While most online sellers are familiar with the concept of Amazon as a lucrative sales platform, you may not be aware that alongside Amazon marketplace and FBA, there is another rather lucrative opportunity available on the platform. This is Amazon Wholesale.
Wholesale is a straight-forward concept and refers to the purchasing of products in bulk which are then resold to consumers.
If you have sold on Amazon or online in general and you run an ecommerce business, you will have purchased your stock from a wholesaler as part of your sourcing process.
But it’s likely that you then resell those products as single units or small sets of items. That’s where the profit happens! It’s simple economics. You buy at one price, resell at a higher price, and the balance is yours, less your other costs.
But what if, instead of buying from wholesalers, you could actually become a wholesaler and sell on Amazon in bulk? This is reselling using a different strategy and is entirely possible as long as you take the correct approach and choose the right products.
How Wholesale Selling on Amazon Works
The Amazon Wholesale process is pretty straight-forward.
There are just five basic steps which consist of:
- Opening a seller account.
- Researching and sourcing an in-demand wholesale product.
- Adding your product listing.
- Promoting your product.
- Managing your inventory.
This probably sounds familiar, doesn’t it? Plainly what’s described here is the usual process you would follow if you were sourcing wholesale products to sell as single units on Amazon?
Well, almost, but there are some significant differences.
How Does Amazon Wholesale Differ From Standard Amazon Selling?
You Won’t be Selling Private Label Products
In recent years, own brand or private label products have been, and still are, a lucrative way to sell on Amazon, and you can undoubtedly build a decent ecommerce business this way, not least because you can limit your competition by creating a uniquely branded product that belongs only to you.
But this model does not fit with the Amazon Wholesale strategy. As an Amazon Wholesaler, you will be purchasing existing branded goods in bulk rather than creating your own brand to promote.
- Advantage: You won’t need to spend time creating unique product listings as you can add your products to existing listings in Amazon’s catalogue.
- Disadvantage: You are at the mercy of the original product listings which may not necessarily rank effectively.
- Pro Tip: It’s crucial you research and source the right branded product.
You Won’t be Dropshipping Your Products
The dropshipping strategy involves you listing products for sale on Amazon and then placing an order for every sale you make with your dropship supplier. So, you don’t store, pack or fulfil your orders.
The Amazon Wholesale scenario means that there is no intermediary; you are effectively the supplier. As such, you will be in complete control of your inventory and will take charge of all your stock and fulfil every order yourself.
- Advantage: You are in complete control of your inventory, orders and fulfilment.
- Disadvantage: Unless you employ a third party, fulfilment and customer service may become time-consuming.
- Pro Tip: Look at incorporating Amazon’s fulfilment service (FBA) with your wholesale strategy but be aware that if your products are over-sized or slow to sell the costs may outweigh the benefits, and you will need to fulfil orders yourself or through an alternative third party service.
You Won’t Be Able to Take the Arbitrage Route
If you are used to sourcing and purchasing discounted branded products from retail sites to then resell on Amazon at a profit, you cannot apply the same strategy to selling on Amazon Wholesale.
Bulk purchases are required rather than one-offs, so you will be negotiating directly with suppliers and manufacturers rather than retailers and won’t be able to take advantage of ‘sales’ as such.
- Advantage: Negotiating directly with suppliers gives you access to the best deals and lower pricing for your stock.
- Disadvantage: You will need excellent negotiating skills to ensure you secure the best prices for your wholesale products.
- Pro Tip: You should take time to carefully build rapport and nurture relationships with suppliers to ensure you source efficiently and achieve the most competitive deals.
You May Need a Wholesale Licence
If you are based in the UK a wholesale licence is not necessary, so no need to worry, you can get started immediately. However, this may differ depending on your country of location, so it’s wise to check before you start your Amazon Wholesale business.
The Pros and Cons of Selling on Amazon Wholesale
Like any new business venture, you’re going to have to weigh up the pros and cons of Amazon Wholesale to decide whether it’s a strategy you want to launch and grow. So, let’s look at the pros and cons so that you can evaluate.
Amazon Wholesale Pros
- It’s quick to start up: It’s possible to be up and running within six weeks! The most time-consuming part of the process is dealing with suppliers at the front end to acquire your stock. Due to ease of set-up, you should be able to start seeing a profit within three months. This is compared to an average of six months for private label products.
- You can sell branded products: You’re probably used to being advised to steer away from selling branded items, but This is the one area where you should sell already established brands. They don’t have to be designer brands or even the top-selling brands, only brands that are popular on Amazon already. This means you have the advantage of a ready-made market and guaranteed consumer interest.
- It’s scalable: You won’t need to build a brand or create listings – that’s already done for you by the brand, so you can concentrate on sourcing more wholesale products and growing your business ultimately reaping the benefits of longer-term dividends.
- You can establish a passive income stream: Once you have trusted suppliers in your arsenal whom you can rely on for quality products at competitive prices all you need to think about is re-ordering so that you always have wholesale products in stock. This makes it more of a hands-off business model.
- You can enjoy repeat business: By selling in bulk, you can build a steady stream of buyers who will turn over your products as single units consistently. As long as you have the stock, and the product remains popular, they will re-order from you.
Amazon Wholesale Cons
- Amazon Wholesale competition is fierce: When you list your wholesale stock on Amazon, there will always be multiple sellers competing. It’s the nature of the beast and so tempting to undercut if you can! But this results in a race to the bottom – and there are no winners – so don’t do it.
- You’ll need a decent wedge of capital: Ordering products in bulk directly from a manufacturer will require an up-front payment which is likely to be substantial. We’re talking a bare minimum of £1,000 to get started. To be able to sell in wholesale lots you must buy in bulk to fulfil the ‘wholesale’ element. That’s the name of the game.
- Choosing the wrong product will mean disaster: Research is time-consuming but critical. You must thoroughly research products, select the ones that are going to sell and then ensure that you can source the product at a competitive price from a manufacturer, so there’s lots of important front-end work to do.
- Significant time investment is needed: Selling wholesale on Amazon is always pretty slow at the front end due to the reason above. But this is where all your effort lies to build a successful business, so it’s worth it.
- Amazon has some ‘brand restrictions’ in place: If you’re thinking of purchasing your Amazon Wholesale stock from distributors or ‘close-out’ type suppliers there is the chance that you may not hold the correct paperwork required by Amazon to allow you to sell products that fall under certain brand restrictions. While frustrating, it just means that you should develop a good trusting relationship with the actual brand owners rather than liquidators, close-out stores and distributors to guarantee that you can source and sell your chosen brand with no issues.
So, now that the pros and cons are clear just how can you ensure you make money selling wholesale on Amazon Wholesale?
Wholesale vs Private Label?
Private label sellers create their own branded products to sell on Amazon. Because of this, they will need to create their own product listings.
If you’re doing wholesale on Amazon then you will be buying branded products and therefore you probably won’t need to create your own product listings.
Which Amazon business model you decide on is entirely up to you. Each has its own pros and cons so do your own research including speaking to sellers in forums and Facebook groups to help you decide which one is right for you.
How to Make Money Selling on Amazon Wholesale
While pricing your wholesale products competitively, remembering to factor in your fees and keeping a handle on your estimated monthly sales are all important, there are two super-critical points that you must understand to make money selling wholesale on Amazon.
1. Do Your Research!
Make sure you choose a product that is not already being sold by Amazon itself or is a unique private label product sold by a single seller.
This might seem basic, but it’s often overlooked due to the excitement of discovering a hot selling product.
There’s absolutely no point in trying to compete with Amazon or a unique branded product. Amazon will always win in the product wars. With a private label product, you won’t be able to source it from the manufacturer because it’s a private label and not widely available. It’s as simple as that, so steer clear.
So, what are the best wholesale products to sell on Amazon?
Unfortunately, there is no definitive answer to this question. The best way to research products is to use Amazon itself.
Look for products that have a proven demand when sold as single units and try and follow the ideal criteria, which are:
- Choose a recognisable brand.
- Make sure Amazon is not already selling it.
- Ensure the manufacturer is not already selling it.
- Don’t choose seasonal products.
- Avoid ‘trends’ that are likely to be discontinued.
- Choose products with a selling price of at least £20/$25.
2. Find the Right Supplier and Negotiate Hard
Once you have researched potential products, you should then look into sourcing the item – so you need a supplier. This is the time to go directly to the brand owner or manufacturer.
This can seem daunting at first as manufacturers are large companies and will have global marketing initiatives in place. But that doesn’t mean they won’t talk to you.
Remember that you are offering to help them increase their sales, so demonstrate how you can add value to their brand, particularly as they may not have a presence on Amazon – this is something you can help them with. If you specifically look for brands that aren’t already selling on Amazon or have difficulties in making sales on Amazon, you can solve their problem.
Don’t be disheartened if the first supplier you speak with gives you a firm ‘no’. Negotiating is a skill, and it can take a lot of to-ing and fro-ing to settle on a price or even to get a good deal. The more you practice negotiating, the better at it you will become. The best advice: do it with confidence!
If you want to set up and build a potentially lucrative business on Amazon, the wholesale strategy is a viable alternative to private labelling. A consistent effort from you will lead to a decent profit, and the big appeal is the fact that once you are set up and have your suppliers lined up, there’s no reason why you can’t sell the same products to the same customers over and over for a long time.
This gives you a more hands-off approach to sustainable business and will enable you to grow your Amazon Wholesale enterprise with new products while your original products continue to tick over consistently.
Effort now means future gains!
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