Amazon Wholesale | Know the Pros and Cons of the Business
We have another video where Matt reviews an Amazon seller trying to get others to also sell on Amazon. This time is Amazon wholesale. The thing Matt wants you to take away though is that all businesses have pros and cons and you deserve to know both before making a decision.
There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!
Video Transcript:
Business Advice Video:
Amazon FBA Wholesale is the only business model that allowed me to scale past $100,000 per month on Amazon. The reason I’m always going to stick to wholesale is because there’s never going to be a time where people are not consuming everyday name-brand products. I don’t pay for any advertising on these goods. I don’t have to promote the product, manage it, build the listings, deal with variations, import from China. It’s all USA, USA manufacturers for the most part and USA distributors or brands.
Matt’s Review:
So yes, wholesale is a business model that you can scale. That you can make money with. He talked about some of the upsides. You know, it’s US-based, you’re not importing from China, generally. Name brand products, you don’t have to manage the listings. They’ve already spent the money to advertise the brand, so you don’t have to spend any money on advertising. But he didn’t talk about was that the margins on this, especially on the e-commerce channel, are really low. So, you have to do a lot of volume to make any good amount of money. And depending on payment terms, you need a lot of capital and you need to be able to, if you don’t have it personally be able to borrow it at effective rates. And then manage the throughput very carefully to make sure that at the end of the day, you’re making money. We’ve had clients doing seven figures in wholesale sales, which sounds like a lot. I’d love to do three, four, five million dollars in sales, but they were losing money. They were, you know, at the end of the year, they’d lost 30, 50, $100,000. So it is a very challenging business to be able to make sure that you’re maintaining your margins and selling profitably as well as in volume. So yes, it absolutely can be done. People can make money at it, but as a business, you have to pay careful and close attention to all the time. And make sure you’re buying it, whatever you’re buying, at a price that allows you to make a profit after all your expenses. And considering the time that you wait between when you buy it and when you can sell it. So sure, it’s a good business model if you are up for the challenges and you have a ton of capital to invest to make it happen. Otherwise, there are other ways you can go that also have challenges but may be a better fit for you if you don’t have a ton of capital or you want to work on building your own brand. Which has longer term benefits in terms of potentially profit margin and also the ability to be able to sell that business down the road for a much higher value than a wholesale business will sell for. So he talked about the pros, which most people tend to do. They talk about what’s good about whatever they’re doing. But there are cons as well to be aware of before launching into this or any business. Every business has pros and cons. And if you hear about one that sounds like it’s all good and no bad, then you know you’ve either got a scam on your hands or again, just somebody is leaving out a whole lot of the information that goes along with whatever the good part is.
