There are a number of ways to sell products on Amazon: private label, retail/online arbitrage, wholesale, etc. Each has its own pros and cons. Selling wholesale on Amazon basically means you are buying products in bulk from a distributor or manufacturer and selling them at a discount. But in order to get started, you have to go through a process of getting approval to sell their products and register your business as a wholesaler. Let’s talk about how to get started selling wholesale on Amazon.
Wholesale on Amazon is not the same thing as retail arbitrage, even though they are similar. Retail arbitrage, as we’ve discussed before in both blog posts and on our YouTube channel, involves going to a store and purchasing items in low quantities (usually on sale or in clearance) and reselling them on Amazon for a profit. Wholesale involves buying products in bulk directly from the manufacturer or a distributor at a discounted price and reselling them on Amazon. You do not have to register as a business at all necessarily in order to do retail arbitrage, but when selling wholesale on Amazon, you do have to register your business as a wholesaler.
Private labeling is also similar to selling wholesale on Amazon but, again, it’s different. With private label products, you are having products made by a manufacturer under your own brand name or you’ve tweaked a product from a manufacturer catalog in order to add value/new features to it. Wholesaling essentially makes you a pass-through between the manufacturer or distributor and the customer on Amazon.
Pros of Selling Wholesale on Amazon
By selling wholesale on Amazon, you get to sell products by brands that have already done the work of building brand awareness, customer loyalty, and manufacturing products customers wants. You also don’t have to constantly hunt for the best deals like with retail arbitrage because wholesalers work with a fixed margin typically. Selling wholesale on Amazon can also be scalable: you can utilize the same purchasing model for tons of manufacturers or distributors.
Cons of Selling Wholesale on Amazon
Finding brands that are willing to work with wholesalers can take some effort, but it is not impossible. You also will have to purchase significant quanities in order to receive good discounts. This means you will need to be prepared to invest a large sum of money in order to make purchases. You need to decide how you will be shipping items once they are ready to sell on Amazon: will you be using FBA or fulfilling orders yourself? If you are going to fulfill orders yourself, you need to take those shipping costs into account when purchasing products to accurately calculate margins.
Brands will likely be working with others who are selling wholesale on Amazon, so that can create a lot of competition. A lot of competition can lead to price margins eroding, which is bad for everyone.
The best way to get started it to identify a product niche that is not too competitive. Once you’ve found one that looks promising, you can find brands that are not selling their own products on Amazon (you do NOT want to compete directly with them) and start reaching out to them. Using sites like Alibaba or Aliexpress can be good places to start finding manufacturers to work with too. Be prepared to negotiate. You need to have clear reasons as to how you plan to help grow their business through selling wholesale on Amazon. You can include things like: you’ll be expanding their customer base without doing the work themselves, that you’ll be easier to work with than Amazon, etc.
Once you’ve acquired products, you can start selling! You’ll probably want to use Amazon FBA to fulfill orders, unless you have a good system setup for order fulfillment already. Other than that, you will need to make sure you’re able to stay in the Buy Box and get as many sales as possible. But don’t forget to manage your inventory and reorder when you’re starting to run low. Figure out how many sales you average per day and forecast when you will run out of product. Then factor how long it takes to get the products from the manufactrer or distributor either to your warehouse or to Amazon if you’re doing FBA. Shipping and processing times can be easy to forget about and you do not want to run out of stock!
Selling wholesale on Amazon can be a much easier option than retail arbitrage or private labeling, but it still requires work. In the end, you have to demonstrate to the brands you want to work with that you are going to help make their business more successful by selling their products for them through wholesale on Amazon. You can learn more about how to sell on Amazon on our YouTube channel!