Understanding Amazon FBA Wholesale Business Model

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professional Amazon virtual assistant service can also assist

E-commerceMany of the online sellers are already familiar with the lucrative opportunities that Amazon’s sales platform can offer. However, a lot of them may not be well versed with the Amazon wholesale business model that this market can offer via FBA. It is yet another outstanding opportunity and an option that for sure needs serious consideration. 

We will discuss in detail the Amazon wholesale model by trying to explain in simple terms its concept and how procuring and selling products in bulk can help. 

There is one thing similar in the Amazon wholesale business if you have already done business on Amazon or have done e-commerce to purchase and sell the products by stocking them and sourcing from a certain process. The FBA wholesale business is slightly different where you do not reseller a small number of products or items that you have bought as an Amazon wholesale seller. This is the difference that results in an altogether varying profit margin. 

In this model you can buy at a given price in bulk and sell at a higher price, the difference is your margin or profit that you have earned after deducting all the costs incurred. This is how this particular business model for the retail market on AMZ. 

However, there is a twist in the plot with this AMZ wholesale FBA model of doing business. In this case, you become a wholesaler by yourself, buying from wholesalers in bulk and selling in bulk on Amazon. This is a slightly differing strategy from what is normally used and it is possible if you follow the right method and intelligently select your product. A professional Amazon virtual assistant service can also assist you with your AMZ FBA wholesale model. 

Amazon FBA

Introduction to Wholesale Selling on Amazon 

You will find the process of selling as a wholesaler on Amazon a lot simpler. Let us have a look at the steps involved. 

Step 1 – Open a seller account.

Step 2 – Now find and source a wholesale product that is in high demand. 

Step 3 – Add your product listing.

Step 4 – Start promoting your product on AMZ. 

Step 5 – Proactively manage your inventory. 

If you think that you already know this process, then it is a lot similar to the usual business model that we follow. The sourcing is the same but just the wholesale products that you need to sell on AMZ. Still, some differences exist between the private label and Amazon wholesale business model that you need to understand. 

How is the FBA wholesale business model different? 

The first thing that you need to understand as an Amazon wholesale seller is that there do exist differences. 

Let us discuss them

Amazon FBA Wholesales Business Model is Not Selling Private Label Products!

2. amazon wholesale business model

Private label is predominantly the main business model and it is something that many of the AMZ sellers consider as their bread and butter. However, Amazon’s wholesale business model also provides you with another dependable way of earning money via the e-commerce business. We all understand that private label’s business model has many advantages that inherently make it the favorite of many entrepreneurs. 

The Amazon wholesale model uses a different strategy than the private label. When you become an AMZ wholesaler, you will be procuring the existing products that are already owned by some brand and you will not need to promote your brand. 

Advantage

One of the biggest pros of the Amazon wholesale business model is that you do not need to spend time trying to create a unique product listing. You can easily add your products to an already established AMZ business listing within the Amazon catalog. 

Limitation 

You may not always find the perfectly ranked product listing and if it is not faring well, you will not be able to make money since you do not own it. 

However, one thing you can do to mitigate this inherent Amazon wholesale business risk is by doing your research thoroughly to find the right brand product to sell. 

FBA Wholesale Business Model is Different from Drop Shipping 

As an Amazon wholesale seller, you need to understand that it has a different strategy than the dropshipping strategy which involves listing your product for sale on AMZ. In dropshipping, once you receive an order, you place an order with your dropship supplier and you do not need to store, fulfill or pack the order by yourself. 

There is a difference in dropshipping and how you would approach Amazon wholesale. In Amazon wholesale, there is no intermediary and essentially you are the supplier. You are in complete control of the inventory that you have and you would have to take charge of your inventory to fulfill the orders received. 

Advantage

You will be managing the entire inventory by yourself and can ensure customer satisfaction by effectively managing the stock and professionally fulfilling orders. 

Limitation 

If you choose to do everything yourself, you would have to do a lot of the work by yourself and that can make customer service a difficult affair to manage. 

When you are trying to take over the fulfillment role or do FBA, you would need to have a clear wholesale strategy but you must be well aware of the products that are oversized or take more time to sell which can increase your costs and make it less beneficial or worse result in losses. Make sure that you are fulfilling your orders and using an alternative third-party service to do it. 

Amazon FBA Wholesale Business Model is Not Arbitrage 

Amazon’s wholesale model is different in the sense that, unlike arbitrage, you cannot source and procure discounted branded products from the different retails that you can resell on Amazon at a higher profit. 

The Amazon wholesalers always advise you to go for bulk purchases and not for one-offs. The wholesale Amazon business is a model where you will have to directly negotiate with the manufacturers and suppliers instead of the retailers and you won’t be able to take any benefit from the sales.  

Advantage

The best wholesalers for Amazon FBA let you directly negotiate with them and you can get top deals with a lower price for buying more inventory. 

Limitation 

You would need to develop highly professional negotiation skills that ensure that you are given the best prices for your wholesale products. 

It takes time for a business relationship to nurture and start delivering the results with your suppliers. Therefore, give it some time before you can efficiently source and get highly competitive deals. 

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The Requirement for a Wholesale License

If you are trying to sell a product in the UK, there is no requirement for needing a license. So, you do not need to worry about that and start almost instantly. However, if you are trying to Amazon wholesale business in someplace else, always check to see if there is a requirement for a wholesale license. 

Advantages and Disadvantages of Wholesale Amazon Business 

One thing that the Amazon wholesalers will tell is that you would have to weigh up the advantages and the limitations. The best wholesalers for Amazon FBA will tell you to have the right strategy for what you want to launch and how you plan to grow it. Let us have a detailed discussion on it. 

Advantages of Amazon Wholesale 

Less Time Required to Start

The first benefit is that it takes a lot less time to start. It is only a matter of few weeks. The only time that you would require to spend is going through the process of dealing with the suppliers and also to have your stock ready. 

Easy Setup Process 

It is an easy process to set up and you will be able to start seeing profits within a matter of months. It is a lot quicker to make this type of business model profitable in comparison to selling private label products, taking anywhere from 6 to 8 months or even more at times. 

Ready to Tap Brand with Established Market

The selling of branded products is a tricky affair. Some would way that you should stay clear of selling the branded products. However, it is an option that you must avail yourself of when you find established brands. You may start from a simpler brand instead of a famous one and even the best ones depending on your budget that are famous on Amazon. An established brand gives you a ready to require market share and ensures great customer interest. 

5. FBA wholesale business

Greater Scalability 

There is no need for you to start creating a listing from the scratch. It is something already taken care of by the brand. You just need to focus on the brand and where to source the products to sell as a wholesaler on AMZ. You can only concentrate on growing your business to ultimately gain long-term business dividends. 

The Amazon FBA wholesale business model can help you set a passive income stream. Once you have established a trustworthy relationship with a trusted supplier who can deliver high-quality products at a highly competitive price, you just need to think about re-ordering and selling the product in bulk. This is the reason it is also called a hands-off Amazon wholesale model. 

The Amazon wholesale business model allows having repeat business. When you sell in bulk, you can build a steady revenue stream and line up customers who can turn your products over as single units. Make sure that you have the inventory in stock and the product that you are selling remains in stock, you can always place a reorder. 

Limitations of the Wholesale Amazon Business 

Seasoned Amazon wholesalers will tell you that there exists a lot of competition. Therefore, the best wholesalers for Amazon FBA will always have multiple sellers competing for AMZ market share. Therefore, you have to be careful when competing else you won’t be able to make any money. 

You will need to have the availability of some decent amount of capital. When you order the products in bulk, you can directly get in touch with a manufacturer which would need you to make payment upfront, which can be a substantial amount. Some experts suggest having a minimum of £ 1,200 for you to get started. When you are trying to sell wholesale, you would have to buy in big amounts to fulfill the requirement of a wholesale buyer. This is how this business model works. 

The wholesale for Amazon sellers is not easy and the wrong selection of a product can result in a big disaster. It takes a lot of time to become a successful Amazon B2B wholesale entrepreneur. Besides selecting the right products, you would also have to ensure that you are buying from the wholesalers and selling online at highly competitive prices. 

This kind of exercise requires a lot of time and when you sell wholesale on Amazon, initially it is a slow process at the front end and therefore sometimes it is not that quick and you would have to be patient with its growth. 

There are many brand restrictions on Amazon. If you think that you can just buy your Amazon wholesale inventory from distributors or the closeout type of suppliers, you may end up not having the right paperwork that Amazon requires you to show up for selling the products which are categorized under brand restrictions. 

It may seem a lot more frustrating and that only means one thing, you would have to develop a trusting relationship so that you can directly connect with the brand owners instead of closeout stores, liquidators, or distributors so that you can guarantee the originality of the source, so you don’t face any issues with the brand that you have selected. 

Hopefully, the details provided above will give you a clear indication of the working of the Amazon FBA wholesale business model. You now know the advantages and limitations of the Amazon wholesale business model. 

Amazon Wholesale Model VS Private Label 

The private label sellers have to create their brand and sell products on AMZ under that. For this reason, they will have to create their product listing. 

When you chose to do wholesale for Amazon sellers you will only buy branded products. For Amazon B2B wholesale, you won’t have to create a product listing in most cases. 

Whether you select to buying from wholesalers and selling online or try to build your brand or choose from any of the other models discussed above, it depends on you. Each one of the Amazon business models comes with its benefits and set of challenges or limitations to deal with. 

4. amazon wholesale business

Making money via the wholesale on Amazon FBA 

When you get information on pricing from your wholesale distributors for Amazon FBA, you have to be competitive. It means factoring in the fees and handling the estimated monthly sales as an important part of it. You need to keep these two points in mind when doing wholesale on AMZ.

Always do thorough research 

When you select a product, ensure that you have done your detailed research to ensure that is not already sold by Amazon or a unique private label brand as a single seller. 

It may seem to be basic common sense for some but a lot of times, this fact gets overlooked when you stumble upon a great selling product. 

In the Amazon FBA wholesale business model, you should never try to compete with Amazon or a single brand that is selling a particular product. You will always lose this selling war to AMZ. Private label ventures are different from the Amazon wholesale business model. Since a single seller means wide unavailability of the product and also not being able to purchase directly from the manufacturer. 

  • Finding the best products to sell via the Amazon wholesale model

It is not easy to try and summarize in one single line the answer to this commonly asked question. You will find Amazon to be the best place to find such products. 

Always work on finding the products to wholesale for Amazon sellers that have established AMZ retail demand. Here is a look at some of the things that you can do to try and improve your chances of success in Amazon B2B wholesale.

  • When buying from wholesalers and selling online, always choose an established brand. 
  • Check to establish before going any further in your research that Amazon is not selling that product. 
  • Also, do not try to compete for a product that its manufacturer is directly selling. 
  • Avoid seasonal products at all costs. 
  • Do not indulge in trendy products that will get discontinued after some time. 
  • Try to select products for doing Amazon FBA wholesale business model which a price range between $25 – $30. 
  1. Finding the right supplier and negotiating tough on the price 

When you are researching a product to sell, make sure that you always establish a source from where you will source it. Therefore, you will need a trustworthy supplier. Make sure that you directly contact either the manufacturer or the brand owner. 

Manufacturers are usually big companies and may not be that easy to reach out to initially. They have globally running marketing campaigns. But, still, there is no harm in trying to get in touch. 

In the Amazon FBA wholesale business model, you are trying to assist them by increasing their sales. Therefore, for you to succeed at this step of the Amazon wholesale business model, ensure that you show them the way you can add value to their brand. The Amazon wholesale model can become more lucrative for those products that are already not sold by their respective brands on Amazon. You can also assist them in selling on Amazon to resolve the problems that they may be facing. 

If you are not able to find a supplier at your first attempt, it doesn’t mean that you need to get disheartened. It takes time to master the skill of negotiation and you would have to improve on that for wholesale on Amazon FBA. It means negotiating with the different wholesale distributors for Amazon FBA and find the one that best suits your requirements. 

Conclusion

When it comes to setting up a more lucrative and highly profitable business on Amazon, you would have to consider learning to master the AMZ wholesale strategy as an alternative to Amazon’s private label. It means putting in consistent effort without worrying about the outcome and remain focused to set up and line up suppliers who would provide you the products that you have identified following the criteria we have discussed above. 

This is a sustainable business model that offers more of a hands-off approach and lets you grow your Amazon wholesale enterprise by introducing new yet profitable products. You can potentially grow to any level that you want. 

Author Bio:

AmazinEcommerce.com is a leading Amazon FBA consultant offering its services to clients across the globe.AmazinEcommerce.com is a premium Amazon FBA Private Label & Wholesale Consultancy assisting in managing your AMZ store including private label, micro-private label, listing optimization (SEO), product photography, 3D rendering, videography, EBC / A+ Content, PPC, Packaging, Design (including Store Branding), and reinstatement of suspended AMZ accounts.

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