Originally published on October 31, 2016, updated July 29, 2020
Have you considered expanding your Amazon business through wholesaling?
Getting started might seem a little intimidating because there is a lot to learn. That’s why the eComEngine team decided to partner with Savage Sellers to offer an educational webinar on the topic of how to become an Amazon wholesale seller. After all, Philippe and Ruben have built a thriving business from the ground up and now rely on wholesaling as a part of their business model.
Topics covered in this webinar include:
Philippe and Ruben started their eCommerce business out of a college dorm room through retail arbitrage. They’ve worked hard to learn everything they can about eCommerce and strategies for success as merchants, from drop shipping to private labeling and beyond. Wholesaling is an important part of their prosperous business model.
There’s no need to start from scratch if you’re thinking about making the transition to wholesale.
You can watch the webinar above or check out the show notes below for the recap and a full transcript.
Becoming an Amazon wholesale seller offers a number of benefits. Selling wholesale items provides a more consistent income than retail arbitrage and requires significantly less brand development work than selling a private label product.
Sourcing wholesale items can help Amazon merchants grow their businesses quickly, but there are a lot of factors to consider. The eComEngine team recently hosted a webinar with the Savage Sellers, Philippe and Ruben, to discuss their wholesaling success and best practices for making the transition to wholesale.
The Savage Sellers team began selling on the Amazon marketplace through retail arbitrage, finding college textbooks for sale at a local library and reselling them for a significant profit. As their business grew, they began searching for ways to generate money through other parts of the business, which eventually lead them to the Amazon FBA program and wholesaling. Philippe noted that wholesaling is simple to scale because the process is similar with any company.
There are a number of potential benefits for Amazon sellers who are interested in making the transition to wholesaling. For example, wholesaling provides a more consistent stream of revenue, lessening a common pain point for some merchants. It also allows sellers to consolidate sourcing and could significantly reduce shipping costs, allowing businesses to operate with higher profit margins without raising prices.
As Philippe said, “The goal is always to get back that initial capital that you have while growing your inventory at Amazon FBA at the same time. This way you can scale it up in a quick and efficient way.”
Philippe and Ruben offer inside advice for Amazon sellers who are considering making the move to wholesale, noting that one of the most important things to look for in a wholesale account is a minimum advertised price (MAP) policy. Wholesale items without a MAP are often forced into a race to the bottom as merchants fight to remain competitive on the Amazon marketplace.
When searching for a wholesale account to work with, you should also look at who they are already selling to and what kind of competition there is for any given item. Merchants can quickly conduct competitive market research with MarketScout, a tool developed by eComEngine. Sellers should also look into the item’s price history, as well as online ratings and reviews, to get an idea of how the product is received by consumers. Is the minimum order quantity affordable, or will it put a significant strain on your current business model? How complex is the ordering process? Is there potential for you to get exclusive seller rights?
Whenever possible, Philippe recommends that merchants who are interested in wholesaling meet with wholesaler accounts in person, whether at a trade show or at the company headquarters. If meeting in person isn’t possible, begin with an email or phone call. He suggests asking about the company’s MAP policy and price lists. Not only is this knowledge that you need, it also shows the wholesaler that a merchant is serious about working with their company.
When placing the first order with a wholesaler, consider margins, profit and order processes. Make notes of ways to optimize the ordering process and save time by cutting out unnecessary steps. Many sellers find that RestockPro, eComEngine’s inventory management tool for FBA sellers, streamlines everything from making restocking decisions to creating purchase orders and printing shipping labels.
If you’re considering adding wholesaling to your eCommerce business model, get advice from merchants who have done so successfully.
Liz: Hi everyone. Thanks for joining us today. I just want to make sure everything's working properly, and we will get started with our webinar on transitioning into wholesale. So starting in just a couple seconds. Bear with us. All right. Hello everyone. Thank you for joining us today for our webinar on transitioning into wholesale. My name is Liz Fickenscher and I am the Business Development lead for eComEngine. I'm joining you from our headquarters in Richmond, Virginia, and our featured presenters today are Philippe and Ruben from Savage Sellers. They are a fantastic eCommerce educating group who have done it all when it comes to selling on the Amazon marketplace. These guys know their stuff.
Liz: So today we're going to learn about their story so far and they're going to take us on the path to transitioning to wholesale. They'll discuss the types of wholesalers, what to look for when choosing wholesalers, the five steps to getting started, and I'll talk a little bit about eComEngine's tools and how they can help you on this journey. And then we'll talk about some special offers and go to any questions that you might have.
Liz: At this point I'm going to go ahead and turn it over to Philippe and Ruben to let them tell you their story and give us some great advice on transitioning into wholesale. We should have about 15, 10, 15 minutes at the end of the presentation to allow for questions. So feel free to post them in the GoToWebinar toolbar during the presentation and then we'll address them at the end. And we're also recording this webinar so I'll make sure to send up a follow-up email with a link so that you can watch it again, share it with everybody you know, all that kind of stuff. All right, Philippe, are you ready?
Liz: All right. Take it away.
Philippe: Okay, I hope everyone can see my screen. I want to thank everyone for joining today. Our webinar is Savage Sellers Transitioning to Wholesale on Amazon FBA. First of all, I'd like to thank Liz and Colleen for the opportunity to speak today. We're going to go through a brief story of our introduction, a little bit about our background, and then get right into things. A little bit about our story. My name is Philippe. I'm the individual on the far left of your screen, and my partner's name is Ruben.
Philippe: We started this business in 2011, in our college dorm rooms, and we started with very little investment. We didn't get any money from any angel investors, venture capitalists, no startup companies. We didn't get any money from our parents. We put our own money into our business and we haven't ... since our inception we haven't put any additional money outside of the business back into the business. So all the revenue of our business has been cycling and creating income. Believe it or not, we started with less than a dollar.
Philippe: We were buying nickel and dime books at the library, nickel and dime textbooks, spending up to a quarter max on college textbooks in 2011 and reselling them on the Amazon platform. We were able to scale that up so we were buying books for a quarter, selling them for $80, selling them for $160. Eventually we were able to generate enough revenue to move to our own dorm style business where we would buy textbooks from students, give them more cash than what the bookstore was offering them so they were incentivized to sell to us. We'd then take those books and sell them on the Amazon platform.
Philippe: And the business became very lucrative in the sense that students would be dropping off textbooks to our dorms at 8 a.m. in the morning and by 10 a.m. we were selling them on the Amazon platform. So we had our DYMO label printers and we were just walking down to the post office and it was cycling, cycling, cycling. Eventually we were able to generate enough revenue to start expand our business and get into new business ventures. So we dabbled in dropshipping. Then we moved into wholesale. We've done it all. We've done liquidation. We've done wholesaling. We've done international selling. We've done private labeling, white labeling, manufacturing our own items. We really have a broad expanse of what we've done as far as an eCommerce company.
Philippe: Today we're going to be focusing on the wholesale side of our business. A majority of our revenue that we generate today is from our wholesale side of our business, and we've been able to generate seven figures of revenue year after year after year. So we have a business model that we abide by, we follow those rules and it proves to be successful for us. We want to share those rules with you today. I'm going to talk about expectations when transitioning to wholesale. We're going to expound on all these points later on into our PowerPoint.
Philippe: The first thing you can expect is consistent income. So with products that already have a demand without selling them, it is unlikely that you can lose a large bulk of your business all at once. We're going to talk about new responsibilities when you're transitioning to wholesale, whether it's managing relationships, abiding by rules of companies such as MAP, branding, et cetera, analyzing trends and monitoring stock levels. And a third expectation that you can have when you transition to wholesale is the simplicity to scale your business. The process of working with wholesalers remains relatively the same with any company, and if you are efficient, you can reach a seven-figure revenue number annually and you can go much higher than that. There are companies generating eight figures, nine figures, just doing wholesale on Amazon platform. And once again, don't be intimidated.
Philippe: Wholesale's for anyone who's looking to maybe supplement their income, all the way to the person who's trying to make a brand new eCommerce business and create sustainability. So anyone far and between. Okay, so we're going to talk about different types of wholesalers. This is a little bit of the lingo behind the whole wholesaling game. You have the manufacturers. They own the intellectual property of the item. They're the most direct source of obtaining an item. Then you have the distributors. They are approved by the manufacturers to sell at wholesale prices to individual retail companies. You have the contract wholesalers. They sell the excess inventory of manufacturers and distributors to retailers.
Philippe: And then you have the general wholesalers. They sell generally lower quality unbranded inventory at very low prices. The best way you can describe this or understand this is maybe as a food web, like one of those food web chains where you have an apex predator at the top and underneath you have another carnivore, carnivore, herbivore. All of these animals are necessary to propagate this entire ecosystem, just like all these wholesalers are necessary to propagate the ecosystem of eCommerce.
Philippe: So although the manufacturer's on top, they are no more important than the distributors or wholesalers underneath them. They all play integral roles in distribution of that product. And the reason why they have separate levels is because for example you have a manufacturer like LEGO. LEGO creates the intellectual property of their item. They're creating LEGO sets. They're focused on creating new products to satiate their customer demand. They shouldn't be worried about the distribution, the end distribution to customers. Although they have a LEGO flagship store, LEGO flagship stores are not in every city in the United States, but there are Walmarts in almost every city in the United States. So they distribute it to stores such as Walmart, Target, Toys R Us. So that's where the distribution-manufacturer relationship comes into effect. One of them is focused on creating new intellectual property while the other one is focused on distribution.
Philippe: So what to look for in a wholesaler? We use these checks to this day in order to understand whether or not we're going to proceed with a wholesaler. And when I say wholesaler, I mean wholesaler, distributor, manufacturer. One thing that we look for is an MAP policy. What is MAP? MAP is Minimum Advertised Price. If you are an Amazon Prime buyer and you have purchased an item that's maybe like 79.99 and you see 20, 30 sellers selling it for 79.99, that indicates that there is an MAP on that particular item, which means it's a minimum advertised price set by the manufacturer that the sellers cannot go under.
Philippe: Why is MAP important? It's because you do not want to have a race to the bottom. If there's no MAP for a wholesale item, you have Company A undercutting Company B by a penny or a dollar, just to try to get time in the buy box. The buy box is that page that third-party merchant or Amazon gets on so the buyer clicks on that particular item. So say you have item A. It says sold and distributed by Company A for that buy box, but that buy box cycles with all the sellers that are actually in that listing.
Philippe: So we look for items with MAP policies. This way everyone can regain their profits that we get that race to the bottom ends up negating people's profits and ultimately you're almost taking a loss for your wholesale orders. We also look for who do they sell to. If the wholesaler sells to 50 companies already, you are going to have a lot of competition on each listing. You may want to move on. And you also want to try to avoid wholesalers who are selling a lot to Amazon and implementing an MAP policy because you're not going to steal any buy box time from Amazon when you're wholesaling if Amazon is competing with you.
Philippe: Another good check that we go through is the ratings and review system. If you're an Amazon Prime buyer, you may be familiar with the five-star system that they have for their customer products. If you have a product A and it is one, two, or three stars, you may want to take a second look before ordering a wholesale, a large wholesale quantity of that particular item. Because what's that going to mean? It may result in a lot of returns. There obviously is some kind of flaw with the item that customers are leaving continuously negative feedback, and returns equates with decrease profit margins. And you want to make sure that you're scaling your business up. You want to go with products that consumers feel happy about and the return rate is generally constant and it's low.
Philippe: Another thing, it's a simple ordering process. Make sure you don't have to jump through too many hoops to make a simple order. Timing is everything in wholesale. This goes back to the scalability. You want to try to grow your business, grow your wholesale business as quick as possible. So that simple ordering process from the manufacturer is important. Another thing is an affordable MOQ. MOQ is Minimum Order Quantity. Depending on the size of your business, make sure that the minimum order quantity is something you can afford and in line with the actual demand of the product. So you have $1,000 or $2,000 to invest in your first wholesale order. You don't want to put all $2,000 or all $1,000 into an order that's going to take eight months to sell out because what's going to happen is you're not going to recoup your initial investment quick enough to reinvest that money.
Philippe: The goal for wholesaling is to always get back that initial capital that you have while growing your inventory at Amazon FBA at the same time. This way you can scale it up in a quick and efficient way. Pricing history. Use online tools such as CamelCamelCamel and Keepa in order to determine pricing volatility. The current state of pricing may not reflect what the normal competitive environment is. We've been burned before. You want to make sure that when you are looking at a listing, you're not fooled. Just because there are no sellers at that particular time, they may be out of stock because the manufacturer is not carrying that particular item at that particular moment. So you don't want to order a large quantity as we've done before just to realize that Amazon is going to come in and you're going to have to compete with a lot of third-party sellers or Amazon themselves.
Philippe: Okay, we're going to go through four, five steps of wholesale. Then we're going to expound later on into this PowerPoint. First step, getting the wholesaler. Once you find what product you want to sell, getting the wholesaler to approve you is the most ... as a dealer is the most critical step. Step two, placing the first order. You want to take into account margins, profits, and order processes when placing your first order. Step three, optimization and efficiency. As you continue to place orders, save time and money by cutting out unnecessary steps. Step four, returns. An unavoidable part of the wholesale business, establish your returns process before you order too many items. Step five, next level relationships.
Philippe: Increase your standing with the company in order to future-proof your business and open up more money-making opportunities. So let's get into step one, getting the wholesaler. There are many ways to get a wholesaler. One way is email. Keep your emails short and to the point. So you're working with the wholesaler, your distributor, your manufacturer, whoever you're working with. You want to introduce yourself, introduce your company name, introduce your title of the company, where you're based out of, what product line you're interested in for that particular company. I'm going to stick with LEGO for this example because I love LEGO. I'm going to be using that throughout my presentation. For example, you're working with LEGO. You may want to say, "Oh, I'm interested in your LEGO Batman line," or, "your LEGO Disney Princess line." This way it shows the company you have a poignant interest in a certain product line that they carry.
Philippe: They have catalogs that may be thousands of units, may be tens of thousands of units. Depending on the company you're working with, you want to make sure that you're telling them, "I want to work with this particular item," because it's not realistic for you to sell all their items initially. Second way, phone calls. Confident conversations allow wholesalers to take you seriously. Slightly better than email in our opinion. You can call them, introduce your company, introduce your location. Same kind of things you said in the email.
Philippe: But what you want to say on the phone also is ask for price lists and about MAP policies. Companies love that key term MAP because it shows them that you are going to abide by their minimum advertised price, and they want to maintain the integrity of the brand. If they sell an item, item A is worth 79.99, they don't want their price pushed down to 49.99 for too long because the customer is going to base that item as a 49.99 item, and it's going to decrease the sales in the long run. So MAP policy great word to put in when you're talking on the phone.
Philippe: These are three keys to legitimacy, one, having your standalone website, two, trade shows, and three, feedback. One, having your standalone website. Having your standalone website will give wholesalers a better idea of what you do. Say your company name is Company Name. You want to have that site www.companyname.com. So use Namecheap or any of those domain hosters to buy a domain and buy your company's standalone website. It does not have to be a dynamic website. You don't have to sell merchandise on that website. It can be static. You can just put your mission statement, what you're doing, what kind of services you provide, and that's good enough. But it's telling them go visit www.companyname.com is definitely a heads up. If you sell on your own website, using Shopify or another platform that gives even more legitimacy. And then make sure when you get an email address, have your domain in it. In this case Company Name it would be email@example.com or firstname.lastname@example.org.
Philippe: Second, trade shows. In our opinion, trade talking in person almost guarantees that you will be accepted by the company. These are better than emails and phone calls. Actually going to expose trade shows we've gotten some of the biggest companies that we're working with because we've gone to trade shows. Head to the trade shows such as Toy Fair, E3, Gift Fair. These are some of the trade shows that we attend yearly, and we've gotten some great partnerships by going to these trade shows. Because the companies want to see a name and a face of who's selling their actual product. Once again, there's an expo for every niche on Amazon. If you're interested in music, selling musical items, you can go to NAMM. If you're interested in selling John Deere tractors, you can go to an expo in Arkansas. I know they sell giant, giant John Deere tractors at some expo, just to show you the breadth of everything that you can actually attend. And this could be worldwide or just in the United States. They're available.
Philippe: Three is feedback. You want to show off your high ratings and convince the wholesaler that you have a great customer service. Use a service like FeedbackFive in order to get the most possible positive ratings on your site. Say you're at a trade show and you're trying to work with a very large manufacturer and you just started your Amazon seller account and it says you have 10 ratings on there and you're like a new seller. While you may be a completely legitimate company, you are working with trying to get a relationship with a Fortune 500 company who trades publicly. So you may want to try to boost up your Amazon account. And you can use a service like FeedbackFive in order to do so.
Philippe: I'm an Amazon Prime shopper. I purchase everything on Amazon Prime and I seldom remember to leave feedback after I receive that particular item. Amazon is very good in you ordering and they take care of everything. But if you have a targeted email afterwards, after the customer purchases the product and receives the product to ask for their feedback, they're more inclined or they're more likely to leave feedback and you can boost your account in a quicker way, get feedback at a greater rate than if you're not actually following up with the customer. And FeedbackFive is very affordable service. Look into it.
Philippe: Step two, placing the first order. You want to look through the price list. You want to find your margins, use the price list you get in combination with the FBA calculator in order to determine how much margin you make on each product. If that margin satiates your margin determination, if you're making enough money, go with that particular item, but always take into account weight and inbound shipping cost before choosing items. Amazon is a great platform because you can actually create shipments and then cancel them. So if you create a small partial shipment, you have 24 hours to void that particular shipment. So create that shipment and figure out exactly how much per unit it is going to cost you to send that unit to FBA and add that to either decrease or increase your margins. And similar to LTL shipments, I believe you have an hour to avoid that particular shipment. So just make a test shipment and see exactly how much it's going to cost you.
Philippe: Creating a purchase order. A purchase order is a great way to when you're working with manufacturers or wholesalers, they often require purchase orders sending them exactly what you're going to purchase from them. These are going to be formal documents. You want to include your FBA number in them. You can use Shopify to generate free, quick purchase orders and you can also indicate prep services that you may need from that particular company. If you're working with the manufacturer, they may offer labeling services, or if you're sending it directly to FBA, you may send them pallet labels and stuff like that so you can indicate that on the purchase order.
Philippe: How to pay, four ways to pay. Net terms, prepay with credit card, ACH transfer, wire transfer. ACH transfer and wire transfer, those are bank transfers. Net terms you may have to create some kind of payment history with a company before they offer you net terms, and this could be Net30, Net15, Net7, Net60. But you're going to have to show a history of payments to that particular company before they establish net terms with you. And prepay with credit card. Just to let you know what we do. We prepay with credit card and do wire and ACH transfers. The reason why we prepay with credit card, we do business travel rewards programs so we get ... where we're putting wholesale orders on our card in order to get travel rewards points so we can travel around the country, going to the expos that we need to go to.
Philippe: Once again, I don't recommend you putting your wholesale ... if you're new to wholesale putting yourself in credit card debt if you're not familiar with what you are doing. But if you have the money, you have the proven steps, you know exactly what you're doing, there's no reason why not to stack up those reward points or whatever your bank offers you. Step three, optimization and efficiency. You want to cut cost everywhere. The reason why we were able to grow our business relatively quickly is because we operate our business very frugally. So we're able to cut our cost to make sure our margins are as great as possible, and this increases your cash flow and increases your ability to make new wholesale orders and build up your inventory. You want to send more than one SKU.
Philippe: Take advantage of Amazon prep services necessary to save on shipping and you want to have go-to items. Get in the ordering flow of the best items that that company has and make sure you're not the seller who runs out of stock. And this could be seasonality based. So if an item is selling greater, in greater quantities in quarter four, you want to make sure you hedge that and forecast your sales for that particular ordering month.
Philippe: Pricing tiers. Many wholesalers provide discounts for the more you buy. If you're not in the highest pricing tier, and not all the items we work with necessarily have a MAP, so those items that don't have an MAP, you want to make sure in the greatest pricing tier so if there is a race to the bottom, you can still recover profits.
Philippe: Free shipping. It completely removes your shipping cost by reaching these free shipping tiers. If a wholesaler offers free shipping, you want to make sure you reach that, or else you're losing money, you're losing your bottom line. Okay, send directly to FBA. This is very interesting. I went to college at Columbia University in New York City and my partner went to college at Stanford University in California. And when we first got into wholesale, we were receiving wholesale orders daily at the student packaging centers, at our respective schools. For me, myself, I was in New York City so I was carrying it up, 14 flights of stairs. Then in the snow to carry it back to UPS, and it was an ongoing process, very tiring, very ... It was very intensive.
Philippe: But now you can send instructions directly to your wholesaler to send the items directly to FBA. Technically you can have an Amazon account. You can do wholesale and not necessarily see a single unit that you sell. I was in Europe on vacation for two weeks this summer and I was spending 10 to 15 minutes a day in Europe just with the Wi-Fi connection and a laptop placing orders to our American based companies. You can really operate with just a computer and a Wi-Fi connection. Step four, returns. So what to do with returns? There are a couple things you can do with returns. You can send them to yourself, then send them to the manufacturer or send them directly to the manufacturer. This is about cutting cost. You want to make sure that you maximize a return on every item that you sell, so even when there's a customer return, you want to make sure you're getting value out of that particular item. Don't destroy the item.
Philippe: Let's take LEGO for an example. We have a LEGO Disney Princess set that we sent to Amazon FBA. It has 500 pieces and five mini figures. It comes back with 500 pieces but no mini figures. Sometimes a customer may take the mini figures out of the set and return it to Amazon. This doesn't happen often but it does happen and some items are more prone to have certain units taken out before they're returned. It's just part of the game. So what you want to do is you can file a case with Amazon and they will reimburse you as long as you provide proof of purchase from the manufacturer or wholesaler or distributor. They will reimburse you for that cost.
Philippe: So it's a really a zero loss game because you can return an item for 50 cents, if it's standard size, or return an item for 60 cents if it's oversize. Once again, if the item comes back to you and it's used, you can also sell it on a different marketplace, make sure you get some money out on eBay or various different marketplaces. Send to a manufacturer after that. They may charge you a restocking fee but you are recouping some of that loss. Step five, taking your relationship to the next level. Brand exclusivity. So why is it so important?
Philippe: Brand exclusivity is important because this is what you should aim for. You should aim to be able to change listings. You're going to have full control of titles, keywords, descriptions and more. Having that control will allow you to create new items in the Amazon's ASIN catalog and move forward with more items and increase your revenue. You're going to be able to ungate your account for that particular niche that you're working with. So brand exclusivity in that particular respect is you are selling in, let's say, shoes niche and you have brand exclusivity with the manufacturer or distributor. You're going to be able to submit that proof to Amazon and get ungated for that particular category. And you can also avoid copyright claims.
Philippe: As a fully approved dealer, no one can make illegitimate claims about the authenticity of the products you are selling. Amazon is a very different platform than what it used to be. Customers can now have, I wouldn't say exploit a loophole, but basically if you're an Amazon Prime buyer, you can claim that the item is defective or the packaging is not intact and you can get free return shipping. But too many defect rates, a lot of customers that are not happy with this particular item may do that so they don't have to pay return shipping, but too many defective rates Amazon may temporarily suspend a listing but you're never going to have to face any issue with that.
Philippe: You can always get it reinstated and let Amazon know what's happening because you are brand exclusive. Other strategies. You also want to try to become exclusive, the exclusivity strategy becoming the only seller on Amazon allowed to sell that products of the wholesaler. So once you ramp up your order quantity, try to create as much market space for that particular item as possible, try to become the biggest buyer of that particular item, and then try and work exclusivity deals with that particular manufacturer, wholesaler, or distributor saying, "We want to be the only ones selling your products on the Amazon platform." And you'd be surprised. It could work. Depending on your order quantity, they may just want to work with one seller.
Philippe: Custom variations. Make sure you have listed every color or size that the products are offered in. So you want to try to bundle while you're wholesaling. For example, let's say LEGO. You have a LEGO Batman series. They're often sequenced, so they may have three sets that are sequenced into each other, and you want to maybe bundle all these sets and sell them as one listing on Amazon, create a new ASIN for that particular listing and sell them because people are looking for ease of purchase. So people are going to look for I need those three sets right now, so I'm going to go purchase those three sets from this seller. You can create new products, subsidize new research and development cost in order to bring a new product to the market.
Philippe: A lot of these companies have ASIN catalogs or UPC catalogs that are thousands of products long. I guarantee you that not all those products are listed on the Amazon platform. You can go ahead and list those products that are not listed and see exactly how you can move that particular item. And then another thing is multi-channel fulfillment. You want to try to be the first to sell on other marketplaces, including eBay, jet.com, Walmart, Newegg, Rakuten otherwise known as buy.com.
Philippe: There are so many different platforms that you can move items from so you can increase your wholesale order quantity on Amazon, just storing stuff at Amazon and sending them out to various different platforms, all at the comfort of a computer and a Wi-Fi connection.
Philippe: Okay, so what's next? With zero waste you can aim for around 15% profit margins. That's mastering the return process, aiming for certain companies, making sure that you get the value out of every single item that you purchase. The larger you get, the profit margins tend to go down to around 3% to 8%. So we're amalgamating averages here so we're saying not every wholesale company that you're going to work with is going to give you 20%, 25% margins. A lot of them are going to give you a lot less than that. So when you take into consideration all of those and you average it out, you can look for that margin in that particular margin range.
Philippe: But once again, if you keep your overhead low, you don't have that many people working with you, you keep it small, you don't overspend, your profit margins are going to go up. After that, you can contact more manufacturers and repeat the process. This process is repeatable. You can scale it.
Philippe: So you just repeat the process over and over and over again. After that, you can keep on scaling. You can go international. We started going international a year ago. And I can tell you from our experience, Amazon in different markets is like Amazon US was five years ago, it's like a goldmine. So you want to look to see if you can wholesale internationally. We've been doing very well selling internationally.
Philippe: After that you can go get assistants, virtual assistants, use Upwork. You can tell them, "Oh, I'm looking for this criteria for a wholesaler or distributor," and they will generate a list for you relatively quickly of all these particular sellers that you can contact, and you just go through one, one, one. You don't get one, you move on to the next, you move on to the next. It's scalable. There are a lot of sellers on Amazon you can keep on going.
Philippe: And then you can ship directly from China FOB in order to decrease your inbound shipping and decrease the per unit cost. You want to always decrease your cost. So ordering in bulk directly from China works out. When you're working with large manufacturers, sometimes you can order full container loads and then save money in that particular way. Once again, I want to thank everyone for joining this webinar today.
Philippe: You can learn more about everything that we're talking about on savagesellers.com, www.savagesellers.com. You can learn about we have a retail arbitrage course, an online arbitrage course, a wholesale course, FBA basics course, liquidation course, and we have more courses coming. We have around 155 video spread over all our courses and we continuously add videos. These courses are affordable and we just want to share a little bit of our journey. We want to share our journey to you expedite your success.
Philippe: We had a lot of I could say not necessarily pitfalls but certain roadblocks that have impeded our road to success in the sense that we could have grown a lot quicker than we were growing currently. So we could have gotten to the point that we are right now probably a couple years ago. So we just want to show you exactly what you need to do in order to bypass these hurdles. The Amazon platform is a lot more competitive than it used to be, but there is still space for people to sell, there's still space for people to sell.
Philippe: I don't think Amazon is anywhere near its prime, so the Amazon platform is continuously growing, the customer base is growing and the time to sell is now. If you don't feel comfortable in purchasing any of our courses, just sign up. It's free. You just put your name and your email address. It's just the two of us. We're not going to flood your inbox with any massive marketing emails. When we have a new course, we're going to let you know. When we put new tools on our website, we're going to let you know. We have a free private label course so you can take advantage of that. And once again, once you purchase our course, you're a member of that course for life, so any videos that we attach to that particular course you'll get free of charge. We really want to try to build a community and ask questions. We have a lot to learn. We have a lot to teach. Once again, thank you everyone for joining today. We want to thank Liz and Colleen and we're going to go ahead and pass the mic to them. We'll be available later on to answer questions. Thank you.
Liz: Thank you Philippe. That was awesome. That was such a great amount of information. I'm going to talk to you a little bit about eComEngine while Philippe is reviewing the questions that you submitted during the webinar. Many of you joining us today are already eComEngine customers but some of you aren't so this is just going to be a brief overview. I'll highlight our three main tools and tell you a little bit about us.
Liz: For anybody who's not familiar with eComEngine, we are a software engineering firm headquartered in Richmond, Virginia. We've been providing software to Amazon sellers for a long time now, about 10 years, and our tools specifically help Amazon sellers to manage feedback and product reviews, forecast and manage their inventory and get inside intelligence into the FBA market. Thousands of merchants including many of you know us as the inventor of feedback management for Amazon merchants with our flagship product which is called FeedbackFive.
Liz: As Philippe told you, your feedback is very important when positioning yourself to get into wholesale. Manufacturers and distributors are going to pay attention to your feedback scores, so it's important to make sure it's as good as possible, and that's where FeedbackFive comes in. FeedbackFive provides personalized automated seller feedback and product review requests with the dashboard and features that help you manage feedback and reviews and minimize the risk for negative feedback.
Liz: You've got lots of options for automatically excluding orders from receiving solicitations like when they have a higher potential to generate negative feedback, for instance, refunds, SKUs that you tend to get negative feedback on and you want to exclude those from your emails. It's really easy to work with, really intuitive tool.
Liz: And also, we now offer the ability to solicit manage product reviews, including matching buyers to reviews. So you can monitor ASINs that you're currently selling or considering selling and determine if it's a good product that you want to sell our avoid. If you see a lot of negative product reviews, obviously you might want to consider the risk and reward of selling that item. You can get alerts on your feedback and your product reviews via email or text. This is important so you can address negative reviews or feedback right away.
Liz: As you transition to wholesale, you'll want to pay close attention to not only your feedbacks but also your product reviews, especially if you're shipping directly into Amazon and you'll need probably an inventory management tool as well. So we have one of those. It's called RestockPro. It's a smart inventory management tool. I'm going to give you a short overview of this as well.
Liz: Our wholesale merchants really love it because it helps with a lot of the tasks involved with direct shipments to FBA, cross stock shipments and more. Restock Suggestions flags urgent restocking needs in red and upcoming alerts in yellow. So for each flagged item you see the suggested ship quantity and recommended reorder quantity. Makes it really, really easy. There's a lot of data available to help you make restocking decision and you can access your sales history, competitive offers, margins, rank and more.
Liz: And the shipment wizard lets you create individual or case pack shipments. And you can view the prep and sticker requirements for each product, finalize a shipment, or you can do it in Amazon Seller Central, but you can do it right in RestockPro as well. And you can create your purchase orders, optimize your orders to ensure you're meeting your supplier target order levels. You can review your selling trends, competition situation. RestockPro also calculates an estimated margin for every product you stock. So it's all here to help you increase the profitability of your FBA inventory and save you time while you keep an eye on cost and focus on the most profitable products.
Liz: Our third tool is eComSpy. It's an enterprise class business software tool that reports on the things you see on the screen here, product sales rank, category, whether or not Amazon's a seller, unit weight and whether the item is considered oversized, potential profit calculations. You can use this information to make better purchase decisions. eComSpy can steer you toward products with higher margins and fewer competitors and away from those with lower margins and a greater likelihood of just sitting in your FBA inventory, collecting those charges.
Liz: So as you research wholesale items, this is a great tool to help you determine whether or not to stock the item. That's a little bit about us and the tools that we offer. We've got some special offers associated with this webinar. Savage Sellers is offering a very generous 50% off one course. I know that their space fills up pretty soon but you just use the coupon code FeedbackFive for that. And then on our eComEngine coupon codes, we've got extended free trials available on FeedbackFive and RestockPro and 150 free credits to look up 150 different UPCs on eComSpy. I think that we're probably in a place to take some questions, so I think I'm going to turn it back over to Philippe so that he can address the questions that came in during the webinar. Oh, I don't have to change it. Philippe, are you there?
Liz: All right. Do you see the questions? Do you have some questions you want to answer?
Philippe: Yes. We're going through them right now. Charlene asked what is your net ROI percentage on your wholesale business. We feel like it's greater than most. It's roughly between 15% and 20%. That's what we aim for. In our infancy it was a lot lower, but we've cut out a lot of companies that are very low profit margin for us and we aim for our larger ROI companies, so it's between 15% and 20%. Once again, this is not indicative of everyone's profit margin. We have a very low overhead. It's just the two of us. It's been the two of us since 2011. We keep our costs very low so that's why our ROI percentage I believe is that great. I'm sure you can get it greater than that, but on average you're probably going to be looking at between 3% and 8%, and if you maximize all those returns and everything like that, you can push it up to 12% to 15%. The second question was or if I said that incorrectly, is there a way to get emailed this PowerPoint?
Liz: Yes. The answer is yes. We've recorded this webinar that includes the presentation. And we'll be sending that out to all the attendees, so they'll be able to view the webinar. In terms of whether or not we send the PowerPoint deck, you can email me about that and we can talk, but it will be available for replay later in response to Joseph's question.
Philippe: Okay. And Charlene asked another question about a website as it relates to your Amazon store. For us specifically, we have a static website so we won't sell products on a particular website. We don't think it's necessarily ... It's not necessary but if you want to have a dynamic website where you're selling products on your individual website, you can definitely use Squarespace or any of those platforms to make it extremely legitimate. Once again, Amazon provides plenty of business if you take advantage of it selling it on different platforms. It's very difficult in this time of day to create your standalone website and sell items that are already on Amazon's catalog, unless you're selling your own particular either private label items or your own branded items. Another question is, do you use software management because things are across multiple platforms? We do have our internal tools that we use ourselves. We have a lot of inventory turnover so we do have internal tools that we use for managing across multiple platforms. Another question is any reference revenue [inaudible 00:41:04] do you mean with Amazon or the revenue you collect after Amazon takes their fees? This is revenue on Amazon before they take their fees. We've been generating seven-figure revenues on Amazon for the past several years, three years. And Amazon collects their fee off of that and then after all our expenses are done. That's it. Yeah. I think that's ... There's another question from Charlene.
Liz: Actually it's a nice little shout-out from Charlene Anderson. Hi Charlene. She says that RestockPro is awesome and keeps her in stock and she can attribute 10% growth to not going out of stock as much. That's great. Thank you for letting us know that. That's awesome. We love stories like that and we do have a lot of customers on the RestockPro platform that our wholesale sellers that manage to keep track of their inventory because of RestockPro. That's what we aim for so we're glad we're helping.
Philippe: And one thing that we want to mention about the coupon code it's when you sign up to our website, when you put your email address, you want to put that into your account FeedbackFive so to get that discount on that course. If you haven't done so and you already signed up, you can just send us a quick email and we'll internally put that code into your account. It's not when you purchase the course. It's when you sign up, so there's a place where it says promo code and you can type in FeedbackFive. And once again, you could just email us if you didn't put that initially. We can put that internally.
Liz: Great. That's helpful. I think there's one more question Philippe.
Philippe: How much is your course? Is it $60? Yes, it ranges. A couple of our courses are $60, I believe a couple are $75. I think that's the max for one course. Our Amazon FBA Basics I believe is 75. We have a liquidation course that's what 25 I believe. Yes. There's no course on our website that is more than 75 at the moment. Once again, you purchase the course, you're a member for life so any videos that we add you will get them free of charge. We have a total of I believe 155 videos on our site right now between all our courses. We're launching more courses and we're putting more videos in already existing courses. If you have a question that you think we overlooked because oftentimes you overlook maybe a minutia, you can always send that to us and we'll reshoot a video or we'll shoot a video and add it to your course, just to give you a little bit more insight of how to do, how to go from this point to this point.
Liz: Wow, that's great. All right, it looks like that is ... those are all the questions we had. We want to thank everybody for attending our webinar today. And thank you Philippe. This was really great information. I'll be sure to send out a follow-up email that includes a link to the recording of this webinar, our contact information, contact information for Savage Sellers and details on the exclusive offers. So on behalf of eComEngine and Savage Sellers we thank you all for joining us today and we wish you great success with your business in quarter four and beyond.
Philippe: Thank you all for joining. Thank you Liz. Thank you Colleen.
Liz: Thank you Philippe. Thanks Ruben.
Ruben: Thank you.
Colleen: Thank you. Bye-bye.
Originally published on October 31, 2016, updated July 29, 2020
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.