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Last updated on June 5th, 2023
Written by Mohamed Aden
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.
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.
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.
Here are just some of the benefits of shifting to the Amazon wholesale business.
Wholesaling allows your business to ride on selling high-demand products that consumers look for.
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.
Selling wholesale on Amazon gives you a guarantee of product availability, as long as the manufacturer produces the item.
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.
Along with the benefits of wholesaling, you have to remember the challenges in this model, especially when you’re just starting your business.
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
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.
Wholesaling is about purchasing bulk products, so you may start by spending a lot.
Here are some tips that will help you gain profit faster when 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.
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.
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!
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