Selling Wholesale Products on Amazon
With the variety of business models to choose from, Amazon sellers tend to follow 1 of 3 primary business models: retail arbitrage, private label, and wholesale. Retail arbitrage and private label are popular approaches most sellers decide to go with, most likely because of the immense amount of educational content. There is not too much information on selling wholesale products on Amazon, but as with business strategies that don’t get too much attention, there is opportunity.
In this post, I want to answer the following questions:
- What does selling wholesale products on Amazon look like?
- What are the pros and cons of selling wholesale products?
- What strategies can I use to scale the wholesale business model?
Amazon Wholesale Product Process
The wholesale model involves you (Amazon seller) positioning yourself between an established brand/manufacturer and the Amazon marketplace as a legitimate retailer. So this means you are not purchasing items at your local department store and you are not creating your own brand. An established brand can range from small niche brands all the way to well known global brands. In this business model, there is a focus on relationships between you and the brands you purchase from. There are some pros and cons to going the wholesale route over other Amazon selling business models. Let’s take a look at what these pros and cons look like.
Pros and Cons of Selling Wholesale Products
Advantages of the Wholesale Business Model
One of the biggest advantages of selling wholesale products, is the fact that you do not need to drive demand to listings. Well known brands already have customers actively searching for the brand’s listings. Purchasing the product directly from the brand allows you to jump onto an existing listing and start selling Day 1. I often give the analogy that selling wholesale products is like trading public stocks. You are purchasing stock (inventory) of a company to flip for a higher price to other potential buyers. You are not really committing to a listing as you would have to with a private label. If you want to move on to another brand, you can simply sell through your inventory and move on.
Another advantage of selling wholesale would be the availability of inventory to replenish stock from. Both retail arbitrage and private label struggle with replenishing inventory efficiently. If you have a private label item sell more than expected, getting more inventory from your supplier, probably in China, is going to take time! If you purchased the products via retail arbitrage, the store you purchased may not have the item in stock, and the discount that was once there may have expired. When purchasing directly from brands, replenishing inventory is as simple as sending a purchase order to the brand and receiving the inventory in less than a week. This is possible because brands hold inventory in their warehouses to be ready for purchases from retailers like yourself.
The final advantage of selling wholesale products would be its scalability. With retail arbitrage, you have to trade your time sourcing from stores. Purchasing wholesale allows you to get a team together and create a repeatable process to bring in inventory from brands and sell on Amazon. To purchase a truck load of inventory to sell on amazon, simply send an email to your supplier. This advantage is one shared with private label sellers capable of buying from overseas suppliers. In addition, like private label, you can form relationships with your suppliers to ship directly to FBA centers.
This last advantage is definitely not the end of the list of advantages, and we encourage you to continue your research!
Disadvantages of the Wholesale Business Model
The biggest disadvantage of selling wholesale products would be tight competition on listings. Since listings on Amazon are available to anyone to jump on with the product, competition can be difficult to deal with. As I mentioned before, it is very much like trading stocks and is available to anyone to compete with you. You definitely need to have a naturally competitive personality to excel in this space. Thankfully, there are strategies to overcome competition and stay one step ahead.
Strategies to Scale Your Wholesale Business
To get started, you need to start finding brands that are worth contacting and purchasing from. One method of finding brands would be to attend trade shows. These conventions are available throughout the US and are usually grouped by industry (toys, housewares, garden, etc.). These trade shows are full of energy and can be great fun to attend! While at these shows, simply ask brands for excel versions of their catalog so that you can see their list of products and wholesale pricing. Having these catalogs are a great resource to find potential flip opportunities. If trade shows don’t sound like your cup of tea, simply finding contact info on brand websites and contacting them by phone or email is an effective strategy.
Source Like a Pro
Once you have these excel catalogs, you can start your research to find which items have good ranks and have enough of a margin to turn a profit. Not every listing will have a margin because of the Amazon fees and competition from other sellers. To scale wholesale, the process of finding profitable listings to source from manufacturers and wholesalers needs to become automated in order to be one step ahead of competition. Manually searching through supplier product lists to find a profitable product is close to impossible to do in a relatively reasonable amount of time. Scan Unlimited’s scan feature provides sellers an intuitive method to scan wholesale product lists and quickly identify items that are profitable and in high demand on Amazon. Scan Unlimited provides open access to its sourcing engine and grants users the ability to scan a supplier product list FREE every month. Learn how Scan Unlimited can help you source inventory effectively at https://www.scanunlimited.com