For wholesale sellers, selecting products with good profit potential and low risks is crucial. Buying products in large quantities means a possible loss if things go south. Therefore, conducting thorough research on products is vital. In this guide, we'll explore the world of wholesale and offer tips on choosing products with high profits and low risks.
What is Wholesale?
Wholesale involves purchasing products in bulk at discounted rates from manufacturers, suppliers, or distributors and then reselling them on Amazon to make a profit. The margin between the wholesale and retail prices is where the profit lies. As a wholesaler, your main aim is to find partners willing to offer low prices for popular products. Breaking into such networks can be challenging, but the rewards in terms of profits can be significant.
How Does Wholesale Function?
Unlike other business models, wholesale involves selling products in large quantities. Wholesale sellers aim to secure the best prices for popular products and favorable buying conditions to maximize profits when reselling on Amazon.
To secure good prices, wholesalers need to establish relationships with brands, manufacturers, or large distributors offering favorable terms. This approach can result in lower costs per unit, ultimately leading to higher profits.
Key Points in Wholesale
There are key aspects to keep in mind when diving into the world of wholesale:
Product research is crucial
Wholesale involves investing upfront to purchase products in bulk. Ensuring the products are profitable and devoid of selling issues (like IP complaints or restrictions) is crucial to prevent losses.
Challenges when trying to work with suppliers
When you aim to get the lowest product price, you prefer to buy straight from the brand or manufacturer. But well-known brands usually have their own sales network set up already, making it tough to convince them to sell to you directly. As a wholesale seller, you need to persuade a brand to include you as a new distribution channel in their network.
Supplier channel preferences
Suppliers might not like working with Amazon sellers because they prefer sellers who sell through different channels. They might think that having more sellers will create more competition. However, if you see other Amazon sellers selling the brand's products, you can use that as a way to convince them to work with you.
Minimum order quantity (MOQ)
High MOQ requirements by brands can necessitate significant upfront investments. Being prepared to meet these requirements is essential.
Boosting supplier trust
To gain a supplier's trust, it's important to invest time in building a strong connection. You should showcase your negotiation skills to prove you're the right person to help increase their sales. Highlighting your experience in selling on Amazon and your capacity to move high volumes is crucial. Once you establish a relationship, you can then negotiate discounts and more favorable terms.
Reduced advertising expenses
Selling a well-known brand on Amazon means you won't need to spend a lot on marketing and advertising. This is because the brand is already promoted effectively, saving you from additional advertising costs.
How to Start Selling Wholesale Products on Amazon
Step 1: Find a Supplier
Begin by locating a brand, manufacturer, or major distributor that offers the products you wish to sell. This can be done by browsing online directories, attending trade shows, or directly reaching out to manufacturers.
Step 2: Negotiate with the Supplier
Contact potential suppliers, request price quotes, and compare pricing, terms, and minimum order quantities. Negotiate prices that allow for a good profit margin. Discuss payment methods, credit terms, and potential discounts for larger orders.
Step 3: Research and Select Profitable Products
Obtain a list of products from your supplier. Utilize tools like the SellerSprite and Seller Assistant App to assess sales data, product performance, and profitability estimates. Look for products with high demand, low competition, good profit margins, and positive reviews. Verify your findings to ensure you can achieve the projected profits.
Step 4: Buy Inventory
After confirming your product choices, purchase inventory from your supplier. Keep in mind that minimum order quantities (MOQ) may vary but usually range from hundreds to thousands of units.
Step 5: List Products on Amazon
Once you have the inventory, list your products on Amazon. Add your offers to existing listings, ensuring they match the descriptions accurately.
Step 6: Process Orders
When customers make purchases, fulfill the orders by either handling it yourself or utilizing Amazon's Fulfillment by Amazon (FBA) service. With FBA, Amazon handles the shipping, packing, and customer service for your orders.
Importance of Product Sourcing Tools in Wholesale
Wholesale sellers need to conduct thorough product research to avoid potential losses. Utilizing product sourcing tools like Seller Assistant App can streamline this process. This tool assists in identifying high-performing products suitable for Amazon sales. It provides various features like an IP Alert database, UPC/EAN to ASIN converter, Bulk Restrictions Checker, Quick View, and more to facilitate efficient product research and validation.
13 Steps to Conduct Product Research Using Seller Assistant App
Step 1: Remove referral links
Delete referral links from product URLs to get accurate data. Eliminate the "ref=" part from the links.
Step 2: Check for private label brands
Make sure the product isn't a private label to avoid potential issues. Look for products with more than one FBA seller and no IP complaints.
Step 3: Research FBA seller count
Identify competition levels by checking the number of FBA sellers. An optimal range is between 3 and 15 for balanced competition.
Step 4: Avoid competing with Amazon
Steer clear of products where Amazon dominates the Buy Box as competing with them is tough.
Step 5: Check product sale history
Verify listing age for sales insights. Ensure at least 6 months of sales data for price, consistency, and seasonality insights.
Step 6: Analyze BSR trends
Examine Best Sellers Rank (BSR) trends for consistent and downward sales trends. Look at average BSR and its changes over different time periods.
Step 7: Research Buy Box offers
Analyze Buy Box prices for pricing trends and competition insights to make informed decisions.
Step 8: Analyze product variations
Check variations to comply with Amazon's rules and see which variation sells best.
Step 9: Review product ratings
Seek products with 4-5 star ratings and minimal negative feedback.
Step 10: Check eligibility and restrictions
Ensure you can sell the product on your Amazon account without restrictions.
Step 11: Identify product flags
Check for flags like oversize or hazardous materials that may cause issues.
Step 12: Estimate sales potential
Get an estimate of potential sales based on current competition.
Step 13: Calculate ROI
Calculate Return on Investment to ensure profitability, aiming for 10% or higher. Use the ROI calculator on the Amazon product pages in Seller Assistant App.
Conclusion
In summary, while finding Amazon suppliers is crucial in wholesale, thorough product research is equally vital to ensure profitability. Utilizing comprehensive tools for product sourcing, like SellerSprite and Seller Assistant App, is essential for achieving success in selling wholesale products on Amazon.
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