So you’re interested in making money on Amazon and doing it with a healthy profit margin. Well, you’ve come to the right place. In this post, we’ll walk you through what it takes to set up a wholesale company on Amazon so you can maximise revenue and profits in a long-term, sustainable way.
Why You Would Want to Sell Wholesale on Amazon
When it comes to selling wholesale on Amazon, you’re purchasing directly from the manufacturer then listing them on Amazon as a reseller, reaching consumers directly. You’re the middleman in the operation. You don’t have to invest in building a private label brand, you don’t have to craft entirely new listings, and you don’t have to jazz up a product’s features or values. All you do is take an established brand’s products and sell them.
However, it’s not always as simple as that. While a lot of the work is already done for you, you still have to establish good relationships with solid manufacturers, find the right products to sell and determine the best prices to list them at, and deliver the high level of customer support Amazon expects of you.
If you’ve decided this is for you, let’s get started.
Step 1: Find the Right Products
Sourcing products will be a bit different for each seller, but here’s a general list of criteria you’ll want to stick to.
- Look for products not sold by Amazon. It’s a losing situation you’ll get yourself into, as they’re just too big and powerful for you to ever compete with them.
- Try to go for more evergreen products instead of hot seasonal ones. That’ll give you a steadier source of income throughout the year and make ordering a lot more predictable. When you’re sourcing these items, look at their monthly sales volume as a way to estimate the kind of revenue you might see.
- Try to also lean towards non-fad products. As profitable as Furbies and fidget spinners were at their apex, how many people want them now? Go for items that’ll have sustained interest over the long-term.
- Lastly, you’ll make it easier on yourself if you stick to brands that have a bit of history, visibility or cachet to them. It means less work on your part to hype up interest so you can better hit the ground running.
Step 2: Connect With Manufacturers
Once you’ve come up with a list of products you think will sell well for you, the next step is to reach out to manufacturers. The best brands will already have a lot of interested resellers, so you’ll need to figure out a way to sell them on your uniqueness and how it’ll positively affect them. A solid way of doing this is to show them your sales history — show them proof you’ve had prior success, whether on Amazon or somewhere else.
If you’ve come across a manufacturer that isn’t currently selling on Amazon, you can convince them to work with you by highlighting the various benefits of you selling their brand on that marketplace — the incredible visibility and widespread use of Amazon, how you’ll be easier and more flexible to work with, and how you’ll be doing all the work of setting things up and selling. Talk about how you can leverage their brand and how they don’t have to do any of the work.
Once you decide on a manufacturer (or a few), it’ll come time to arrange a contract. Be prepared to negotiate, whether that’s on price, volume, shipment details or anything else. You might not get a ‘yes’ right away, so spend some time on your own anticipating questions or concerns they might have and how you can put them at ease.
Step 3: Set Up Shop on Amazon
Now that you’ve got a manufacturer and contract in place, you’ll need to figure out where to store the products — you can either manage inventory in your own warehouse or go with Fulfillment by Amazon (FBA). Each option has its pros and cons, so research both to find which suits you best.
Regardless of which method you opt for, you’ll need good inventory management software to keep track of everything. If you run out, you’ll lose out on sales and possibly the trust of buyers. But if you carry too much, then you’ll be paying storage fees until you can move everything.
This is why research comes in very handy. When you’re looking at good products to sell, one thing you’ll want to pay special attention to is the sales volume so you can get an idea of how much to order for each month (or whatever your ordering cycle is).
If you’ve decided to go with FBA, they’ll handle order fulfilment for you. But if you’ll be storing things yourself, then you’ll need to come up with a system for picking, packing and shipping.
And last but not least, be sure to make good use of your Seller Central account and stay on top of sales and audience insights. There is a lot of useful data in there you can use to track trends, as long as you stay regular and adaptable with it.
After you’ve established your wholesale company on Amazon, a new, nice situation you’ll encounter is gathering reviews. Feedback helps you see where you’ve succeeded and where you need to improve, as well as convince new buyers to make a sale with you. For help with this, FeedbackExpress will handle all the details you don’t want to so you can channel your energy into other areas. Sign up now and take advantage of our 30-day free trial.