Amazon Wholesale - How to Build a ‘Million’ Business

 

Not many sellers share information about wholesale on Amazon on the Internet. However, many of them wonder whether wholesale selling is profitable. In this article, we are going to tell you how this works, how it differs from Private Label, and whether a wholesale business can be lucrative for sellers.

 

What is Amazon Wholesale? How Does It Work?

Let’s start with answering the question: “What does wholesale mean?”. In general, wholesalers resell products produced by other companies without changing them or adding labels, etc.

Selling wholesale on Amazon means that you buy goods from your manufacturer and resell them to consumers on Amazon.

You can sell products that you buy from a producer under their brand, not your own one. So, the answer to our first question lays beyond how to buy and sell on Amazon. The only difference is brand.

However, a wholesale license is necessary for everyone who wants to act legally. After you get a license and exercise in buying goods from manufacturers and fulfill Amazon bulk orders or customers’ orders, you will be able to scale your wholesale business on Amazon.

 

Keep in mind that this kind of business differs from retail arbitrage and Private Label (PL) in the following ways:

  • Retail arbitrage means that you will visit physical stores, find goods there and resell those goods on Amazon while wholesale means you have to do everything online without leaving your home or office.
  • Private label is about having your own brand. We have an article about Private Label and how to become a successful PL seller. Check it out to learn more.

The greatest news about Amazon wholesale business is that you will sell products under an already established brand. What other pros and cons does it have? Let’s go further and find that out!

 

Pros and Cons of Amazon Wholesale Business

Why selling wholesale on Amazon is good?

  • You get scalable opportunities for growth.
  • You won’t need to create a brand or listings from the very beginning.
  • You will be a business owner and have a team if you build it.
  • Expenses control: you will know everything about your products in stock and will be responsible for packing and shipping items.
  • If you don’t want to pack and ship them, use Amazon FBA! It works well for wholesalers too.
  • There are usually no strong price fluctuations on the manufacturers’ side, so you can be sure that you won’t lose a buy box due to price changes.
  • You can start working with well-known brands.

 

Why can it be unattractive for sellers?

  • You will need to look for exclusive offers and search for manufacturers who don’t sell on Amazon yet.
  • You have to be approved to register a wholesale business.
  • You may need funds for acquiring and setting up your own warehouse if you don’t use FBA.
  • You will have to process a lot of orders, be ready for that.
  • At the same time, wholesalers usually sell low margin goods on Amazon. Still, this can be compensated by the previous point (high order quantities).

 

How to Find a Nice Product for Selling It Wholesale?

When researching products to sell them on Amazon in such a way, pay attention to those which:

  • Have a good and stable brand history.
  • Are not present on the Amazon marketplace yet.
  • Are not sold as PL products.
  • Have a high sales velocity.

 

In general, your ‘To Do List’ will look like this:

  1. Find opportunities on Amazon.
  2. Look for the manufacturer or several producers.
  3. Contact them and get the prices.
  4. Negotiate regarding the prices and order products.

 

Let’s take a closer look at how everything works!

 

Sourcing on Amazon

Look for interesting product ideas and niches while browsing categories on Amazon. Think about whether you will be able to look for cheap wholesale products for resale in these categories.

In fact, the first step is similar to what PL sellers do. Research work includes finding popular and well-sold products that fit specific criteria. Here is our article about how to research products, forecast customers’ demand for them and predict how they can be sold on the marketplace. Do the same when starting your wholesale business on Amazon.

After you have estimated average monthly sales for the product of your choice, see how many sellers work with it on Amazon. Even if there are 10 or more sellers, not all of them are competitive. Find out whether many of them sell at 2% within the buy box, which means they have the lowest price on Amazon).

When you get quotes from the manufacturer, you can calculate whether starting a wholesale business with this product will be profitable.

If your decision is positive, find manufacturers which can supply you with enough quantity of these products.

 

Negotiating with manufacturers

How to ensure suppliers that you are the best seller who will wholesale their products?

  • Tell them in what way you can add value to their brand.
  • Find problems you can solve for them.
  • Demonstrate them cases or examples of your previous selling experience.
  • Find brands which are not going to sell on Amazon without third-parties.
  • Specify all the additional benefits of your future cooperation.
  • Don’t become discouraged if they say ‘No’ after your first question, as this is where you start negotiating.

After you have found suppliers, you can think of who will manage your inventory - either you will do it on your own or you will pay to Amazon to participate in the FBA program.

 

The Bottom Line

So, as you see, Amazon wholesale business is challenging, still, you can become a wholesaler anytime you want. Even if you don’t have extensive experience in this field, don’t worry, as everyone has to start with something small. Select one product from one manufacturer and work with it, next, add one more product, and so on.

Actually, the answer to the question “How to sell wholesale on Amazon?” is not very complicated. Take our ‘To Do List’ specified above and don’t hesitate to start your wholesale business on Amazon right now!