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Pros and cons of Amazon wholesaling Litter Box Pet Toilet
How to start selling wholesale products on Amazon
How to fulfill your wholesale orders through Amazon
Pros and cons of Amazon wholesaling
How to start selling wholesale products on Amazon
How to fulfill your wholesale orders through Amazon
In order to sell hundreds of millions of different products to consumers around the world, Amazon’s sales platform is supported by more than 6 million third-party sellers worldwide. Of those sellers, 25% sell products using a sales model called wholesale.
Wholesale is the practice of purchasing bulk branded products from another manufacturer, supplier, or distributor to resell to consumers. Examples include popular consumer electronics, kitchenware, and even popular toys.
Selling wholesale on Amazon in 2023 is a lucrative opportunity — but there’s a lot you need to know before diving in. This article offers the pros and cons associated with the wholesale business model and offers step-by-step instructions on how you can efficiently get your business up and running on Amazon.
READ MORE | Want to learn more about selling on Amazon? Check out our complete guide.
In a nutshell, selling wholesale on Amazon comprises five basic steps:
For all methods of selling on Amazon, sellers will need to follow certain business setup practices.
For wholesale sellers, this may require you to get a business license, and a sales tax permit, or a “resale certificate.” These two items allow you to purchase products tax-free and to collect sales tax on your state’s behalf. Plus, most brands you contact will require this information from you before opening a wholesale account.
Make sure you look into what the wholesale license requirements are in your country or state.
At first glance, wholesale may seem similar to the other business models on Amazon. However, there are some pretty big differences as detailed below.
Arbitrage is the process of purchasing products from retail stores or websites at a discounted price to resell on Amazon. Like wholesalers, resellers buy branded products. Unlike arbitrage, wholesalers make bulk purchases directly from the brand instead of individual purchases from a retail store.
Wholesalers also negotiate rates with brands and distributors directly (i.e., earlier in the supply chain), whereas resellers (arbitrage) purchase discount products retail to sell via retail.
While wholesalers purchase and resell existing branded products, private label sellers create their own branded products to sell on Amazon.
Because of this difference, wholesalers do not necessarily need to create new product listings. Instead, they add their offer to an existing product listing. Private label sellers must create their own product listings.
Dropshippers list goods for sale on Amazon without taking ownership of the product first. Then, when a purchase is made, they place an order through the supplier/manufacturer of the product, who fulfills the product on behalf of the drop shipper.
Wholesalers own their inventory and are in charge of fulfilling orders themselves or through Fulfillment by Amazon (FBA.)
READ MORE | How to Make Money on Amazon in 2024 (16 Methods)
If you’re considering selling wholesale on Amazon, it’s important to consider both the pros and cons, especially after comparing it to the other methods of selling on Amazon. Let’s take a look.
Product demand. You can sell established brands that consumers are already searching for and purchasing. This takes the burden off your business for marketing.
Quick to get started. Behind retail arbitrage, wholesale is the easiest business model to get up and running. 42% of wholesalers in Jungle Scout’s study of thousands of Amazon sellers told us it took them less than six weeks to get their businesses up and running.
Profitable. Also, 55% of wholesalers told us that they started to turn a profit in under six months.
Scalable. You can focus your time on growth, even building a team to manage the day-to-day operations, rather than focusing on building a brand, creating listings, or other efforts fledgling brands need to do.
Competition. Nearly all of the listings on which you place offers will have multiple sellers. And since the only “lever” you have to pull is price, it can sometimes become a “race to the bottom.”
Up-front cost. Because you must purchase goods in bulk, wholesaling is more expensive than reselling or dropshipping.
Research. The most time-consuming aspect of wholesaling is research. You will have to explore dozens — maybe even hundreds — of product opportunities and ensure that you can get the product in stock from a supplier.
Cold outreach. Before you can begin reselling other brands on Amazon, you must be approved by the brand. This includes cold calling or emailing various companies requesting to open up a wholesale account so you can resell the products on Amazon.
Before actually contacting any brands, you need to be aware of what they’re likely to ask for as a prerequisite to opening a wholesale account.
Yes, reselling wholesale products on Amazon can be profitable. In fact, 18% of sellers who resell wholesale products on Amazon, see profit margins between 26-50%, according to data from our State of the Seller Report.
As with any business model you follow on Amazon, your profitability depends on what you buy the product for and what you sell it for. And of course, you need to account for Amazon fees as well.
Now that you understand why you should sell wholesale products on Amazon, let’s go over how to find profitable wholesale products.
If you prefer video, we also have a fantastic Youtube video on this exact topic, check it out!
Here are a few tips when looking for wholesale items to sell on Amazon.
Amazon can afford to lose money on a sale. As such, they will price their products lower than many competitors, so you don’t want to (and likely can’t) compete with them.
To see if Amazon is (or was) on the listing, use the Jungle Scout Extension historical graph and check the “Amazon price” box. The graph will show you when Amazon has placed its offer on that particular listing.
If a product is a private label product, the listing will likely have just one seller. Look instead for products that have multiple sellers; this tells you it is either an arbitrage or wholesale product.
Jungle Scout’s Chrome extension populates key insights including product demand, competitive data, and profit projections directly from Amazon.
You don’t want to have to market for a company that’s not your own. Remember: a big part of wholesaling is about riding the coattails of successful brands.
You can do so by checking for the product’s demand. Use Jungle Scout’s Extension or free Sales Estimator to estimate a product’s monthly and daily sales (more on this below). You want to find products that have a chance of selling tens — if not hundreds — of units per day.
MAP stands for “minimum advertised price” which is the lowest price a retailer is allowed to sell a product, according to the brand. Products with a MAP typically end in “.99”, “.95” and so on. The price looks uniform across all sellers and not random like “$18.37.”
This also prevents price wars where sellers are constantly competing with each other by slowly lowering their price. It forces all sellers of that particular product or brand to have the same minimum selling price. We’ll go over this more in the “Calculate how much money you can make” step.
Note: Products with a MAP policy may not always be priced at the minimum, so keep that in mind.
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, which sorts Amazon’s massive catalog based on your criteria.
In this example, you can see the categories selected to the left. We also set the following criteria:
You don’t need to choose the exact same criteria, just make sure the minimum number of sellers is greater than one or two because if a listing has just one or two sellers, that tells us it is likely a private label product.
If you are not sure on what filters to use in Product Database, the tool has preset filters to choose from as seen in the image above.
Let’s check out the Doggone Good Rapid Rewards Deluxe Dog Training Bag with Belt listing.
This looks like the perfect opportunity. It’s priced well enough to earn profits, there’s sufficient consumer demand, and there aren’t too many sellers.
Product Database is a searchable catalog of 475 million products pulled directly from Amazon. Organize, explore, and evaluate product ideas.
Once you have some products ideas, you need to figure out where to buy wholesale products to sell on Amazon.
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, 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:
Finding the right supplier for a product is as simple as Googling the brand. Using the previous example, let’s search for “Doggone Good.”
Once you find the brand’s website, navigate to the contact section. Sometimes, a brand will have a “wholesale” or “dealer” tab, so keep an eye out for that.
This brand just has the Contact Us tab, with an option to send them an email.
Here is an example of what you can say to initiate a negotiation:
I am interested in opening up a wholesale account with [brand name here]. Please let me know what information you require from me and I will get it back to you as soon as possible.
When you contact the brands, you want to demonstrate how you can add value to their company and products. This is usually done once you receive a reply from your initial email. You are offering to help extend their brand and increase their sales.
When you contact the brands, you want to demonstrate how you can add value to their company and products.
This 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:
Jungle Scout’s supplier outreach template helps Amazon sellers easily communicate with potential suppliers and establish reliable partnerships.
If the brand says yes to opening a wholesale account, congrats! Your next step will be to get a price list, figure out their MOQ (minimum order quantity), and how to order.
Now just because you’re approved, does not mean the products will even be profitable. It all depends on what the wholesale cost is. In the next step, we’ll show you how to calculate your potential profit per sale once you have the wholesale costs of the products you want to sell.
If they come back with a resounding “no” at first, that doesn’t mean it’s the end. Sometimes, negotiations take a while— it’s all a part of the process. If you are really wanting to sell a particular product or brand, don’t give up just yet. Continue to follow up every few weeks or so.
The truth is, many brands do not like to work with ecommerce/Amazon sellers because they don’t want them to tarnish their brand or just be in it to profit.
Obviously, you’re interested in selling a product on Amazon to earn a profit. Once you receive a wholesale price list from the brand, here’s how you can evaluate sales and profitability before making an investment.
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.
Use the current Buy Box price when doing your profitability calculations.
You can also look at Jungle Scout Extension and Product Tracker data to see what the average price is of a particular product. This will give you more confidence when figuring out your potential profit.
You don’t want to sell a product where the price constantly fluctuates. As mentioned above, look for brands that enforce a MAP policy.
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, then enter product cost.
Using Amazon’s Revenue Calculator, determine your profitability. The calculator will show you the cost per unit (after costs and Amazon fees), your net profit, and net margin. For wholesale products, I typically look for products with a minimum of 15% to 20%.
Remember, you likely won’t need to spend any money on advertising so that net margin is a good minimum target.
Determine the product’s monthly sales estimate using the Jungle Scout Extension or free Sales Estimator. Divide that number by the number of sellers on the listing plus one (which will be you). This is the average number of sales those sellers share on the listing.
For example, if a product has 3,000 sales per month and there are currently 9 sellers selling the product, the math looks like this:
Though keep in mind that just because there were only 9 sellers on the listing at the time of buying inventory, doesn’t mean there will always be only 9 other sellers. It could be less or more.
This is why you should work towards building a solid relationship with the brand and get an exclusive reseller partnership as mentioned above.
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 (assuming there are always 10 sellers.)
You can continue to monitor how much stock you’ll need and when to reorder with Jungle Scout’s Inventory Manager, which takes a data-driven approach to managing inventory on Amazon.
Accurately predict how much stock you should order and the best dates to order it. Boost your Amazon sales and avoid stockouts and fees.
There are also a handful of ways to source brands that aren’t yet on Amazon.
There are two ways to fulfill your Amazon sales:
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.
If you want to sell on Amazon, but don’t want to get involved with private label, wholesale is a great alternative. Plus, as mentioned above, selling wholesale could mean turning a profit in half the time it might take as a private label seller.
So don’t wait! Now that you know how to buy wholesale and sell on Amazon, explore your opportunities with Jungle Scout and start now.
Learn more about how you can use Jungle Scout to launch, grow, and run your Amazon wholesale business.
Ecommerce Expert & Writer at Jungle Scout
Brian Connolly is an Amazon seller, ecommerce expert, and writer for Jungle Scout. He lives in the New Jersey Shore area with his wife and cat. When he isn’t writing advice online for aspiring and experienced Amazon sellers for Jungle Scout, he spends his free time boating, fishing, and selling boating-themed items on his Amazon business.
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