The great thing about Amazon is that it’s a very versatile platform. You can do private labeling, dropshipping, and even wholesaling. As the e-commerce industry continues to skyrocket, many sellers are looking for ways to start their online businesses, and wholesale is one of many ways to jumpstart your entrepreneur journey.
With wholesaling, you get to save a lot of money since you’re buying in bulk. You also get to build a broad supply network that enables you to choose which manufacturer best suits your needs and preferences. In this article, we’ll go over the basics of wholesaling on Amazon so that you can start this type of business model in 2022.
What is wholesaling?
First off, let’s discuss what wholesaling is all about. Simply put, wholesaling refers to the act of buying products in bulk straight from a company or manufacturer and reselling them for profit. It’s kind of like retail arbitrage where you source discounted products and post them on marketplaces with a price increase.
The two major differences between wholesale selling and retail arbitrage are the time investment and product availability. You don’t need to go around brick-and-mortar stores to source items. You purchase inventory straight from the manufacturer, and that’s it! With this business method, you get to save time and replenish your inventory much faster than with retail arbitrage.
What makes wholesale selling attractive to sellers is the scalability potential. Since you’re purchasing directly from a manufacturer or company, you can feel confident that the product is always available. You don’t have to worry about keeping up with demand since you can replenish your inventory consistently and reliably, thus making it easy to scale your business as demand grows.
What are the advantages of wholesaling on Amazon?
There’s a reason why Amazon is the go-to platform for many e-commerce sellers as it offers everything you need to start your online business. If you plan to do wholesaling on Amazon, here are a couple of advantages that will help kickstart your dream business.
According to Statista, wholesalers experienced an $8.38 billion increase from September 2021 to November 2021. That’s a lot of money to be made by doing wholesale, especially on a global platform like Amazon.
1. Access to an established customer base
The number one benefit of wholesaling on Amazon is the established customer base. E-com sellers know how difficult it is to amass a solid following to sell their products. With wholesaling, you don’t have to worry about this as you already have a target audience to work on!
As a wholesaler, your main priority is to ensure customer satisfaction through timely delivery and excellent customer service. Since you already have an existing customer base, you can expect to make sales quicker than other business models.
2. Sell branded products
Branding and product research can sound quite complicated to some sellers, and in fact, it is. Not everyone has the time or experience to build a brand and source the right products intensively. If you want to get your business up and running as quickly as possible, then wholesaling on Amazon is the one for you.
When you sell branded products, the brand owner is responsible for promoting their items. They do all the marketing for their products, thus enabling you to focus more on the customer experience. With wholesaling, you get to skip the initial phase of starting an online business and get to selling products right away!
3. Greater profit margins
Since you’re buying products in bulk, the opportunity to widen your profit margins is greater when wholesaling on Amazon. Of course, you need to be mindful of your inventory to succeed in wholesaling. That’s why we recommend using inventory management software to help you become more efficient with your process.
When selling wholesale on Amazon, you need to handle your schedule properly. You must keep an eye on emerging trends and continue to analyze the numbers to schedule your future orders more effectively.
4. Establish a passive income stream
If you’re an experienced seller on Amazon and you want to diversify your income, then wholesaling is an excellent choice. Many sellers do wholesale on the side to build a passive income stream since it doesn’t require as much time and effort as other business models do.
While you still need the right approach to become a successful wholesaler, the process is more hands-off compared to online arbitrage or private labeling. Once you’ve built a list of reliable suppliers from which you can source quality and competitively priced products, all you need is to replenish your inventory.
5. Minimize risk for new sellers
A wholesale business model carries less risk than private labeling or online arbitrage. The reason is that you don’t need to dabble with brand development and product manufacturing. The brand takes care of all of that for you. Your only focus is to sell the products and do so in large quantities.
Another reason why wholesaling on Amazon is a low-risk approach is because the platform offers all the tools you need to succeed in the online space. With Fulfillment by Amazon (FBA), you can leverage their logistics expertise and outsource the entire shipping process. You also benefit from Prime shipping, which provides lightning-fast shipping speeds to consumers.
The stability and security of wholesaling are major reasons new sellers prefer this business model. If your risk tolerance is low, but you want to build an online business, wholesaling might be for you.
Steps on wholesaling on Amazon
Wholesaling on Amazon is a pretty straightforward process. Here are a couple of steps to get you started.
Step 1: Set up your Seller Account
The first step is to set up your Amazon Seller account. You’ll have two options to choose from, and these are the Individual account and the Professional account. For wholesaling, you want to choose the Professional account as the $39.99 fee will save you a lot of money on commissions compared to an Individual account.
Now, depending on your location, you may need to obtain a wholesale license or a business license before you can start wholesaling on Amazon.
Step 2: Find the right product to sell
The key to successfully wholesaling on Amazon is finding high-demand products that offer good profit margins. You can find ideas on which products to sell by looking for trending items on places like eBay or Alibaba.
In general, you want to avoid selling products with very high competition as it will be difficult for you to generate sales. Keyword research is perhaps the most important aspect of sourcing wholesale products as it gives you a solid idea of which product categories have good sales potential.
Step 3: Source the product from the manufacturer
Once you’ve found the ideal product to sell, it’s time to contact the manufacturer to source the products. At this point, you must ask as many questions as possible regarding the products you want to source.
Remember, your manufacturer plays a huge role in your success as a wholesaler. As such, you want to clarify everything from meeting delivery deadlines to manufacturing the number of products you require.
Step 4: Create a well-optimized listing
We all know how listing optimization is crucial to maximizing product visibility. Thus, you want to ensure you’re using relevant keywords in your listing copy along with high-quality images and videos of the product you want to sell.
Your product descriptions should be as accurate as possible and highlight the item’s key features. It would be best to use informational bullets to provide customers with important details regarding the product.
Step 5: Launch the product on Amazon
Now that your listing is well-optimized, the last step is to launch the product on Amazon. Once you start selling the product, you need to develop a sound marketing strategy to ensure the product reaches the right audience.
To do this, you’ll need to implement PPC advertising campaigns and track things like your engagement, impressions, and other important metrics. Marketing is the time-consuming aspect of doing wholesale, as you’ll need to constantly revise your marketing strategy until you obtain the results you want.
Wholesaling on Amazon is a great way to start your online business in 2022. Wholesaling can turn into a lucrative business, provided you use the right approach. You can even use it as a means of building a passive income stream.
Hopefully, this guide provides you with a solid introduction on how to do wholesale on Amazon. You must always do your research and learn as much as possible before starting any business online to minimize the risks and set you up for future success.
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