The Entrepreneur’s Simple Guide to Starting an Amazon Wholesale Business

September 13, 2021
Written by Kevin Wong
amazon wholesale business

Starting a wholesale business can be very profitable.

You decide to jump in. After all, you have the capital and the will to make it work. You're also eyeing to join Amazon because everyone has taken their business there. Naturally, you think that's where you can succeed in times of crisis.

But you have too many things to consider, and the scale of what you're trying to start overwhelms you. Add to that the complexity of the known and the uncertainty of the unknown in the Amazon marketplace.

Worry no more. We're here to help you uncomplicate things and give you simple steps on matters related to starting your Amazon wholesale business.

Amazon wholesale business can be profitable if you have the capital to get started

How to start an Amazon wholesale business

Becoming a wholesale supplier can be easy despite the difficulty of launching a product in this time of crisis. By following these simplified steps, you can get into wholesale selling smoothly.

Know your niche.

A niche is a segment in the market where you can comfortably sell your goods for mutual benefit. That means getting a huge chunk of profit selling to a specific consumer group that wants what you offer. More importantly, only you (and perhaps a few others) cater to this group.

You can know your niche in two ways. You must have a rough idea of the products you want to sell and who's willing to buy them. From there, go deeper into the consumer subcategories to analyze where the demand is high and the supply is low.

Purchase a domain name.

Once you have connected the dots between the product and the buyer, it's time to invest in market presence. Getting a domain name or a website name is the easiest way to do it. It's also the most important one.

Buying a domain name is, in a sense, a form of business registration. You think of a unique business name, and you check whether someone else already owns the name. If not, you can claim ownership of the name by purchasing it.

You will hit several online business milestones when you get a domain name.

  • Your domain name effectively becomes your brand name.
  • Your business gets an instant online presence.
  • It gives you credibility.
  • It gives you a chance to reach your target market online.

There are websites where you can purchase a domain name. The hard part here is in coming up with a creative one. 

If you're starting from scratch, create a shortlist of possible domain names for your business. If you already have an existing business, create acceptable variations of your business name in case someone has claimed your business name and uses it as their domain name.

Set up an Amazon Seller Central account.

Marketplaces like Amazon give buyers and sellers a platform to find each other and do business instantly. Joining Amazon Seller Central is ideal if your business website is still in progress.

If you already have the products on hand and want to start moving them immediately, you can create an Amazon seller account.

Amazon Seller Central has many benefits for online wholesalers. Once your account is live, you have an opportunity to reach thousands of retail sellers looking to buy in bulk for a lower price. Amazon Seller Central also lets you have full control of your products and promotion. It also gives you all the data you need so that you can strategize for maximum profit.

A man in a warehouse taking care inventory for an Amazon wholesale business

Source suppliers and find potential buyers.

In the wholesale business, sourcing your suppliers and finding buyers aren't as straightforward as being in direct retail. It involves big money, and due diligence is a must. 

Here are a few things that will help.

Sourcing suppliers

To get a leg up on profitability, wholesalers must buy directly from the manufacturer. While some manufacturers have an online presence, you should only use it to know pertinent information. These include who the head honcho is, what departments are involved, and, most importantly, who can help you get your foot in the door.

After doing your research, it's time to do some legwork. Visit the manufacturer, check out the factory, and do business directly with the person in charge. That's how you get yourself in a good position to negotiate with your supplier and get competitive rates.

Finding potential buyers

The truth is retailers won't be queuing up to place a bulk order anytime soon. No one has heard of you yet, so you need to drum up business by finding potential buyers. Ideally, you must find a high-converting retailer with the potential to buy in bulk but can't afford the volume requirements of a manufacturer.

Determine your product's price point.

Pricing affects all facets of your business. Your ability to expand inventory, discount and promote your product, or pay your business debts relies on good pricing. 

Here are the things you need to consider when setting a price point.

Knowing your fixed and variable costs

Determine what costs increase when you make one sale and what costs remain the same. Doing this will help you determine what to account for the cost of goods sold (COGS).

Knowing the price ranges of your competitors

Once you have determined your COGS, it's time to scout the marketplace for your competitors' prices. 

Normally, the prices would vary, so you'll need to gather pricing info from many of your competitors until you see enough of a pattern to create a price range. That should be your reference on the acceptable prices in the market. Doing this prevents you from overpricing or underpricing your product and makes sure you're maximizing profit.

Deciding on an initial pricing

The amount you decide to charge for your product is to be your initial pricing. That's because your pricing isn't a one-off decision; it will change over time. 

The initial pricing is a way for you to get data on how willing your customers are to pay the price you set. From there, you can start playing around with the amount until you hit the price point where you get the most sales.

Outsource to maximize time and profitability.

If you’re a startup wholesaler, it's a good business decision to keep your costs down and your profits up. Outsourcing covers that spread.

Doing your own storage and shipping can be taxing, and the quality of service may not be that great since you're still learning the ropes. So it's best to delegate these tasks to experts by putting your wholesale business on Amazon FBA (Fulfillment by Amazon). Doing this saves you time and brings your service quality to a competitive level.

Dive into Amazon wholesale business

Wholesaling can be a rewarding business if done right.

Doing it right early is crucial for your wholesale business to thrive. However, you can't do it alone. You'll need a partner invested in the progress of your business and with the same passion for profits and growth as you do. 

We at Seller Interactive can be the partner that helps you navigate the ropes of the Amazon wholesale business

Contact us at [email protected] if you want hands-on help in diving into Amazon as a wholesaler.

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