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Best Guide to Wholesaling on Amazon in 2021

Christina Passmore
Founder & CEO, Christina Ink

So you've taken the leap and are looking to e-commerce to begin your journey into business! Both exciting and a bit nerve-racking, we know that starting an online business can be overwhelming. Here's the thing, tiny steps of daily action, combined with what we call active learning, can set you well on your way to living the laptop lifestyle.

If you're just getting started, you may be looking through the barrage of online sales channels and wondering where you should begin. Well, we think Wholesaling on Amazon could be for you! 

Wholesaling on Amazon

What Is Wholesaling, and What Are Its Benefits?

Wholesaling means buying products in bulk at wholesale pricing and selling those same products at retail prices. Retail markups can generally be upwards of 30-50 percent. You can easily see that markups like this and buying in bulk can lead to a sizeable profit outcome and sound business structure. Wholesaling is not for the lazy though, be ready and willing to work hard!

Now that we've established what wholesaling is let's dive into its benefits.

  1. Fast Startup: There is virtually nothing slow about this process! If you're comparing against selling private label on Amazon, we estimate that wholesaling can be done in half the time against PL.
  2. Brand Trust: When you choose to wholesale, you sell products that are already branded and have built brand trust with their ideal customers.
  3. Profit: With markups as much as 50 percent combined with selling trusted labels, the consensus is that most wholesalers on Amazon turn a profit in a reasonable amount of time. Whereas with private labeling on Amazon, you can be surprised at how fast a niche gets saturated and how much more your PPC budget can expand. All of those factors combined can result in you being less profitable in a private label model than wholesaling.

Step 1: Wholesaling Requirements

To wholesale products through Amazon, you are required to open an Amazon selling account. Wholesaling may also require specific licenses to be eligible. Doing a bit of research and leg work into these requirements will ensure you are prepared to follow whatever rules are in place and not find yourself surprised right before attempting to wholesale products or ineligible.

Opening an Amazon selling account is a reasonably straightforward process, but there are a few considerations to make before jumping in feet first. Ensure you understand tax implications and legalities, and know that ultimately following Amazon's terms of service is pivotal to your success. It's Amazon's playground, and as such, you will need to play by Amazon's rules. For a detailed overview of how to set up a professional Amazon account, see this article.

Step 2: Investment

When you start a business, it's essential to plan to invest in a long-term and sustainable business model. With that in mind, you will need to invest in your wholesaling business. The capital you choose to invest is up to you, but we suggest being a little more liberal with your budget than, say, those starting 5-6 years ago.

Online platforms have gotten ultra-competitive. While wholesaling is still an insanely viable option, it, like any eCommerce business, requires capital to get started and to compete. You want to be sure you have enough money for appropriate inventory levels and other startup costs, like a website and other business necessities. Plan and avoid shortchanging yourself before you've even begun.

Step 3: Finding the Best Products

To find success and compete in wholesaling on Amazon, you will want to find profitable products with a solid sales history. Avoid selling products that Amazon sells! Amazon will always have the most competitive pricing; therefore, going up against Amazon won't be in your favor.

Okay, so you're thinking great, but HOW do we find the best products to sell?

You could spend a significant amount of time cold calling retailers and showing up at wholesale trade shows to negotiate to find wholesale products. While these methods may be viable, they are not necessarily simplified or fast.

SmartScout is the most extensive brand and product finder ever made. With its user-friendly and efficient setup, you'll be skyrocketing your way to profitable products for wholesaling on Amazon in no time. As a wholesaler on Amazon, search for items that are not stocked well, not being sold by other sellers, and where the profit margins make sense. This is what finding wholesale products is all about- searching for products that have not already infiltrated the market, that will be profitable and needed by consumers!

How Does SmartScout Work?

SmartScout works by narrowing in on profitable brands and products. You can easily search all brands by category using our total product count and monthly revenue smart filters. Zero in on your ideal brands with 13 filterable data fields, and that's how you will reveal products of any brand within a single click.

SmartScout enables you to know instantly which brands and products have potential with our in-house scoring system. Everything is rated on a scale from 1 to 10. SmartScout offers a simplified and efficient process for finding profitable products without the headaches! From the beginner to the advanced wholesaler, you focus on selling and turning a profit. 

Pro Tip: The Amazon in-stock rate is a data point unique to SmartScout, and just one of the ways we help you find the best products to sell and knowing where you can compete and where it doesn't make sense to try.

Be sure to consider factors such as sales rank, the total number of sellers, and also remember to calculate your potential return on investment.

Step 4: Sourcing

With the help of SmartScout, you've gathered a significant list of potential products, and now you need to make an effort to gain the approval to sell those products. A bit of time and determination can go a long way when trying to source products wholesale. If you're new to wholesaling and have a limited sales history, don't give up! You may run into many "No, Thank Yous" to start.

Reaching out to brand owners can be done through making communication over email or websites. Always keep communication professional and to the point, and as stated, keep trying. Remember that in any negotiation process, proving value will assist you in securing a deal. Becoming an exclusive or semi-exclusive wholesaler on Amazon is a best-case scenario and what you should ultimately strive towards!

Step 5: Fulfillment

A massive benefit to selling on Amazon is the benefit of having Amazon fulfill and ship your products, known as Amazon FBA. When you list your wholesale via Amazon FBA, Amazon will fulfill and ship these products for a fee. If you can sell through inventory quickly, these fees can be minimal and an advantageous way to clear profit and scale your wholesale business.

Wholesaling on Amazon offers a faster and leaner way to scale your e-commerce business. Without the need to build a brand, you can save money and countless hours by reselling at retail pricing. While wholesaling can be challenging, and building trust with retailers may take time, it isn't impossible. Once you have a few retail brands under your belt, you're more likely to find success with other brands as you navigate the wholesale world.

Are you looking to find viable products to wholesale? SmartScout is offering a FREE 7-day trial. Click here to get started!

Christina Passmore
Founder & CEO, Christina Ink

Christina Passmore is the founder and CEO of Christina Ink. Christina Ink helps Amazon agencies and sellers craft compelling content to help them grow their reach and skyrocket their growth in the Amazon ecosystem. In her spare time, Christina enjoys actively participating in the Amazon community, fitness, and outdoor activity in the Rocky Mountains of Canada, where she currently resides.

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