Every online retailer is always looking for new and innovative ways to increase sales. However, while most Amazon sellers are familiarized with the concept of making sales on the platform via the Amazon Marketplace, some are unaware that another lucrative option is available. This is Amazon Wholesale, which basically means you buy in bulk for resale the products.
In this write-up, we will learn how Amazon Wholesale works and how to buy cheap wholesale products and resell them through Amazon FBA. Read on!
What Does Buying Wholesale Entail?
Buying wholesale products involves purchasing products in bulk at wholesale prices directly from manufacturers or wholesalers. After that, you resell the items to make a profit from the discrepancy between the wholesale price and retail price. With this process, you will definitely make a higher margin than buying from retail sellers.
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This business model is different from buying retail because you will make purchases in large quantities, and you get a discounted wholesale price, meaning you can then make more profit on the resale.
However, most wholesale suppliers will have a minimum order requirement that you have to meet to purchase the products. A minimum order refers to the least amount of items you, as a retailer, can purchase to do business. This figure allows a wholesaler to achieve revenue and profitability targets.
Differences Between Selling in Bulk and Other Business Models
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1. Wholesale vs. Dropshipping
Dropshipping allows a seller to outsource stock management, order fulfillment, and shipping to external partners, while wholesale demands you to take responsibility for these functions yourself.
On Amazon, dropshippers list goods without taking ownership of the product first. Then, after a purchase is made, they place an order via the supplier, who fulfills the product on behalf of the dropshipper.
2. Wholesale vs. Arbitrage
A major difference between wholesale and online arbitrage is that, with wholesale selling, you buy in bulk and directly bargain rates with suppliers or manufacturers. On the other hand, arbitrage sellers buy discounted products from other retailers to resell. For instance, if your local or online store sells pet products at 50% off, you could buy them for $20 and sell them on Amazon for $40.
3. Wholesale vs. Private Label
Private label sellers create their own products from scratch to sell on Amazon. Therefore, they will require to create their own product listings. Whereas wholesalers purchase and resell entails selling existing branded products, hence you will not need to create your own product listings.
How to Buy in Bulk for Resale Through Amazon FBA
Amazon sellers can source products through a wholesale supplier or directly from a manufacturer. However, selling bulk items at a wholesale discount is not permitted in Amazon stores. That said, the Amazon Wholesale process is straightforward. There are just a few basic steps you will need to follow:
1. Register As an Amazon Seller
If you are not an Amazon seller, you must create an account on Amazon's sellers' platform. To do this, Amazon will provide you with two seller account options: Individual or Professional. Ultimately, your chosen program boils down to why you plan to sell on Amazon.
a) Individual Seller Account
An individual Amazon seller plan is best for online retailers who will likely sell less than 40 units of their product each month. This is a perfect option if you want to sell a few items. It's also a great plan if you want to try selling on Amazon before going all in and expanding your business to something like a private label.
b) Professional Seller Account
A professional account is best suited if you sell large volumes of products, meaning you want to sell more than 40 units monthly. As a professional seller, you can feature your items in the "buy box." This is the featured seller on a listing on Amazon.
2. Find the Perfect Product
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When you have an account, it's time to find the best cheap wholesale products for resale. As we stated earlier, Amazon wholesale is strategizing the in-demand products to buy cheap wholesale items in bulk and resale them at a higher price. For the best chances at success:
i) Choose a Product with High Demand
It's best to consider products in Amazon's best-selling categories, such as pet supplies, fashion accessories, beauty products, baby products, and Books.
ii) Choose an Item with Low Competition
Since every seller is mostly looking for products with high demand, you will find that some categories are saturated. Therefore it's best to pick a product with low competition.
To analyze the products with low competition, you can use Amazon ASIN, which is a free tool from SellerApp, that gives you a detailed analysis of listing quality, Fulfillment by Amazon (FBA) fees, product potential, and keyword analysis. Alternatively, you can use other paid product finders and research tools.
iii) Go for a Product with Good Profit Potential
You might find a great product with a high-demand, low-competition, but it won't count if you can't profit from it. Cost estimates and profitability analysis is paramount in deciding what wholesale products to sell on Amazon. Using Amazon's FBA Revenue Calculator is a great way to view potential net profits.
iv) Other Dos and Don'ts
- Avoid private-label products or sold-by-Amazon items.
- Go for product categories that are less fragile, perishable, or too heavy to ship
- Avoid choosing restricted products such as animal-related products, drugs, drug paraphernalia, gambling, and lottery.
3. Find Suppliers or Cheap Wholesalers
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To successfully sell wholesale goods on Amazon, you ought to identify where to buy cheap wholesale products. This means you need a supplier with cheap wholesale products to make high-profit margins. Below are some tips to help you find good wholesale suppliers:
a) Background Research
Look up your supplier and ensure they run a legitimate business with all the necessary certifications. For instance, you can check if the supplier is a member of the National Association of Wholesalers-Distributors (NAW).
b) What Is the MOQ?
Confirm that the supplier has a minimum order quantity (MOQ) that is practical for your needs. For example, if you are starting Amazon wholesale, you probably do not need to commit to buying over 1000 units of a product.
c) Check the Quality
Ensure that the products the manufacturers or wholesale suppliers sell meet Amazon's quality standards. You can always ask for a sample or an item's prototype before placing an order. This will help you gauge if the product meets quality standards.
d) What Are the Costs?
Shipping products from a foreign country may take time and also includes costs. Therefore, you must ensure that you factor in these additional costs before partnering with a supplier.
e) Vary Your Options
To keep your retail prices as low as possible, you must diversify your search. When looking for a supplier, ensure you're in touch with multiple wholesale companies. This way, you will have more options before making the final call. After all, the costs and quality of the products can vary from one company to the other, so it is advised that you keep your options open before selecting the supplier that suits your business needs.
To find cheap wholesale products for resale, you can find wholesalers through paid directories, a B2B marketplace, google search, and trade organizations. You can also attend industry events, or trade shows to find suppliers.
4. Contact the Wholesaler
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Getting great deals from a wholesaler boils down to understanding what the suppliers want and creating a win-win situation. This essential step will impact the whole process, but it's not difficult with constant practice and comprehensive research. As a new Amazon seller, here is how to navigate this stage:
- Introduce yourself and your enterprise cordially
- Inquire about the minimum order quantity
- Ask for a price list or catalog
- Request documents to verify the wholesaler's legitimacy
- Request for products you are interested in
How to Fulfill Your Wholesale Orders Through Amazon FBA
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Fulfillment by Amazon is a resource offered by the platform that lets you ship your items to Amazon's Fulfillment Centers to store. With this fulfillment option, Amazon stores, picks, packs, ships, and delivers your items to your customers on your behalf.
Amazon also manages customer service and returns for all your orders. This takes much of the pressure off your new business, as you will not have to worry about shipping the orders. Plus, the fees for FBA are usually less than the costs involved with shipping the products yourself.
With FBA, you don't have to manage inventory, either. Instead, you send the products acquired from your supplier to one of Amazon's warehouses around your country. Then, whenever a customer places an order, the warehouses act as middlemen to receive the order and ship it out for you.
Remember, if you are selling products that turn slowly or are oversized, FBA might not be the best choice for your business. You may have to turn to your own resources to store and ship your products. In that case, Fulfillment by Merchant (FBM) may be the optimal method for your business.
The Pros and Cons of Trading on Amazon Wholesale
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Amazon Wholesale Pros:
a) A Quicker Start
It takes less time to start up. With Amazon wholesale, it's possible to have your business up and running within six weeks.
b) No Brand Headaches
Another advantage of buying and selling wholesale on Amazon is the reduced pressure of inventory forecasting compared to manufacturing your own brand.
c) No Inventory and Shipment Worries
With Fulfillment by Amazon (FBA), you dont have to worry about storing, sending, or dealing with returns.
d) Simple Management and Extra Income
You can establish a passive revenue stream. Then, once you have trusted suppliers, all you need to think about is re-ordering more products so that you always have wholesale products in stock.
e) Demand Already Exists
Another of the biggest advantages of selling wholesale products via Amazon is that there is already existing demand for the products you sell.
Amazon Wholesale Cons:
a) Steep Competition
Amazon Wholesale competition is intense. If you dont get products with low competition or don't choose products with high demand, it can be very hard to beat multiple sellers competing. It will help if you conduct an Amazon seller competitor analysis.
b) Capital Intensive
You will need a lot of capital to set up your online store. Buying cheap wholesale products requires an upfront payment which can be hard to obtain.
c) Comprehensive Research Is Key
The research process can be time-consuming and require your full attention. You must exhaustively research products, select the items that will sell, and then ensure that you can source the product at a competitive price from a manufacturer. It's also good to ensure that your target market will love the item before investing too much.
d) Brand Approval Is Necessary
Another notable concern of wholesale selling on Amazon is the need for approval from the brands.
How Much Money Can You Make Selling Wholesale Goods on Amazon?
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Most Amazon sellers earn between $1,000 and $2,500 on average per month, with some sellers earning up to $45k per year. So, generally speaking, you can expect to earn from 10% to 50% profit on each sale.
The amazing thing about selling on Amazon is that most sellers start gaining profits within the first year of selling on Amazon. Since Amazon allows you to display your products for everyone, you are more likely to make more sales and, ultimately, higher profit margins. It's, however, necessary to note that the amount you make depends on the items you choose and how well you market them.
Again other factors affect profitability. For instance, the product's initial price, shipping costs, competition among retail sellers, and other associated fees.
You need to do marketing to increase your chances for your retail business to succeed. You ought to write high-quality product descriptions with the right keywords so your products appear first in search results. Your product title is also consequential in showing up in search results and encouraging shoppers to click on your product instead of another one.
Conclusion
Many businesses buy wholesale products in bulk to increase profit margins and save time. This entire process is less time-consuming and more cost-effective since you don't have to create the product from scratch. So use this article to build a successful strategy for buying wholesale merchandise.
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