Amazon FBA Wholesale Business - Product Research & Market Strategy

AMAZON FBA WHOLESALE BUSINESS - MARKET STRATEGY 

Amazon is one of the Trillion Dollars worth of Companies, its revenue in 2020 was $386 Billion. In 2021 it is now estimated that it will grow as the prevailing conditions of Covid-19. People are more prone to get their home inventory from online Marketplaces.

There are two ways to fulfill your Amazon sales: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM).

Fulfillment by Amazon is a program Amazon offers that lets you ship your products to Amazon’s fulfillment centers to store. After you make sales, Amazon picks, packs, and ships the products on your behalf. This takes a lot of the pressure off your new business as you won’t have to worry about shipping your own goods.

Plus, the fees for FBA are often less than the costs involved with shipping the products yourself.

1.  Find a good product to sell wholesale

Make sure that the product is preferably not sold by Amazon or a private label seller. If Amazon is the seller you need to check for BUY BOX rotation.

Further, private label sellers often block other sellers from placing offers on their respective listings with similar products. Look for established brands.

Check for the product’s demand. Use FBA TOOL KIT or free SALES ESTIMATOR in us to estimate a product’s monthly and daily sales. You want to find products that have a chance of selling tens—if not hundreds—of units per day.

2.  Calculate how much money you can make

Obviously, you’re interested in selling a product on Amazon to earn a profit.

 Here’s how you can evaluate sales and profitability before making an investment.

Make sure your product is priced within 2% of the Buy Box

The Buy Box is the widget to the right side of the Amazon product page that lists pricing and has the gold button that reads “Add to Cart.”

Whatever the current price is in the Buy Box, you want to be within 2% of that price. If your price is higher, your offer for the product may never display in the Buy Box.

Understand the product’s fees

Next, make sure you know what fees to expect from the product. The easiest way to do this is to use Amazon’s FBA calculator. Enter the ASIN of the product into the calculator, enter the data and review.

Determine your profitability

Subtract Amazon’s fees and the cost of your product from the sales price.

If you’re in the positive, then congratulations: you’re profitable!

If you know how many products you expect to sell (if you have the stock or can estimate it — see next step), you can calculate profitability from those sales and fees, too.

Estimate your monthly sales

Determine the product’s monthly sales estimate using the FBA TOOL KIT or free Sales Estimator. Divide that number by the number of sellers on the listing (rather, those within 2% of the Buy Box price) plus one (which will be you). This is the average number of sales those wholesalers share on the listing.

For example, if a product has 3,000 sales per month and there are currently 9 sellers selling the product within 2% of the sales price, the math looks like this:

3,000 / (9 + 1) = 300 sales per month.

Understand your turn rate

To avoid costly storage fees on Amazon, try to keep only 2-3 months of sales in stock. For example, for the example product above, you would need 600-900 units in stock in order to cover sales between orders.

3.  Research products with high potential on Amazon

If you aren’t sure where to start your search for good wholesale products to sell on Amazon, you can use Jungle Scout’s Product Database, Helium 10 and Keepa, which sorts Amazon’s massive catalog based on your criteria.

4. Find the right suppliers

Finding suppliers for wholesale products looks a little different from sourcing a private label product. Typically, you’d use a tool like our Supplier Database to find high-quality suppliers in China or other top overseas manufacturers. But for wholesale, we’ll go directly to the brand owner.

 To open a wholesale account, you’ll contact the brand owners directly. If you’re approved, you will be able to place an order and start selling as soon as possible—some brands may even ship to Amazon for you!

There are a few benefits to this approach:

• You don’t have to ship products from China

• This is a huge plus. Since the brands you will be contacting are most likely located within the US, you won’t have to wait weeks or months to receive your inventory or worry about things like customs clearance or overseas shipments.

• You don’t have to wait for responses from Chinese suppliers

You don’t need to create your own brand

One of the biggest benefits of selling wholesale products is that you’ll be reselling someone else’s brand—you won’t have to start from scratch and launch a new product. The idea is to source a product that is already selling well on Amazon.

Sell products with little to no PPC advertising

Since you will be selling a product that already has a following and sales history on Amazon, you won’t really need to worry about advertising. Again, the idea is to sell products with existing strong demand. If you want to help boost your sales, PPC is still recommended but not necessary for many products.

How to find the brand’s contact information

Getting in touch with a brand is as simple as Googling them.

You can take help from Google Map too.

Once you find the brand’s website, navigate to the contact section. Sometimes, a brand will have a “wholesale” tab, so keep an eye out for that.

You can contact them via an email or its better to call them

What brands or distributors will require from you

Now that you know how to find and contact brands, you need to be aware of what they’re likely to ask for as a prerequisite to opening a wholesale account.

Register a business or sole proprietorship

You will need to register a legal business entity or do business as a sole proprietor in your state. When filling out a wholesale form from a brand or distributor, they will ask for this information.

Resale certificate from your state

This allows you to purchase products from a brand, distributor, or wholesalers tax-free for the purpose of reselling. Most brands or wholesalers will not allow you to purchase at wholesale without this.

Apply for an EIN number

An EIN (Employer Identification Number) or Federal Tax Identification Number is basically a social security number, but for your business. You can receive an EIN number for free from the IRS.

Now that you know how to find suppliers and what you’ll need to do business with them, let’s move on to the negotiation.

5.  Contact and negotiate with suppliers

When you contact the suppliers, you want to demonstrate how you can add value to the brand. Remember that these manufacturers are big companies concerned with new product development, patents, and global marketing initiatives and so on.

You are offering to help extend their brand and increase their sales.

This also gives you a fantastic advantage to negotiate with here. You can help them with selling on Amazon, because they often don’t have the time or know-how to do it themselves.

Here are some ways you can offer to add value:

• Identify any problems that you can help with them. For example, does their product have poor images? Could the SEO for their listing use improvement?

• Show examples of how you can make their products more appealing or address customer pain points (see the reviews for this). After you identify the issues, tell them what you can do to help them & gain their trust.

• Look for brands that aren’t interested in selling their products on Amazon themselves. These might even be brands that are already selling on Amazon but have had difficulty with it in the past. If you can effectively convince them you bring the Amazon selling experience, you’re solving their problem.

• If they come back with a resounding “no” at first, that doesn’t mean it’s the end. Sometimes, negotiations take a while. Continue to follow up every month or so.

How to fulfill your wholesale orders through Amazon

There are two ways to fulfill your Amazon sales: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM).

Fulfillment by Amazon is a program Amazon offers that lets you ship your products to Amazon’s fulfillment centers to store. After you make sales, Amazon picks, packs, and ships the products on your behalf. This takes a lot of the pressure off your new business as you won’t have to worry about shipping your own goods.

Plus, the fees for FBA are often less than the costs involved with shipping the products yourself.

However, if you are selling products that turn slowly or are oversized, FBA may not be the best choice for your business. You may have to turn to your own resources to store and ship your products.

In that case, Fulfillment by Merchant may be the optimal fulfillment method for your business.

Unlike FBA, rather than paying Amazon a fee for taking care of their orders, FBM sellers are responsible for handling the storage, picking and packing, and shipping of their products to their customers.

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