Last updated on September 6th, 2023
Written by Mohamed Aden
When starting your journey as an Amazon seller, you must decide whether to create your own branded products or become a wholesale product seller. If you choose to create your own brand, you’ll develop your own unique products. It’s the opposite when selling wholesale, where you’ll buy products in bulk and sell them in retail.
Selling wholesale is profitable, as profit margins are higher than retail businesses. However, it can be risky at the same time. Aside from putting in a much bigger capital investment, you need to carefully manage your inventory and keep up with changing trends because your large inventory can quickly become obsolete.
We're here to help you uncomplicate things and give you simple steps for starting your Amazon wholesale business.
With wholesale sourcing, you buy products in large quantities from a manufacturer and resell them on Amazon at the standard retail price. The responsibilities and risks of becoming wholesale sellers can be overwhelming. It demands significant effort, considerable time to research products, and thorough planning.
Here are the perks of having a wholesale strategy business:
When you join the Amazon FBA program, Amazon's high-end fulfillment centers will perform the picking, packing, and shipping for you. They can also handle customer service and returns.
With wholesaling, you get to sell the products at a higher price, but the quantities are more than when selling on Retail Arbitrage. Usually, RA deals with one-off items in lower quantities.
In terms of investment, the main difference is that you invest more money compared to RA. Another notable difference will have to be the sources of products. With the RA, you can order products in bulk from online stores and brick-and-mortar stores.
Wholesaling, on the other hand, sources products entirely from the manufacturers.
Due to different sources, obtaining inventory is much faster for wholesaling than retail arbitrage.
The first steps to selling private labels and wholesale products on Amazon are the same. The succeeding steps are what sets one apart from the other. Both models source the products directly from the manufacturers.
Private label sellers work closely with the manufacturers to add a label to the products. This is done to increase the value of the private label products.
However, wholesaling is just merely selling what the manufacturers are selling. No modifications will be made, and no private labeling will be done. Compared to a private label product, wholesale prices are significantly lower.
If you want the wholesale selling business model on Amazon, here is a complete step-by-step guide to complete your Amazon wholesale account.
While it is true that it is more fitting for a startup to be an Individual Seller first, a Professional Seller account can reap more benefits, such as:
If we do the math, you will save more with a Professional Seller plan. The Individual plan has a fixed $.99 per item fee, while the Professional plan has a fixed monthly fee of $39.99.
Deciding 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 time, money, and courage to take risks in the hope that you are about to build a profitable business.
The Amazon catalog has many options. All you have to do is go through the platform's search criteria. As such, the first step towards a serious Amazon wholesale business is to devote yourself to product research.
Conduct rigorous research on high-demand products that you can sell on the platform in bulk and proceed to sort them out depending on your preferences. 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:
Once you tick off all the items on this checklist, you're set to determine your long-term profitability.
When starting a wholesale company, finding wholesale suppliers and buyers isn't as straightforward as having a retail store. It involves big money, and due diligence is a must.
Here are a few things that will help.
Finding Wholesale Suppliers
Wholesalers must buy directly from the manufacturer to find profitable products. Some manufacturers have an online presence, use it to know pertinent information. These include who the head honcho is, what departments are involved, and, most importantly, who can help you contact suppliers.
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 an excellent position to negotiate with your supplier and get a discounted price for your wholesale items.
Finding Potential Buyers
No one has heard of you yet, so you must drum up business by finding potential buyers. Retailers won't be queuing up to place a bulk order anytime soon. Ideally, you must find multiple sellers with the potential to buy in bulk but can't afford the volume requirements of a manufacturer.
Do you need a wholesale license or permit to sell on Amazon? The online retail giant doesn't require it, but the state where you operate your business does. Non-compliance with federal or state rules can lead to severe penalties and costly fines, or worse, forced closure of your budding business.
Take note that the requirements are based on the nature of your business and the area of service. So to avoid getting into trouble with the law, you must obtain a state sales tax license, reseller's permit, and business EIN (Employer Identification Number).
It would be better to seek help from accountants, tax advisors, or Amazon FBA consultants for guidance.
Besides taking advantage of Amazon's sophisticated fulfillment centers, you can also enjoy the following benefits when you have an Amazon FBA account:
Here's how you can get started with FBA and have wholesale accounts:
Once you've completed all these steps, you can begin selling Amazon products.
Not all Amazon sellers have self-branded products and can open retail stores. You can always try to sell wholesale goods for your Amazon business. Here are some benefits you can get when you choose this route.
Wholesaling means you don't have to put much effort into product research and branding. All you need to do is ensure you give your customers the best experience possible. If you're wholesaling, you can sell established brands.
Your customers already know what to expect when they buy wholesale regarding product quality and price. As a wholesaler, it's your responsibility to make sure the products are processed, packaged, and shipped on time.
You also have to handle customer complaints. You will have to go through every step a typical Amazon seller would go through. Only this time, you can put little effort into the initial phases of selling.
If you would like to be a successful wholesaler, you have to be mindful of your inventory. The more inventory you have, the higher the profit margin you can make. The products you're going to sell already have their suggested retail prices.
Selling wholesale products is about scheduling things properly and managing your supply chain. You have to be great with numbers and analyze trends to help you schedule your future orders.
In the wholesale model, owners buy bulk purchases, but you do not pay for resources like materials and workforce in manufacturing your products. But aside from investing too much money, an Amazon store is also at risk of suspension.
This suspension can be caused by customers reporting that you sell counterfeit products. Amazon takes serious action on entities selling inauthentic products on the marketplace.
As a wholesale seller, you're not responsible for creating or manufacturing your products. But even if you're not directly involved in creating or manufacturing the products you sell, you should still pay attention to the authenticity of the items you offer.
In addition, your reputation as a trustworthy supplier is essential for attracting and retaining customers. So, look for a reliable wholesale supplier who is transparent about their operations and has a good track record of providing quality products.
If you want to start selling wholesale on Amazon but don't know which product to sell, consider getting into wholesaling. It's not for every seller, but if you have the budget, you can enjoy the perks of selling wholesale products.
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.
Seller Interactive can be the partner that helps you navigate the ropes to become an Amazon wholesale seller. Book a call with us if you want hands-on help in diving into Amazon as a wholesaler.
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