Amazon Wholesale is the practice of purchasing bulk branded products from another manufacturer, supplier, or distributor to resell to consumers. Examples include popular consumer electronics, kitchenware, and even popular toys.
Selling wholesale on Amazon in 2021 is a lucrative opportunity — but there’s a lot you need to know before diving in. This article offers the pros and cons associated with the wholesale business model and offers step-by-step instructions on how you can efficiently get your business up and running on Amazon.
In a nutshell, selling wholesale on Amazon comprises the basic steps such as:
For all methods of selling on Amazon, sellers will need to follow certain business setup practices.
For wholesale sellers, this may require you to get a wholesale license — which might also be called a business license, tax-exempt form, or something else, depending on where you live. Make sure you look into what the wholesale license requirements are in your country or state.
At first glance, wholesale may seem similar to the other business models on Amazon. However, there are some pretty big differences as detailed below.
Arbitrage is the process of purchasing products from retail sites at a discounted price to resell on Amazon. Like wholesalers, resellers buy branded products. Unlike arbitrage, wholesalers make bulk purchases instead of individual purchases.
Also, wholesalers negotiate rates with suppliers and manufacturers directly (ie. earlier in the supply chain), whereas resellers (arbitrage) purchase discount products retail to sell via retail.
Wholesalers purchase existing branded products whereas private label sellers create their own branded products to sell on Amazon.
Because of this difference, wholesalers do not necessarily need to create new product listings. Instead, they add their offer to an existing product listing. On the other hand, private label sellers must create their product listings.
Drop-shippers list goods for sale on Amazon. Then, when a purchase is made, they place an order through the supplier/manufacturer of the product, who fulfills the product on behalf of the drop shipper.
Wholesalers own their inventory and are in charge of fulfilling orders themselves.
Make sure that the product is not sold by Amazon or a private label seller. Amazon can afford to lose money on a sale. As such, they will price their products lower than many competitors, so you don’t want to (and likely can’t) compete with them.
Further, private label sellers often block other sellers from placing offers on their respective listings with similar products.
Look for established brands. You don’t want to have to market for a company that’s not your own. Remember: a big part of wholesaling is about riding the coattails of successful brands.
You’re interested in selling a product on Amazon to earn a profit. Here’s how you can evaluate sales and profitability before investing.
The Buy Box is the widget to the right side of the Amazon product page that lists pricing and has the gold button that reads “Add to Cart
Whatever the current price is in the Buy Box, you want to be within 2% of that price. If your price is higher, your offer for the product may never display in the Buy Box.
Next, make sure you know what fees to expect from the product. The easiest way to do this is to use Amazon’s FBA calculator. Enter the ASIN of the product into the calculator, enter the data and review.
Subtract Amazon’s fees and the cost of your product from the sales price. If you’re in the positive, then congratulations: you’re profitable!
If you know how many products you expect to sell ( if you have the stock or can estimate it,see next step), you can calculate profitability from those sales and fees, too
Determine the product’s monthly sales estimate using the Jungle Scout Extension or free Sales Estimator. Divide that number by the number of sellers on the listing (rather, those within 2% of the Buy Box price) plus one (which will be you). This is the average number of sales those wholesalers share on the listing.
For example, if a product has 3,000 sales per month and there are currently 9 sellers selling the product within 2% of the sales price, the math looks like this:
3,000 / (9 + 1) = 300 sales per month.
To avoid costly storage fees on Amazon, try to keep only 2-3 months of sales in stock. For example, for the example product above, you would need 600-900 units in stock to cover sales between orders.
If you aren’t sure where to start your search for good wholesale products to sell on Amazon, you can use keep, Helium10 and jungle scout, which sort Amazon’s massive catalog based on your criteria.
First, set your preferences :
In this example, you can see the categories selected to the left. We also set the following criteria:
Jungle Scout returned:
Let’s check out the 05310 Ceramic Flipside Belgian Waffle Maker.
This looks like the perfect opportunity. It’s priced well enough to earn profits, there’s sufficient consumer demand, and there aren’t too many sellers or reviews that we won’t be able to compete in the space.
Once we do this homework to find the right product to consider selling, we move on to sourcing.
Finding suppliers for wholesale products looks a little different from sourcing a private label product. Typically, you’d use a tool like our Supplier Database to find high-quality suppliers in China or other top overseas manufacturers. But for wholesale, we’ll go directly to the brand owner.
Yup, that’s right! To open a wholesale account, you’ll contact the brand owners directly. If you’re approved, you will be able to place an order and start selling as soon as possible—some brands may even ship to Amazon for you!
There are a few benefits to this approach:
This is a huge plus. Since the brands you will be contacting are most likely located within the US, you won’t have to wait weeks or months to receive your inventory or worry about things like customs clearance or overseas shipments.
Usually, to contact suppliers in China you’d need to stay up late to communicate or wait until the next day to get a response. With wholesale, the brands you contact will be working normal US business hours
One of the biggest benefits of selling wholesale products is that you’ll be reselling someone else’s brand—you won’t have to start from scratch and launch a new product. The idea is to source a product that is already selling well on Amazon.
Since you will be selling a product that already has a following and sales history on Amazon, you won’t need to worry about advertising. Again, the idea is to sell products with existing strong demand. If you want to help boost your sales, PPC is still recommended but not necessary for many products.
Getting in touch with a brand is as simple as Googling them. Using the previous example, let’s search for “Presto.”
Once you find the brand’s website, navigate to the contact section. Sometimes, a brand will have a “wholesale” tab, so keep an eye out for that.
Here is an example of what you can say to initiate a negotiation:
I am interested in opening up a wholesale account with Presto products. Please let me know what information you require from me and I will get it back to you as soon as possible.
Now that you know how to find and contact brands, you need to be aware of what they’re likely to ask for as a prerequisite to opening a wholesale account.
You will need to register a legal business entity or do business as a sole proprietor in your state. When filling out a wholesale form from a brand or distributor, they will ask for this information.
This allows you to purchase products from a brand, distributor, or wholesalers tax-free to resell. Most brands or wholesalers will not allow you to purchase at wholesale without this
An EIN (Employer Identification Number) or Federal Tax Identification Number is a social security number, but for your business. You can receive an EIN for free from the IRS.
Now that you know how to find suppliers and what you’ll need to do business with them, let’s move on to the negotiation.
When you contact the suppliers, you want to demonstrate how you can add value to the brand. Remember that these manufacturers are big companies concerned with new product development, patents, global marketing initiatives, and so on.
You are offering to help extend their brand and increase their sales.
This also gives you a fantastic advantage to negotiate with here. You can help them with selling on Amazon because they often don’t have the time or know-how to do it themselves.
Here are some ways you can offer to add value:
If they come back with a resounding “no” at first, that doesn’t mean it’s the end. Sometimes, negotiations take a while. Continue to follow up every month or so.
Plus: How to source established brands that aren’t already on Amazon
There are also a handful of ways to source brands that aren’t yet on Amazon.
There are two ways to fulfill your Amazon sales: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM).
Fulfillment by Amazon is a program Amazon offers that lets you ship your products to Amazon’s fulfillment centers to store. After you make sales, Amazon picks, packs, and ships the products on your behalf. This takes a lot of the pressure off your new business as you won’t have to worry about shipping your goods.
Plus, the fees for FBA are often less than the costs involved with shipping the products yourself.
However, if you are selling products that turn slowly or are oversized, FBA may not be the best choice for your business. You may have to turn to your resources to store and ship your products.
In that case, Fulfillment by Merchant may be the optimal fulfillment method for your business.
Unlike FBA, rather than paying Amazon a fee for taking care of their orders, FBM sellers are responsible for handling the storage, picking and packing, and shipping of their products to their customers.
If you want to sell on Amazon, but don’t want to get involved with private labels, wholesale is a great alternative. Plus, as mentioned above, selling wholesale could mean turning a profit in half the time it might take as a private label seller.
Product Hunting is the basic part of wholesale FBA. We will hunt products for you that have the following characteristics.