Selling wholesale on Amazon is a lucrative opportunity — but there’s a lot you need to know before diving in. This article can point you in the right direction.
We will cover the major respects associated with the wholesale business model and step-by-step instructions on how you can efficiently get your business up and running on Amazon.
Let’s dive in…
What is the Amazon Wholesale Business?
There are a bunch of ways you can sell on Amazon: Online Arbitrage, Retail Arbitrage, Dropshipping, Private Label, Wholesale, etc.
Selling wholesale involves buying bulk branded products directly from the manufacturer or distributors at wholesale prices, then selling them as a reseller on Amazon for retail prices. This model allows us to sell products from established brands with existing demand.
So, what does wholesale differ from other business models?
There are some pretty big differences when comparing a wholesale-based business to other business models on Amazon. Below are the quick views of each comparison.
- Wholesale vs Arbitrage:
Arbitrage is the process of purchasing products from either online sites or in retail stores at a discounted price to resell on Amazon.
Like wholesalers, arbitrage sellers buy branded products. Unlike arbitrage, wholesalers make bulk purchases instead of individual purchases and can reorder month after month.
Also, wholesalers negotiate rates with suppliers and manufacturers directly, whereas resellers (arbitrage) purchase discount products retail to sell via retail.
- Wholesale vs Dropshipping:
Dropshippers list goods on Amazon as merchant fulfilled (fulfillment by Merchant). Then, when a sale is made, they place an order through the supplier/manufacturer of the product, who will ship the product to the end customer on behalf of the dropshipper.
Whereas, wholesalers own their inventory and are in charge of fulfilling orders themselves.
- Wholesale vs Private Label:
Wholesalers purchase existing branded products whereas private label sellers create their own branded products to sell on Amazon.
Because of this difference, wholesalers do not necessarily need to create new product listings. Instead, they add their offer to an existing product listing. On the other hand, private label sellers must create their own product listings.
Why You Should Add Wholesale to Your Amazon Business?
Now that you know how selling wholesale works, below are major benefits that come along with it:
1. You can sell the same items that are reordered from your suppliers month after month and you can buy as many products as you can afford or sell.
2. Your business can be started with pretty low capital, as little as $2,000
3. You can get started and scale up quickly since this is the easiest business model to get up and running just behind retail arbitrage. That being said this model took more than half of sellers less than six weeks to get their Amazon businesses up and running.
4. You’re dealing with existing brands with a proven track record and sales data.
5. You can focus your time and money on growth, even building a team to manage the day-to-day operations, rather than focusing on building a brand, creating listings, or other efforts fledgling brands need to do.
6. You will be able to build relationships with brand owners or manufacturers that maximize the potentials and reap the benefits from the mutual partnership.
In terms of profitability, wholesale is the best of both worlds of Retail/Online Arbitrage and Private Label with an average ROI anywhere from 20% to 80%+. So, you will be able to get the most ROI with the least amount of risk.
What Do You Need to Start Selling Wholesale on Amazon?
To get your Amazon wholesale business started, you’ll need three absolutely required things plus one thing that will dramatically increase your odds of success.
1. An Amazon seller account
2. A resale certificate
3. An amount of starting capital
The most basic thing you will need to get started selling on Amazon obviously is an Amazon seller account. We recommend choosing a professional selling account since it brings cutting-edge advantages for your business. If you don’t have one set up yet, you can go to www.amazon.com/sell to sign up for yours.
The next thing that you will need is a resale certificate to provide to suppliers you will end up working with. This will be required for the vast majority of suppliers. If you don’t have one yet, you can follow the 3-step process as below to obtain yours:
Step 1 - Name your company
Choose a name for your business that should be general and isn’t related to any specific product line.
Step 2 - Form your business legally
Form your business under the name you chose in step one. You can do this either through a local law office or with an online service such as www.legalzoom.com
Step 3 - Obtain a resale certificate
You can usually acquire a resale certificate online from your state’s department of revenue or through a local CPA office.
The third required thing is the starting capital. We recommend having an amount of capital from $2,000 to start with wholesale. More is definitely preferable, but starting with such an investment is just fine.
Now for the last thing that will dramatically increase your odds of success is a value prop website and an email at your company’s domain name. While you can technically start with a Gmail address, it is very unprofessional. Setting up a nice website that talks about your company, and how you can help the suppliers that will be working with you is pretty cheap and relatively easy, but it greatly boosts the image you convey and the odds people will work with you.
At Wholesale Tradecraft, we help you to build a nice, professional website fast and affordable. We handle everything for you, from design to complete management and support you to change or update your content whenever you need to. If you don’t have one set up yet, let us create your own prop website that helps you to establish yourself as an expert on the Amazon space and a valuable partner to the prospective suppliers.
How to Sell Wholesale on Amazon?
Now that you have an overall understanding about the Amazon wholesale-based business model, how it works and its cutting-edge benefits, in this section you’ll learn how to make money selling wholesale products on Amazon. In essence, the process has just only three steps as below:
1. Find Your Amazon Wholesale Products
Finding products is the first and one of the most challenging parts of wholesale sourcing. Basically, there are two methods we can use to find potential leads, that are sourcing OFF of Amazon and sourcing directly ON Amazon.
- OFF Amazon Sourcing - Scan supplier's catalog:
By this method, we will start from the suppliers that we successfully get connected with them either via trade shows or via Google search. We utilize tools like Price Checker 2, Tactical Arbitrage or OAXray to scan on their pricelist to filter through all of the opportunities that exist on the Amazon platform.
- ON Amazon Sourcing - Scout directly on Amazon:
This method is the converse of the above method. We will do things in reverse by sourcing directly ON Amazon. We call it the Wholesale Reverse Sourcing and it is our most favorite sourcing strategy since it helps our product sourcing process faster and much more effectively.
So essentially, we’re going to find good products on Amazon that already have a loyal customer base. They are products with reliable and consistent sales. Below are the main things we look for when using this method:
1. Standard-size & not fragile items
2. Selling price is $20 and up
3. Review rating is 4 stars and up
4. Not too competitive (3-15 sellers in the listing)
5. Amazon is not a seller
6. The brand owner or manufacturer is not the only seller
7. The share of the sales is at least 20 units/month
If a product fits these above criteria, then it’s likely worth getting in contact with the company to see if we can get an account setup. Doing this research prior to reaching out is a good idea to make sure the product actually has potential, and makes sure we use our time efficiently.
You may want to learn more about how to analyze a wholesale product in our other article “8 Criteria of an Awesome Product” in which we explain more detail of each criterion.
You may also want to check out our product sourcing service that we help you to find a plethora of awesome products in your niches.
2. Source Your Amazon Wholesale Products
Now that you’ve found lists with a plethora of potential products, you want to source your goods from the highest possible point in the supply chain to maximize your profits. Supplier sourcing is the next most challenging part of the Amazon wholesale business.
In most of the cases, you'll find the contact of the suppliers through online research. Hop on Google and start researching the manufacturer of your desired products. Reach out through their website or to designated sales representatives via email and/or phone. Sometimes, reaching directly to the suppliers in person will be more effective. This is all about communication and relationships with people because at the end of the day, companies are just people.
When you contact the suppliers, you will want to demonstrate how you can add value to the brand. You are offering to help extend their brand and increase their sales.
This also gives you a fantastic advantage to negotiate with them. You can help them with selling on Amazon because they often don’t have the time or know-how to do it themselves. Bear in mind that, the more things you can do for them, and the more clearly you communicate that, the better your odds of being able to succeed in opening a wholesale account and purchase from them. You have to come up with creative angles for why you would be a good retail partner for the brands and how you could help grow their business.
Here are some ways you can offer to add value:
- Identify any problems that you can help with them. For example, do their products have poor images? Could the SEO for their listings use improvement?...
- Show examples of how you can make their products more appealing or address customer pain points (see the reviews for this). For example, can you fix or improve their Amazon listings? Will you spend your own money on ads to sell their products? Will you be expanding the distribution channels their products are available on?...
- For those brands that aren’t interested in selling their products on Amazon themselves or those are already selling on Amazon, but have had difficulty with it in the past, then if you can effectively convince them you bring the selling experience and help their brand soar on the Amazon space, you’re solving their problem.
If one brand comes back with a resounding “no” at first, that doesn’t mean it’s the end. Sometimes, negotiations take a while. Almost all brands are willing to negotiate to some degree, so keep trying and proving your worth.
3. Sell Your Wholesale Products on Amazon
Now, once you’ve scouted a bunch of awesome products, you’re also approved by a brand owner and have landed a wholesale account, it’s time to get paid by selling those products on Amazon. This may be the easiest part when compared to the above parts. Once you’ve sourced your products, all you have to do is ship those products to Amazon and list them for sale. After that, you have to make sure your inventory doesn’t run out and the sales will roll in.
Conclusion
Now that you have an overall understanding of the Amazon wholesale-based model, you will agree with us that it really is a simple business model, right. There’re so many things you don’t have to worry about such as marketing campaigns, large initial investments, and the list goes on and on.
The beauty of selling wholesale on Amazon is that you can sell the same products over and over again and create a consistent, reliable revenue stream, month after month. This means that the work you put in now can pay off for years to come. So get out there and get some wholesale accounts!