Being able to work from home is more important than ever before and selling on Amazon can help you to do it.
That’s where Amazon comes in. It’s a way to make extra income without having to be in the office from 8-5 every day.
Most people get started selling on Amazon through retail arbitrage or online arbitrage. These methods are great to find deals, but over time, you might start running short on new products or deals in your local communities.
This when you have to make a decision:
Do you keep looking and hoping or do you shift your business model?
I recommend considering the latter and looking into Amazon wholesale.
What is Amazon Wholesale & How Does it Work?
As you know, Amazon endeavors to be the go-to retail store for everyone. However, they don’t sell everything themselves.
Amazon has third-party sellers who use the Amazon platform to sell their own items. That’s the whole reason you can even sell on Amazon in the first place.
When buying through a third-party seller, most Amazon FBA customers don’t know the difference. For customers, the purchasing process is the same as it would be when buying directly from Amazon.
The difference is that the bulk of the money for the sale goes to the third-party seller.
Where third-party sellers come into the equation is their ability to source products. Most sellers find items in physical stores or in online storefronts.
Wholesale sellers take it one step further and start connecting directly with a manufacturer or wholesale suppliers.
Why do they do this?
Purchasing wholesale allows the buyer to purchase items at a discount when they are purchased in bulk.
This provides the buyer with an opportunity to send these items to Amazon with a lower cost than anyone else can.
Talk about a sweet advantage. Amazon wholesalers can find a consistent source of inventory at a price point that can’t be found by any other seller.
The wholesale products may come from a supplier, a manufacturer or a distributor of the product. These products can be virtually anything from clothing to tools to electronics.
The key is to have a good bulk of that item to sell wholesale.
Selling Wholesale on Amazon
Wholesale selling through Amazon is a popular way to make money because of the power of Amazon. Amazon is a trillion-dollar company that has surpassed Walmart to become the biggest retailer in the U.S.
There is nothing better than using the power of Amazon to help make you money.
It has also become the internet’s biggest retailer in the world. If most of the people you know buy on Amazon, and chances are that they do, imagine how many people there are across the country who buy from the site.
That retail power has made it the ideal place for third-party sellers to make a profit. Amazon sellers number two million in the world, and for good reason.
With such strong retail power, sellers don’t have to do a lot of marketing to move their products.
They have a built-in audience of millions of people who shop on the site.
Just like with any type of Amazon seller, wholesalers are in the game of getting products at the lowest price possible and reselling them on Amazon. It might sound easy, but there is a little more to it than that.
It’s one thing to find a product at a low price, but it’s another to find a product that actually sells.
Once they have sourced products, or, found a source that can reliably supply the product, the seller can list the items for sale and sell them through Amazon’s platform.
Once you get everything set up, it’s as easy as checking inventory and placing orders. Amazon handles the rest of the process from packing your order and handling the customer service.
Fulfillment by Amazon
You might have noticed that I mentioned Amazon can handle the majority of the busy work. It might sound a little good to be true, but it is actually just one of the many services Amazon offers.
Increasingly, third-party sellers who sell on Amazon are not shipping the items they sell themselves. There is another way to make selling wholesale on Amazon even easier to do.
The program is called Fulfillment by Amazon (Amazon FBA) and it might be my favorite thing since sliced bread.
When you are using Amazon FBA, you don’t need to ship it as you would do with most third-party selling sites. Instead, you find your product, box them up and send them to Amazon’s fulfillment warehouse.
When the items reach the Amazon FBA warehouse, the items are checked in and they handle the rest. They store the items in their warehouses and that’s where the magic starts to happen. Well the magic of Amazon that is.
When Amazon sells one of your products, Amazon will ship it to the customer. They have staff members hand pick the items and handle making sure it gets to the customer.
In essence, you ship the items to Amazon and they handle the rest. You don’t have to worry about taking trips to the post office or make sure you have enough boxes on hand to ship out all of your orders.
All you have to do is make sure Amazon gets your products from the manufacturer or wholesaler. This can be as easy as sending a shipping label via email and waiting for your products to hit the virtual shelves.
Amazon FBA is what makes selling on Amazon possible for those sellers, like wholesalers, to sell the volume of products needed to be a full-time seller.
It gives the seller the ability to scale without having to build a warehouse or hiring a bunch of staff.
And to be honest, it’s pretty easy to get started. You just need to sign up for an Amazon account and turn on the FBA feature. Once you do that, it is as easy as shipping products to Amazon.
Pros and Cons Of Selling Wholesale On Amazon
Like any other business endeavor, there are pros and cons to this way of selling merchandise. Most sellers find that the pros definitely outweigh the cons when they consider the whole business of selling wholesale on Amazon, but smart sellers understand both sides before taking a dive into the world of wholesale.
The Pros
1. Massive Customer Audience
One of the best reasons to sell through Amazon is the massive audience who are already on the site and looking for items to buy.
Selling items from your own website would take years of marketing, and then it still may not work. But on Amazon, the numbers are certainly in the seller’s favor.
When you sell wholesale, you’re selling branded items, not generics. This helps you as a seller because so many people search for the brand name along with the name of the item.
And with a brand name behind the product, more buyers feel confident in buying it and knowing what level of quality it is. The brand has already done the marketing and created a customer base.
With branded products, that isn’t your job. You are just simply the supplier. Demand for the brand has already been created.
2. Flexibility
It’s becoming more and more normal to work from home these days. When people think about the ideal job, it often involves them being able to stay at home and having a flexible schedule.
Selling wholesale on Amazon has both of these attributes in spades.
All of the sourcing and shipping is on your own schedule. You can even arrange a pick-up for the boxes you ship to Amazon. You are never tied to a timetable that will tell you what to get done that day.
Instead, you create your own schedule so that everything gets done.
Because you set the schedule, it’s easy to schedule work for your Amazon business around your day job. Eventually, you may want to quit your day job, but you don’t have to.
You can have both of these streams of income at the same time.
3. Simplicity
You won’t have to create listings from scratch. With so many millions of items for sale on Amazon, you likely won’t have to create a full listing including photos, a description and answering questions.
All of that is already done for the items you will sell, and you can simply get your items sold from the existing listing. This is why many sellers find it preferable over selling on eBay.
With FBA, you don’t need your own warehouse to store the products.
Selling bulk items instead of the occasional one-off that you find means having an enormous amount of physical products, and they have to be stored somewhere.
With Amazon FBA, Amazon does the warehousing of your wholesale products. You won’t have to rent a building or fill up your house for your wholesale business.
The Cons
1. Restrictions
There are some items that beginning Amazon sellers are not allowed to sell through the site.
These are brands that have set this rule for Amazon, and it’s part of the agreement for Amazon being able to sell that product.
If you aren’t sure which products you are cleared to sell, you can ask customer service. Or, you can try listing an item as a test to see if it will go through.
2. Finding Suppliers
You will likely have to talk with a number of manufacturers and/or suppliers to get them to allow you to sell the items on Amazon.
If you are a new seller, it may take a little while to get manufacturers and suppliers to get on board with you selling their item.
And, you will likely have to go to several brands to get enough products to sell for a significant profit.
Having many products to sell also gives you a way to keep your items evergreen. If you have holiday items, these won’t sell in summer, so you will need summer items as well.
Balancing your product offerings takes time and a lot of work.
3. Low Margins
Profit margins for some items can be slim. Amazon wholesale selling depends quite a lot on volume. The difference between the wholesale price and the normal, retail price may be a small one.
Compare this to online arbitrage or retail arbitrage and the margins look a heck of a lot different.
And, you may have a lot of competition as other wholesalers try to sell the same products you do. But, even the thinnest margin can be a good source of profit if it is a popular item that sells regularly.
4 – Startup Cost
The amount that you have to invest into your selling business can be high. Because wholesale prices rely on buying in bulk, you’ll have to have large numbers of each of the products you sell.
Coming up with that initial investment to buy wholesale can be difficult.
How To Get Started Selling Wholesale On Amazon
After you have made your seller account with Amazon, you need to come up with the right products to sell. This can be a time-consuming process that takes a long time to complete.
Even after you have found some great products to sell, the market for one or more of them may get smaller, necessitating starting the process over again.
Once you have the skills you need to find the right products, you can do it whenever it becomes necessary.
Looking through product catalogs can give you some ideas about the items that may be available for you to sell. It’s always helpful to look at lists of best-selling items so that you have a good feel for what is selling well.
Spend some time looking around on Amazon listings and looking at how well the products sell. This information is in most Amazon listings.
When you look at a listing, look for a heading called “Product Details.” Then, look for the “Best Sellers Rank” below that. This ranking will show you how well the item has been selling within its product category.
The lower that number is, the better that product has been selling through Amazon. If it has an enormous number, it’s best to stay away from that product. It will not sell at a volume that would be worth your time and effort.
Tactical Arbitrage can also help you narrow down some wholesale suppliers using a Reverse Wholesale Sourcing method.
Check out a video about it here.
Once you find your product, you simply order and send it to the Amazon warehouse system. After that, you reorder when needed and adjust prices if competitors hop on the listing.
Wholesale Accounts
When you have identified a few products that you feel are popular enough to sell well, it’s time to get your wholesale account.
This is an account with the manufacturer or distributor that will allow you to purchase their items in bulk.
Finding a good product and getting in as a wholesale account holder is what keeps many prospective Amazon sellers from actually getting into the business.
It sounds really intimidating, but it’s honestly just a lot of busy work.
Another reason that so many people don’t do this is that they will be required to place a bulk order. Your wholesale account will likely have minimum quantities (MOQ) that you have to buy in order to get the product.
This does mean that you will need more money upfront than if you sold items as one-offs that you got through retail arbitrage.
You will need to know what your budget will be for each product before you invest time into getting wholesale accounts. Some manufacturers have enormous minimums that would be hard for any small business to afford.
These products are ones you might want to shy away from, but it could also be an opportunity to make big money.
Things to Consider
Product Niches
For every mainstream, highly popular product to sell there are likely many, many wholesale sellers offering them through Amazon.
That’s why it’s important to find niche products that will still sell well. A niche product has a ready-made customer base, but it isn’t something that everyone would buy.
These types of products can still sell quickly, but you will have far less competition when you sell them.
I always recommend that you be an equal opportunity seller, but wholesaling might require you to get a little more specialized.
Since you will be buying large quantities of a given product, you might want to consider really understanding the demand of a few different product categories.
Established Brands
Before choosing a product, look into the brand. Do they market themselves? Is it a brand that is already established in its niche? Even if you’ve never heard of it, it may be highly popular in some circles.
If the brand isn’t well-established, you may end up having to market it for the company. Online marketing can be very expensive and is always time-consuming.
Avoid having to do it if possible. An established brand will already have advertising to bring in customers.
They will already have a good reputation in their niche. This is a valuable asset for a wholesaler.
The Competition
Let’s face it. When you are buying in bulk, the last thing you want is for another seller to hop on your listing. You want to know that your product is going to be in demand and will be sold in a reasonably predictable pattern.
You don’t want to get stuck holding a bunch of inventory. So you want to choose the right products and have the lowest level of competitors as possible.
When you have your wholesale account and can begin to sell, you will have to look at the listed price of the item on Amazon to see whether it’s a price that is going to stay steady or not.
When an item is sold by someone as a one-off sale, they are free to lower the price as much as they want so that their item will be next in the buy box.
But when the company allows wholesale sellers of the product, there is no reason to lower the price, as everyone selling it has paid a similar wholesale price.
This keeps product prices steady and discourages a pricing war that will eventually get too low for a profit to be made.
With your sellers’ account, you can see how much competition you would have in the buy box of a product. Your main competition will be those sellers who are within about 2% of the price in the buy box.
If the item is popular, it can withstand having a lot of sellers and still offer you the opportunity to sell through the listing. Ideally, you’re looking for a niche product with minimal competition and a steady price range.
The price you list the product for should also be within this 2% range.
However, if you find a product that is highly profitable, sells fast and has a lot of competition, it may be worth it to sell this product. Profitability is a major indicator that a product may be right for you to sell.
The ROI numbers are important, even if it takes a little longer for your item to sell. It’s also important to look at the competition and to make sure the manufacturer of the product isn’t selling it.
When the manufacturer is a competitor, they can always price the item for lower than you can because they made a profit when they sold you the items in the first place.
Look at the number of items that are selling. With third-party software, you can not only see the competition, but you can see an estimate of how many of the items are moving.
When you divide the sales numbers by the number of competitors, you can see just how likely it is that you will be able to sell a high volume of that item.
Negotiation
When you get in touch with a manufacturer or distributor, don’t be afraid to negotiate the price. Some companies may have very strict pricing rules, but many don’t.
The answer is always no if you don’t ask. If you’re buying a large volume, you may be able to negotiate down the price per unit.
If you are able to get a lower price than your competitors, you might be able to be the top seller even if the listing is crowded.
Setting Up An Account With a Wholesale Supplier
Finding the right products is a difficult part of this process, but setting up wholesale accounts with companies can be almost as difficult. And by difficult, I mean time consuming.
After your product search, you will have to find out who makes the products and how they are sold. To get a wholesale account with a manufacturer or distributor, sellers contact them directly and simply ask for a wholesale account.
Signing up for an account is straightforward, but it can involve a lot of paperwork and other verification methods. Be sure to have all of your business information on hand and respond quickly to any request.
If you are accepted, there are some manufacturers that will actually ship your items directly to Amazon so that you don’t have to. Others will require you to receive the items at your house or place of business and then resend those items to an Amazon warehouse.
Convincing the Brand
Just because you ask for a wholesale account doesn’t mean that it will be granted right away. It all depends on the individual company and what their guidelines are.
Virtually all of them will want more information from you so they can decide whether you would be of benefit to them. They will also have some requirements for your business.
Do you have a business license? If not, you may need to get one before you begin selling and definitely before you try to negotiate with manufacturers.
When companies sell items wholesale, they generally require you to have a license to do business.
You may also need to have a resale certificate in your specific state. This certificate allows you to buy your inventory tax-free so that you can sell it. Most companies selling wholesale items do require that you have this before they will do business with you.
They may also ask for your employer identification number. This number is issued by the IRS, and it’s free to get one.
The EIN is similar to a social security number, but it’s applied to businesses.
Developing Relationships
Business is all about relationships, and wholesale selling is doubly so. You need good, strong relationships with manufacturers and distributors in order to continue to buy from them and the ability to negotiate with them.
Part of that relationship is you doing what they ask of you and being honest with your supplier. You have to tell them that you are selling the items on Amazon and that you will bring their brand value of some kind.
Adding value to the brand is often a major selling point when you’re trying to lock down wholesale accounts.
When you approach companies, you need to have a few ways that you can add value, and add those to your communications.
Your offer to manufacturers and distributors is that you will increase sales of the product.
You can do this by selling on Amazon, yes, but there may be other things you can do. If you plan on marketing the product, tell them about that.
If you can improve the product listing, let them know specifically how you can make it better.
Many companies don’t know much about Amazon selling, and they may have very basic listings that you could improve. It may be new photos of the product or new copy that is in line with SEO.
You are the expert on Amazon, so you can bring them value they didn’t even know existed. When you bring value to the relationship, the company then has a reason to allow you to sell their product.
If a company has popular products but does not sell on Amazon, this is a good sign. It means you can pitch the entire Amazon selling experience to them.
You can offer to create the listing and to build up sales through that listing. This might take some extra work on your end, but it can end up making you a lot of money in the long run.
Tactical Arbitrage Comes into Play
Tactical Arbitrage is a software that helps you through much of the product-searching process. It also has several other features that can help you as you get your Amazon business going.
The software is a tool to help you search through wholesale products to weed out the ones you want. You simply import a manifest that most wholesale companies will provide you.
Tactical Arbitrage searches Amazon and provides you with all of the data you need to make a purchasing choice. It helps you to scan manifests, conduct quick UPC list searching and scan brands.
It helps to keep you on the pulse of wholesaling, allowing you to calculate pack pricing, to see the store’s product images and has a bundle multiplication algorithm.
It will compare these products to the existing Amazon listings and sort them by profitability, sales rank and many other metrics.
You will get a snapshot of the number of sellers each product has and how many sales each product generates.
When you’re running a business, especially as a sole proprietorship, every minute of your time is important. If you have to spend a long time scanning lists, brands and prices, you have less time for the other aspects of your business.
Tactical Arbitrage saves you time, and that means you’ll be better able to scale your business. And as you grow, the software also grows with you.
It also has many other features that you can use as your Amazon reseller business gets off the ground. You can set it up at night and let it search while you sleep to make it even more convenient.
You can grab a free trial of Tactical Arbitrage here.
Attending Trade Shows to Find Suppliers
Selling wholesale on Amazon requires you to create the relationships you need. There are several ways that this can happen. One of those is by attending trade shows throughout the year.
A popular one that many Amazon sellers attend is the ASD Market Week held in Las Vegas.
At these shows, manufacturers and distributors display their wares to the attendees in the hope that some of them will want to sell the products.
It’s the perfect place for you to lay the groundwork for a great relationship.
Being able to talk to someone involved with the product allows you to ask any questions you have as well as to answer the questions of the supplier.
It also gives you a chance to look around and discover products that you never thought about before.
You can see the products and hear the pitch, then look up those products on your phone or computer (I suggest looking at them with Tactical Arbitrage) and find out the real skinny on those items.
Attending trade shows is also a great way to experience the products before you decide to sell them. Are the products high quality? Are they sized well? Or are they a piece of crap?
You can handle the products and get a first-hand look at what you might decide to sell before ever making an order.
A good way to maximize your time is to scour the list of potential suppliers that you want to work with before you attend the show.
Contact them before the show and schedule some time to speak with each representative. When you meet at the show, put in your order so you can get some nice incentives.
Local Shows
Wholesale sellers usually start with trade shows that are in their local areas. Just look up trade shows in your city to begin finding them.
Trade shows are usually specific to one industry, so it can help to add the name of the industry you’re interested in to your search.
As you build up your business and start making profits, you may then want to branch out to trade shows in your wider region to find more products.
Perhaps the best thing about trade shows is that suppliers are there specifically to look for people who want to sell their product. This makes it far easier to get in with a supplier and to get your wholesale account in place.
You can also ask the suppliers about the other trade shows they’re attending to find out about more shows that may be good for your business.
You can also set up appointments with some of the vendors before the trade show begins. This will get your foot in the door before the show begins and guarantees you time with the vendors you are most interested in.
Final Thoughts
If you want your own business that you can run from home, selling wholesale on Amazon is a fantastic option. With this business, you are in the driver’s seat: choosing products, forging supplier relationships, and getting the products to Amazon.
You set your own schedule and can sell as few or as many items as you like.
You can use the Tactical Arbitrage tool to help you along your way. It can help with going through wholesale manifest lists, product lists, scanning brands, searching by UPC, and more.
It allows you to sort products by the amount of competition, sales numbers and how profitable the products are. This tool is helpful both at the beginning of your business and when you scale upward.
Grab a free trial of Tactical Arbitrage here.
As you begin with finding products to sell, keep in mind that the relationships you forge are the key to it all. You need to maintain good relationships and follow through with everything you promise to the supplier.
Finding the right products is often a difficult part of the process, but going to trade shows can make it easier to discover products and to get those wholesale accounts.
Amazon wholesale selling is a great way to get a business off the ground and to generate more of an income.
By following all of the proper steps, you can begin to build a business that is highly scalable and might even lead to being able to be your own boss in the future.
Best of luck!