January 7, 2019
There are many ways to sell on Amazon. You can sell things you already own, like used books, just one at a time. You can manufacture your own products and sell via FBA/FBM. You can do Retail Arbitrage where you find popular items that are deeply discount in physical stores and resell them on Amazon. Lastly you can resell products from popular brands through direct relationships with manufacturers and distributors. This is called Wholesale Selling. This article will discuss Wholesale Selling, what it is, how it’s different from other types of Amazon Selling and ways to get started.
Wholesale Selling on Amazon
Wholesale selling on Amazon is where the seller has existing relationships with manufacturers or distributors. The seller negotiates buying terms with the manufacturer or distributor and then resells the products on Amazon. If the brand is already selling on Amazon you can jump onto their listing and compete for buy box. If you happen to find a brand that is not selling on Amazon, you would create your own listing and begin selling for a profit.
How is this different from Retail Arbitrage?
Retail Arbitrage is all about instant gratification. You find a product at deep discount at your local big box store, research and find that it’s selling for much more on Amazon, purchase the product, list it on Amazon, sell and make a profit. Rinse, Repeat!
Wholesale Selling is a longer, slower process. You don’t see the instant type of gratification. However once you build up relationships with suppliers and you are approved to sell these products on Amazon, it can become a true passive income stream.
How does this compare to Private Label?
With private label selling on Amazon, you are creating your own brand. Selecting a product, sourcing a manufacturer typically from China, designing the product, creating a logo, receiving samples, placing a minimum order of typically 1000 pieces or more, coordinating ocean or air shipping. Once your product hits the US you need to either warehouse it outside of Amazon and send smaller shipments as needed to Amazon, or ship the whole thing to Amazon directly and hope that everything goes well!
With Wholesale Selling, you are not creating your own brand. You are selling someone else’s brand. This is similar to how a brick and mortar retailer works for say a shoe store. If you own a men’s shoe store in a strip mall, you probably stock several dozen brands of men’s shoes. These come from a wholesale relationship. The same principles apply for selling on Amazon, just without the brick and mortar.
Also Amazon is constantly adding in new requirements for wholesale sellers. For example, in some situations if you are trying to sell products from very large brands you might need to go through a lengthy approval process and possibly even pay a fee. To be approved as a seller for these larger brands might also be required to provide paperwork from the supplier stating that you have permission to resell these branded items. However that is generally the exception rather than the rule, most brands are not gated on Amazon.
Benefits of Wholesale selling
- Lots of opportunity
- Lower capital investment than Private Label, smaller order qty requirements
- No need for your own product liability insurance as that is normally the brand owner responsibility.
- No need to generate demand for a brand new product
- Start selling faster with domestic suppliers
- Work with some of the most well-known brands
Challenges of Wholesale selling
- Sourcing of products. One of the hardest parts of Wholesale Selling on Amazon is finding suppliers that are not already oversaturated on Amazon
- Finding suppliers that are open and willing to work with Amazon Sellers
- Finding suppliers that are not already selling on Amazon. This is not a deal breaker, but if you can find a manufacturer that is not already on Amazon, it could be a big win!
- Lower margins than with Private Label
How to find products ripe for Wholesale Selling on Amazon
For Wholesale Selling on Amazon you ideally want to look for a product that is already selling well on Amazon. Finding products to sell on Amazon as a Wholesaler is very similar to how you find products for an Amazon Private Label business, the major difference is where you source the products from. Thankfully there are existing software vendors that help with this sourcing process. Companies like SupplySpy specialize in helping Wholesale Sellers identify brands with the greatest potential. The software allows you to analyze a supplier’s product list and identify the most profitable products to sell on Amazon. Companies like SupplySpy can literally save you countless hours of research.
As you can see, there are many ways to sell on Amazon and the Amazon platform is ever evolving as their business grows and matures. Wholesale Selling is a great option to investigate if you are a current Private Label seller or if you are a current Retail Arbitrage seller. As an existing seller you already have the advantage of understanding how Amazon works. Keep in mind that finding the right product for Wholesale Selling on Amazon will take time, just like finding a product for a Private Label Business. However, if you are methodical about your process, add in research software and you are patient, Wholesale Selling has the potential to exponentially expand your business. Happy Selling!