How to Set Up a Profitable Wholesale Business with Amazon’s FBA
If you're seeking a low-risk secure method of making money, selling items on Amazon wholesale is among the best choices. Amazon Marketplace currently has over 2 million third-party sellers around the world that earned a total of $80.5 billion in sales in 2020. Of the selling companies, 26% employ wholesale models for business. Wholesale is simpler to establish in comparison to any other model, other than online arbitrage (which we'll discuss in a later article) Furthermore, a majority of wholesalers begin to earn a profit within three months.
What Is Wholesale Selling? Wholesale is buying branded products in large quantities from a manufacturer or supplier, and then reselling them. In this instance, through Amazon. You’ll have to find Amazon wholesale suppliers that fit your Amazon Business. Wholesalers can benefit from the current consumer demand for products from a brand that is well-known, which means lower costs for branding and marketing, and a greater concentration on growing your business.
If the product isn't yet available on Amazon or other marketplaces, it will be listed by several sellers. It is the Buy Box, which contains the "Add to Cart" and "Buy Now" buttons on the Amazon site, lets customers buy the item without having to search other sellers that offer the item. A Buy Box winner is the vendor that is featured within the Buy Box. 83% of Amazon sales occur via the Buy Box, so winning the Buy Box is essential for wholesalers. Amazon decides who wins by evaluating the cost and fulfillment method, delivery time, stock availability as well as the rate of order defect (ODR) as well as the legitimate rates for tracking, the late delivery rate, on-time delivery rate, feedback from customers, and many other aspects.
What Is the Process for Setting Up an FBA Wholesale Business? Wholesale selling with FBA is a three-step process to complete: identifying the product you want to market as well as identifying the most suitable supplier that will meet your requirements and finally, selling your product.
Before you can begin, you must be registered to become an Amazon Professional Seller. Although you are able to participate in wholesale using a no-cost individual account paying the monthly charge for the professional seller account grants the ability to access inventory as well as report tools, the ability to use buying into the Buy Box, the ability to sell within specific areas, and the promotions tools such as sponsored brands and products. Once you have started selling a small quantity of goods each month, your monthly charge will be less expensive than the $0.99 commission per sales made by an account for each individual. Once you've been signed up as an Amazon Professional Seller, you are able to enroll for FBA through Amazon Seller Central. Another essential requirement for selling wholesale is the need to obtain a wholesale license or a business license. Although Amazon does not require you to obtain an authorization in order to market on the platform each state that your business is operating in has its own rules. In addition, many sellers will only work with sellers who are licensed.
Finding the right product to sell. When you've got your license and are fully registered as a seller via FBA You can then begin your market research. Like we said this is the longest-running part of the wholesale model. Since you'll be purchasing a large amount of this item it is important to ensure that it's a safe investment prior to committing. Here’s a list of things you should keep in mind when searching for the best product: ●
●
●
●
● ●
●
Don't be a competitor with Amazon. Check to ensure that the product you are selling is not sold through Amazon or a private label vendor. Amazon is known to sell products for a profit to compete with smaller firms, which is why it's highly unlikely that you'll be able to succeed with the product that they provide. Don't try to compete directly with manufacturers. Avoid products that the manufacturer themselves have already sold effectively on Amazon. They won't only be able to provide cheaper prices than you do and they'll also have less incentive to cooperate with you. Brand. Find established brands with brand recognition and don't need you to promote their products to them. One of the most significant advantages of FBA wholesale is the chance to make money from the success of a well-known brand. If you're selling products that are in high demand on Amazon You can concentrate on getting into your Buy Box as often as feasible, and then grow your business. Demand. Check to see if the product is in demand and has at least 300 monthly sales. Online tools like Amazon sales estimator to calculate the sales per month. You can then divide your total monthly sales by the quantity of sellers selling the product at a price that is within 22% of the cost that is listed on the Buy Box to estimate how many sales per month you'll get. It's recommended to pick a product with the lowest sales rank, which is lower than 100,000. Price. Find products that are priced at 20 or more to get the most optimal balance between the sales and profits. Competition. Beware of products with more than 10 sellers or reviews to increase your chance of competing in this market. You should, however, try to stay clear of products that have less than 10 reviews or sellers, as this is an indication that the product isn't a success. Profitability. Find out how much you could earn if you price your product within 2percent that of Buy Box. Only items that fall within this price range have a shot to win in the Buy Box. Once you've created an account for selling, you'll be able to utilize Amazon FBA Revenue Calculator to determine whether the product will make you money.
Finding the right supplier. Once you have found the perfect product, you'll be able to contact suppliers to identify the perfect solution for your company. It is necessary to contact brand's owners directly, and then negotiate deals with them.
There are a myriad of options to locate suppliers. Google is the first option. Visit the websites of your suppliers and public information prior to making a decision on whether to get in touch with them. When deciding whether to work with a supplier, consider the following: ● ●
●
●
Affordability. This is a common one. You must ensure that you are able to afford the wholesale price that the vendor will offer and can allow you to earn profits. Geographical region. Search for suppliers who are in your area. One of the benefits that wholesale has over private label sales is that it permits you to collaborate with suppliers within the United States. There will be less time waiting and won't need to be concerned about customs clearance or international shipping charges as well as your suppliers could be able to directly ship into Amazon to you. Trustworthiness. Be sure that a prospective supplier is open, honest and efficient in communicating with you. A good supplier will accept feedback and be accountable to rectify any issues when they do. They can be reached via either phone or email, and they are also willing to allow third-party inspections of their facilities. Ethics. As consumers become increasingly aware of the place where their money goes, the supply chain is under more scrutiny. You should select an organization that shares your beliefs. Be sure to look for companies that have been able to demonstrate their compliance with the rules of Amazon in order to prevent costly setbacks in the future.
Launch your product. While wholesale sales don't need any marketing effort as private label sales and all branding has been taken care of by you, you do require some marketing. There's plenty of competition within the market of FBA wholesale even if you discover an item that is in high demand but isn't as many sellers are selling. Enhancing the rank of your listing of products is a primary goal when you're first beginning your journey, rather than creating sales. Amazon Pay-Per-Click (PPC) Ads is an extremely useful tool for wholesalers as private labels. It lets you make sure you are targeting Amazon customers that are looking for products that are similar to those you offer. You may also sign up for this program called the Amazon Early Reviewer Program by paying $60 per SKU to create authentic reviews for your product listing. Amazon will give reviewers 1 to 3 Amazon gift cards in the first year, or up to the point that your product is reviewed five times.
External advertising is also beneficial to your listing's rankings. Marketing via email, influencer marketing along with social media marketing may be hugely beneficial to your wholesale business.