk orders.
- Focusing heavily on seasonal products:If you are not a full-time Amazon seller, then selling seasonal products is a great idea. But if it is the other way, you are making a huge mistake. Sure, seasonal products are high in demand when it’s their season and can help make you a lot of money. However, if you are not a seasonal seller, then focusing too much on seasonal products will cause nothing but harm. You will not have any product to sell during the off-season.
- Not factoring in every little spending:This is the most common and probably the biggest mistake new sellers make who are trying to sell wholesale in Amazon. In most cases, the sellers determine their total costing based on the price they paid for the product including shipping. But this is not it. This misunderstanding is what turns a successful product into an unsuccessful one. Buying the product from the manufacturer is not all that will be included in your costing, but the costing relating to preparing the inventory, packaging (if any), etc. also matter.
Read More About Amazon Selling:
- Ultimate Guide to Protecting Your Amazon Seller Account from Scams, Fraud, and Fraudulent Sellers
- Top Ten Tips to Compete in a Over Saturated Market on Amazon FBA Space
- 15 Things You Should Understand if you are in Amazon FBA Private Label Business
- How Sentiment Analysis Can Power your Amazon FBA Business?
#5 Inventory Management
Inventory management is of utmost importance when selling wholesale in Amazon. Just like private label selling, inventory management for wholesale selling is somewhat the same. Even if you have your own warehouse where you are housing the inventory, you need to keep the costs to the minimum. To successfully accomplish robust inventory management, you would want to stock the right amount. You need to stick to a target of selling this much unit in a month. This will help plan your inventory easily. For starters, if the sale of your product is decreased, you can sell them on discounts to clear out the inventory.
While there are definite advantages and disadvantages to selling wholesale on Amazon, at the end of the day, it is up to you whether to consider the wholesale model or not and if yes, would it make sense for your Amazon business. It is extremely important to do the research on your part. You can seek advice from those who are already using this business model.