Curious about how to successfully source wholesale products and sell them on Amazon? Wholesale might be the perfect opportunity for you if you’re looking to buy in bulk and resell for a profit.
Wholesale sourcing involves purchasing products in large quantities at discounted rates from wholesale suppliers. The seller then repackages these products to sell to customers, aiming for a profit.
Finding the right wholesaler for your business can be tricky. In this post, we’ll explain what wholesalers do, how to find them, and what to consider before placing your first order. We’ll also guide you on how to buy wholesale products and sell them successfully on Amazon.
In this article, Ad Badger will talk about:
What’s a wholesaler?
It’s a supplier that acts as a middleman between manufacturers and sellers.
With a wholesale license, they buy products in bulk from manufacturers at a discount and sell them to businesses at a slight markup. They usually don’t sell directly to end customers.
If you want the freedom to choose products for your business instead of working directly with a manufacturer, consider working with a wholesaler. They already have products to choose from, so you don’t need to handle product development or source raw materials.
How Amazon Wholesale Works
Can you wholesale on Amazon? Absolutely!
Sellers on Amazon can list third-party branded products or their label products. Professional sellers can list products in bulk. Joining the Brand Registry gives access to more tools and resources.
Start by signing up for a Professional selling plan and keep reading for more details.
Selling wholesale on Amazon boils down to five steps:
- Set up an Amazon seller account.
- Find a high-demand product to resell.
- Source the product from a brand, manufacturer, or distributor.
- List the product for sale on the brand’s existing Amazon listing or create a new product detail page.
- Manage and grow your business, including inventory and sales.
To sell on Amazon, you’ll need to follow certain business setup practices.
For wholesale, this might include getting a business license and a sales tax permit or resale certificate. These documents let you buy products tax-free and collect sales tax on your state’s behalf. Most brands will ask for this info before opening a wholesale account.
To be fully prepared, consider watching our video, “What should you do first when Amazon PPC sales drop?” and tune into our podcast for in-depth strategies to handle every challenge.
How Can You Source and Sell Wholesale Products on Amazon?
You can buy products in bulk from wholesalers and sell them directly to customers on Amazon. Buying in larger quantities benefits you with volume discounts and lower per-unit costs, maximizing your profit margins.
Start by identifying products that are in demand. Research market trends and consumer preferences, using tools like Amazon Best Sellers, Google Trends, and social media insights to spot high-demand items. Once you have identified potential products, search for reputable wholesalers. Check their reviews and ratings, request product samples to assess quality, and verify their credentials to ensure they can provide necessary documentation like invoices and authenticity certificates.
After finding reliable suppliers, maintain thorough records of all transactions. Ensure you have all necessary approvals and documents to sell on Amazon, including Amazon’s approval if required. With everything in place, create detailed and attractive product listings. Use high-quality images and detailed descriptions, and implement competitive pricing strategies to attract customers while maintaining a healthy profit margin.
Next, manage your inventory and fulfillment effectively. Monitor inventory levels and restock as needed to avoid stockouts. Process sales promptly and ensure efficient fulfillment. For hassle-free logistics and superior customer service, consider using Amazon FBA (Fulfillment by Amazon).
How to Decide What to Sell?
Let’s delve deeper into this point with Ad Badger.
Want to focus on a single niche or carry a wide selection of different items?
One approach is to browse catalogs from various wholesalers to understand what’s available. This can help you identify potential products to sell. Additionally, you can compare prices and quality across different suppliers to find the best deals. Taking note of trending items can also give you an edge in the market.
Additionally, you can explore popular products and Amazon’s best sellers to generate ideas.
Utilize tools like the Product Opportunity Explorer to pinpoint trending items and categories within the Amazon store.
Some products and categories require approval before you can sell them in the Amazon store.
Use the Compliance Reference portal in Seller Central to determine the necessary documents for your chosen categories and products.
Next, think about the quantity of products you want.
The objective with wholesale is to purchase enough to gain from the wholesale discount but not so much that you end up with excess inventory.
Verify if the wholesaler has a minimum order quantity requirement. Request samples to evaluate the cost against the quality of the products. Remember that quantities and prices are often negotiable, so don’t hesitate to discuss terms with your supplier.
How to Find and Validate Wholesalers?
Once you’ve determined what you want to sell, the next step is to identify and verify suppliers for those products.
Begin by researching companies that offer the products you wish to sell.
Attending trade shows, seeking referrals, and joining professional networks can help you connect with potential suppliers.
As an Amazon seller, it’s crucial to ensure that the products you sell are genuine. If you sell branded items, source them directly from the brand or an authorized distributor.
When dealing with wholesalers, verify their legitimacy by checking their business license and brand authorization letters. When contacting suppliers, have your business license and tax identification number ready.
Wholesalers need to verify this information before they can engage with you.
How to Document Your Purchase and Obtain Approval?
Let’s dive deeper with Ad Badger into documenting purchases and obtaining necessary approvals.
If you need approval to sell a particular product on Amazon, you’ll require a purchase invoice from the manufacturer or distributor or an authorization letter from the brand.
Amazon will prompt you to submit this documentation when you list the product.
Steps to Follow:
- From the main menu, click on Inventory and then Add Products.
- Use the product name, UPC, ISBN, ASIN, or another identifier to find the product.
- If the product needs approval, a Show limitations link will appear next to it. Click on Show limitations to view a summary of the listing requirements.
How to List Products and Set Prices?
Ready to showcase your products on Amazon and boost your sales?
There are two main types of product listings you can choose from—existing and new.
By matching an existing product listing, you link your offer information (price, quantity, etc.) to an already established product detail page in the Amazon store.
No need to create new product details; simply pair your offer. Creating a new product listing means providing complete offer information and detailed product data to create a fresh product detail page.
Effortlessly add your products to your inventory in Seller Central with two straightforward processes: one at a time or in bulk.
Use the Add Products tool for individual product listings, or create a comprehensive spreadsheet of your product information and use the Add Products via Upload tool to list multiple products at once.
Get started today and optimize your product listings to captivate customers and drive sales.
How to Process Sales and Handle Fulfillment?
Choosing the right fulfillment method is crucial for your business success.
Determine which fulfillment method aligns best with your business goals and resources.
Let’s explore the few common options to get your products to customers efficiently.
Fulfillment by Amazon (FBA)
Fulfillment by Amazon (FBA) allows you to ship products to Amazon’s fulfillment centers.
When a customer orders, Amazon picks, packs, and ships on your behalf, also handling customer service and returns.
Dropshipping
Dropshipping is an option if you prefer not to store, pack, or ship products. Suppliers can ship orders directly to customers for you.
However, this can limit your branding opportunities and product differentiation.
Ensure your suppliers comply with Amazon’s dropshipping policy and discover more about how dropshipping works.
Dropshippers list products without owning inventory, and placing orders with suppliers who fulfill the products.
Wholesalers own their inventory and fulfill orders themselves or through FBA, maintaining control over the process.
Merchant-Fulfilled shipping (MFN)
Direct shipping, also known as merchant-fulfilled shipping (MFN), involves maintaining your own inventory and shipping directly to customers.
Arbitrage
Arbitrage involves purchasing discounted products from retail stores to resell on Amazon.
Wholesalers, on the other hand, buy in bulk directly from brands or distributors, negotiating better rates.
Private label
Private label sellers create their own branded products, requiring them to create new product listings.
Wholesalers add their offers to existing product listings without needing to create new ones.
Feeling lost and frustrated by the chaos, wasting precious time trying to piece together fragmented details?
The Badger’s Amazon PPC Checklist is here to help you cover all your bases.
But this isn’t just any checklist. It’s also your hub for tons of info that’ll help you conquer each item on the list, from goal and strategy building to keyword targeting to SEO and more.
What Are the Pros and Cons of Amazon Wholesaling?
If you’re considering selling wholesale on Amazon, it’s crucial to weigh both the advantages and disadvantages.
Let’s dive into the details to help you make an informed decision.
Selling wholesale on Amazon presents unique opportunities and challenges. While it can be a profitable and scalable business model, it also comes with significant competition, upfront costs, and extensive research requirements.
What Are the Pros of Amazon Wholesaling?
- One of the most significant benefits of wholesaling on Amazon is the ability to sell established brands. These are products that consumers are already searching for and purchasing, which means you don’t have to invest heavily in marketing efforts to generate demand.
- Wholesaling is one of the easiest business models to launch on Amazon, right after retail arbitrage.
- Wholesaling allows you to focus on scaling your business. You can concentrate your efforts on growth and potentially build a team to manage day-to-day operations. Unlike fledgling brands that need to focus on building a brand and creating listings, wholesalers can streamline their processes and dedicate more time to expanding their business.
What Are the Cons of Amazon Wholesaling?
- A major downside of wholesaling is the intense competition. Most listings on Amazon will have multiple sellers offering the same product.
- Wholesaling requires a significant upfront investment. Because you must purchase goods in bulk, it is inherently more expensive than reselling or drop shipping.
- The most time-consuming aspect of wholesaling is the research involved. To find profitable products, you may need to explore dozens, if not hundreds, of product opportunities.
- Before you can resell branded products on Amazon, you must be approved by the brand. This often involves cold calling or emailing various companies to request opening a wholesale account.
If you pursue wholesaling, focus on thorough research, building strong relationships with suppliers, and maintaining competitive yet profitable pricing strategies.
Despite the challenges, wholesaling can be a highly rewarding and scalable way to sell on Amazon, offering a path to quick profitability and growth.
What Are the Amazon Wholesale Account Requirements?
Before you start contacting brands, it’s crucial to understand the prerequisites for opening a wholesale account.
First, you must establish a legal business entity or register as a sole proprietor in your state. Brands or distributors will require this information when you fill out a wholesale application form.
Next, a resale certificate is essential for purchasing products tax-free from brands, distributors, or wholesalers for reselling. Without this certificate, most suppliers won’t allow you to buy at wholesale prices.
Additionally, an Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is crucial. You can obtain an EIN for free from the IRS. This number is often required on wholesale application forms and is essential for tax purposes and business identification.
Having a clear business plan can be useful when negotiating with suppliers, showing that you are serious about your business and have a strategy.
How to Calculate How Much Money You Can Make?
Once you receive a wholesale price list from the brand, the first step is to ensure your product is priced within 2% of the Buy Box.
The Buy Box is the section on the right side of the Amazon product page that lists pricing and features the “Add to Cart” button.
To be competitive, your price must be within 2% of the current Buy Box price.
If your price is higher, your offer might not appear in the Buy Box, reducing visibility and sales potential. Use the current Buy Box price for your profitability calculations.
By carefully analyzing the Buy Box price and using reliable tools for market data, you can confidently calculate your potential profits.
Ensure your product pricing strategy aligns with current market conditions and brand policies to maximize your sales and profitability on Amazon.
How to Understand the Product’s Fees?
Hidden fees can significantly reduce your profits when selling on Amazon. It’s crucial to know all the fees upfront to avoid unpleasant surprises.
Imagine investing in a product only to find out later that the associated fees on Amazon drastically cut into your profit margins. This can be incredibly frustrating and jeopardize your business’s success. Without knowing these fees, it becomes difficult to price your products competitively and still turn a profit.
The solution is straightforward: use Amazon’s FBA calculator to understand all the fees involved.
Start by obtaining the ASIN (Amazon Standard Identification Number) of the product you plan to sell.
Enter this ASIN into Amazon’s FBA calculator, which provides a detailed breakdown of all fees, including referral fees, fulfillment fees, and additional charges.
Input the cost of the product into the calculator to get an accurate calculation of your profit margins after all fees are deducted.
How to Determine Your Profitability?
Without accurately calculating profitability, you might sell products that don’t yield sufficient returns.
This can lead to wasted time, effort, and resources, and ultimately, it can hinder your business growth.
Use Amazon’s Revenue Calculator to determine your profitability.
This tool will provide you with essential information, including the cost per unit after all costs and Amazon fees, your net profit, and your net margin.
For wholesale products, aim for a minimum net margin of 15% to 20%.
This margin ensures that you achieve a healthy profit even without spending money on advertising.
What Are the Marketing Strategies for Amazon Wholesale?
Without effective marketing strategies, your Amazon wholesale business may struggle to stand out in a crowded marketplace, leading to low visibility and poor sales performance.
Imagine having a warehouse full of great products but not getting enough sales because your listings aren’t reaching the right customers. This can lead to frustration, unsold inventory, and an underperforming investment.
Implementing specific and practical Amazon PPC (Pay-Per-Click) strategies can significantly boost your visibility and sales.
Effective keyword research is the foundation of a successful Amazon PPC campaign.
Start by identifying relevant keywords using Ad Badger. Once you have a list of high-performing keywords, incorporate them into your product titles, bullet points, and descriptions to improve search rankings.
Setting Up Sponsored Product Ads
Sponsored Product Ads are a great way to increase the visibility of your individual products.
To create Sponsored Product Ads, go to the Advertising tab in Seller Central and select Campaign Manager.
Click on “Create campaign” and choose “Sponsored Products.”
Define your daily budget and campaign duration, then select automatic targeting for beginners or manual targeting if you have specific keywords.
Add the products you want to advertise and set competitive bids for your chosen keywords, starting with a moderate bid and adjusting based on performance.
Utilizing Sponsored Brands Ads
Sponsored Brands help in building brand recognition and driving traffic to your products.
In Campaign Manager, choose “Sponsored Brands” and customize your ad by uploading your brand logo, creating a custom headline, and selecting multiple products to feature.
Define your budget and set bids for keywords, and choose whether to link to a product listing page or your Amazon Storefront.
Leveraging Product Display Ads
Product Display Ads target customers based on their interests or related products they are viewing.
To create Product Display Ads, go to Campaign Manager and choose “Sponsored Display.”
Select your audience based on interests or related products, then define your budget and set competitive bids.
Setting Up Automated Campaigns
Automated campaigns can help you identify high-performing keywords and placements without much manual effort.
For automated campaigns, go to Campaign Manager, choose “Sponsored Products,” and select automatic targeting.
Define your daily budget and set a default bid, letting Amazon’s algorithm test various keywords and placements.
A few important tips to follow…
To optimize your PPC campaigns, regularly manage negative keywords to avoid wasting ad spend.
Regularly review your campaign performance reports in Seller Central to identify non-performing or irrelevant keywords.
Add these as negative keywords to prevent your ads from showing for those terms.
Negative Keyword Target Nightly Hunt
How to Scale Your Amazon Wholesale Business?
Once your Amazon wholesale business is up and running, the challenge becomes how to scale efficiently without losing control over quality and operations.
Scaling too quickly can lead to logistical nightmares, inventory issues, and a dilution of your brand’s quality. This can result in customer dissatisfaction and, ultimately, a decline in sales and reputation.
Implementing a structured approach to scaling your Amazon wholesale business ensures sustainable growth.
Your first step: Inventory management
Use inventory management tools to track stock levels in real-time, set reorder alerts, and avoid stockouts or overstock situations.
This helps maintain a balanced inventory to meet customer demand without tying up too much capital in unsold stock.
Remember to automate
Automation can significantly streamline your operations and reduce manual workload.
Use software solutions for tasks such as order processing, customer service, and financial reporting.
This allows you to handle a larger volume of sales with the same level of efficiency, freeing up your time to focus on strategic growth initiatives.
Diversify Your Product Offerings
Diversifying your product offerings can help attract a broader customer base.
Conduct market research to identify trending products that complement your existing catalog.
Adding new products strategically ensures you meet varying customer needs and capture more market share.
Use Fulfillment by Amazon (FBA) to Scale Your Business
Fulfillment by Amazon (FBA) can help you scale your business by taking over logistics and customer service.
With FBA, Amazon handles storage, packing, shipping, and even returns, allowing you to focus on sourcing products and growing your brand. This reduces the burden on your internal resources and improves customer satisfaction with faster and more reliable shipping.
Build a Strong Brand Presence for Long-Term Success
A strong brand presence is essential for long-term success. Invest in high-quality product images, detailed descriptions, and enhanced brand content to differentiate your products.
Utilize Amazon Brand Registry to protect your brand and gain access to advanced marketing tools that can boost your visibility and sales.
Expand to International Amazon Marketplace
Consider expanding your business to international Amazon marketplaces. Research the regulations and market demand in different countries, and adjust your strategy accordingly.
Expanding globally can open new revenue streams and significantly increase your customer base.
Summary
Interested in making a profit by selling products on Amazon? Wholesale might be the perfect opportunity for you. By purchasing products in bulk at discounted rates from suppliers, you can repackage and sell them to customers for a profit.
Understanding how to source these products effectively and leveraging tools like Amazon’s Fulfillment by Amazon (FBA) can streamline your operations, increase your efficiency, and help you build a successful and scalable Amazon wholesale business.
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