There are plenty of ways to make money on Amazon, with opportunities for nearly every budget, time commitment, and expertise level. One of the most popular ways of making money on Amazon’s platform is selling wholesale.
According to a recent report, more than a quarter of current Amazon merchants are wholesalers, making it the second-most popular selling model behind only private label selling.
Why do so many choose wholesale as their choice? And how can you get started with your own wholesale Amazon business? Let’s dig in!
What exactly is Amazon Wholesale?
Oberlo defines wholesaling as when a business may buy goods in large quantities directly from manufacturers, warehouse them, and resell them.
Wholesalers act as a middleman between manufacturers and sellers, with a prime opportunity to profit by buying in bulk at a discounted price and selling at a higher price individually.
Also known as reselling, wholesaling is a tried-and-true business model utilized by some of the largest companies in the world. Walmart, Target, and many more buy products from manufacturers in bulk at a discounted price to sell at an elevated price to the end consumer.
Amazon Wholesale vs. Private Label Selling
Private label selling, the most popular Amazon-selling method, involves working with a manufacturer to produce items and add your brand name and logo to the products. Many private label sellers use Alibaba.com to connect with manufacturers, get samples, purchase inventory, and more. An example of a private label business would be creating a company logo and having the manufacturer add the logo to an existing product to sell to customers under the company name.
Brand Creation
One of the main challenges for new Amazon brands is sticking out from the crowd. In a crowded Amazon market, owning a brand that customers recognize and trust can be a powerful selling proposition. Brand creation on Amazon can be a time-consuming and costly endeavor, and even doing so doesn’t guarantee success.
For newer brands, the unfamiliarity with a brand and lack of trust may be a reason for customers to choose another name that rings familiar to them, even if you’re offering a more attractive price or product.
Wholesaling circumvents this step, as they sell an already established brand name. Once your shop has been created with an appealing brand offering, you’ve essentially checked off the brand creation step and avoided the costs and risks of creating your own brand.
Additionally, wholesalers do not need to concern themselves with design or many of the start-up marketing costs that private sellers must make a priority. Depending on the strength of the brand and product, long-term marketing costs may be reduced for wholesalers as customers search for a specific item from a particular brand.
Consider the power of a customer shopping for Apple Airpods vs. Bluetooth wireless earbuds. Even if a generic private label seller goes all-out on PPC spending and marketing materials, a customer searching specifically for the brand name likely has more power without spending a dime on PPC.
Independence
While wholesaling skips the brand creation step, there’s a give-and-take. By nature, wholesaling requires a high dependence on the brand owners. If a partnership with a brand you do business with deteriorates or if they change their strategy, you can encounter significant issues.
As mentioned earlier, there’s also an expectation that you positively present their brand. While wholesalers are in charge of creating copy, product photography, and inventory management, there’s more supervision with an offering for wholesalers.
Conversely, private-label sellers are afforded more freedom with their offerings and presentation without anyone looking over their shoulders.
Scalability
Regarding opportunities to scale, private-label sellers can utilize their independence by offering cross-channel offerings, product extensions, and complete creative control over new product offerings.
For wholesalers, the opportunity to scale still exists, but again is limited to what already-established brands are making. The way to scale while wholesaling is simple — find more wholesale suppliers. This isn’t too difficult with the number of wholesale suppliers, but you’re a bit more limited than a private-label seller.
Start-up costs
Generally speaking, it takes more capital at the beginning to become an Amazon wholesaler. Since you’re buying a name-brand product and a bulk quantity, your first order as a wholesaler is likely to be much more pricey than that of a private-label seller.
However, private-label sellers often have to pay more down the road with increased marketing costs for visibility, such as PPC. Keep this in mind when calculating your potential costs, and carefully consider this when deciding which selling method to pursue.
How can you find a product to sell through Amazon wholesale?
Start your product research with a tool like Viral Launch’s Product Discovery or Market Intelligence. If you choose Viral Launch’s comprehensive software, be sure to download the Market Intelligence Chrome extension, available at no additional cost. The Chrome extension helps you peruse Amazon search results pages to find data about the products displayed.
Product Discovery and Market Intelligence help you find and validate wholesale items to sell. When searching for Amazon wholesale products, these tools can streamline your experience by providing crucial data points to help you decide whether they’re a winner.
Ideally, you’ll want to find a product with customer demand but with as little competition as possible. You can infer demand by looking at the search volume data showcased within Product Discovery and Market Intelligence or Keyword Research. Since customers on Amazon search with the intent to buy, we can use this search data as a critical indicator for the number of customers looking to purchase a product.
Of course, you’ll need to crunch the numbers on what it would take to see a return on your investment. While every situation differs, price, monthly sales, and unit margin are metrics every seller should keep an eye on while searching for a product. Also, product seasonality and competition in the market are crucial and require additional research that can be done within Market Intelligence.
You decided on your product! Now what?
After you’ve found your product, you’ll need to find a quality supplier. Fortunately, several resources are available to help wholesalers find products that will elevate their entrepreneurial careers!
SaleHoo, Worldwide Brands, and Wholesale Central represent just a few platforms created to connect those buying wholesale with suppliers globally, with thousands of products across each brand.
Remember that more prominent brands will want their products displayed professionally and effectively. While these brands are happy to work with those who will move the brand forward, protecting that brand comes first. Because of this, please remember to keep it professional when discussing possible opportunities and consider what you can do for the brand, not just what they can do for you. While it’s easy to think selfishly, long-lasting wholesale relationships are symbiotic in nature, and taking the extra step to make sure both sides are happy can make a tremendous difference in the long run.
What else do I need to know once I get started?
Before your first order, you’ll need to apply for a wholesale license, also known as a business license. While not mandatory across the board, many brands will require a business license for wholesaling opportunities, making setting up your shop on Amazon a much smoother process. To be sure, check the wholesale license requirements in your country or state.
You’ll also need to create a business account to begin selling on Amazon. This step only takes a few minutes once you know your plan.
Most Amazon sellers use Amazon’s Fulfillment by Amazon (FBA) service. This service allows businesses to outsource order fulfillment to Amazon and take many time-consuming elements of owning a business off of a seller’s plate. With this option, Amazon stores, picks, packs, ships and delivers the products to customers while also taking care of customer service and returns.
A key way to maximize your sales would be to optimize your product detail page. You can do this by optimizing your copy for search and having compelling product photography shot by a professional.
Get started with Amazon Wholesale today!
Unsure of where to start? You’re not alone! Whether you choose private label selling, Amazon FBA wholesale, or one of the many other ways to make money on Amazon, starting something new with massive potential can be daunting.
That’s why we’ve created our free How To Sell on Amazon course to have a step-by-step guide to learning the basics of Amazon from sellers who made the leap from employee to entrepreneur.
With experienced Amazon experts helping you every step of the way, our course curriculum takes you through each step of starting an Amazon business with tips and pointers so you can avoid common roadblocks on the way to successfully launching your Amazon wholesale or private label business.
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