Do you want to start a scalable Amazon business without the hassle of creating your own brand? Selling wholesale can help you achieve that.
Amazon wholesale is a business model where you purchase products in bulk directly from manufacturers or distributors and resell them on Amazon's platform for a profit.
With the wholesale business model, you can access a wide range of products at competitive prices, streamline your supply chain, and reduce costs associated with storing inventory. This makes it an attractive option for sellers who want to start a scalable Amazon business without investing the time and resources required to create a brand from scratch.
Follow this guide to learn the basics of starting an Amazon wholesale business.
As a wholesaler on Amazon, you act as the intermediary between the manufacturer (or distributor) and the end user. You’re buying goods at a low price and then selling them at a higher price. This business model can be a profitable venture for entrepreneurs looking to expand their online presence and reach a wider audience.
Amazon wholesale is still a good business to start in 2023 because, despite an increase in the number of Amazon sellers, the potential customer base on Amazon also continues to grow.
Here’s the growth of Prime users in the United States:
The growth of the number of Amazon Prime users comes with the growth of Prime Day sales.
Here’s the table of the Prime Day sales growth since 2015:
All the data above shows that Amazon’s revenue continues to grow, so there is still plenty of room for new sellers to get started.
Amazon offers two types of seller accounts: Individual and Professional.
The Individual plan, which costs $0.99 for each item you sell, is best for sellers who plan to sell fewer than 40 items per month. The Professional plan, which costs $39.99 per month is best for those who plan to sell more than 40 items per month or want access to advanced selling tools.
Since you'll likely be dealing with a high volume of sales as a wholesaler, the Professional plan is the best plan for you.
Here’s an overview:
Before diving headfirst into the wholesale pool, make sure you have the right gear — meaning permits and licenses.
Here's what you'll need:
1. Reseller's permit. A reseller's permit (also known as a sales tax permit) allows you to purchase goods for resale without paying sales tax. Suppliers often require a reseller's permit before they'll do business with you, so don't skip this step. The process varies by state, so be sure to check your state's requirements.
2. Business license. Depending on your state and local regulations, you may need a business license to operate your Amazon wholesale business. Think of it as your business's ticket to the big leagues. Check with your local government office to determine what's required in your area.
3. Tax ID number. You'll need a tax ID number (also known as an Employer Identification Number or EIN) to file taxes and open a business bank account. It's like your business's Social Security number — unique and essential. You can obtain one for free from the IRS by applying online.
Amazon charges various fees for selling on their platform. Here's a breakdown of the main fees:
The FBA fees vary based on the size and weight of the product, as well as the time it takes to store and fulfill orders. These fees include storage fees, which are calculated based on the amount of space the product occupies in the fulfillment center, and fulfillment fees, which are charged per unit and cover picking, packing, and shipping.
There are several methods for finding wholesale products to sell. And there’s no one right way to do it. When you’re in the game for a long time, you’ll discover nuances in product hunting and develop your own method.
Here are some general tips when finding products for your wholesale business:
One way to hunt for products on Amazon is through category filtering.
Category filtering is where you dive deep into categories and subcategories to find profitable products.
In a nutshell, here’s what the process looks like:
Step 1. Go to Amazon and choose a category you are interested in selling to.
Step 2. Then choose a category.
Suppose you want to find products under the Pet Supplies category.
Step 3. Click “Search,” and you will see subcategories under the Pet Supplies category.
Step 4. Choose a subcategory. (Ex. “Dogs”)
And then another subcategory within your chosen category. (Ex. “Toys”)
Step 5. Set your filters.
Step 4. Start exploring for product opportunities.
Here’s a demonstration of The Category Filtering Method from Larry Lubarsky:
If you have enough budget, you can also use Amazon seller tools such as SmartScout to make product hunting easier and faster.
For example, you can perform the Category Filtering Method faster using the Subcategories tool. SmartScout’s Subcategories tool shares the same browsability feature with Amazon, helping you to easily zoom in on your chosen subcategory and filter out products that you don’t want to see.
Let’s perform the same exact process from Method #1 using the Subcategories tool.
Step 1. Login to your SmartScout account.
Step 2. Click “Subcategories” and then choose a subcategory (ex. Pet Supplies).
Step 3. Then click a subcategory (ex. Dogs) and another subcategory (ex. “Toys”).
Step 4. After that, click the “magnifying icon” and then “Products.”
And you will see all the products inside the Toys subcategory.
Step 5. Set your desired criteria to only show products that you want to see.
Suppose we set the criteria below:
After setting the filters, we narrowed our list from 37,185 to 1,173.
You can further narrow your list down by setting more filters. Let’s say we set the minimum BSR to 40,000 and also set the Variation pages to “No” to remove products with variations.
As you can see, we narrowed down our options to 116 potential products to sell. You can now go through each product and run them onto your checklist for profitable products hunting.
Bonus Method:
Here’s another way to find wholesale products to sell on Amazon using SmartScout:
How I've been using SmartScout (@SmartScout_com) to find Wholesale Products and Brands!
(Best for Beginners)
Another way to find profitable products for a wholesale business model is by opening an account with wholesale suppliers and asking for a master list of their wholesale catalog.
In general, here are the steps to find profitable products using this method.
Here’s Larry Lubarksy again finding 10 -50 potential products from a Brand’s catalog:
TIP: Use SmartScout’s UPC Scanner tool to scan thousands of products and determine which ones give the highest ROI.
1. Attending Trade Shows
Trade shows provide a unique opportunity to meet potential suppliers in person, learn about their products, and network with industry professionals. Plan your visit by researching the exhibitors and preparing a list of suppliers you'd like to meet. If you can't attend in person, many trade shows provide a list of exhibitors on their websites, allowing you to research and contact suppliers directly.
2. Reverse Sourcing with SmartScout
Reverse sourcing involves analyzing competitors' listings on Amazon to identify their suppliers. Tools such as SmartScout simplify this process by providing valuable data on sellers, products, and brands. Use SmartScout to identify trends, find popular products, and uncover suppliers used by successful sellers.
3. Local Distribution Advantages
Sourcing from local distributors offers several benefits, including faster shipping times, lower shipping costs, better quality control, and stronger personal relationships. Additionally, working with local suppliers supports your local economy and small businesses.
4. Wholesale Forums and Communities: Wholesale Central and SaleHoo
Wholesale forums and communities such as Wholesale Central and SaleHoo offer valuable resources for sellers looking for suppliers. These platforms provide a place for sellers to connect with suppliers, share experiences, and seek recommendations.
Wholesale Central is a comprehensive directory of wholesalers and dropshippers, offering a wide range of products from various industries. The platform also features a forum where sellers can exchange information and advice.
SaleHoo is a popular wholesale directory and community, providing access to over 8,000 suppliers and dropshippers worldwide. The platform offers a forum, market research tools, and customer support to help sellers find and work with reliable suppliers.
5. Supplier Directories
Finding suppliers can feel like searching for a needle in a haystack, but supplier directories can make the process much easier.
Here are a few popular options:
You've found profitable products and reliable suppliers, but your Amazon wholesale journey is far from over. Now comes the task of managing inventory and order fulfillment.
In this chapter, we'll help you navigate the ins and outs of fulfillment methods, inventory management, and dealing with returns and refunds.
When it comes to fulfilling orders, you have two main options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Each has its pros and cons, so let's take a closer look:
Fulfillment by Amazon (FBA): With FBA, Amazon takes care of storage, packing, shipping, and customer service for your orders. This means you can sit back, relax, and let Amazon handle the nitty-gritty details. However, FBA comes with its own set of fees, and you'll need to comply with Amazon's strict inventory requirements.
Fulfillment by Merchant (FBM): FBM puts you in the driver's seat, allowing you to manage your own inventory, shipping, and customer service. This can lead to lower fees and more control over your business, but it also means increased responsibility and potential time constraints.
Note: FBA products win the BuyBox more than the FBM products. Amazon prioritizes FBA. Plus, your products become eligible for Amazon Prime when you use FBA, helping you increase your sales and visibility. Prime members tend to prefer products that are eligible for free two-day shipping, so having this badge on your listings can give you an edge over competitors.
Maintaining optimal inventory levels is crucial for ensuring smooth order fulfillment and happy customers. Follow these best practices to keep your inventory management game strong:
Returns and refunds are inevitable in the world of eCommerce. Here's how to handle them like a pro:
1. Amazon's Return Policy
As an Amazon seller, you're required to comply with Amazon's return policy, which generally allows customers to return items within 30 days of receipt. Familiarize yourself with this policy and make sure your business practices align with its requirements.
2. Handling Returns Efficiently
To minimize the impact of returns on your business, establish an efficient return process. This includes:
Starting an Amazon FBA wholesale business can be a lucrative opportunity for those who are willing to put in the effort and learn the fundamentals of the business. Despite the increasing competition, the growth of Amazon and e-commerce in general presents a promising market for wholesalers.
Additionally, tools such as SmartScout can help in finding profitable products with ease. By investing time and effort, anyone can thrive in the world of Amazon wholesale. The key is to stay focused, determined, and willing to adapt to changes in the industry. With these traits, success in Amazon wholesaling is possible.
