Learn how to launch a successful Amazon wholesale business with our complete guide.
With over 200 million Prime members and counting, Amazon offers access to a massive customer base eager to buy products at competitive prices.
And it presents entrepreneurs with an opportunity to establish a highly lucrative business model.
As opposed to creating your own private label products or sourcing discounted items for retail arbitrage, wholesale allows you to tap into massive consumer demand on Amazon for popular branded products.
The concept is simple – you purchase goods in bulk directly from manufacturers or brand owners and then resell them as individual units on Amazon.
While there’s more upfront effort involved compared to other models like retail arbitrage, wholesale selling enables you to scale your catalog rapidly once everything is set up properly.
In this comprehensive guide, we’ll break down exactly how to start selling wholesale products through Amazon FBA (Fulfillment by Amazon) in simple yet effective steps.
Here’s what we’ll cover:
Let’s get right into it! This is everything you need to know to build a successful wholesale business on Amazon in 2024.
Wholesale selling means purchasing large quantities of products from a supplier, distributor, or manufacturer and then reselling the items individually to customers.
Rather than creating your own branded products like a typical Amazon privateseller, wholesale sellers profit by sourcing popular name-brand inventory that already has significant consumer demand.
It is different from retail arbitrage, where you source discounted products from stores to sell for higher prices. It also differs from private labels, where you develop a unique product and sell it.
With wholesale, your primary focus is on identifying branded goods with existing consumer demand to tap into.
Here is the basic workflow of running an Amazon wholesale business:
While all three models involve purchasing inventory to resell through Amazon, there are some notable differences between wholesale, retail arbitrage, and private labels.
Let’s explore them with this table:
| Criteria | Wholesale | Retail Arbitrage | Private Label |
|---|---|---|---|
| Branding | Selling existing brands; no branding required. | Selling existing brands; no branding required. | Building and promoting your own brand. |
| Inventory Control | Bulk purchasing with larger quantities; inventory control is essential. | Limited control over stock as products are sourced opportunistically. | Full control over product design, quality, and inventory management. |
| Investment | Generally, it requires a larger upfront investment due to bulk purchasing. | Lower upfront investment as you buy products individually or in small quantities. | Variable investment. Depends on product development, branding, and marketing efforts. |
| Competition | Higher competition, as other sellers may also have access to the same wholesale suppliers. | Moderate competition, as product availability depends on local retail deals. | Lower competition, as you create unique products with your own brand. |
| Profit Margins | Lower profit margins due to higher competition and potentially lower product prices. | Variable profit margins, depending on the deals found, can be higher for rare or clearance items. | Potentially higher profit margins as you have more control over pricing and brand value. |
| Scaling | Easier to scale by establishing relationships with more suppliers and increasing bulk orders. | Scaling may be limited by the availability of discounted products in retail stores. | Scalable, but may require more effort in marketing, product development, and brand building. |
| Time Investment | Requires time to build relationships with suppliers and manage bulk orders. | Time-consuming as it involves searching for deals in retail stores. | Time-intensive due to the need for product development, branding, and marketing efforts. |
| Sourcing | Purchasing products in bulk from manufacturers or distributors. | Finding and buying discounted or clearance items from retail stores. | Creating and selling your own branded products. |
Selling wholesale products through Amazon FBA offers some major advantages but also comes with a few drawbacks. Let’s break it down…
It can take 9-12 months to get a private label product to market between design, manufacturing, and shipping. Wholesale products can be available to sell on Amazon within a few weeks. Additionally, 55% of wholesalers turn profits within 6 months.
Choosing the right branded products in popular categories means you already have surging demand. Customers want trusted name brands – your role is just to supply ample inventory, and you find yourself a good business.
While the dollar markup per item may seem small, steady reorders with 500-1000+ unit production runs create fantastic profit margins. If you can streamline the fulfillment costs through Amazon FBA further, it can be a sweet icing on the cake.
Once you get trustworthy suppliers for your products, managing inventory becomes more passive. Simply monitor sales velocity across products and reorder when stock levels are running low. Amazon handles fulfillment and shipping.
Experimenting with new products is complex for private label owners but easy for wholesale sellers. You have complete flexibility to test new brands, categories, and suppliers to optimize profitability.
Wholesalers need to order pallets or containers worth of inventory upfront. This can tie up $5000+ of working capital depending on volume commitments. However, ordering bulk inventory also gets you wholesale discounts, which can improve your profit margin.
Reaching out to suppliers and negotiating favorable contracts demands a time investment upfront. However, once manufacturers are secured for proven products, reorders become streamlined over time.
Certain brands have strict sales requirements for resellers, which Amazon enforces rigorously. Violate these terms, and your inventory or profits could be wiped out. So, conduct thorough supplier research to alleviate these issues.
Wholesaling requires more forecasting precision around reorders and storage. Stock too many slow-moving products, and you’re burning cash on storage fees every month. Or if you let bestsellers sell out completely without reordering, your sales momentum can get disrupted.
From commission fees to FBA fulfillment and shipping costs, Amazon’s extensive fee structure ranges around 15-25%+ of sales. Accurately calculating net margins is crucial to avoid these excess costs chipping away at your bottom line.
With proper preparation, these obstacles can be anticipated and overcome quite smoothly.
Now, let’s dig into the most critical pillar of any wholesale business – finding profitable products to sell!
The ultimate metric determining your Amazon wholesale business profitability is consistent sales velocity.
You need to source branded products that already demonstrate sufficient baseline demand that your steady inventory will immediately piggyback on.
Here is a step-by-step process for starting your Amazon wholesale business:
First, pick a high-level category fitting your interests and expertise. Electronics, kitchenware, toys, laundry products, automotive accessories, you can choose anything. Also, Browse Amazon’s best-sellers to spur more niche ideas.
SellerApp has an excellent database of all products available on Amazon. You can screen using custom filters to pinpoint potential wholesale opportunities.
Key indicators for Amazon wholesale products:
High Monthly Unit Sales – Look for consistent baseline demand between 500-5000+ units/mo, which signals existing consumer demand
4+ Sellers per Listing – Having a handful of 3P sellers indicates a wholesale-friendly product not restricted to a single reseller
Strong Organic Reviews – Consistent recent reviews suggest satisfied customers and unlikely brand restrictions
Reasonable Weight/Dimensions – Ensure products aren’t too large or heavy, which would create excess inbound shipping costs
Additionally, avoid…
Size, weight, or other restrictions making products ineligible for Amazon’s standard FBA fulfillment program.
Seasonal products with short sales windows and storage issues over off-seasons.
Highly regulated products requiring special licensing like electronics, supplements, etc.
The goal is to identify “goldilocks” products with a healthy baseline of organic sales. If demand already exists, all you need to do is inject fresh, steady inventory supplies, and you’ll be able to easily ride the momentum.
BONUS TIP: Search for products with a Minimum Advertised Price (MAP) policy, which enforces a standard retail price across sellers. This helps avoid damaging price wars undercutting profits.
Google Shopping aggregates millions of products from retailers across the web. This allows you to validate broader market demand exists for a given product outside Amazon.
Strong representation on Google Shopping reinforces steady baseline consumer demand beyond just Amazon marketplace activity.
If other major stores are selling the item successfully, it also becomes a high-potential product to sell through Amazon wholesale.
Check Instagram hashtags and tags associated with your shortlisted products. Consistent quantities of customer posts suggest wide appeal and demand.
Scanning buyer-generated social content also provides real-world feedback. Are customers satisfied with the product quality, durability, usability, etc? Any NMR (not matched as described) feedback or customer issues raise red flags to consider a different product.
Some major brands limit wholesale partners from selling their products. Search “[brand] wholesale application” and identify the brands with open sign-up forms or contacts to request approvals to sell inventory.
With this strategic research process, you can reliably shortlist wholesale products aligned with recurring consumer demand on Amazon. Remember to verify:
Once you identify high-potential products, the next step is to locate capable suppliers to kickstart your Amazon wholesale business.
Here is the systematic process to source reputable suppliers:
Once you narrow down a few suppliers, the next process is to negotiate the best possible pricing and terms with them:
Follow these sourcing and negotiation strategies to lock in supply contracts from reputable manufacturers.
Next, let’s cover a few tactical elements to operate your Amazon wholesale business profitably.
Once reliable wholesale product sources are secured, day-to-day business operations become smoother. Here are key areas to focus on:
Integrate Amazon FBA with your wholesale business to simplify warehousing and shipping.
Upon receiving palletized inventory, you simply ship to Amazon’s nearest fulfillment center. As sales come in, Amazon handles picking, packing, and shipping your products. Additionally, Amazon Automation keeps overhead costs in check as sales scale.
If you’re selling oversized products, ineligible for Amazon FBA, utilize 3PL (third-party logistics) providers to store pallets and fulfill orders as they come in.
Brands usually get a lot of cold emails from wholesale businesses. To stand among them and get the brands’ attention, here are a few tips you can follow:
These strategies can differentiate your wholesale outreach from other sellers and help you stand out.
With Amazon wholesale, consistency and realistic goals are key.
Jumping into a market early will establish a presence and minimize risk, but an opportunity taken too late will leave your brand bankrupt and in debt.
So, don’t wait. Use this comprehensive guide to launch your booming Amazon wholesale empire today.
Boost Amazon Sales with SellerApp Insights!
View Comments
I got know your article’s Content and your article skill both are always good. Thanks for sharing this article this content is very significant for me I really appreciate you.
Thanks! Happy to hear!
Your blog got me to learn a lot, thanks for shearing, nice article.
Great to know it was helpful!
Thanks for sharing such a great information.. It is really helpful to me. Please do share more posts like this.
Sure, Thanks for the feedback!
Enjoyed reading the article above , really explains everything in detail, the article is very interesting and effective. would like to see more posts like this.
Thanks for your kind words!