How to Sell Wholesale on Amazon: The Fast Track
Amazon is the largest online store in the world, and it's only growing. As a result, selling wholesale on Amazon has become an increasingly popular way to make money online. With this opportunity come many intricacies that you need to know before finding success. Luckily for you, we have created this blog post outlining everything you need to know about how to sell wholesale on amazon! Let's get started...
How to Sell Wholesale on Amazon
In a nutshell, Amazon offers a platform for sellers to list their products. The amazon marketplace is divided into two categories: Fulfillment by Amazon (FBA) and Fulfilled by Merchant (FBM).
Selling wholesale on amazon through the amazon warehouse program (FBA) is the most common for wholesale sellers (particularly those just getting started).
Using FBA, sellers ship their products directly to Amazon and then Amazon handles the rest.
How does wholesale differ from other business models?
There are four primary ways of selling on Amazon. While wholesale may seem similar to arbitrage, drop shipping, or private label - there are some key differences between these eCommerce business models.
Arbitrage is when you buy an item at a lower price and then sell it on Amazon for profit. There are two flavors of arbitrage - online arbitrage and retail arbitrage.
Online arbitrage is when you buy products from an online retailer and then sell them on amazon. Retail arbitrage involves going to retail stores like Walmart, Target or Best Buy for the sole purpose of buying items at cheaper prices and then reselling them on amazon.
Dropshipping is when a wholesaler or retailer sells products for stores without ever holding the merchandise in their own inventory. Unlike dropshipping, wholesale involves sellers directly stocking and maintaining amazon's warehouses with large quantities of goods.
Private label is when you create your own branded product and work directly with (usually overseas) manufacturers to produce your product.
Why Sell Wholesale on Amazon - Pros and Cons?
Selling wholesale on Amazon has a number of benefits.
A great way to make money online and "get your feet wet" with amazon without risking too much upfront capital.
Sell products from brands with existing demand
You don't have to ship products from China. By ordering products in bulk from suppliers within your country you reduce your turn rates and shipping costs.
You are not required to buy large quantities of inventory upfront, which means you can start small and grow over time.
It's a good way to spread your risk. By having many different products, your business stays healthy even if one or two products start to slide.
It is easier to build a flywheel effect with replenishable products with wholesale products
Fast. Since you are selling existing products, you don't need to create new Amazon product listings, get professional pictures taken, or worry about SEO for the listings. you don't have to spend time designing and sourcing products from overseas or getting them manufactured.
The margins are not as good as with private label. Wholesale is, primarily a business model that focuses on volume.
There is a lot of competition on Amazon, which can make it difficult to stand out from the crowd.
If you're working with amazon's warehouse program, there are fees associated with every sale that will need to be considered.
Category restrictions. New sellers can't list in all categories.
Brand restrictions. New sellers can't list all brands and some brands are blocked from third-party sellers entirely.
Frequently Asked Questions
Q: How much do I need to invest?
A: A good rule of thumb is $500-$1000 upfront for your first shipment of products from suppliers or manufacturers, and then anywhere between $0-2000 per month as you grow. The more established the brand, the less
Q: How long does it take to see success when selling wholesale?
A: Successful amazon sellers report anywhere between 30 and 300 days for seeing results. There is no "easy route" to creating an Amazon business, but there's an opportunity for those who are willing to put in the time and effort!
What are some other considerations when selling wholesale?
- Shipping: amazon will charge a fee for every item you send to Amazon, which can add up quickly.
- Storage costs: amazon charges a monthly storage fee based on the size of your inventory. If you're selling wholesale through amazon's warehouse program and an item doesn't sell after 30 days, you'll be charged storage feeds
- Amazon requires all FBA sellers - even those selling wholesale - to have a Professional Selling plan on amazon which costs $39.99
What other requirements are there for an Amazon wholesale business?
You will need to establish a professional seller account with Amazon.
You will want a legal entity for your business
A resale certificate to show your suppliers that you are a registered business
While optional, a website goes a long way in showing suppliers that you are serious!
How long does it take to see success when selling wholesale?
Successful wholesale sellers report that Amazon can take anywhere between 30 and 300 days to show a profit.
There is no "easy route" to creating an Amazon business. But there is an opportunity for those willing to put in the time and effort.
How do I avoid the pitfalls when selling wholesale on amazon?
- Set your amazon prices at a competitive level.
- Stay on top of inventory levels to avoid lost sales and amazon fees.
Understand the fees involved when you sell on Amazon
Use your common sense. If you find a product that looks like it makes you a $100 profit every time it is sold and you can buy it for $1 from your supplier, this should be a big red flag that something is probably wrong somewhere! As a rule of thumb, any product with an ROI over 100% should be looked at suspiciously.
Set your FBA prices competitively, but avoid races to the bottom. If margins get too low on one item, don't reorder more of that product.
Find the right wholesale suppliers
Great suppliers are the cornerstone of any thriving wholesale business. Finding them is an important step in finding wholesale products to sell.
Suppliers are much more likely to give you a good price on products and help with sourcing if they believe that your business will thrive. One thing to keep in mind, their business is selling products to retailers just like you. If you can sell their products, they will want to work with you.
There are many different suppliers out there, so it's important to be clear about what kind of supplier you're looking for in order to narrow down the search process. You are looking for a supplier that
offers a number of profitable, in-demand products
provides quick shipping
as a bonus, offers credit terms to give you longer to pay
Some suppliers have experience working with FBA wholesale and will offer the ability to prep and ship your products directly to Amazon for you!
There are a few different ways to find wholesale suppliers.
Search for wholesale suppliers on google. If you are looking for suppliers of pet products, try
"pet product wholesalers"
"pet product distributors"
"pet product suppliers"
"distributors of pet products"
"wholesalers of pet products"
"suppliers of pet products"
Research established brands and reach out to them. Established brands often will provide you with a list of distributors from which you can buy products from.
Try industry events, trade shows, and conventions. Commercial trade events often have a section for wholesalers, and they are eager to speak with new retailers. Think about it, their job is to sell products and you are looking to buy products!
Another effective way of finding suppliers is networking in your industry or niche. One secret tip - if your supplier is out of stock on a product, ask if they know anyone else who carries that product! You can sometimes find suppliers with similar products to sell that you hadn't even heard of before with this strategy.
Also be sure to check out reverse wholesale sourcing - one of the best ways to reverse engineer existing, successful wholesale sellers.
Find your profitable, high demand wholesale products
When you have found a supplier to work with, the first thing to do will be to figure out which of their products you are interested in selling. When looking at any product to sell you want to look to make sure that it
are in high demand on Amazon (look at monthly sales)
are not sold by Amazon themselves (they don't tend to share the buy box)
have a fairly low level of competition (look at the number of sellers)
you are allowed to sell (the brand owners are okay with Amazon sellers, the category is not gated, etc)
While you can do this manually, that is time-consuming and can be difficult. A more efficient way is to use a product research tool that will point you in the right direction. Wholesale Inspector is the market leader for product research, giving you important data points you can't get anywhere else.
Don't be afraid to ask your suppliers for help. They know which products are popular and make be able to give you a heads up for new products that are releasing!
Understand the buy box and how to sell your products
So, if you are selling your products on existing listings, how exactly does someone purchase your product and not a competitor's? The secret is Amazon's buy box. The buy box uses an algorithm to show the customer the best seller for them, even when there are multiple sellers. The buy box algorithm is trying to show the customer the best offer for them. This is primarily driven by price and the time it will take to reach the customer. Generally, if you are priced lower than your competitor's, you will be more time in the buy box!
The buy box is the little box in the right-hand corner of the products page. That's where people will click to purchase the product. In this case, if you were to click Buy Now, you would be purchasing from the seller Firefly Shopping, one of 28 available sellers for this product. If you were to check back at a different time, there would likely be another seller in the buy box.
While no one (except those at Amazon) knows the exact algorithm, there are some clues. Sellers with lower prices and faster shipping times tend to win the buy box more often. The good news - as an FBA seller, Amazon gives you some of the fastest shipping times available. That leaves just pricing for you to control. Generally, it is recommended to stay within 2% of the current buy box price.
If your competition has an equally good price and shipping time as you do but they're higher on the buy box, there's a strong chance they may be better in another area (such as having higher reviews).
The buybox is the coveted spot on Amazon that will generate you sales and profits. The more time you can spend in the buybox, the more monthly sales you will have in your Amazon FBA business.
Become a wholesale seller today
If you want to sell wholesale on Amazon, then there isn't any better time to start selling than today. As the old adage goes, "The best time to plant a tree was 20 years ago. The second best time is now."
And with Wholesale Inspector by your side, you are giving yourself the best possible tools to sell on Amazon and grow your business!