Amazon Wholesale Business
Wholesale is the practice of purchasing bulk branded products from another manufacturer, supplier, or distributor to resell to consumers. Examples include popular consumer electronics, kitchenware, and even popular toys.
How to Sell Wholesale on Amazon?
In order to sell hundreds of millions of different products to consumers around the world, Amazon’s sales platform is supported by more than 2 million third-party sellers worldwide. Of those sellers, 26% sell products using a sales model called wholesale.
Selling wholesale on Amazon in 2020 is a lucrative opportunity but there’s a lot you need to know before diving in. This article offers the pros and cons associated with the wholesale business model and offers step-by-step instructions on how you can efficiently get your business up and running on Amazon.
How wholesale works on Amazon:
Selling wholesale on Amazon comprises the basic steps of:
- Setting up a seller account
- Finding a high-demand product to sell
- Sourcing the product (in this case, from the manufacturer)
- Creating an optimized listing to rank against your competitors
- Launching and promoting the product
- Managing and growing your business (including inventory, sales, etc.
How does wholesale differ from other business models?
Wholesale may seem similar to the other business models on Amazon. However, there are some pretty big differences as detailed below.
Wholesale versus Arbitrage:
Arbitrage is the process of purchasing products from retail sites at a discounted price to resell on Amazon. Like wholesalers, resellers buy branded products. Unlike arbitrage, wholesalers make bulk purchases instead of individual purchases.
Wholesalers negotiate rates with suppliers and manufacturers directly whereas resellers (arbitrage) purchase discount products retail to sell via retail.
Wholesale versus Private Label:
Wholesalers purchase existing branded products whereas private label sellers create their own branded products to sell on Amazon. Wholesalers do not necessarily need to create new product listings. Instead, they add their offer to an existing product listing. On the other hand, private label sellers must create their own product listings.
Wholesale versus Dropshipping:
Dropshippers list goods for sale on Amazon. Then, when a purchase is made, they place an order through the supplier/manufacturer of the product, who fulfills the product on behalf of the dropshipper.
How to fulfill your wholesale orders through Amazon:
There are two ways to fulfill your Amazon sales:
- Fulfillment by Amazon (FBA)
- Fulfillment by Merchant (FBM)
Fulfillment by Amazon (FBA):
Fulfillment by Amazon is a program Amazon offers that lets you ship your products to Amazon’s fulfillment centers to store. After you make sales, Amazon’s picks, packs, and ships the products on your behalf. This takes a lot of the pressure of your new business as you won’t have to worry about shipping your own goods. The fees for FBA are often less than the costs involved with shipping the products yourself.
If you are selling products that turn slowly or are oversized, FBA may not be the best choice for your business. You may have to turn to your own resources to store and ship your products.
Fulfillment by Merchant (FBM):
Fulfillment by Merchant may be the optimal fulfillment method for your business. Unlike FBA, rather than paying Amazon a fee for taking care of their orders, FBM sellers are responsible for handling the storage, picking and packing, and shipping of their products to their customers.