Time to Sell Big: A Crash Course on Amazon Wholesale

January 12, 2021
Written by Jenna
Amazon Wholesale

The process of selling wholesale on Amazon requires purchasing products in bulk from a manufacturer and reselling them on the Amazon platform for retail prices. This practice is particularly encouraging for businesses since buying bulk from the manufacturer is more economical than having customers pre-order goods. At the same time, you wait for the stock to arrive. As an online retailer, it can be frustrating to lose customers over products that are out of stock, but anticipating product demand and ordering from the supplier in bulk beforehand lets you keep the revenue and grow as a business.

There are also numerous advantages to Amazon wholesale. Besides being able to build rapport with established e-commerce businesses, you can take control of inventory and purchase as many products as you are capable of buying from the source. Nonetheless, building a relationship with these brands is equally crucial since it can create a competitive advantage. In the long run, these brands may let you negotiate for better prices or make you an exclusive partner.

How Do I Create an Amazon Wholesale Selling Account?

Simple. You will need three basic things:

There are two types of Amazon seller accounts: individual and professional. The individual account is free but charges $0.99 for every item sold. On the other hand, a professional account has a fixed fee of $39.99 but no longer charges an additional fee per item. The professional account may be overwhelming for some, but you can save up on payments if you sell over 40 items a month. Among other things, choosing the account that suits you depends on your expected volume of orders.

A sales Tax ID is essential in obtaining the resale certificate that you ought to provide for suppliers. However, regulations vary from state to state, so it's vital to research the requirements. 

Like any other business, being an Amazon wholesale seller requires capital. Nonetheless, you can start with less than $1,000 for inventory. Manufacturers will vary in price depending on products sold, and you will find products for $500, but it's better to be safe than sorry.

If you're motivated to start your own Amazon wholesale business, this article briefly covers what you need to know to be able to start.

Step 1: Research on Promising Products to Sell on Amazon

Making the decision to start selling wholesale on Amazon is both exciting and terrifying for any aspiring entrepreneur. After all, taking on this endeavor will require a substantial amount of your time, money, and courage to take risks in the hope that you are about to build a profitable business. 

As such, the first step towards a serious Amazon wholesale business is to devote yourself to the research process. Conduct rigorous research on in-demand products that you can sell on the platform in bulk, and proceed to sort them out depending on your preferences. The Amazon catalog has a multitude of options to choose from, and all you have to do is go through the platform's search criteria. It pays to wait and be patient before you decide which product to sell on the wholesale market.

To give you a head start on your research, look for a product based on the following essential requirements:

  • prices that are geared towards continuous wholesale profit;
  • minimal competition; and
  • adequate consumer demand.

Once you tick off all the items on this checklist, you're now set to determining your long-term profitability.

Step 2: Determine Your Long-Term Profitability 

It's safe to assume that all aspiring wholesale entrepreneurs enter the industry to make a decent profit. As such, you must take the time to analyze, calculate, and ultimately determine if you're set to have significant returns by the time you launch your business.

On the Amazon platform, long-term profitability can be identified by first figuring out what your product prices will be. You should make sure not to overprice or underprice your products, or else they might not be eligible for the Amazon Buy Box. On top of that, pricing your products means taking into account any product fees that may show up on Amazon's FBA Calculator, as well as additional storage penalties when your stocks remain in their factories for long.   

If your priced products remain at a favorable rate with all these external factors, that simply means your business will likely be profitable.  

Step 3: Choose a Suitable Supplier for Your Business

Looking for suppliers takes a lot of effort, especially early on in your business development. It will be a stressful and time-consuming process, but it remains a vital part that would contribute to your success as an Amazon wholesaler. 

If you go on the Internet, you will see lots of Amazon wholesale suppliers worldwide, and it wouldn't be too difficult to hunt for prospects. It's because finding a long list of suppliers is easy, but convincing them to partner with you is an entirely different ball game. 

To convince suppliers successfully, you need to find ways to augment their brand. These suppliers have already established themselves in the industry, and so they are looking for wholesalers with new insights on their product developments and marketing campaigns. Look for loopholes in their products and attempt to solve them by reading reviews or reinforcing their SEO capabilities to maximize their potential. If the brand isn't registered on Amazon, try convincing them to let you sell their products on the platform.

It may take a while before you see things materialize, so it is essential to remain patient when looking for your suppliers.

Step 4: Organize Your Product Inventory

Now that you've done proper research on a product, calculated your potential profits, and found trustworthy suppliers to work with, it's time to create your product inventory.

Basic inventory management is considered by many wholesalers to be a significant part of their business, primarily because it may make or break a company in various ways. One's poor handling of inventory will undoubtedly lead to a variety of problems. For instance, customers may be discouraged to buy when you don't have enough stock for a product, while overstocking your factory may end up hurting your profit margins.

An ideal way to start organizing your inventory is to invest in a reputable inventory management software program that monitors your stocks in real-time. Cin7, Ordoro, and Fishbowl are only a few of the most popular management programs that assist you in managing your inventory. 

Another traditional approach to inventory management would be the ABC labelling technique, in which you categorize your products between "A," "B," and "C," depending on consumer demand. "A" products, being your most in-demand and popular products, will be put on strict inventory control to ensure that they will never go out of stock. Your "B" and "C" products, on the other hand, would be the not-so popular items and would require less monitoring.

These are just some of the inventory management techniques you can roll with when you decide to start your own wholesale business, and it's best to have one organized as soon as possible.  

Step 5: Fulfilling Your End of the Bargain

The final step to Amazon wholesale is fulfilling your end of the bargain: getting your products safely to your consumers. To understand how the fulfillment process works, Amazon wholesalers should be aware of the two possible options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). 

Amazon FBA wholesale suppliers, which make up the majority of wholesale sellers, are those who send their products straight to the Amazon warehouse. Their products are safely stored and shipped directly to customers. On the other hand, Fulfillment by Merchant (FBM), which only accounts for around 6% of users, manages shipping, storage, and customer support services.

What most Amazon wholesalers don't know is that you can use both methods to your advantage! You can utilize FBA if you want Amazon to take care of your customer service and logistics problems, and eventually switch to FBM once you have found your footing.

It all boils down to the types of products that you sell and your capabilities as a start-up wholesaler. 

Final Thoughts

Setting up your own Amazon wholesale business is not an easy feat, but it can be done if you take the right steps early on. If you choose to be meticulous with the details and do your research ahead of time, you might be able to make serious money on the Amazon platform.
You may choose to take on this challenge alone or hire a team of Amazon professionals to assist you in your wholesale business. We at Seller Interactive can provide proper warehousing, logistics, and account management services, where we can take over your Amazon account or become a wholesaling partner. You may schedule a call with us by sending Jenette an email at [email protected]. Book an appointment today!  

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