This is a guide on how to buy wholesale products and sell them on Amazon.
Unlike a lot of the stuff you may read about wholesale on Amazon, the wholesale product sourcing strategies in this guide actually work. I know because we’re using them right now to buy hundreds of thousands of dollars worth of products every month.
If you are interested in the potential benefits that an Amazon wholesale business can offer you, this guide will help you figure out things like what wholesale products to sell on Amazon and how to find wholesale suppliers.
Let’s dig in…
- How does Amazon wholesale work?
- The 4 major advantages of wholesale on Amazon
- What you should have in place before trying wholesale
- How to find wholesale products and suppliers
- Making initial contact with the manufacturer
- Evaluating wholesale products for FBA
- Shipping products to FBA warehouses
- Maintaining inventory levels of your wholesale products
How does Amazon Wholesale work?
Selling wholesale on Amazon involves buying bulk products directly from the manufacturer or supplier of the product at a discount, then selling them as a reseller on Amazon for retail prices. This model allows you to sell products from established brands with existing demand.
Before you can place a wholesale order for most brands, you must open what is known as a “wholesale account”. This account will give you access to their product catalog and allow you to buy the products in bulk.
Setting up a wholesale account with a good brand or supplier is the biggest barrier to entry for most people trying to get started with wholesale on Amazon. Another barrier is that a minimum order quantity will apply to your orders, meaning there will be a minimum amount of each product that you have to order. This increases the startup costs associated with wholesale when compared to arbitrage strategies.
This is why most beginners are better off getting their first sales on Amazon with retail arbitrage and then leveraging the experience they gain to have success with wholesale. You can read more about getting started on Amazon in this post.
An example of a wholesale order would be buying a bulk lot of mixers directly from KitchenAid (or one of their distributors) for a discount and then listing those mixers on Amazon for the regular retail price (or whatever a reasonable price is based on what other sellers are asking).
After purchasing a product from the manufacturer or distributor, the product can then be sold via your online retail distribution channels.
These channels can include Amazon, eBay, Jet, Walmart, your own website, and any other marketplaces where you are selling products. In this post, we’ll be focusing on selling the items on Amazon, as that’s where we are seeing the best results right now. Even if you want to sell on other channels as well, I recommend starting on Amazon.
When purchasing an item via wholesale sourcing, you will generally pay around 50% of the manufacturers suggested retail price (MSRP). The industry term for items offered at 50% of retail is “keystone pricing.”
Some suppliers will have additional discounts based on purchase volumes, and many will have the ability to provide discounts after you have worked with them for a period of time. In general, the margins of products sourced from wholesale suppliers will be lower than what you would get from inventory sourced via retail and online arbitrage, but wholesale provides its own distinct advantages over other sourcing methods.
The 4 Major Advantages to Sourcing Wholesale
There are four major advantages to wholesale:
- You can sell the same items over and over again.
- You can buy as much product from your suppliers as you can afford or sell.
- You’re dealing with existing brands with a proven track record (and sales data).
- You will be able to build relationships with manufacturers, brand owners, and distributors.
The first major advantage is that once you set up a relationship with a supplier, you can keep selling that item as long as there are buyers. When you are running low on inventory, you can simply order more! If you have ever sourced a product via retail arbitrage or online arbitrage, you may be familiar with how frustrating it is when you can’t get any more units of a profitable product that sells quickly. With wholesale, you can send your supplier an order and get more product on the way immediately in most cases.
The second advantage is directly related to the first. When you set up a relationship with a supplier, you can get as many units at one time as it makes sense to based on how much money you have and how well the product sells. In some cases, you can buy hundreds or thousands of a single item at one time. This is another big advantage compared to the arbitrage methods because you can make your supply levels match the demand for the product.
Unlike the first two, the third advantage is one shared with the arbitrage methods – you are dealing with products and brands that already exist, which means you have data indicating exactly how well the item has sold in the past. This also usually means that you don’t have to create new listings and work to get them to rank on Amazon. While private label strategies have a lot of distinct advantages, you lose the benefits gained from existing branding and sales pages.
The fourth major advantage involves the relationships you’ll build, which can impact your business positively in many ways:
- Referrals to other suppliers
- Free financing of your inventory purchases through payment terms.
- Ability to negotiate better pricing for the items you are purchasing
- Ability to be the exclusive seller for some or all of the products a supplier sells. This provides a big competitive advantage!
These benefits are still available in 2019, and if you are interested in taking advantage of them, the rest of this guide will show you how.
What do you need in place to start wholesale sourcing?
In this section you’ll find three things that are absolutely required in order to get started with wholesale, plus two things that will dramatically increase your odds of success.
The most basic thing you will need to get started with wholesale sourcing to sell on Amazon FBA is an Amazon seller account. If you don’t have one set up yet, you can read more about that here.
The next thing that you will need is a sales tax ID so that you can have a resale certificate to provide to suppliers you will end up working with. This will be required for the vast majority of suppliers. The process of setting this up will vary by state, but all of the information should be available on the secretary of state’s website for the state you live in. Google and your secretary of states website will be the main tools you’ll need to get this setup.
The third required thing is starting capital. I recommend having at least $500 available for inventory before getting started with wholesale. More is definitely preferable, but you will be able to find suppliers where you can do opening orders for less than this. If you are starting with less capital than this I’d recommend doing retail or online arbitrage first.
Now for two things that will dramatically increase your odds of success.
The first is a website and an email at your company’s domain name. While you can technically start with a gmail address, it is very unprofessional. Setting up a nice website that talks about your company, and how you can help the suppliers that will be working with you is cheap and relatively easy, but it greatly boosts the image you convey and the odds people will work with you.
Setting up a website is a simple process and can be done for around $50. I’d recommend setting it up through either iPage or Siteground. These are 2 companies I’m using right not for websites in my business, and both have been more reliable than other options. If you aren’t comfortable setting up a site yourself, I’ve had good results having websites put together through Freeeup for very reasonable rates.
The other thing that I’d recommend having in place before getting started with wholesale sourcing is a plan for adding value to your suppliers. Most manufacturers get a lot of wholesale account requests, and the quickest way to make your request stand out is to add value beyond just buying their product. Here are a few examples of how this can be done:
- Will you be expanding the distribution channels their products are available on?
- Can you fix or improve their Amazon listings?
- Will you spend your own money on ads to sell their products?
The above is by no means and exhaustive list and are just a few things to give you a jump start. Think about these things in advance, and give suppliers a reason to work with you. These are the types of things you should include on your website as well.
How to Find Products and Suppliers
Finding potential suppliers is the first and one of the most challenging parts of wholesale sourcing. Finding and securing a relationship with a manufacturer, brand owner or distributor will take the majority of your time (especially early on).
In general the main key to securing a wholesale relationship is to follow the following format for successful outreach:
Email < Phone < In Person
All 3 of these methods of communication work, and should be used in your outreach. We’ve found that in person is the best way to land new accounts early on, with phone being the next best option, followed by email.
The more personal you can make your outreach, the better your chances – especially if you’re primarily an online-only business that sells on Amazon. You increase your chances of being heard the farther right you move in the above spectrum as it will make it more personal. Basically the farther right you go, the harder it is for a rep to say no!
With that introduction on communication options, let’s look at some of your options for finding wholesale suppliers. Here are methods we’ve used and are still using:
- Trade shows
- Cold call or email representatives of products we have sold previously
- Find products on Amazon that are selling well, and reaching out to the company
- Doing research via Google on products we want to sell and finding their local distributors
Trade Shows for Amazon FBA Wholesale Sourcing
Trade shows can be a great way to get accounts set up with suppliers. They are usually industry-specific, and will have many different vendors looking to sell their products. This makes it the perfect environment to look for products to sell.
When you are trying to decide which trade show to go to, I recommend starting with ones that are local to you. You can locate these by searching “trade show + your city name” and see what you find. If you know you want to source a specific product category, you can add that into your search as well.
When first looking for trade shows, Google is where I’d recommend starting.
Then once you’ve attended a trade show, I recommend asking the brand representatives what other shows they will be attending. Do this with most of the representatives you talk to and you are likely to find out some other good shows to attend.
Some will likely tell you that, “you need to go to X trade show” or “X is the biggest trade show of the year.” If they say something like that, I’d recommend doing some further research to see if attending makes sense for you.
Sourcing Items That Have Proven Demand on Amazon
Another way to find potential products to source wholesale to sell on Amazon is to use Amazon itself to search. Simply search for a brand or product name that you are interested in selling, and search for it on Amazon. Then look through the search results and see if there are products there that look like they have potential if you are able to setup an account with the supplier.
Here are the main things we look for when using this method:
- A sales rank with a number less than 100K
- A selling price above $20
- Amazon.com is not listed as a seller
- The product isn’t being sold directly by the manufacturer
If the product fits those criteria, then it’s likely worth getting in contact with the company to see if you can get an account setup. Doing this research prior to reaching out is a good idea to make sure the product actually has potential, and makes sure you use your time efficiently.
An important side note: This is an example of a way you can use some easily available data points to help influence your behavior. This is important to be able to filter through all of the opportunities that exist on the Amazon platform. We factor the above data points into just about every wholesale sourcing decision we make. Learning to follow what works based on analytical information has served us well, and is something I recommend others use to their advantage. If you have a theory, or think a product may be good, do some research and test it before proceeding. 🙂
How to Set Up an Account with a Wholesale Supplier
After you have found a product that you want to purchase wholesale to sell on Amazon, then it’s time to get things in place to be able to begin ordering. Here are the steps involved with setting up your account with a manufacturer or distributor and placing your first wholesale order:
- Find a product you want to sell
- Locate the contact information for the company who sells the product
- Reach out to the individual who makes decisions about their wholesale distribution
- Convince them that you should be one of their distributors
- Fill out an account application
- Fill out any eCommerce agreements (if applicable)
- Obtain product catalog and price list
- Evaluate price list
- Place opening order
This is a general order of how things typically go. There will be some companies that have additional steps, and some that have fewer, but this should give a good idea of what to expect. I will go into more detail on some of the most important steps throughout the remainder of this post.
Making Initial Contact with Potential Wholesale Suppliers
When you reach out to companies, you’ll want to get in contact with the main representative for the brand, product, or product line that you are interested in purchasing. For the purposes of this post, we’ll use the term brand representatives. Brand representatives (Reps) are the people you’ll communicate with to purchase product from each brand.
They can have various titles such as:
- Sales Representative
- Brand Manager
- Territory Representative
Your goal will be to get in contact with the brand representative that can help you get an account opened to sell their products.
At times, these individuals will be “gatekeepers” and will need to understand why they should sell their products to you. Many reps have been instructed to ignore online-only businesses without getting many other details.
At this stage, it’s very important to clearly communicate your value adds, and how you will be able to help them. The more things you can do for a brand owner, and the more clearly you communicate that, the better your odds of being able to purchase from them. You have to come up with creative angles for why you would be a good retail partner for the brand/distributor and how you could help grow their business.
Providing value can take many different approaches, but try to identify any issues the representative is having related to distributing their products online. If you are able to identify issues, do what you can to help them solve the issue.
This can take many forms, but one example we’ve had happen is buying product that the company has had trouble selling to other people. Another example is providing expertise related to helping them understand different online retail marketplaces. If you can help in these ways, and build rapport & trust with the representative, your odds of being able to purchase from them wholesale go up dramatically.
In addition to providing value, make sure you have a clear message before starting your outreach.
I find it often helps to show your outbound emails to people close to you or other members of your team (if applicable). You want the messaging to be concise and coherent as you oftentimes only get one chance with a representative to determine if you will be able to work together. I recommend doing this for emails, phone calls, as well as in-person events.
It’s also a good idea to practice for questions that are likely to come up if you’re having the conversation on the phone or in person. We practice all of these things with all team members prior to attending any trade shows, or having them help with outbound phone calls.
The goal for all outreach: No matter how you contact the brand representative or who you talk with, your first goal should be to get the account setup forms. This will gain you some momentum and makes it more likely to keep the conversation going and ultimately get the account setup.
Here’s some info you’ll want to have before talking to a wholesale contact and some sample explanations:
- Type of store / What’s your story? / Why do you want to carry their brand?
- Mention you are an online (insert category name) retail business that is looking for new products to add to your current selection
- Current customers are expressing demand for their products
- Your story should fit your category
- Other products you sell:
- List any products you sell that are similar — if none, mention that you are just getting started and would like to purchase their products because it fits the customer base you are marketing to.
- Brick & Mortar presence/location (If you have one)
- Distribution methods / marketplaces
- Amazon, eBay, Jet, Walmart, etc.
- Full price or off-price retailer?
- Frame the conversation as you sell for full price rather than sale merchandise
Assuming you are able to work something out and the representative agrees to try to open an account, you’ll want them to send over the account setup forms to your email. At this point, you will usually need the following information for most account applications (in addition to the info above):
- Tax ID Number/Resale Certificate
- This is your state resale certificate
- EIN Number
- This is your employer identification number
- Business Address / Shipping Address / Billing Address
- Shipping Account Numbers
- If you have an account with UPS, you should have a parcel and freight shipping numbers.
- If not, you can have most companies ship to you and bill you on the invoice under their shipping accounts.
- Dun & Bradstreet Number
- This is a company that does credit checks for businesses and some companies will want to contact them to get previous payment history on your business.
- If you don’t have one, you can register for one here. Note that Dun & Bradstreet has paid plans, and you will almost certainly be marketed them at some point (either via mail or phone). I would not recommend any of their paid options, as the free one is more than adequate.
- References — If applying for credit
- This is a list of other wholesale accounts you have had in the past
- May ask for banking references as well
- Bank Acct Info — If applying for credit
*Also keep in mind that most accounts will only be opened if accompanied by an initial order, so you’ll want to be able to send that in with the forms. We’ll talk more about deciding what to order later in this post.
After you’ve filled out all the required information, submit it all to the company. If you don’t hear back within 2 to 3 business days, reach out and see if you can get an update. A lot of business success comes down to persistence. This is a time when you want to push to get the account up and running. For some accounts we currently order from it’s been necessary for us to follow up 4 or 5 times to get an account opened up. This doesn’t happen every time, but persistence does pay off in some cases.
When you hear back from the company on your account application, hopefully you will be getting the “yes” you’ve been waiting for so you can start selling their products. If your application was declined, try to find out the reasons why. Then see if you can reopen the dialogue to address the concerns and see if there’s a way you can add value that will be able to get them to reconsider.
You can’t win every account though, and you will get some “no’s” that can’t be solved for one reason or another. It’s important to determine the difference between a situation where you should move on and one where you should continue to try to “win” the account. This is a bit of an art form and will be easier as you have more contact with potential brands.
If we determine that it’s a firm “no”, we will move on and set a reminder to follow up with that company in 6-9 months to see if anything has changed.
How to Evaluate Which Products to Buy to Sell on Amazon for a Profit
Once you have an account set up, you’ll want to acquire a list of all the products the supplier sells and the pricing information.
This can usually be found in the product catalogs or other information you were provided when you opened the account.
If not, you’ll want to reach out to your representative to ask for it.
Your goal should be to get this information in a spreadsheet that includes prices and UPCs to make evaluation as easy as possible.
We’ve been able to get a list of prices and UPCs in a spreadsheet from the vast majority of accounts we’ve worked with. When you make this request, you might be initially be met with some resistance. If you are persistent, they typically will be able to get it for you. In the event you can’t get the spreadsheet with prices and UPCs, then I’d consider having a virtual assistant help get the data into a spreadsheet.
Once you have the products and prices in a spreadsheet, you can run them through a tool that will help you evaluate the products in bulk to see which ones match your guidelines. The tools we recommend for this are Price Checker 2 and Tactical Arbitrage.
We’ll walk through an example of how to use Price Checker 2 below. If you already are using Tactical Arbitrage for online arbitrage, then I’d recommend using that for your initial evaluations when getting started with wholesale sourcing.
Once you have an excel sheet with UPC’s and their corresponding prices, here are the things you’ll want to set up before starting the evaluation:
- Setup the Price Checker 2 software
- Select the excel document (file) to run in Price Checker 2
- Make sure the columns for UPC and price pull through correctly and match up with the correct headers from your file
- Input a cost profile to estimate prep and ship costs which can be factored into the net profit/ROI results when the product is evaluated
- You should enter what these costs are in step 9 in the screenshot below
Then hit submit and the file will run and you’ll be able to make buying decisions based on the output! Make sure to fill out the boxes next to all of the red arrows in this screenshot:
Once the process finishes, you will be provided with an Excel output file that has just about all of the information you need to make a sourcing decision. It will include the price it’s selling for, how much you will net after fees, the current sales rank, and many other useful pieces of information.
To decide which products to buy, I recommend using buying guidelines that are similar to what you typically use for retail and online arbitrage. Some, but not all, of the main things to make sure you factor into what to buy include:
- Sales rank
- Number of sellers
- Total purchase amount.
If you are interested you can setup a free trial to Price Checker 2 here.
How to Ship Products to Amazon FBA Warehouses
This process is fairly straightforward for those with previous selling history. You simply have the company you are buying from ship to your address. They will either bill you for shipping on the invoice, or they’ll ask for your UPS parcel or freight number.
If they mention that they can “Bill collect” to your shipping address, this just means that it will bill to your UPS freight account which is attached to your address. So it’s the same as asking for your freight account number. If you don’t have an account with UPS, you’ll want to head to their website and create an account if you have a supplier asking for this number.
Once the product is received at your location, you can then go through the process of prepping the items to be sent to Amazon’s FBA warehouses. You can learn how to create an Amazon FBA shipment in this blog post.
One quick note on shipping: as your wholesale business grows, you can typically negotiate shipping rates with the carriers you are using. The more volume you do with them, the larger the discounts they will be able to offer. This can provide very material savings on every shipment you do going forward.
How to Keep Your Profitable Wholesale Inventory In Stock
Once you have product shipped to Amazon warehouses, you will hopefully see some sales roll in quickly. At this point, your job becomes keeping the profitable products in stock so you can sell them over and over again.
Your goal should be to keep all of your profitable products in stock at all times. This will be challenging right away, but over time you will be able to get very close on most of your accounts.
The flip side of this is that you don’t want to have too much in stock, as that ties up capital and incurs storage fees. So it’s a balancing act.
For most companies we work with, our goal is to place orders for 45 days worth of inventory at a time. This gives us time for the supplier to get the order ready, the product to be shipped to our location, our team to process it to ship to FBA warehouses, and to arrive at FBA warehouses without running out of stock. You’ll want to evaluate what order quantities make sense in your business, but the goal should be to have just enough to stay in stock without having too much excess.
For any product that you are going to order again, you should make sure that you made your desired profit on the initial sales and that the pricing at the time you are ordering it again will allow you to make your desired profit.
Prices change over time, so it’s important to make sure that you evaluate your profitability at current pricing before reordering.
Keeping Track of Inventory Levels
Tracking all of the inventory levels of all of your products you source wholesale is a very important task. We’ll walk through two ways you can use tools to help you with this task now.
The first option to setup “replenishment alerts” directly within Amazon Seller Central. This is a free option and is a good starting point when you don’t have a huge number of items to keep track of. Let’s walk through a quick example of how to setup a replenishment alert on any item in your inventory:
First, locate the item in your inventory and click on the button just to the right of “Edit” as shown below:
Then we will want to click on the “Set replenishment alerts” option that pops up:
You will then be taken to a screen to set the inventory level you want to be notified of when you reach. Let’s say you set the replenishment to 10 units, that means that when your inventory level reaches 10 units, Amazon will let you know.
You can set up the replenishment alert quantity in this next screen. Enter the number by the red arrow as shown in this screenshot:
After clicking save, you will receive alerts going forward when your inventory reaches the level you set.
The above method is great when starting out but can be difficult to manage as your business scales. If you reach that point then it’s worth taking a look at getting a more robust tool involved. We currently use RestockPro to help us manage which products to reorder.
When you first start using RestockPro, we recommend setting up your metrics at what you believe will be optimal and then fine tune over time with the overall goal of avoiding going out of stock on the items you are selling.
Using RestockPro is a bit beyond the scope of this post, but if you sign up I’d recommend reading through their user guide. There’s a lot of different settings, and it’s important to know how each one works.
Amazon FBA Wholesale Frequently Asked Questions
Q: What companies should I contact to find wholesale suppliers?
A: Any that you have determined have potential. Make sure they meet your initial criteria for selling price, demand, etc, but above and beyond that if you think they might have potential, reach out.
Q: Should I attend trade shows? What trade shows should I attend?
A: Yes, this follows up on the “In person” method from above. This will be your best chance to open an account with many companies. You should google potential shows for the categories you sell in and try to attend related local shows. Start with small local shows as this will help ease you into the process.
Q: Do you have to be able to receive pallets when doing wholesale sourcing for Amazon FBA?
A: No you don’t have to. As you scale your business it will likely be necessary, but right away you won’t need to. Most of your initial orders will be shipped via parcel carriers at arrive at your location via Fedex or UPS.
Q: Do I have to have a website?
A: No you don’t have to. But if you want to give yourself the best chance of success, I’d highly recommend setting one up. It’s much more professional, and will give you an email at your company’s domain too. So while you technically don’t have to, seeing results will be harder without a website.
Q: How much money do you need to get started with Amazon FBA wholesale sourcing?
A: Minimum orders for suppliers we work with range from as low as $150 up to several thousand dollars. The majority are between $200 and $1,000 for the minimum order. I wouldn’t recommend trying to start wholesale sourcing with less than $500. If you can start with $500 or more then you should be able to place one or two orders to get the ball rolling. If you don’t yet have $500, I’d recommend starting with retail arbitrage.
Amazon FBA Wholesale Expert Tips
Here are a few tips for you as you get started growing the amount of inventory you are able to source via wholesale:
- Focus on how you can add value to your suppliers. This was discussed a bit above in this post, but it’s a very important part of seeing results with wholesale. Use the methods outlined above as ideas, and then get creative in ways you can help suppliers. And most of all listen to the problems they bring up in your conversations with them, and see what you can do to help.
- Patience combined with persistence will pay off. In our experiences, the process to get a new wholesale account open can take 3 months or more. Many of the accounts you want to open are going to be relationship based and there is no way to rush this process. Some accounts will open up to you after you engage with the brand representatives over an extended period of time and they begin to understand that you’re in the business for the right reasons. They want to be sure that you are more of a “partner” and less of a “flash in the pan” type of seller. Online sales are often viewed as a riskier model from a representatives point of view and various companies we’ve worked with have had issues or perceived issues with online sellers in the past.
- Consider doing wholesale in conjunction with another sourcing method. Especially if you are currently doing retail or online arbitrage, I would recommend adding wholesale as a component to your business, but I wouldn’t shift all your time to wholesale right away. You will save yourself frustration if you gradually move to this model. This is the same advice I would give to those that wish to quit their job to sell online. You want to test and generate some results before going “all in.”
- Refine your processes over time. Now that our team has invested several years into this process, we are purchasing over $100,000 of products from our wholesale suppliers monthly. This didn’t happen overnight and took many months of continual effort to scale and refine our methods. When we started out we were met with some real challenges and received a lot of “no’s”, but we found ways to solve problems and move the business to the next level by constantly evaluating our approach. Doing the same in your own business will give you the best chances of success.
- Stick with one category to “snowball”. We recommend picking one category of products to focus on when getting started with wholesale. If you are able to land one account in a category it generally becomes easier to get another account in that same category. Companies will ask you what other products you carry and if you can answer with competing products or complementary products, they’ll be more likely to want to work with you. As you work with more and more companies in a category, your results will “snowball” in this way. Pick a category, refine your message, qualify your leads and reach out with a consistent message, and you should start to see some breakthroughs.
- Keep your winners in stock!
- Renegotiate over time.
That brings us to the end of this introduction to wholesale sourcing.
If you put consistent effort in and refine over time, this process will lead to a significant wholesale business. It’s a lot of work to get setup, but the beauty of sourcing wholesale is that you can sell the same products over and over again. This means that the work you put in now can pay off for years to come. So get out there and get some wholesale accounts!
About the co-author: This post was co-authored by Nick Kopischke, the COO of the Amazon business talked about on this website. He’s been with the business since 2014, and has helped grow the wholesale sourcing side of the business from zero. In 2018 we did over $2.9 Million in sales of products purchased from our wholesale suppliers. Nick is an expert at what it takes to start sourcing via wholesale, as well as how to scale an Amazon FBA wholesale business to millions in sales per year.
This post provides an introductory overview of what it takes to get started with wholesale sourcing on Amazon. If you are interested in hearing about the advanced strategies we use, and how we’ve grown to buying over $100K in product per month via wholesale sources, you can learn more here.
Please comment below if you have any questions with wholesale sourcing.