This week I talk about the business model that I have been working on this year — Amazon FBA Wholesale. I explain how it work from start to finish and describe some of my results.
Amazon FBA Wholesale Business Models Episode Show Notes
Last week, we talked about how you can create your own products and sell them in Amazon or how you can sell other people’s products in this platform, which is referred to as Amazon FBA Wholesale. FBA stands for Fulfilment by Amazon which means that Amazon is going to do the packing and shipping; and on your end, you will be responsible for buying stuff wholesale and sending it to Amazon to be sold. You buy it cheap and sell it in Amazon prices and make a profit after Amazon takes their cut.
Chances are, you have brought a lot of stuff in Amazon without realizing that these items actually came from a third party. Or maybe you have realized it but have not really understood what it meant. But whatever the case, your experience as a customer will not be affected as all you need to do is click the ‘Buy’ button and a robot at an Amazon facility will get your ordered item off of the shelf, put it in a box, wrap it up and ship it over to you.
There is no reason for you not to take advantage of this Amazon FBA Wholesale business. You can sign up, participate and sell anything on Amazon. But here are some questions you may have in mind:
How does Amazon decide which seller to assign the ‘buy’ button to when a customer purchases a product? If there are 7 sellers distributing the same item, who gets the sale?
Amazon rotates the ‘buy’ box between qualified sellers of the product every time there is a new customer.
What is a qualified seller?
A qualified seller is someone who has the lowest price (or close to it), has a good customer rating and someone who is going to deliver the product via Prime delivery. If you are part of the FBA program, you are automatically Prime eligible.
How do you find products to sell and how do you decide if they are going to be profitable?
Find wholesale suppliers who are willing to sell you stuff. You can approach a wholesaler and ask a list of the things that they sell. Review the list one item at a time and find them in Amazon to learn if they are selling well. This will give you an idea if you can make a profit off of it as well as give you an estimate of how many to buy. One wholesaler can give you a list made up of thousands of items though so use the aid of software to sift through and analyse for you. This software will be the one to look it up in Amazon for you and will give you a general sense of how many are sold per month; and will bump prices from wholesaler to Amazon and even has formulas to give you an estimate on how much you will profit from it by shaving off Amazon fees prior.
Personally, I like working on those items in the lower price range but has higher volume as they carry less risk. I have also found in this business that the return rates on higher-priced items seem to be higher as people are more willing to return a $200-item that they are having second thoughts about than they are with a $12-item due to the hassle of the act of returning it.
What are the costs associated with this business?
The name of this game is finding good suppliers and I have outsourced this work excellently but this is a constant work of sourcing and finding new and better ones.
How do I keep up with the price changes and how often do I need to change the prices?
Prices are changing in Amazon all the time, you can view the changes in Keepa, but to keep up, you may need to change prices every 15 minutes. Don’t worry, as most things in life, there’s software for that. These softwares are called re-prizers and I am currently using informed.co.
The whole Amazon FBA wholesale process is pretty straightforward: you buy things at a price, you analyse data on Amazon, you send the products to Amazon, and you keep the profit after selling.
I had missteps along the way in this business which cost me money but what people say about Amazon FBA wholesale is true — that you should expect to make about 15% to 20% margin. I have products which made this kind of profit and it may be worth your while to look into this business as well.
At the very end of the episode, I mention toilet paper holder that I made money selling on Amazon. Here it is (as promised).
Links Mentioned In This Episode
- Zoom H4N Pro Digital Multi-track Recorder
- Keepa – Amazon Price Tracker
- Informed – Repricing Software
- BQool – Amazon Repricing Software
- Fetcher – Amazon Accounting Software
- Forecastly – Inventory Software
- Subscribe in iTunes
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Amazon FBA Wholesale Business Models — Transcript
Selling Items with Amazon FBA Wholesale
If you’re like me and you need to buy something online, you don’t even bother going to Google anymore. It used to be you would search around on Google and try to find somewhere on the internet that was trying to sell the thing that you wanted to buy. Nine times out of 10, I just go straight to Amazon. Maybe even 99 times out of 100. Why do I do that?
Amazon has my credit card already, they have my payment information locked and loaded. I have the Buy It Now, it ships instantly with the one click purchase thing. I know I’m going to get it in two days, because I’m an Amazon Prime member. I know that if I have a customer service problem Amazon is going to take care of me. They pretty much, at least in my household, have the market cornered on buying stuff online.
The question is as internet marketers how can we take advantage of that? It turns out that you can sell stuff on Amazon. We’ve talked about this a little bit before, and also a little bit last week. You can create your own products and sell them on Amazon, or you can also sell other people’s products on Amazon.
This method of selling other people’s products on Amazon, this business model is often referred to as Amazon FBA Wholesale. Amazon suggests that it’s going to be sold on Amazon. FBA stands for Fulfillment by Amazon, which means that Amazon is going to do the packing and shipping and take care of the customer for you. The wholesale part suggests that what you’re going to do is buy stuff wholesale and send it in to Amazon to be sold.
You’re going to buy it cheap and you’re going to sell it on Amazon at whatever price Amazon is selling it, and you’re going to make money. Amazon is going to take a cut for doing the distribution and the logistics and the marketing, you’re going to pay for the product, and whatever is left is your profit. That’s the Amazon FBA Wholesale business model.