Amazon Wholesale: Is it worth it in 2022?
Selling on Amazon is a lot of work, and one of the things that takes the most effort is developing products and creating the branding and marketing. With wholesale, you take all of that effort out of the process, as you’re selling products that already exist, and sometimes already have a listing on Amazon.
Sounds easy? Well not quite, you still need to find the products, build the relationships with suppliers and work out the operations and logistics. But if you have more of an operations brain, rather than a marketing brain, then Amazon Wholesale could be a perfect business model for you. In this article we dive into the pros and cons and what you need to consider before going into selling wholesale.
What is Amazon Wholesale?
Selling wholesale on Amazon involves buying products in bulk from manufacturers or distributors and then selling them on Amazon to a customer base of over 197 million people. If you work with a large manufacturer then they might already be selling on Amazon, however if you’re working with a smaller manufacturer then you might be the only one selling their products on Amazon.
Amazon Wholesale is different to retail arbitrage in that you’re dealing with large quantities of product whereas retail arbitrage usually involves selling one-off or low quantity items.
Pros of Amazon Wholesale
No marketing required
When you sell wholesale, the manufacturer has already done all the hard work to brand, develop and market the product. This means you don’t need to worry about marketing materials, social media or packaging design, all of which can free up a lot of time and resources. If the product is already selling on Amazon, you simply use the existing listing or if it’s new to Amazon, the manufacturer will provide you with the content and imagery for the listing.
With Amazon Wholesale you typically have far fewer costs than if you’re selling your own products on Amazon (also known as private labeling) since you don’t have all the marketing expenses that come with launching and selling a product such as photography, packaging design or advertising. With Amazon Wholesale you should have a better idea from the outset of what your profit margin is likely to be since your costs are relatively fixed and you’ll know your expected sale price in advance. Providing you negotiate a good deal with your manufacturer and select a product with good demand then you can make a really decent profit.
Once you’ve developed a good relationship with your distributor then you can quickly scale up by placing larger orders and selling more of their products. Since you’re not spending time on marketing and you’re selling a product which already has a proven track record (if you’ve chosen the right product that is), then you can focus entirely on ordering more stock and ramping up your business.
Cons of Amazon Wholesale
Finding the right manufacturer can take time
It can take a while to find a manufacturer with the right products who’s interested in partnering with you. Manufacturers get a lot of approaches so you have to do a lot of research and be persistent. If you like a product but the manufacturer isn’t interested in selling to you on a wholesale basis, it’s worth asking if they can put you in touch with their distributor (if they have one) as distributors often tend to be more open to partnerships.
You still need to find the products
Likewise, finding the right products to sell can also take some time. Tools like Helium10 can be helpful as they can show you how much demand there is for a particular product and estimated monthly revenue and fees, which you can use to assess whether a product is worth selling.
If you’re selling a popular product then you could find yourself competing with other sellers on Amazon. Generally whether you get the sale or not will come down to price so it’s important that you negotiate a good cost price with your manufacturer so you can offer competitive pricing.
Being able to buy large quantities is an advantage…but not essential!
A successful wholesale business relies on having a strong relationship with your manufacturer. Being able to purchase large quantities of stock from your manufacturer can often get you better terms and lead to a more profitable relationship down the road. That’s not to say that all manufacturers will require you to place a large order from the outset – if you find a small, start-up manufacturer then you may be able to negotiate small orders to begin with – but it’s likely to help.
Is Amazon Wholesale right for you?
If you enjoy building relationships and you would rather not spend time developing and marketing your own products then Amazon Wholesale could be a great model for you. Like any business, it takes some work upfront to find the right products and manufacturers but it can lead to a very profitable and scalable business in the long run.