Amazon Wholesale Explained: A Complete Guide for Beginners

 

Amazon Wholesale Explained: A Complete Guide for Beginners

Amazon Wholesale is a popular business model for selling on Amazon, particularly for beginners because it leverages the existing demand for established brands.

Here is a complete guide to understanding and starting with Amazon Wholesale:

1. What is Amazon Wholesale?

Amazon Wholesale is a business model where you:

• Purchase branded products in bulk directly from manufacturers, brand owners, or authorized distributors.

• Get a significant discount on the per-unit price due to the bulk purchase (the wholesale price).

• Resell those products individually to customers on Amazon for a profit.

The core idea is to find profitable, high-demand products that are already selling well on Amazon and compete with other sellers on that product's existing listing (known as sharing the "Buy Box").

2. Wholesale vs. Other Amazon Models

Feature	Wholesale	Private Label	Retail/Online Arbitrage
Product Source	Manufacturers/Distributors	Create your own brand/product	Retail stores/Online clearance sites
Brand	Established, known brands	Your own new brand	Established, known brands
Listing	Add offer to existing listing	Create a new listing	Add offer to existing listing
Competition	Compete with other authorized sellers	Compete with similar products	Compete with other arbitrage sellers
Startup Speed	Relatively fast	Slow (product development/manufacturing)	Very fast

3. Key Advantages of Amazon Wholesale

• Built-in Demand: You sell products that customers are already searching for and buying, reducing the need for heavy marketing to create brand awareness.

• Faster Launch: You don't have to spend months on product development, branding, or listing creation. You can start selling within a few weeks.

• Scalability: Once you establish a relationship with a supplier, reordering is simple, allowing you to quickly scale your inventory and business.

• Profitability: Buying in bulk at lower per-unit costs helps achieve better profit margins than buying small quantities.

4. Step-by-Step Guide for Beginners

Step 1: Business Setup & Registration

Wholesale suppliers are typically B2B (Business-to-Business), so they require you to have a legitimate business structure.

1. Register a Legal Entity: Form a legal business entity (e.g., LLC, Sole Proprietorship) in your region.

2. Obtain an EIN: Get an Employer Identification Number (like a Social Security number for your business) from your government (e.g., the IRS in the US).

3. Get a Resale Certificate/License: This allows you to purchase products from suppliers without paying sales tax, as the tax will be collected from the end customer on Amazon.

4. Create an Amazon Professional Seller Account: This costs a monthly fee but is necessary for serious sellers and offers lower per-item fees than an Individual account.

Step 2: Product Research and Selection

The goal is to find established products with high, consistent sales volume and where you can secure a favorable wholesale price.

• Look for Proven Demand: Use Amazon Seller tools (like Jungle Scout, Helium 10, etc.) or manually check Amazon Best Sellers to identify products that sell hundreds or thousands of units monthly.

• Analyze the Buy Box: Check how many sellers are currently on the listing and how often the Buy Box rotates. More sellers mean more competition, but if the Buy Box is shared fairly, it can still be profitable.

• Estimate Profitability: Use an Amazon FBA calculator to subtract your estimated wholesale cost, Amazon fees (referral fee, FBA fee), and shipping costs from the current selling price. Aim for a healthy net margin (e.g., 15-20% or more) and a decent Return on Investment (ROI).

Step 3: Find and Contact Suppliers

This is the most critical step, requiring persistent effort and professionalism.

1. Identify the Brand/Manufacturer: Once you know a product you want to sell, search for the brand's main website.

2. Find Wholesale Contact: Look for a "Wholesale," "Distributor," or "Contact Us" section on their website.

3. Reach Out Professionally:

   • Call or email them using your professional business email address.

   • Introduce your company (the one you set up in Step 1) and state that you are interested in opening a wholesale account to sell their products online.

   • Ask for their wholesale catalog and price sheet.

4. Negotiate: Once you have the price list, negotiate Minimum Order Quantities (MOQ) and pricing to ensure a profitable margin.

Step 4: List and Fulfill Orders

Once you secure a wholesale account and place an order:

1. Create a Purchase Order (PO): Send the supplier your formal order.

2. Use Fulfillment by Amazon (FBA): The most common method. Once your inventory arrives, you ship the entire bulk order to one of Amazon's fulfillment centers.

   • Amazon stores the inventory.

   • When a customer buys, Amazon picks, packs, ships the product, and handles customer service and returns.

3. Create the Offer: Add your offer to the existing Amazon product page, setting your quantity and price to compete for the Buy Box.

4. Monitor Inventory and Sales: Track your sales velocity to know when to place your next, larger wholesale order to avoid running out of stock.

5. Getting Started Checklist (The Essentials)

Item	Status	Notes
Legal Entity	$\square$	LLC or Sole Proprietorship registered.
EIN	$\square$	Employer Identification Number obtained.
Resale Certificate	$\square$	Sales tax exemption license acquired.
Amazon Seller Account	$\square$	Professional Plan registered.
Product Research	$\square$	Found at least 3-5 high-demand product candidates.
Supplier Contact	$\square$	Wholesale accounts opened with a few brands/distributors.
Starting Capital	$\square$	Minimum $\$1,000 - \$2,000$ (ideally more) for first PO.