If you've been selling on Amazon for some time and you want to take your business up a level, selling wholesale on Amazon might be something to set your sights on.
Perhaps you're currently flipping products or making some side money with online arbitrage, but you're feeling like you've plateaued a little and you want to add a little more excitement to your Amazon business.
If any of the above resonates with you, Amazon wholesale is going to be a great challenge for you to explore.
In this guide we're going to explain what Amazon wholesale is, the pros and cons of this method, how it compares to other methods of selling on Amazon, and how you can get started in your very own Amazon wholesale business.
What is an Amazon Wholesale Business?
Generally speaking, selling on Amazon revolves around one broad strategy.
Find a product that's already selling on Amazon, source it cheap enough that you can make a profit when you sell it.
But of course this is a very simplistic, high level view of how it works. You also need to take into account all of the time and expenses that go into making an Amazon business work. There's a lot of moving parts.
If we were to define what it means to sell wholesale products on Amazon, it really comes down to the method in which we source products.
If you are a wholesale seller, you are sourcing products in bulk from an actual wholesaler, rather than buying small quantities from a retailer like you might with online arbitrage.
This brings with it greater risk, but also greater reward.
How Selling Wholesale on Amazon Works
If you've been a reader of the Clear The Shelf blog for any amount of time, you might know that I'm an avid believer in the online arbitrage model. This isn't to say that all other methods are wrong, it's just where I found my groove and it is such a great model that can almost be completely outsourced.
Being an Amazon Wholesale seller is just as good as online arbitrage if you ask me, but there are definitely some more risks involved (I'll explain these later in the pros and cons section).
The premise of Amazon wholesale is the same. You need to do your due diligence and find profitable products to sell on Amazon.
Where it gets different is when it comes to finding and securing wholesale suppliers for your Amazon business.
Let's break down wholesale selling on Amazon into a series of steps.
Step 1 - Create an Amazon Seller Account
This is quite easy to do over at sell.amazon.com, but you will need some basic business and personal documents to provide to Amazon.
You will also need to choose between an individual or professional seller account. An individual account has no monthly fee, but it does attract an additional 99c fee per sale. A professional seller account will set you back $39.99 per month but it also gives you various other perks and advantages over a an individual account.
Step 2 - Research Products to Sell on Amazon
The research phase of your wholesale journey is going to take you the longest. This is where you will use various methods to find the best products to sell on Amazon.
I don't recommend that you take shortcuts here, because selling wholesale really is all about finding the right product. You don't want to end up purchasing products that are just going to rot in your garage, not selling. That's like tipping money down the drain.
Software can be extremely helpful in the product research phase. I highly recommend you get yourself a Keepa Product Finder subscription (just over $20 usd per month) and consider using software like SmartScout to help find brands to sell on Amazon.
Step 3 - Find a Wholesale Supplier
A Wholesale Directory Can Help You Find Suppliers
Once you've found a brand you want to source and sell on Amazon, you will need to then start reaching out to wholesalers, distributors, or manufacturers to try and get your hands on a steady supply of the product.
This can pose some challenges for people that aren't comfortable doing cold outreach, but the benefits far outweigh the drawbacks in my opinion.
You may find that any legitimate suppliers will require you to purchase a minimum order quantity (MOQ) of a product, which is really what wholesale is all about. Buying in larger quantities to reduce your costs and make more profit margin.
Take a look at my guide to finding wholesale suppliers for more help on this step.
Step 4 - Decide on Your Amazon Fulfillment Method
When it comes to selling on Amazon, you have two fulfillment methods. Fulfillment by Amazon or Fulfillment by Merchant.
I've covered these methods further along in this article but no matter which you choose, it is important to take into account all the fees and charges involved with each method.
Using a simple Amazon profit calculator can help you calculate your costs with both fulfillment methods.
Step 5 - List and Sell!
If you've made it this far, it is time to list and sell your products on Amazon. There is a learning curve here, much like all of the steps, but once you've got a few sales under your belt this step of the process will become second nature.
Now let's start discussing some of the advantages and disadvantages involved in selling wholesale on Amazon.
Amazon Wholesale Pros and Cons
As with any sort of business venture, there's always upsides and downsides. It's important to evaluate all factors at play when exploring a new business opportunity.
Let's start with the great things about Amazon wholesale.
Pros
Cons
What's The Difference Between Private Label and Wholesale?
This is a very common question and while the two business models share many similarities, their are significant differences.
Let's cover a couple of the similarities first.
Buying in Bulk - Both methods involve buying products in bulk.
FBA vs FBM - Both private label and wholesale can be done with Amazon FBA or FBM.
The main difference between private label and wholesale is the product type, and the method of sourcing.
Private Label involves placing your own brand (label) on a product, which means you need to negotiate with manufacturers. Private label sellers may even have their own versions of products manufactured.
There is a significant amount of innovation involved in private label products. Private label sellers look for unique gaps in the market and bring their own product to market.
Private label sellers may very well be selling generic, widely available products with their own brand named slapped on them, but this method of private label isn't as viable as it once was.
Amazon wholesale simply involves selling established brands on Amazon, rather than creating your own branded product.
Both methods can be wildly profitable.
FBA or FBM, Which is Better for Amazon Wholesale?
To answer this very common question, it's important that you have an understanding of both business models first.
A Simplified Infographic of Amazon FBA vs FBM
Amazon FBM, Fulfillment by Merchant, is where you as the seller handle all of the product storage, picking, packing, and shipping.
Amazon FBA, Fulfillment by Amazon, on the other hand is where you send your products to be store in the Amazon FBA warehouse and they handle everything from there. They will even handle your returns and customer service, unlike with FBM where these tasks are also on you as the seller.
Amazon FBA attracts extra fees when it comes to warehouse storage, but these are costs you would need to cover yourself if you are going down the FBM route.
If you value your time and want to take a more hands-off approach to your business, where you can spend more time sourcing and negotiating with suppliers, then Amazon FBA is going to be the best option for your wholesale business.
If you want full control over your inventory, or you sell oversized or slow selling products which may attract more fees from FBA, then perhaps Amazon FBM is going to be a better option for you.
Neither options are wrong, but it is going to come down to your particular scenario.
More often than not, Amazon FBA wholesale is going to be the best way to go.
Amazon Wholesale Frequently Asked Questions
One of the great things about selling on Amazon is that you don't need a huge amount of startup capital, but with wholesale you do need to have enough to invest in your first load of inventory. Because you are buying in bulk, the startup costs will be a little more than something like online or retail arbitrage, but you still don't need a fortune.
I recommend you have around $1,000 to start, but obviously having a little more is going to give you some breathing room.
Your wholesale supplier MOQ (minimum order quantity) is going to dictate how much you need, too.
This is going to be specific to the country or state that you live in. Licenses you may require include things such as a business license, sales tax certificates or permits, resale certificates etc.
You may also need an incorporated business, which is something like an LLC or S-corp if you are in the US. These are topics that you will need to speak to a a qualified accountant with so you can ensure that you are getting the correct advice.
Absolutely yes, Amazon wholesale can be an incredibly profitable business. But much like any business, be it brick and mortar or online, there is a risk of failure. You must do your due diligence and take careful steps when it comes to investing money into something new.
Amazon has various restrictions on its products, many products and categories are restricted, so you will need to explore more about getting ungated on Amazon before you take a leap and purchase inventory to sell on Amazon.
Trade shows, online directories, and direct outreach are all great ways to find wholesale suppliers for Amazon. I have written a full guide to help you find and secure Amazon wholesale accounts if you want to learn more about this topic.
MOQ stands for minimum order quantity. This is the minimum number of units that your supplier requires you to purchase when you order from them.
Conclusion
As the old saying goes, there's many ways to skin a cat. This couldn't be more true when it comes to selling on Amazon.
You can make a bucketload of money selling wholesale on Amazon, but you can also do this with private label, online arbitrage, retail arbitrage, or flipping books on Amazon.
Many of the methods of selling on Amazon aren't for me, but wholesale is definitely up there on my list of the best ways to run and Amazon business.
If you're interested in learning how to wholesale on amazon, I recommend you taking a look at the Wholesale Challenge, created by yours truly along wholesale maestro Corey Ganim.
