Transition to Wholesale - Tips for Amazon Sellers
by Liz Fickenscher, on October 31, 2016
Have you considered expanding your eCommerce 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. 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:
- Why wholesaling offers an opportunity for growth for many sellers
- What to look for in a wholesaler
- How to communicate with wholesalers
- An overview of why minimum advertised price (MAP) is important for both wholesalers and merchants
- What you need to know about your competitors
- Strategies for optimizing the ordering process
- And much more!
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 dropshipping 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.Here is the webinar recap written by Becky Trowbridge:
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.
The Amazon Seller’s Guide to Getting Started with Wholesale
Transitioning to wholesale offers a number of benefits for eCommerce sellers. 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 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.
Scaling for Success
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.”
What to Look For in a Wholesale Account
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?
Getting Started with Wholesaling
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.
Make the Transition to Wholesale
If you’re considering adding wholesaling to your eCommerce business model, get advice from merchants who have done so successfully.