23 Nov How to Start Selling Wholesale on Amazon
Starting a profitable wholesale offering on Amazon is one of the best strategies to grow your business fast and set it up for long-term success. It is pretty straight-forward to get started selling wholesale on Amazon even if you’ve never sold wholesale online before. It’s a good way to find new customers and add a new revenue stream, especially if you’re already selling wholesale on your own website. Wholesale refers to the purchasing of products in bulk which you then resell to consumers. This requires buying products in larger quantities, so you’ll need a bigger capital outlay. Using a wholesale supplier is also a more reliable way of sourcing products. They’ll likely always have what you’re looking for, at scale, or have the ability to order what you need.
How Wholesale Selling on Amazon Works
Registering as an Amazon wholesale seller may require you to get a wholesale license, a business license, or a tax-exempt form, depending on your location. Check all the requirements needed in your state. You need to have inventory and think of order fulfillment when selling wholesale on Amazon. There are two options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). These two programs are vital when you start your business on Amazon and start fulfilling orders.
Choosing FBA means you ship your products to Amazon’s fulfillment centers. Then, they will be in charge of storing and safekeeping the products. It’s a lot more convenient because Amazon will process the picking, packing, and shipping on your behalf. This makes the fees for Amazon FBA wholesale suppliers cheaper than shipping the items to your customers yourself.
FBM handles oversized products. While they handle storage, pick-ups, and packaging, they also manage the shipping process, so your customers get their orders on time.
The difference between FBA and FBM is that with FBA, you can directly send the products to the Amazon warehouses for safekeeping, inventory, and shipment. With FBM, you need to list or post your products on Amazon and the merchant handles all the logistics. This includes keeping track of inventory, storage management, customer service, and the shipment to the customers.
How to Start your Wholesale Amazon Business
Do your Research
Before you decide on a specific product to start with, you need to do a little research on Amazon. Make sure you choose a product that isn’t already sold by Amazon or a private label seller.
If it’s sold by Amazon, you won’t be able to compete with them on price or shipping. If it’s sold by a private label seller, you may be blocked from selling the item. You want to look for items that are in high demand, especially if you’ll be selling an item from an established brand.
The wholesaling business is about piggybacking on to the success of other products and/or brands for the benefit of your business.
Do the math
You should evaluate the sales and profitability of the product you’re planning to wholesale before ordering and launching online.
The point of selling wholesale on Amazon is to make money. This means you need to take the time to figure out what margin you need. After you have identified the product you want to sell, you want to work backwards from its list price to see if you can sell it for a price that gives you the margin you need. Don’t forget to take into account Amazon’s fees and the wholesale cost of your product. That will tell you how much you can expect to pocket from each sale.
Buy your products
Once you have researched potential products, you should then look into sourcing the item – so you need a supplier. This is the time to go directly to the brand owner or manufacturer.
They should respond with information about opening a wholesale account and how many items you’ll have to purchase to get a bulk wholesale discount.
Remember that you are offering to help them increase their sales. Show them how you can add value, particularly as they may not have a presence on Amazon. This is something you can help them with. If you specifically look for brands that aren’t already selling on Amazon or have trouble in making sales on Amazon, you can solve their problem.
Capital to scale
It takes money to make money. Once you launch your wholesale business on Amazon and start selling, you’ll also need to start investing in your growth.
Growth capital is the supplemental cash-on-hand you need to invest in your company’s growth. If, for example, you want to transition to selling wholesale on Amazon, you will need to invest at the beginning to make sure the transition is smooth. That’s where Yardline can help.
At Yardline, we provide growth capital coupled with business optimization tools to help you build out your online store on Amazon and other platforms. Get in touch with us today.