What is wholesale FBA selling? Is it Profitable?
What is wholesale FBA? This is the question popping in every Amazon vendor’s mind nowadays. Before explaining it further, I want to ask you a few questions. Would you like to create an Amazon business that is profitable and scalable? Are you interested in implementing new strategies such as retail arbitrage to grow your business? In that case, you should consider becoming an Amazon wholesale seller.
In this blog post, you’ll learn how to find wholesale suppliers that meet your needs. After reading this blog, you can start your wholesale Amazon business after getting the information you need. Let’s get started with the guide to What is wholesale FBA.
What is Amazon FBA wholesale selling?
To answer What is wholesale FBA? You need to know there are two fulfillment options available to Amazon sellers: FBA and FBM for wholesale for Amazon FBA. FBA stands for Fulfillment by Amazon, and FBM stands for Fulfillment by Merchant, and in this case, Fulfillment by Amazon should be the obvious and most convenient choice. While Amazon takes care of picking, packing, and shipping products, you can focus on your core business plan and marketing strategy. Customer service is also available through Amazon.
For wholesalers interested in Amazon FBA, these are the steps for creating an account and getting started.
- The first step to selling on Amazon is opening an Amazon account.
- Activate FBA (Fulfillment by Amazon) by logging into AMZ Seller Central.
- Generate the product listing.
- Select the listing for FBA inventory from the Manage Inventory page.
- The products should be prepared for shipping to the fulfillment center.
- Shipping the product to Amazon is the final step.
The fulfillment process is completely automated in Amazon FBA wholesale. To optimize fulfillment, you should focus your efforts on the following:
- You can find product keywords by searching.
- Your product listings or ASINs should be created and optimized for search engines.
- Ensure that your product reaches as many customers as possible by following the product ranking tips.
- Provide any missing or incorrect information, and answer any questions that are asked.
- Make sure your inventory is complete.
- Keep inventory under control by being proactive. Maintaining your stock in Amazon warehouses or fulfillment centers is also a possibility.
How To Sell Wholesale On Amazon?
Products can be sold on Amazon in several ways: private label, retail/online arbitrage, wholesale, etc. They all have advantages and disadvantages. You buy products in bulk and sell them on Amazon at a discount by purchasing them directly from a distributor or manufacturer. You have to go through a process to become a wholesaler and get approval to sell their products. Let’s look at how to become an Amazon wholesaler.
Despite their similarities, wholesale on Amazon is different from retail arbitrage. The principle behind retail arbitrage is to buy low quantities of items at retail stores, resell them on Amazon, and profit from the sale. A wholesaler is a company that buys goods in bulk from manufacturers or distributors at a discount, then resells them on Amazon at a profit. When selling wholesale on Amazon, you need to register your business as a wholesaler, even though you do not necessarily have to register as a business to do retail arbitrage.
Like selling wholesale on Amazon, private labeling also involves a different process. With personal label products, your brand name is applied to the products manufactured by a manufacturer, or you’ve altered a product from a manufacturer’s catalog to include new features or add value. You represent a middleman between the manufacturer or distributor and the customer whenever you wholesale on Amazon.
How can you make money from selling products on Amazon FBA?
1. To sell wholesale, you need a good product
You need to ensure the product is not sold by Amazon or a private label seller. Amazon can afford to lose money when selling a product, due to this, their products are likely to be priced lower than many of their competitors, so you probably won’t be able to compete with them.
Also, private label sellers frequently prevent other sellers from placing offers with similar products on their respective listings. Invest in well-known brands. Marketing for another company is not something you should do. Taking advantage of established brands is a big part of wholesale.
2. Calculate how much money you can make
It’s obvious that you want to make money on Amazon by selling products. To determine whether you’d be making money on Amazon, consider sales and profitability.
3. Keep your product’s price within 2% of what’s listed in the Buy Box
If you look at the Buy Box, the widget that appears on the right side of Amazon product pages next to the gold button “Add to Cart,” you will see the price. If you compare it with your price, you will see the difference. If your offer is higher than the Buy Box price, it may not appear.
4. Understanding the fees associated with a product
The next step is to understand the fees associated with the product. Using Amazon’s FBA calculator is the easiest way to do this. Enter the ASIN of the product into the calculator, enter the data, and review.
5. Determine your profitability
Calculate the sales price after deducting Amazon’s fees and the cost of the product. Having a positive result is an indication that you’re profitable. Knowing your sales and fees, along with the number of products you expect to sell, can help you calculate profitability.
6. Estimate monthly sales of your product
In your seller account go to Reports > Payments, click the “Date Range Reports” tab. Select the type of report (Summary or Transaction). Click Month and choose your month, click generate. You can now see your monthly sales on Amazon.
7. Knowing your turn rate is important
Store only 2-3 months’ worth of sales on Amazon to avoid costly storage fees. Note: when learning what is wholesale FBA profitability you can never ignore your turn rate.
Replenishment of Inventory
If you need to replenish your inventory, you can use retail arbitrage or wholesale arbitrage.
Make a profit on Amazon by reselling products from brick-and-mortar retailers at a lower price. One downside is that you cannot buy more than one unit at a time, depending on its availability.
Amazon FBA Wholesale
You can buy wholesale products from a manufacturer at a discount and resell them on Amazon as part of the Amazon FBA wholesale business model. To get more deals and add more profitable items to your inventory, you can ask a manufacturer for a catalog. Purchasing products from a manufacturer allows you to quickly order as many items as you need to replenish your inventory. You can earn handsome profits by doing wholesale via Amazon FBA if you can find reliable wholesale suppliers.
What is the wholesale FBA Challenge for Suppliers?
How does wholesale selling work? When you sell branded merchandise sourced directly from authorized suppliers (also called wholesalers), you sell branded products. If you intend to purchase larger quantities of goods, you will need a larger budget as well. Although, you will pay less for your inventory per item than you would if you bought it from a retailer. Therefore, you will profit more. Furthermore, dealing with a wholesale supplier is a much more reliable way to source products because you can pretty much always find what you want there, or they can order it.
The biggest challenge in using Amazon FBA wholesale has been finding reliable suppliers. It would be a good idea to pick one supplier carefully when shortlisting them for your business.
Finding Amazon FBA wholesale suppliers for your store
We can maximize the success of our businesses by understanding some characteristics of reliable Amazon FBA wholesale suppliers.
When looking for a wholesaler for your Amazon FBA business, you need to consider the following things:
- Their team is open to receiving feedback and is committed to correcting any issues.
- The company’s focus is to create quality products at an affordable price for customers and resellers alike.
- If you wish to discuss their products, you can get in touch with them via email or phone.
- Inspections by third parties are welcome.
- A top Amazon FBA wholesale supplier strictly follows the rules and regulations and is meticulous in their work.
What is the wholesale FBA Amazon suppliers finding process?
Various methods exist for finding suppliers. There is, however, a common thread in finding the right wholesale supplier for Amazon FBA wholesale and private label.
Discovering suppliers can be done in several ways.
Searching for suppliers on Google is a good idea. Finding dozens of options in minutes is possible when you know the right keywords. It is essential to understand how to combine the words you can use. You can save yourself a lot of time if you intelligently use quotation marks.
The following are examples of search queries: wholesale “inventory” “xls”, wholesale “data feed” “xlsx”, and wholesale “inventory” “CSV”. To find suppliers in a particular location, you can add “[location]” to your queries.
The opportunity to network, meet people with like-minded business interests and explore new opportunities can also be gained from attending trade shows. At trade shows, buyers and sellers gather under one roof from different industries. In addition, you might be able to spot large brands and suppliers; a wholesaler’s exhibition or stall may also be an option.
The trade show is a walk-in opportunity to make contacts that can easily be reached in the future. A face-to-face meeting or even a chance to speak to the sourcing coordinator of a company will help dispel any misconceptions you have about the company or its products.
Trade Industry Publications
Google is also a good source for finding trade publications. Subscribing to industry magazines will help you identify wholesalers and distributors in your target market. Subscribing to the publication’s newsletter and blog can also be done through their website.
You can communicate directly with industry experts through industry associations, which follow a more formal structure. Some industry associations might also be able to refer you to wholesale suppliers.
There are a lot of wholesale manufacturers on LinkedIn, the world’s leading social network. Searching for wholesale manufacturers is possible when logged in (once you have logged in). Manufacturers and wholesalers in [name of the industry] can be classified as suppliers and manufacturers, respectively.
Verify the authenticity of a distributor’s profile on LinkedIn before following them. After that, please send a message to the wholesaler in which you introduce yourself and state why you want to communicate with them.
Private Label Manufacturers
Third-party manufacturers specializing in private-label products can also be considered for Amazon FBA wholesale. Despite appearing as outsourcing companies, they are directly producers and sellers of products.
Wholesale directories are an excellent way to track down reliable suppliers. SaleHoo and Worldwide Brands are two popular directories. Thousands of products are available on these websites and contact information from suppliers in different parts of the world.
A one-time fee is required to subscribe to Worldwide Brands. Their list is updated every week. Fraudsters can be avoided by using “scam protection” added to your account. In addition to selling close to 3 million products, SaleHoo offers a place to locate Amazon FBA wholesale suppliers. Thousands of wholesale suppliers are trusted with a strict supplier review system, and minimum order quantities do not apply. When you choose SaleHoo, you can choose between an annual subscription fee and a lifetime subscription fee. Prices, The Wholesaler, The Wholesale Forums, and Tuesday Morning are other examples.
Be a part of Facebook groups.
In addition to connecting with family and friends, Facebook has become more of a networking platform. Find suppliers and manufacturers by joining FB groups. If you’re targeting a specific industry, you can use keywords such as retail, group, wholesale, distributors to target your search.
A location can also accompany the search keyword. Consider joining groups with a few hundred or a few thousand members.
B2B Wholesale Websites
Finding Amazon FBA wholesale suppliers can also be done using B2B websites. These websites mainly serve retailers and wholesalers who buy in bulk. Suppliers can be contacted directly through the websites, ordering products online. DHgate, Alibaba, eWorldTrade, and Global Sources are examples of B2B wholesale marketplaces you can find.
You can also find wholesale suppliers using product packaging. By looking at the product’s packaging, we can determine the product’s manufacturer. Contact information is often located on the print alongside the manufacturer’s name. Even if that is not always the case, the effort will still be worth it.
Finding Amazon FBA wholesale
To create an Amazon wholesale business, you need to contact the shortlisted suppliers. After that, you will need to negotiate with them and show the supplier how your company can add value by preparing for negotiations.
Sales representatives, brand representatives, brand managers, territory managers, or even brand representatives may be on the other side. It is essential that you fully understand the supplier and their brand representative before negotiating. Visit their official website, LinkedIn, and Facebook pages if you want more information.
Sending the introductory email
The following information needs to be included in your first email.
- Describe your experience as a wholesale Amazon FBA seller.
- Demonstrate your authenticity as an Amazon FBA wholesaler.
- Consider how well you know the trade.
- Ensure that you pay promptly.
- Finally, plan on a long-term relationship that will be mutually beneficial.
- Each email should be customized and tweaked for each supplier to make it stand out. To win their business, you can employ some email marketing tactics.
Before sending an email it, is essential you must understand What is wholesale FBA? Moreover, please understand that Amazon FBA wholesale suppliers are often inundated with requests for wholesale purchases. If that happens to you, use the telephone or direct mail to follow up with them. Use courtesy and professionalism when you contact them, write down the questions you will not ask when you call, and plan your call.
Here are some questions you may ask.
- Address of the main office
- Name of the exact product
- Detailed product information (color, weight, size, variations)
- Catalog of products
- A discount based on quantity
- The time it takes to produce a product
- Fast-tracked orders may incur an additional fee
- Payment schedule and method
- Your brand (private label) can be launched
- Options for shipping
Advantages of selling through wholesale on Amazon
People are often asking What is wholesale FBA selling benefit? Well, there are several advantages when you start selling wholesale. The platform doesn’t require all sellers to sell new products. Wholesale items are a good option if you don’t have any new products to market. If you are interested in wholesaling clothing or other products, you can do so. If you choose this option, you can enjoy the following benefits:
1. Establish relationships with established brands
When you wholesale, you don’t need to spend time researching products and branding them. A well-known brand can be sold when you wholesale. Making sure that your customers have the best possible experience is all you need to do.
They already know what quality and price they can expect when purchasing from you. You have a responsibility to ensure that the products are packaged, processed, and shipped promptly as a wholesaler. Also, you must address customer complaints, which means that you will have to go through all the steps an Amazon seller would. The only difference is, you don’t have to invest a lot of effort in the initial phases of the sale this time around.
2. Controlling prices better
You must be aware of your inventory to be a successful wholesaler. There are already suggested retail prices for the products you’re going to sell. Profit margins are higher when you have more inventory.
Having the ability to schedule things correctly is essential when selling wholesale products. To prepare your future orders, you should analyze trends and be good with numbers. With the right keyword’s insight strategy, you can easily find wholesale FBA trending products nowadays.
3. Easy to scale up
When it comes to wholesale on Amazon, one of the best things about it is the ability to scale up further if need be. It is easy to contact the manufacturer and place a larger order if the demand increases significantly. Orders are processed immediately, so you don’t even have to wait.
4. Reduced risks
Wholesalers have less risk when it comes to manufacturing products and advertising. Having worked with a reputable company that already has a full-service manufacturing plant, you no longer need to worry about anything. You will have to put resources into launching new products, nor will you have to devote resources to research and development.
By doing so, the risk is significantly decreased. Production costs and manufacturing costs are also not an issue. Additionally, there is no need to hire staff for these processes.
5. Follow-up with existing customers
A wholesale store on Amazon would mean that your products already have a broad audience, so you wouldn’t have to worry about introducing them to your customers. You only have to process and ship the order and a wholesaler since they already know about the brand. Advertising and PPC campaigns cost less when you use this service. The brand will also be responsible for introducing a new product line. That way, you won’t need to worry about launching it yourself; hence, you do not need to build from scratch.
Disadvantages of selling through wholesale on Amazon
Even if there is no contesting the multitude of benefits associated with selling your inventory on Amazon, there are many things to consider before making that leap. Several factors can impact your strategy and pricing, such as high competition, high selling fees, and order management.
We have discussed what wholesale FBA selling advantages are. Now it’s time to discuss wholesale FBA selling disadvantages as well.
Here are some of the disadvantages of selling on Amazon FBA:
1. High competition
There is fierce competition, as you probably predicted. Planning is essential. You will compete with other merchants for the Amazon Buy Box if you sell the same product as other merchants. Amazon’s product pages are arranged by-product rather than sellers, as with Google Shopping.
A seller with the highest Buy Box Score will get the sale even if dozens of other sellers offer the same product. Since the winner always takes it all in mobile shopping, the Buy Box is even more crucial because people are less likely to scroll down to review other sellers. Moreover, Amazon Marketplace’s competition increases when new entrants enter the scene.
You can also improve your score in several other ways. A merchant’s inventory is always up-to-date when they use an order management system to sync it. By fulfilling orders in real-time, fulfillment times will be reduced. There is no way to crack the Buy Box code, but providing excellent customer service, increasing fulfilment speed, reducing the number of cancelled orders, and keeping a current inventory are all important factors to success on Amazon.
2. Selling fees
All those benefits you listed in the first paragraph are not free. Retailers earn a substantial commission when they sell products through Amazon. To avoid being surprised by those monthly fees, you should have an idea of what they will look like.
Let’s examine what is wholesale FBA fee per sale is. You can choose between two different account types when registering your business account.
Amazon’s two selling plans are:
- Professional – $39.99 monthly with no item fees
- Individual – no subscription fee, but a $0.99 fee per sale
If you still haven’t decided what you’re going to sell yet, or if you sell less than 40 items per Month, the individual selling plan may be right for you. Alternatively, the professional selling plan is more suitable. No matter which plan sellers choose, referral fees will be required; these fees vary according to the type of product sold.
As mentioned above, there are other fees you need to consider if you choose the FBA route, which is the main focus of this article. The cost of keeping your items in storage varies based on the number of things you sell. From January to September, you’ll pay $0.48 (per cubic foot), and from October to December, $0.75. Each cubic foot of your inventory is charged per Month. Let’s say you’re renting the space for the whole year to store oversized items.
3. Order Management
It is imperative to sync orders if your inventory is sold on multiple marketplaces. A central order management system that is constantly updated will require that Amazon orders are brought directly into your system.
Shopping cart systems are not integrated with Amazon. It makes managing orders and maintaining stock status very challenging for merchants selling their products across multiple channels. Several third-party sellers and consulting agencies offer checkout order management services to make selling on Amazon easy for you.
4. Data feed that is complex.
Amazon needs daily product data updates. Their requirements are also stringent. Therefore, merchants must design their own customized Amazon feed from scratch. Amazon-API is required for all product uploads, and ASIN numbers must be assigned to all products. The development required to connect to an API is too complex and expensive for most merchants.
Amazon allows you to add products in a few different ways. They are:
- The products are added individually, each with specific data filled out manually
- The process of uploading your inventory file (spreadsheet) and adding product data
- Automating the feed process.
If you don’t have many products to add, the first option may be manageable. The solution is to use a 3rd-party data feed tool to handle the technical stuff if you have a data source already (for example, Shopify or another shopping cart).
What Can I Sell On Amazon?
If you’re going to sell anything on Amazon, you’ll have to determine what products are in trend by proper keywords insights. You can find many paid tools to learn wholesale FBA trending products to sell. Try to negotiate a trial period or convince the supplier that you can sell a few of their products on Amazon before refusing to sell any. Depending on the supplier, some products might only be allowed on Amazon, while others may be denied altogether.
Sellers should always conduct product research before launching their product on the market to make the most of their investment. Moreover, launching multiple products is the best way to build a robust Amazon storefront and ensure that you’re always in the race.
How much capital should I have to start with FBA?
What is wholesale FBA initial capital depending on the goal you are pursuing and the audience you are targeting. However, according to experts, $1000 is good capital for an excellent start.
Tip: Sending your used books is a great place to start with little or no required investment.
Is it necessary to have a custom package of my brand on Amazon FBA?
If you wish to sell on Amazon FBA, you do not need a custom package. A simple polybag will be sufficient. Well, having your customized one printed is excellent, but it’s not something Amazon forces upon you. You can often get away with just a simple polybag for your product when testing it for the market.
How Much Does Amazon FBA Costs to a Seller?
The fulfillment and inventory management fees are on top of Amazon’s 15% of the product’s selling price (the referral amount changes for specific categories). In fulfillment fees, the costs involved in picking, packing, and shipping every item sold are included.
Amazon only charges you for storing products on their servers. In our example, Amazon would take 15% of a $50 purchase, or $7.5 in this case.
Can Amazon stock my product in their warehouse within a few days after making it live?
As a rule, Amazon stocks your product within 3 to 7 business days and makes it available for sale. When a product has not been packaged or prepared following Amazon guidelines, it can take longer to deliver.
Can I sell or Buy an FBA Account?
The practice of selling a business via sale is not very common, but many sellers use it. The sale or purchase of FBA accounts is 100% legal. Amazon approval is all you need to ensure smooth transactions of the listings if you wish to sell your Amazon FBA account. You can turn the business over to the new owners with permission in hand.
What is the Amazon Buy Box?
A seller who has their product listed at the best price is rewarded by Amazon and other factors such as availability of stock, FBA/Prime shipping, and overall seller performance. The buy box can only be won once by one seller for a given product.
In the guide, as mentioned above, we have discussed What is wholesale FBA? And everything you need to know about it. Please feel free to ask us in the comment section if you have any other queries.