What is Amazon Wholesale?

Amazon Wholesale refers to the practice of buying products in bulk from manufacturers, distributors, or suppliers at a discounted rate, and then reselling those products on Amazon’s marketplace for a profit. This model is different from retail arbitrage or private labeling, as it focuses on purchasing already branded or manufactured products (often in large quantities) and selling them through the Amazon platform.

Wholesale on Amazon has become an increasingly popular business model due to the vast reach of Amazon, the convenience of its fulfillment services (like FBA – Fulfillment by Amazon), and the scalability of the business. Here’s a detailed breakdown of Amazon wholesale:

1. The Basics of Amazon Wholesale

In an Amazon wholesale business, the key steps include:

• Product Sourcing: You identify suppliers or manufacturers of popular products that have consistent demand on Amazon. These suppliers often sell to resellers at discounted wholesale rates.
• Bulk Purchasing: You buy products in bulk (often in larger quantities) to take advantage of wholesale prices. This is typically a more cost-effective way of purchasing than buying in small quantities from retail stores.
• Listing and Selling on Amazon: Once you’ve acquired the inventory, you create product listings on Amazon. These listings can either be through Amazon’s marketplace (on an existing listing if the product is already listed) or you create a new one if it’s a unique product.
• Fulfillment by Amazon (FBA): After receiving the inventory, many wholesale sellers choose to use Amazon FBA, where Amazon handles the storage, packaging, and shipping of products to customers. This allows you to scale your business more easily without having to manage logistics yourself.
• Marketing & Promotion: Wholesale sellers also use Amazon’s various marketing tools like Sponsored Products, Amazon Deals, and promotions to increase visibility and drive sales for their products.

2. How Amazon Wholesale Works

a. Finding a Supplier

The first step in starting a wholesale business on Amazon is sourcing products from reliable suppliers or manufacturers. You’ll typically find wholesalers through:

• Wholesale Directories: Platforms like Worldwide Brands, Wholesale Central, or SaleHoo have extensive lists of vetted suppliers.
• Trade Shows: Attending industry-specific trade shows can connect you with manufacturers and wholesalers who supply products to Amazon sellers.
• B2B Marketplaces: Platforms such as Alibaba, Global Sources, and ThomasNet allow you to directly connect with suppliers and negotiate bulk purchasing.

b. Selecting Products to Sell

Not all products are suitable for a wholesale business model on Amazon. Successful wholesale sellers typically choose products that:

• Have Consistent Demand: Use tools like Jungle Scout, Helium 10, or Amazon’s Best Seller Rank (BSR) to identify high-demand products that are already selling well.
• Are Profitable: Ensure that after factoring in all expenses (product cost, Amazon fees, shipping, advertising, etc.), there’s enough margin for profit.
• Have Low Competition: It’s best to focus on products that aren’t overly saturated with competition. Tools like the Amazon Seller App can help you assess the level of competition for specific products.

c. Listing and Selling the Product

Once you have sourced your wholesale products, the next step is creating an Amazon product listing. You can either list products directly on existing product listings if the item is already being sold by other sellers, or create your own listing if the product is unique.

In your listing, you’ll need to provide:

• Product Title: Clear and optimized with keywords.
• Product Description: A detailed explanation of the product.
• Product Images: High-quality images that show the product from different angles.
• Keywords: Relevant search terms to increase visibility.

d. Managing Inventory and Pricing

Managing inventory is crucial for wholesale sellers. When working with bulk purchases, it’s important to:

• Keep Track of Stock: Monitor your inventory levels regularly to prevent running out of stock or overstocking.
• Competitive Pricing: Pricing is a critical factor in Amazon’s marketplace. You need to stay competitive by adjusting prices based on demand, competition, and Amazon’s dynamic pricing algorithms.

e. Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM)

One of the significant decisions in running an Amazon wholesale business is deciding between Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM).

• FBA (Fulfillment by Amazon): If you choose FBA, you ship your bulk inventory to Amazon’s fulfillment centers. Amazon then handles storage, packing, shipping, customer service, and returns. This allows you to tap into Amazon’s Prime membership and have your products eligible for faster shipping, which can increase sales.
• FBM (Fulfillment by Merchant): If you choose FBM, you are responsible for storing and shipping your products to customers directly. This gives you more control over logistics but can be more labor-intensive.

3. Advantages of Amazon Wholesale

• Low Startup Cost: Compared to private labeling or creating your own product, wholesale can have a lower upfront cost since you’re not developing your own products. Instead, you’re purchasing established products in bulk.
• Scalability: Wholesale is scalable because once you have your processes set up (finding suppliers, purchasing inventory, and managing listings), you can add more products or expand to new suppliers to grow your business.
• Less Risk of Product Creation: Since you’re not designing or manufacturing products, there’s less risk involved in terms of product quality and market demand. You’re selling products that are already proven to be popular.
• Established Brands: Many wholesale sellers work with established brands, so they don’t need to worry about brand building or marketing from scratch.
• Amazon’s Massive Customer Base: Amazon’s vast marketplace gives you access to millions of customers globally, which is hard to replicate with other sales channels.

4. Challenges of Amazon Wholesale

• Competition: The wholesale business on Amazon is competitive. Many other sellers are offering the same products, so distinguishing your listings and maintaining competitive pricing is essential.
• Amazon Fees: Amazon charges various fees (referral fees, FBA fees, etc.) which can eat into your profit margins. It’s important to account for these fees when calculating pricing.
• Inventory Management: Overstocking or understocking can lead to lost sales or extra costs. Managing inventory effectively is key to avoiding these issues.
• Brand Restrictions: Some brands may restrict resellers from selling their products on Amazon, or they may require approval to sell. You may need to navigate brand gatekeepers or find alternative suppliers.
• Cash Flow: Since you’re purchasing inventory in bulk, you’ll need significant upfront capital to stock your Amazon store. Managing cash flow is crucial as you scale the business.

5. Conclusion

Amazon wholesale can be a lucrative business model for entrepreneurs looking to sell products without having to create their own brand or worry about manufacturing. By sourcing in-demand products from reliable suppliers, creating effective listings, and leveraging Amazon’s fulfillment network, wholesale sellers can tap into a massive customer base.

However, it’s important to be aware of the competition, Amazon’s fees, and inventory management challenges. Success in Amazon wholesale requires careful product selection, strategic pricing, and good supplier relationships, but for those willing to put in the work, it offers significant potential for profit and growth.