If you're looking to start a business on Amazon, selling products via wholesale can be a profitable business model. Wholesale is the business model of purchasing lower-priced products in bulk from a manufacturer, supplier, or distributor and reselling them to Amazon buyers for profit. The profit comes from the difference between the wholesale and retail prices.
Selling wholesale on Amazon can be a great way to grow your business and take advantage of Amazon's massive customer base. However, it's important to understand the basics of the wholesale business model before jumping in. Let’s start with a few key things to keep in mind:
Wholesale vs Retail
The main difference between wholesale and retail is the price point. Wholesale products are sold at a lower price point than retail products because they are purchased in bulk. Retail products are sold at a higher price point because they are sold individually or in small quantities.
When selling wholesale on Amazon, you'll be purchasing products in bulk from a manufacturer or supplier and reselling them to Amazon buyers. This means you'll be able to offer lower prices than retail sellers, which can be a big selling point for buyers.
Finding the Right Products to Sell
When it comes to selling wholesale products on Amazon, finding the right products to sell is crucial. You want to make sure you are selling high-demand and profitable products to ensure a successful business. Here are some tips to help you find the right products to sell on Amazon:
Conduct Product Research
Product research will help you identify high-demand products that are profitable to sell. You can use tools like Jungle Scout's product database to search for products that are currently selling well on Amazon. This will give you an idea of what products are in demand and what products are not.
Look for High-Demand Products
High-demand products will ensure that you have a steady stream of customers looking for your products. You can use Jungle Scout's market research tools to identify high-demand products in your niche. This will help you find products that are currently trending and have a high potential for sales.
Consider Profitable Products
Selling profitable products means that you want to sell products that have a high profit margin. You can use Jungle Scout's product research tools to identify profitable products in your niche. This will help you find products that have a low cost of goods sold and a high selling price.
Sourcing Suppliers and Manufacturers
You need to find reliable and trustworthy suppliers who can provide you with high-quality products at a competitive price. Here are some tips to help you find the right suppliers and manufacturers:
1. Use Online Directories and Marketplaces
Online directories and marketplaces like Alibaba, ThomasNet, and Global Sources can help you find suppliers and manufacturers from all over the world. These platforms allow you to search for products by category, location, and other criteria. You can also read reviews and ratings from other buyers to ensure that you are dealing with a reputable supplier.
2. Attend Trade Shows and Exhibitions
Trade shows and exhibitions are great places to meet suppliers and manufacturers in person. You can see their products up close, ask questions, and build relationships. Some of the popular trade shows for Amazon sellers include ASD Market Week, Canton Fair, and Global Sources Exhibitions.
3. Contact Brands and Manufacturers Directly
If you have a specific brand or product in mind, you can contact the manufacturer or brand owner directly to inquire about wholesale opportunities. This is a great way to establish a direct relationship with the supplier and negotiate better prices.
4. Use Private Label Suppliers
Private label suppliers can provide you with custom-branded products that you can sell under your own brand name. This is a great way to differentiate yourself from other sellers and build a loyal customer base. Some popular private label suppliers include Alibaba, AliExpress, and Global Sources.
5. Consider Working with Local Suppliers
Working with local suppliers can help you save on shipping costs and reduce lead times. You can find local suppliers by searching online directories, attending trade shows, or asking for referrals from other sellers.
Do you need help in looking for wholesale suppliers for your business? Read our guide for finding the right suppliers here.
Building Relationships with Brand Owners
One of the key factors to successfully selling wholesale on Amazon is building strong relationships with brand owners. This can be achieved through cold outreach, establishing credibility, and maintaining open communication channels.
When reaching out to brand owners, it's important to be confident and knowledgeable about your business and their products. Introduce yourself and your company, explain why you're interested in selling their products, and highlight any relevant experience or success you've had in the past.
Establishing credibility is also crucial in building relationships with brand owners. This can be achieved by providing references from other manufacturers or distributors you've worked with in the past, showcasing your sales history and customer reviews, and demonstrating your knowledge of the market and their products.
Maintaining open communication channels is also essential in building and maintaining relationships with brand owners. Respond promptly to inquiries and feedback, provide regular updates on sales and marketing efforts, and be transparent about any issues or challenges that arise.
Need more tips on choosing the right wholesale products to sell on Amazon? Click here.
Pricing Strategies for Wholesale Selling
When it comes to wholesale selling on Amazon, pricing is a critical factor that can make or break your business. You need to set prices that are competitive, yet profitable enough to keep your business afloat. Here are some pricing strategies to consider:
Set a Business Price
The first step in pricing your wholesale products on Amazon is to set a business price. This is the price that covers your costs and provides you with a reasonable profit margin. To calculate your business price, you need to consider the following costs:
Cost of goods sold (COGS): This includes the cost of manufacturing or purchasing your products, as well as any shipping and handling fees.
Amazon fees: Amazon charges fees for using their platform to sell your products. These fees vary based on the category, size, and weight of your products.
Marketing costs: You may need to invest in marketing your products to increase visibility and attract customers.
Once you have calculated your costs, you can set a business price that covers your expenses and provides you with a reasonable profit margin.
Provide Discounts Using Coupons
You can create coupons for your products on Amazon, which can help you attract customers and increase sales. You can offer different types of coupons, such as percentage discounts or dollar amount discounts.
However, it's important to be strategic when creating coupons. You don't want to offer discounts that are too steep, as this can eat into your profit margins. Instead, consider offering discounts on products that are not selling well, or during slow periods when sales are typically lower.
Specific Categories for Wholesale on Amazon
When it comes to selling wholesale on Amazon in 2024, choosing the right product categories is crucial to your success. In this section, we'll explore some of the most profitable categories for wholesale selling on Amazon.
Toys are a popular category for wholesale selling on Amazon. With the holiday season just around the corner, demand for toys is likely to surge. You can source toys from manufacturers or distributors and sell them in bulk on Amazon. Some popular sub-categories include action figures, dolls, board games, and puzzles. Make sure to check safety regulations and age restrictions before selling toys on Amazon.
Clothing is another profitable category for wholesale selling on Amazon. You can source clothing from manufacturers, distributors, or even retail stores. Some popular sub-categories include t-shirts, dresses, jeans, and activewear. Make sure to check the sizing and material information before listing clothing on Amazon. You can also consider selling clothing bundles to increase your profit margins.
Selling wholesale to retail stores is another lucrative option on Amazon. You can source products from manufacturers or distributors and sell them in bulk to retail stores. Some popular categories include electronics, home goods, and pet supplies. Make sure to establish a good relationship with your retail customers and offer competitive pricing to stay ahead of the competition.
Retail arbitrage is another way to source products for wholesale selling on Amazon. This involves buying products from retail stores and reselling them on Amazon for a profit. Some popular categories for retail arbitrage include beauty products, health supplements, and electronics. Make sure to check the condition and expiration dates of the products before reselling them on Amazon.
Arbitrage involves buying products from one marketplace and reselling them on another marketplace for a profit. Some popular categories for arbitrage include books, DVDs, and video games. Make sure to check the condition and pricing of the products before reselling them on Amazon. You can also consider using software tools to automate your arbitrage business.
Pros and Cons of Selling Wholesale on Amazon
Selling wholesale on Amazon can be a lucrative business model for entrepreneurs looking to expand their ecommerce presence. However, like any business model, there are pros and cons to consider before diving in.
Product Demand Selling wholesale products on Amazon can be a profitable venture due to the high demand for popular items. By offering products that are already in demand, you can quickly turn a profit without having to worry too much about marketing.
Competition Selling wholesale on Amazon means competing with other sellers who are offering the same products. This can lead to price wars that may eat into your profit margins. Additionally, Amazon may introduce its own private label products, which can further increase competition.
If an item is selling particularly well, you can quickly and easily increase your inventory to keep up with customer demand. This scalability is a significant advantage of selling wholesale on Amazon.
Brand Control When you sell wholesale on Amazon, you are not in control of the branding and marketing of the products. This can make it difficult to differentiate your products from those of other sellers.
Amazon Brand Approval When you have brand approval to sell on Amazon, you can benefit from reduced buy box competition. In some cases, this can even result in exclusive selling rights on Amazon, giving you a significant advantage over other sellers.
Limited Control Over Inventory When you sell wholesale on Amazon, you are reliant on the supplier to maintain inventory levels. This can be problematic if the supplier runs out of stock or discontinues the product.
High Margins Wholesaling generally offers higher margins than other selling models. By buying products in bulk at a discounted price and reselling them to consumers, you can earn a higher profit margin than with other models.
Fees Selling on Amazon comes with fees, including referral fees, fulfillment fees, and storage fees. These fees can eat into your profit margins, so it's essential to factor them into your pricing strategy.
By following the strategies and tips discussed in this blog, you can build a sustainable and profitable wholesale operation that takes advantage of Amazon's vast customer base and robust e-commerce infrastructure.
Remember, success in wholesale selling requires dedication, careful product selection, and a commitment to providing excellent customer service. As you navigate this exciting journey, keep learning, adapting, and innovating to stay ahead in the competitive world of e-commerce. With the right approach, you can unlock the full potential of Amazon's wholesale platform and achieve your financial goals while serving the needs of online shoppers around the world.
Want to learn an effective strategy for wholesale sourcing? Read our guide to wholesale reverse sourcing here.
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Frequently Asked Questions
1 - What are some reliable Amazon wholesale suppliers?
There are many reliable Amazon wholesale suppliers to choose from, including manufacturers, distributors, and wholesalers. Some popular options include Alibaba, DHgate, and AliExpress. It is important to do your research and choose a supplier that is reputable, reliable, and offers high-quality products at a competitive price.
2 - How does the Amazon wholesale FBA business model work?
The Amazon wholesale FBA (Fulfillment by Amazon) business model involves purchasing products in bulk from a manufacturer or distributor and then shipping them to an Amazon fulfillment center. Amazon then stores, packs, and ships the products to customers on your behalf. This model allows you to focus on sourcing and selling products while Amazon handles the logistics and customer service.
3 - Where can I find wholesale products to sell on Amazon?
There are many places to find wholesale products to sell on Amazon, including trade shows, online marketplaces, and wholesale directories. Some popular options include Alibaba, DHgate, and AliExpress. It is important to do your research and choose a supplier that offers high-quality products at a competitive price.
4 - Is selling wholesale on Amazon worth the investment?
Selling wholesale on Amazon can be a profitable business venture if done correctly. It requires an initial investment in inventory, but with the right products and pricing strategy, it can lead to a steady stream of income. It is important to do your research, choose reliable suppliers, and stay up-to-date on Amazon policies and best practices.
5 - How much capital is needed to start a wholesale business on Amazon?
The amount of capital needed to start a wholesale business on Amazon varies depending on the products you choose to sell and the quantity of inventory you purchase. It is recommended to start small and gradually increase inventory as sales and profits grow. It is also important to factor in additional expenses such as shipping, storage, and Amazon fees.