Wholesale Selling on Amazon- New way of Business
Many Amazon sellers have given thoughts on wholesale selling on Amazon. Some are in the favour of it while some think that whole selling is not profitable. Though the marketing experts have given many profits of this idea of wholesale selling on Amazon still this debate is continuing. Amazon has its strict guidelines for its sellers. So here we are exploring more about this.
What the term wholesale selling is?
If you are a manufacturer or brand owner and you don’t have the time of selling your products to the individual customer then you can sell those items to the retailers. This is termed as wholesale selling. The retailers in the next chain will sell those items to the individual buyer. This gives the opportunity to the retailers as well as manufacturers to earn the profit.
Wholesale selling is not a concept of online selling only. Rather in offline selling too, the wholesale trend is quite famous and many resellers adopt this trend in their business. In wholesale selling, the products are directly purchased from the manufacturers or factories. These items are more often purchased in bulk. This gives an advantage of getting discount on the retail price.
In simple words, wholesale selling is buying products in bulk directly from a manufacturer or a brand owner and reselling the products to the customers.
How does wholesale selling work on Amazon?
With the same concept, the Amazon sellers need to buy the products from the manufacturers or brand owners in bulk (in wholesale) and then resell the products to the buyers through Amazon platform. Amazon allows its business sellers to buy the products in bulk and then resell them to earn the higher profit margin and expected ROI. As every new business (online and offline both) whether selling large quantity items, small item, or selling even from home, the sellers need to register their businesses, in the same way, the Amazon sellers too need to register their business to Amazon and specify the type as like wholesale or retail. Then, they get registered with the Amazon as wholesale seller or business seller. The process and documents of getting a wholesale license may or may not differ from one marketplace to another.
How to select products for wholesale business?
- Pick the products that are popular among the customers.(Google will be the best companion here.)
- Those products that no other sellers are selling on Amazon. (Again Google it.)
- Contact the manufacturers and brand owners and negotiate.
- The products with less investment cost but can contribute to higher profit margin.
- Products with more buying frequency.
- Don’t put the private label product into your wholesale inventory.
Difference between wholesale & retail arbitrage
Though the ultimate goal of wholesale and retail arbitrage is to sell products to the customers yet the approach differs. The bulk purchasing and full inventory in wholesale give the reseller more chances to fulfil maximum orders instantly while in retail arbitrage the retailer may run out of stock with the limited inventory. Also, the retail arbitrage online takes more time and efforts in inventory sourcing to set the business. The scalability in retail arbitrage is less than that in wholesale approach.
Difference between wholesale & private label
If you are private label sellers, then, you will need a manufacturer to make your product’s idea live into the hand. Also, you will always keep on improvising the products list. Post manufacturing, you will buy the inventory from your associated manufacturer and then need to put in Amazon’s inventory warehouse. Quite hectic it becomes. The private label sellers generally opt for FBA.
While in wholesale, you reach to the manufacturer who is a brand owner and selling the branded commodities. The wholesale sellers find both the option of FBA and MFN on Amazon convenient.
Benefits of wholesale Selling
When you sell as a reseller, you can take a sigh of relief from many tantrums of Amazon selling process. Some sweet fruits of wholesale selling are as follows:
- You can sell the branded products without launching your own brand: You have bought the branded products from the famous brand owner and the only thing you need to to do is resell them to the customers. More customers will come to you on seeing the brand tag on the products you are selling. Wow...without launching any brand you are getting customers to your store. Good deal!
- No need to create the new listing on Amazon: You already know how the process of listing becomes tiresome when you have a bulk of products to sell on your Amazon store. To aid more work, Amazon guidelines for listing are enough. But when you resell the products that are already on the manufacturer store you need not create a new listing for the existing products.
- No need to find the niche products to sell: To be in competition, Amazon sellers apply every possible strategy in the market. For attracting the customers, the sellers come up with the unique and niche products and call themselves as the exclusive sellers. But finding niche products to sell requires a deep research of market demands, patience to reach the expected ROI and above all, it may be risky to sell new products with which customers aren’t familiar. In spite of that, you are reselling the set branded products so that you run with less risk of failing.
- You will get a handsome discount: This purchasing differs from retail purchasing. When the purchasing is done in bulk the cost price always gets reduced. To encourage more reseller, the manufacturers offer more discount rates depending on the quantities of items. For example, the manufacturer may offer discounts like- 10% off on 100 products; 20% off on 200 products and 30% off above 200 products. Then the resellers in their online stores, sell the products in retail by increasing the price of the products. Here, with the simple maths logic, when the selling price is more than the cost price, there is an obvious profit. The wholesale resellers earn more profit than in retail selling.
Challenges you might face in wholesale selling:
- Searching the right products to resell.
- Searching the manufacturers and brand owners that are not on Amazon platform directly.
- Negotiation in the price of the products with the manufacturers sometimes might get converted into a sour taste.
- Managing the good terms and relationships with the manufacturers for having the inventory all the time.
- Inventory management might be cumbersome.
- Picking the low margin commodities that can give an expected profit.
The wholesale selling is a potential concept in business. The success and viability of wholesale selling on Amazon are highly predicted. Selecting the products that aren’t already on Amazon platform for selling on Amazon as an exclusive seller can be a profitable deal. Before implementing any idea into a business, calculate the estimated cost of products purchase, its selling cost, profit margin and ROI and then only finalize the decision. Always keep the good relations with the manufacturers and brand owners from whom you are purchasing your inventory so that you can always fulfil your customer’s orders. Though starting from the research of products and manufacturers to managing the wholesale business on Amazon require some efforts yet it would turn into ripen fruits. Don’t miss out any reason for selling on Amazon.