How to Choose Wholesale Products to Sell on Amazon
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Maybe you want to build your own ecommerce business, maybe you’re in need of some extra income, or maybe you just want to scratch that entrepreneurial itch. Whatever your goal, you’ve probably heard that selling wholesale products on Amazon is a good way to make it happen.
While this isn’t the “get rich quick” opportunity some would have you believe, the business of buying wholesale products and selling them on Amazon can be a great way to build a profitable business. It can also be a great way to lose a lot of money.
The difference between success and failure is often the product itself. Profitable, high-quality goods from reliable suppliers keep you out of the red and put you ahead of your competition.
So how do you choose which wholesale products to sell on Amazon? The short answer is research, market savvy, and a good business plan. Keep reading for the long answer.
Understand Your Amazon Business Model
There are two different ways to sell wholesale products on Amazon: the reseller model and the private label model. While they have some similarities, the business model you choose will impact everything from the products you choose to the suppliers you work with.
The Reseller Model
Sellers who purchase brand-name products at wholesale discounts, and then turn around and list them on Amazon follow a reseller model of business. Brick-and-mortar stores like Rack Room Shoes follow this same model but must deal with the difficulties of building their store’s brand equity in addition to selling other brands. Amazon resellers don’t have this problem.
In the image example above, Converse is the manufacturing brand, but you can see in the buy options that Converse isn’t selling their product directly. Instead, this product is sold by reselling businesses, like ShoeAngle or AWESOMEKICKS.
It should be noted that reselling is different from dropshipping, where the seller has no inventory on hand and relies on suppliers to ship to customers. Resellers do have to manage their inventory one way or another. But their model does provide a lot of flexibility. Since resellers don’t have to worry about brand equity or overhead, they’re able to capitalize more quickly on product trends.
This model works well for small businesses or individuals who are focused more on short-term profits than long-term business growth. Competitive pricing is key to success in this model, however, as Buy Box competition is usually a major factor. Resellers should choose their suppliers and product categories carefully to remain profitable.
The Private Label Model
Private label sellers sit between proprietary product owners (like Converse) and resellers (like AWESOMEKICKS in the image example above). They buy generic products wholesale, and then repackage those products with their own branding. A good brick-and-mortar example of this would be Walmart—you can buy a pair of black high-tops, but you’re buying a generic product with a Walmart brand tag slapped on top.
Private labels are not counterfeiters—they don’t claim to be an original product. They simply source their products from a manufacturer or wholesaler that supplies other private labels instead of creating a unique product. Because of this, identifying a profitable product niche (vs. simply a profitable product) is a major concern since brand consistency matters for this seller.
This model isn’t quite as flexible as reselling, but it does offer a low barrier to entry for sellers who want to build their own business and brand identity. The challenge lies in identifying product niches that don’t pit your private label against well-known brands (such as Converse, in our example) or a horde of other private labels.
The core strategies for choosing wholesale products to sell on Amazon remain the same, regardless of your business model. However, each model will experience the competitive landscape in a different way, which should affect how sellers approach product research and competitive analysis.
How to Choose the Best Wholesale Product to Sell on Amazon
Everyone wants a straightforward answer to this question, but the “best wholesale product” depends entirely on your situation. Demand trends, your business model, the capital you have available, and your fulfillment methods all play a major part in answering this question.
So while we can’t answer this for you, we can offer you three steps that will lead you to the right answer.
1) Choose a product with high demand
The best wholesale product is one you can sell. You may have found a great supplier with steep discounts, but if there’s no market demand for the product, you’re going to lose money. You can use a supplier catalog as a springboard for product ideas, or you can start from scratch, but your first step should be to gauge demand for the product.
- Consider products in one of Amazon’s bestselling categories. Electronics, Clothing, Shoes & Jewelry, Toys & Games, and Books are often the most profitable categories. One notable reason for this is that they all offer a lot of room for variation since shopper preference plays a big part.
- Study current Amazon bestselling products. Amazon keeps a list, updated hourly, of their best sellers in every category. This is a key way to gain insight into what buyers want.
- Study products similar to the one you want to sell. If you already have an idea for a product, browse similar Amazon products and note indicators of demand. A high Best Sellers Rank (BSR) and the number of customer ratings are both good indicators of demand.
Luckily, while you do have to do all this product research, you don’t have to do it all by hand. There are many paid tools available to help you do product and demand research on Amazon. However, one of the best tools, Unicorn Smasher, is totally free. It gives you detailed insights on everything, from the number of sellers for a product to its BSR, and even estimates sales and revenue.
So now that you’ve narrowed down your product ideas based on demand, it’s time to layer on the second factor: the competition.
2) Choose a product with low competition
Everybody else wants to sell a high-demand product. The trick is to find a product that people will want in a market that’s not already saturated. Competition is more difficult to judge than demand, but here are a few steps that will get you started and some tools to help you along the way.
- How many sellers are advertising?Even if organic results show many sellers, a good Amazon advertising strategy will quickly set you apart from competitors who aren’t leveraging Sponsored Products. Run searches on a variety of keywords around your product ideas in order to see who’s advertising.
- Resellers, identify how crowded the product listing is. You will likely have to compete for the Buy Box with competitors selling the same product.Use Unicorn Smasher to quickly look at the number of existing sellers for a specific product.
- Private label sellers, do a qualitative analysis of your competitors. What do their product listings look like? Are their descriptions SEO optimized? Do they have good images, videos, or a lot of reviews?
What’s their seller rank?
These factors indicate how hard (or easy) it will be to make your brand stand out.
When it comes to tools to help you analyze the competition, there are a lot of paid options that will show you varying degrees of detail on product and category competition. These may very well be worth your money. It will give you an in-depth analysis of listing quality, number of sellers for the ASIN, Fulfillment by Amazon (FBA) fees, product potential, keyword analysis, and more.
Armed with data on the competitive landscape, you’re now ready to move to the next part of choosing a wholesale product to sell on Amazon: making sure you can turn a profit.
3) Choose a product with good profit potential
You might find a unicorn of a high-demand, low-competition product, but it won’t matter if you can’t turn a profit on it. Cost estimates and profitability analysis are essential parts of deciding what wholesale products to sell on Amazon.
- Don’t get trapped in a race to the bottom. Price competition is intense on Amazon, so don’t pick a product that will make you choose between generating sales and turning a profit. Choose a pricing strategy that works for your product category and still ensures profitability.
- Understand all the costs involved. The true cost of selling wholesale products goes beyond a simple price tag. There are a dozen other costs to consider, and they’ll quickly stack up if you don’t account for them early on. Do a detailed profit analysis that factors in Amazon fees, fulfillment and shipping costs, inventory management, and relevant taxes.
- Look for products that are small and lightweight. Even if you don’t choose to use FBA, smaller and lighter products are much cheaper to ship and take much less space to store. This will save you a lot of money, which in turn increases your profits. You can get a good sense of the costs associated with various dimensions by looking through the FBA fee schedule.
While it’s no replacement for calculating exact costs, Amazon’s FBA Revenue Calculator is a great way to view potential net profits when you’re in the research phase. You can search for any product or ASIN, and this calculator will estimate the net profits and margins of fulfilling with FBA. (Just use an educated guess for the “Your Fulfillment” part of the equation.)
Once you have a shortlist of wholesale products you want to sell, make sure you estimate all the costs involved before making a final decision. (JungleScout has a helpful article breaking down the costs of becoming a first-time Amazon seller.)
Now that you have the criteria for choosing a good wholesale product to sell on Amazon, it’s time to actually go and source those products.
How to Find Wholesalers for Amazon
Just as there’s no “golden ticket” wholesale product that guarantees success, there’s no secret list of perfect suppliers. To be successful selling wholesale products on Amazon, you need to identify what you need from a supplier, and then learn how to get it. This begins with having the right knowledge. (We recommend taking a few minutes to read our Essential Guide to Product Procurement for more context on the following advice.)
1) Three things to know before you start your search for a wholesaler
The first step to finding a supplier is knowing how to recognize the best supplier for your business goals.
- Decide what kind of supplier you need. If you’re a reseller, you’ll want to look for a brand manufacturer; if you’re a private label seller, you should look for a supplier of “generic” wholesale products you can use to build your own brand. It’s easier to find what you need if you know what you want.
- Learn to identify scams.Always start by checking the Better Business Bureau for information on wholesalers. Contacting suppliers in certified networks is also a smart move, especially for new wholesale product sellers. (Read guide to Spotting a Wholesale Supplier Scam to learn more.)
- Engage with the industry.Don’t focus on a couple of wholesale products; take the time to understand your niche. Who are the major manufacturers and brands? What are the distribution channels? Who should you expect to work with? Answering these questions will help you narrow your focus and find the right wholesaler for your Amazon business.
Once you have this context, it’s time to prepare for success by learning how to approach suppliers once you find them.
2) Learn how to communicate with suppliers
Getting a great deal with a good supplier often comes down to knowing what your supplier wants out of this deal and finding a way to negotiate a win-win. This is a step many beginners miss, but with a bit of research and practice, it’s not difficult.
- Learn the basics of negotiation. Don’t go into supplier communications unprepared. Even if you’re an individual seller just looking for a side hustle, it’s worth the time to learn business negotiation.
- Learn what suppliers want. Wholesalers want what any of us want: reliable income. If you’re able to offer them this kind of stability—either through longer-term contracts, larger deposits, or promises of more business—you put yourself in a better position to drive a deal. (Reading business advice for suppliers can be a good way to find negotiation angles.)
- Leverage the competition. Don’t only negotiate with one supplier at a time—enter conversations with a few different wholesalers, and use competing offers to drive better deals with your ideal suppliers.
- Show them you’ll be a good partner. Don’t underestimate the power of simply being courteous, responsive, and professional. Approach this like someone seeking to build a partnership, instead of a shopper looking for the cheapest option. Suppliers appreciate this, and your business will benefit long-term from this approach.
For a deeper dive into this topic, we recommend reading Harvard Business Review’s article, How to Negotiate with Powerful Suppliers.
3) Start your search with a trusted wholesaler directory or network
When you’re getting started, wholesaler networks are a good place to start. The best directories have a subscription cost for their service, but it’s often well worth the cost in time and money saved.
- Wholesale Central gives you access to thousands of verified wholesalers without any subscription or membership costs. It’s a great place to start your search and gives you direct contact information for wholesalers, without any paywall or registration required.
- Worldwide Brands is one of the highest-rated wholesale networks out there and provides resources and member benefits (like research support) on top of access to quality-certified suppliers. They offer a free preview of their directory, too, making it a great place to start.
- SaleHoo offers start-to-finish support for those who want to sell wholesale products. They offer a rich supplier directory as well as tools to help you research products, organize your supplier search, and manage communication with suppliers.
- Alibaba, an international marketplace for buyers and suppliers alike, generates a lot of controversy in ecommerce. Some sellers source excellent products on Alibaba, while others run into quality—even counterfeiting—issues. Because of this, put in extra effort to research Alibaba suppliers before purchasing.
Investing in a professional supplier directory isn’t for everyone, but bear in mind that you don’t need to keep paying for a subscription after finding a good wholesaler. A little money spent upfront might end up saving you a lot of money (and frustration) in the long run.
How to Sell Wholesale on Amazon
You’ll make better product procurement decisions if you have a plan for how you’re going to sell those products. While a full discussion on selling your wholesale products is beyond the scope of this article, here are a few top-level recommendations (and additional resources) that will get you started.
- Consider using Fulfillment by Amazon.It’s an ideal program for very small businesses and resellers. In most cases, you can arrange for your wholesalers to ship products directly to Amazon (although there might be extra processing fees involved).
- Have a plan in place for inventory management.If you decide to use an alternative to FBA, you’ll need a plan for managing your inventory in a way that’s cost-effective but still allows you to ship quickly.
- Have a plan for promoting your products. Advertising has become an increasingly important tool for success on Amazon. Consider your options, learn the challenges of Amazon PPC management (and the solutions), and have a plan for getting your product noticed.
There’s obviously a lot more to selling on Amazon, but factoring fulfillment, inventory, and promotion into your business plan will help you start strong. (We’ve written a lot about selling on Amazon if you want more advice.)
Time Invested in Product Research Always Pays Dividends
Choosing the right wholesale products comes down to understanding the market and understanding your capabilities, needs, and limitations as a seller. Product and supplier research can become time-consuming, but it’s worth the effort it takes to find a great product backed by a great wholesaler.
With a plan in place and a strategic approach, it doesn’t matter if you’re selling from your garage or from your own warehouse—you can build a successful business selling wholesale products on Amazon.Register for FREE Live Virtual Workshop on 17-19 2021 and learn to build a successful amazon wholesale business in 3 days.