How to Start Selling Wholesale on Amazon

December 24, 2020
Written by Nicasio Co III
Amazon Seller Account Optimization

The explosion of eCommerce and the continued rise of the Amazon marketplace during times of uncertainty has brought many opportunities for businesses worldwide. One of these is the growing trend of selling wholesale on Amazon. In fact, 26% of Amazon sellers are currently using the wholesale sales model.

Since Amazon sales went up during the pandemic, the wholesale business has also become a profitable opportunity. It paved a way for sellers to get the most out of the eCommerce world. However, becoming a successful Amazon wholesale seller does not simply happen overnight.

Do you wonder how Amazon wholesale business works? Just read on, and you’ll learn all the intricate procedures.

Learning how it works

To begin, sellers must first have a general idea about wholesaling. Wholesaling is the process of directly purchasing bulk products from a manufacturer or a company to get a  discounted retail price. 

Whether you’re new to the world of selling wholesale on Amazon or just simply looking for new ways to gain more profit, here’s how the wholesale model works on Amazon.

  1. Start with setting up your seller account.
  2. Look for a high-demand product to sell.
  3. Source the product from its manufacturer.
  4. Create an optimized listing to rank against your competitors.
  5. Launch and promote the product.
  6. Manage and grow your business.

Registering as an Amazon wholesale seller may also require you to get a wholesale license, a business license, or a tax-exempt form, depending on your location. Remember to check all the requirements needed  in your area.

You also need to have inventory and think of order fulfillment when selling wholesale on Amazon. You’ll face two options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). These two programs are vital when you start your business on Amazon and start fulfilling orders.

Choosing Fulfillment by Amazon (FBA) means you ship your products to Amazon’s fulfillment centers. Then, they will be in charge of storing and safekeeping of the products. It’s a lot more convenient, especially if you run a small business because Amazon will process the picking, packing, and shipping on your behalf. This makes the fees for Amazon FBA wholesale suppliers cheaper than shipping the items to your customers yourself.

On the other hand, Fulfillment by Merchant (FBM) handles oversized products. While they handle storage, pick-ups, and packaging, they also manage the shipping process, so your customers get their orders on time.

The main difference between FBA and FBM is that with FBA, sellers directly send the products to the Amazon warehouses for safekeeping, inventory, and shipment. Whereas with FBM, sellers list or post their products on Amazon but they do all the logistics which includes keeping track of inventory, storage management, customer service, and the shipment to the customers.

3 benefits of selling wholesale on Amazon

Here are just some of the benefits of shifting to the Amazon wholesale business. 

Product Demand 

Wholesaling allows your business to ride on selling high-demand products that consumers look for. 

Profitable 

The Amazon wholesale business is a good way to get your business up and running. Compared to private labeling, wholesaling cuts all the time-consuming factors that may impact your brand’s sales. A survey conducted by Jungle Scout showed that it only took three months for 57% of wholesalers to gain profit, while 65% of private label sellers took  six months.

Efficiency in Inventory 

Selling wholesale on Amazon gives you a guarantee of product availability, as long as the manufacturer produces the item.

Time-Friendly 

You no longer need to spend a lot of time building your brand, creating listings, and other efforts to boost your sales. Wholesaling cuts all the hassle so you can focus on other tasks that may improve your overall business.

3 challenges you will face while selling wholesale on Amazon

Along with the benefits of wholesaling, you have to remember the challenges in this model, especially when you’re just starting your business.

Research

Though the wholesaling process itself doesn’t require a lot of time, t research can be i time-consuming. You may need to look for product opportunities and make sure that you have a reliable supplier 

Competition 

For sure you’ll have a lot of competition with the similar product listings. And the only solution to make your business known is by pulling the price down through coupons, lightning deals, parent-child listings, etc.

Up-front cost

Wholesaling is about purchasing bulk products, so you may start by spending a lot.

3 tips on how to start your wholesale Amazon business

Here are some tips that will help you gain profit faster when selling wholesale on Amazon.

Find A Good Product That’s Worth Selling Wholesale on Amazon

The entire wholesaling business is about riding onto the success of other products and/or brands for your business benefit. Look for known brands and products with high-demand among Amazon customers. 

Research for products with high purchasing chances per day, so it would be cost-efficient on your end as you get these products from your supplier. Ensure that there's sufficient customer demand, establish  reasonable pricing to earn profits, and pick legit sellers that wouldn’t affect your business.

Calculate Your Estimated Profit

It’s best to evaluate the sales and profitability of the product you’re planning to wholesale before ordering from your supplier and officially launching online.

  • Make sure that the item you want is within the 2% of the Buy Box price. You’ll find the widget on the right side of the Amazon product page where prices are listed. Next to it is a golden button that says “Add to Cart”.
  • Utilize Amazon’s FBA calculator to know the product’s fees. You need to enter the Amazon Standard Identification Number (ASIN) of the product into the calculator, enter the data, and review it.
  • Determine your profitability. Sellers determine their profitability by deducting Amazon’s fees and the product cost from the sales price.
  • Know your monthly sales. You may determine the product’s monthly sales estimate using a free Sales Estimator tool.
  • Understand your turnover rate. You can avoid high Amazon storage costs by only stocking at least 2-3 months’ worth of sales.

Look For Guaranteed Suppliers

Now that you have a product idea, immediately contact a supplier. Keep in mind that you’re wholesaling their products and you are offering to promote their brand and increase their sales too.

Getting brands that aren’t on Amazon yet is an opportunity for your business because you’re helping them gain more customers in a different platform. Since these suppliers are big companies that may have patents, global marketing standards, and more, add value to their brand. 

Final Thoughts

It’s normal to get confused and feel overwhelmed with all the information mentioned above, especially if you’re just starting with the Amazon wholesale business. Sure, you’ll face a number of challenges, but that’s perfectly fine. That’s how you grow not only as a seller but even as a person. If you’re finally ready to start selling wholesale on Amazon, you may get the help of Amazon specialists like Seller Interactive to streamline your wholesaling business. 

Leave the worries to them because they’ll handle everything from storage, fulfillment, and logistics. They will manage your Amazon account or act as a wholesale partner while planning and executing the best marketing strategies to help boost your business. If you want to know more, schedule a consultation today!

Go from surviving to thriving on Amazon.

Use the power and influence of advertising to increase sales. Learn more about how you can benefit from our management expertise.
Talk to us

Read More

Amazon Refund Policy: A Guide on How to Refund on Amazon

Being the largest and most popular eCommerce website globally, Amazon has been the best place for buyers to shop for their needs without leaving the safety of their home or office. With over $233 billion in revenue and 288 million square feet of stores and warehouses, Amazon, like any other business, has had their ups […]

7 Signs You Seriously Need an Amazon Ad Agency, and How to Find "The One"

Is your conversion rate as dry as the Sahara desert? Are you running a one-man show where you are responsible for Amazon SEO, PPC campaigns, listing optimization, marketing, etc.? Is your ACoS too high? Are your customers giving you more hate than love? It only means one thing. You, my friend, badly need an Amazon […]

Beginner's Guide: ASIN Basics and Amazon ASIN Suspension Appeal

As a new seller, you might get overwhelmed with the Amazon policies and guidelines when creating ASINs. It is too overwhelming that you're, well, tempted to skip reading it all together because you still have a business to run. You will just go with the flow, read the tutorials on the web, and follow your […]

crossmenuchevron-down