Amazon Wholesale to Maximize Your Revenues!
Amazon comes with endless possibilities as a platform for its resellers. The Amazon FBA wholesale business model is there to increase further your chances of making the most money. The Amazon wholesale model provides a lucrative opportunity as a third-party seller if you know and understand its working. The Amazon wholesale business is the perfect opportunity for the third-part sellers to enter into a new AMZ market. Let us have a look at how you can succeed at it.
What is Amazon Wholesale?
When a brand’s products are purchased in bulk from a supplier and sold as individual products for profit, that is wholesale. The profit is also realized at a large scale. When you choose to buy a large number of products at once and get price breaks, it lowers the cost of the individual products. You can resell the purchased products individually or in smaller sets at a higher price for earning more significant profit margins.
The sellers in the Amazon FBA wholesale model act as middlemen. Suppliers can be the product distributors or directly the manufacturers producing it.
Amazon facilitates the entire Amazon wholesale model by providing the sellers with a large targeted audience, credibility, and storage facility. So, let us have a closer look at the working of the Amazon wholesale business model.
Advantages of Amazon Wholesale Business
Products in High-Demand
You can buy branded products via Amazon wholesale. These wholesale products can be found for any brand with its products selling at a high sales velocity with very decent demand. You can buy those products in bulk and sell them at a profit. You don’t need to worry if those products would have a market on AMZ or not.
Accessible to Start Business Model
It is widespread for the wholesalers to get their business up & to run in one to two months. Amazon FBA wholesale business model is easy to set up and takes a few weeks of focused effort to establish a relationship with the suppliers.
High-Profit Margin Potential
FBA wholesale business provides the sellers with an opportunity to earn more significant margins. An Amazon wholesale seller can quickly turn their business into a high-profit venture, making profits faster. Some wholesalers even turn their business into earnings in just three months. However, this may differ from seller to seller but still a lot quicker than the private label business model, where it can take a minimum of 6 to 8 months to start seeing profits.
A Nice Option for Earning Passive Income
Successful Amazon wholesalers focus a lot on the relationships that they have. Once they have completed their research, they can create an efficient business and find a reliable supplier to work with. After setting up everything, most of the process becomes automated. This is particularly true for products in demand. However, it would help if you keep placing orders for the products and review sales. Thus, Amazon wholesalers can turn this into a side gig.
Greater Control Over Costs
It is up to you to determine the amount of money you want to invest in your inventory and manage the shipping expenses.
Ease of Retaining Customers
If you keep up with the inventory requirements and the product you are selling stays in demand, you can keep selling the products to the same customers to gain more business.
Limitations of the Amazon FBA Wholesale Business Model
Requirement of Upfront Capital Investment
When bulk order is placed, it needs a lot of money to pay all at once for obtaining the inventory. However, when you invest more money at once, you can buy products at a lower cost, which may not always be the case.
More Competitive Niche
It would help if you also were prepared to face competition when you place an offer as an Amazon wholesale seller, as several sellers are competing against each other. Competition can lead to a price war, driving down the overall profits and making it difficult for the Amazon wholesalers with shallower pockets to compete with the well-off wholesale resellers. Again, this can lead to having a loss instead of profit.
It is critical for the FBA wholesale business to invest time in product research; otherwise, bulk purchases will become ineffective. It is an expensive purchase option for buying products in large quantities with storage costs added to it. Research is why the Amazon FBA wholesale business model is considered challenging, requiring finding the right product. However, too much time spent researching the product makes it difficult for sellers to become more productive.
It would help if you researched the wholesale Amazon business because it involves risk. First, you have to buy the right product. Second, it allows you quickly turn a profit in this business model, and if you made a mistake in product selection, you can also fast start losing your money.
You May Face Amazon Brand Restrictions
There are brand restrictions by Amazon that you need to abide by for selling their product. If you are not familiar with it, it can result in problems. If you are not familiar with this problem, you can face issues. To deal with it as a wholesale reseller, you need to contact the manufacturer to get approval to resell their products.
Use of a Repricer Tool for the Wholesale FBA Model
Wholesale’s profitability relies a lot upon reducing the costs and offering a highly competitive price. Therefore, you will need a repricing tool to boost your capabilities to make the price more competitive. This software tool’s continuous market price analysis can take care of the required changes in listing fees. You can also get help from virtual assistant services for Amazon if you do not exactly know how to start the Amazon FBA wholesale business.
When viewing the pricing strategy, you need to remain focused on not losing sight of the big picture and maintaining a competitive edge. Therefore, when you use a repricing tool as required, you will notice an increase in sales. This is particularly true for good price tools for resolving the typical issues faced.
There are many top repricer tools available that you can use for automatically repricing the product listings to win more sales against your competitors. When you use a repricer tool for Amazon wholesale, you will start noticing its benefits.
Let us look at some benefits of using a repricer tool for the Amazon FBA wholesale business model.
Remain Competitive in the Market
The use of a repricer lets you keep an eye on the current prices at which your competitors are offering the product. You can use this information to adjust and lower your price for winning the sales. Sellers in the wholesale market can go very low in prices as they can afford to do so because they have bought the product in bulk at a discounted price.
Owning the Buy Box Frequently
Pricing remains to be one of the top factors to ascertain which sellers will get the Buy Box. The Buy Box is crucial for wholesalers for gaining a significant chunk of the sales for the product they are trying to sell on Amazon. During the time you own the Buy Box, it boosts the sales to increase your revenues significantly. The best repricer tools increase the time for which you own the Buy Box.
Save Time Spent on Research
One of the biggest challenges of the Amazon FBA wholesale business model is spending more time in research. Top repricer tools can help you reduce the amount of time required to automate them for pricing research and change the prices for you. In addition, this process takes place in real-time, letting you stay ahead of the ongoing wholesale market trends.
Save Money & Earn More Profits
Make sure that you are not losing any profits in the wholesale pricing wars. A top repricer tool lets you set a minimum price, so you do not have to sell it at a low cost and result in losses. When the price war goes below the minimum level, the listing price won’t go down any further. You can set price maximums for increasing profits. Automation eases the pressure on you for proactive maintenance and raises prices when there is a low competition to help you earn more significant profit margins.
You now know the method for maximizing the pros of using Amazon wholesale while overcoming the limitations of this business model.
Understanding the Working of Wholesale for Amazon Sellers
- The first step is creating a seller account using FBA (Fulfillment by Amazon) or FBB (Fulfillment by Merchant).
- The second step is to research niche and in-demand products that you can sell. Something the best wholesalers for Amazon FBA spends a lot of time on.
- You need to find the manufacturer or distributor from where you will source the product.
- Add the product listing to rank against other competitors.
- The next step in wholesale on Amazon FBA is to promote the product.
- Lastly, efficiently manage the inventory and make the business operations more cost-effective.
When contacting the wholesale distributors for Amazon FBA, make sure that you keep in mind the need to acquire a wholesale license as per the country’s requirement or region in which you reside.
What Products to Sell Wholesale on Amazon?
Let us look at the key traits of products that adequately qualify for wholesale on Amazon.
- Well-established and successful brands own the best products to sell. You do not need to create and promote your brand from scratch.
- Do not try to sell products sold by Amazon. Amazon will win this business over you and lower the cost to an unbeatable level. Thus, you cannot compete with Amazon when it comes to reducing the price to win the business, even if that results in a loss for Amazon.
- Don’t sell products sold by private label sellers. The private label sellers can stop you from sending your offers on their listings with similar effects.
- You have to be very reactive to selling eligible products that are high in demand.
- You have limited control over the product listing optimization to try and generate organic sales in most cases.
Finding the Right Supplier to Wholesale for Amazon Sellers
The best wholesalers for Amazon FBA directly talk to the brand owner or manufacturer to resell their product. It can be challenging at first, but as you gain confidence, you will find it relatively easy to convince them to increase their revenues. One tip is to reach a manufacturer who did not have a lot of success selling on Amazon.
One of the nice things about wholesale on Amazon FBA is finding a manufacturer that doesn’t sell on Amazon and make them an offer. You may not always get a yes right away, so it is essential first to build a rapport. The same applies to product sourcing when finding the right wholesale distributors for Amazon FBA.
Requirements for Starting Product Sourcing
You need to fulfill the following requirements.
– A registered seller account.
– Sales Text ID Number
– Resale Certificate
– The Application for an EIN Number (IRS (Internal Revenue Service) issues it to you for free).
How is Amazon FBA Wholesale Business Model Different from Other Business Models on AMZ?
Selling as a Private Label Owner
The private label sellers are owners of their brands on Amazon. In Amazon B2B wholesale, you are selling someone else’s brand. The private label sellers create product listings, and wholesales do not need to do that.
Buying from wholesalers and selling online is different from arbitrage. In arbitrage, sellers purchase products at a discount and sell them on Amazon. In both FBA wholesale and Amazon arbitrage business modes, the branded products are resold. The arbitrage sellers procure only one product at a given time.
Negotiation and relationship building is required in wholesale to reduce bulk costs. Arbitrage is retail and not wholesale.
You do not need to own an inventory as a drop shipper. Drop shippers list the items for sale on Amazon and then place an order to their suppliers’ every time an order is sold. The supplier takes care of the fulfillment. In wholesale, you can own the inventory and also control what you want to achieve with it.
Fulfillment by Amazon for your Wholesale Business
In the Amazon FBA, wholesale business model orders are fulfilled either by FBA or FBM. With FBA, the charges are shipped in bulk inventory at a large scale to a dedicated Amazon warehouse. In FBA, Amazon facilitates inventory management by taking care of packing and shipping products directly to the customers. Of course, orders fulfilled by Amazon make cost money, but it will save you a lot on the shipping costs and expenses for fulfilling the order as a merchant by yourself.
However, when buying from wholesalers and selling online, FBA may not always be the most optimal way of selling the products. When you are prone to have slow product turnover, or you are trying to sell oversized units, you may need to consider using FMB. FBM, lets you fulfill the orders and saves you costs that you would have to pay to Amazon, including the company’s set shipping rates.
In Amazon B2B wholesale, you have a lucrative opportunity to buy and sell in bulk to earn considerable profit margins. It is a problematic model initially, but as you know more about it, you will come to know the risks and find ways to mitigate them. In addition, there is software available that can help you lower the risk, particularly the repricer tools. After you have gone through the initial steps involved in the Amazon FBA wholesale business model, you will succeed as a wholesale reseller and sometimes even with a hands-off approach.
AmazinEcommerce.com is a leading Amazon FBA consultant offering its services to clients across the globe.AmazinEcommerce.com is a premium Amazon FBA Private Label & Wholesale Consultancy assisting in managing your AMZ store including private label, micro-private label, listing optimization (SEO), product photography, 3D rendering, videography, EBC / A+ Content, PPC, Packaging, Design (including Store Branding), and reinstatement of suspended AMZ accounts.