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Selling on Amazon takes a lot of work, and one of the things that takes the most effort is product development and creating branding and marketing. With wholesale, you take all that effort out of the process because you’re selling products that already exist and sometimes already have a listing on Amazon.
Sound easy? Not quite, we still have to find the products, build relationships with suppliers and work out operations and logistics. But if you have more of a working brain than a marketing brain, then Amazon Wholesale might be a perfect business model for you. In this article, we take a look at the pros and cons and what you need to consider before getting into wholesale.
What is Amazon Wholesale?
Selling wholesale on Amazon involves buying products in bulk from manufacturers or distributors and then selling them on Amazon to a customer base of over 197 million people. If you work with a large manufacturer, they may already sell on Amazon, but if you work with a small manufacturer, you may be the only one selling their products on Amazon.
Amazon Wholesale is different from retail arbitrage in that you are dealing with large quantities of products, whereas retail arbitrage typically involves selling single items or in low quantities.
Advantages of Amazon Wholesale
No marketing required
When you’re wholesale, the manufacturer has already done all the work to brand, develop, and market the product. This means you don’t have to worry about marketing materials, social media, or packaging design, all of which can free up a lot of time and resources. If the product is already selling on Amazon, you just use the existing listing or if it is new to Amazon, the manufacturer will provide you with the listing content and images.
With Amazon Wholesale, you generally have a lot less expense than selling your own products on Amazon (also known as private labeling), because you don’t have all the marketing expenses associated with launching and selling. of a product such as photography, packaging design or advertising. With Amazon Wholesale, you should have a better idea of your profit margin upfront, as your costs are relatively fixed and you’ll know your expected selling price in advance. If you negotiate a good deal with your manufacturer and select a product with good demand, you can make a really decent profit.
Once you have developed a good relationship with your distributor, you can quickly scale up by placing larger orders and selling more of their products. Since you’re not spending time on marketing and you’re selling a proven product (if you’ve chosen the right product), you can fully focus on ordering more stock and ramping up of your company. .
Disadvantages of Amazon Wholesale
Finding the right manufacturer can take time
It may take some time to find a manufacturer with the right products who wants to partner with you. Manufacturers have a lot of approaches, so you have to do a lot of research and be persistent. If you like a product but the manufacturer isn’t interested in wholesale to you, it’s worth asking if they can put you in touch with their distributor (if they have one) as distributors often have tend to be more open to partnerships.
Still need to find the products
Likewise, finding the right products to sell can also take some time. Tools like Helium10 can be helpful as they can show you the demand for a particular product and the estimated monthly revenue and fees, which you can use to gauge whether a product is worth selling.
If you’re selling a popular product, you might find yourself competing with other sellers on Amazon. Generally, whether or not you get the sale will depend on the price, so it’s important that you negotiate a good cost price with your manufacturer so that you can offer competitive prices.
Being able to buy in large quantities is an advantage… but not essential!
A successful wholesale business relies on a strong relationship with your manufacturer. Being able to buy large amounts of stock from your manufacturer can often get you better terms and lead to a more profitable relationship down the road. That’s not to say that every manufacturer will require you to place a large order upfront – if you find a small start-up manufacturer, you may be able to negotiate small orders to start – but it will probably help.
Is Amazon Wholesale right for you?
If you love building relationships and would rather not waste time developing and marketing your own products, Amazon Wholesale could be a great model for you. Like any business, it takes some upfront work to find the right products and manufacturers, but it can lead to a very profitable and scalable business in the long run.