If you’ve read our article about retail arbitrage, you will see it’s a relatively easy business model to follow. One of the disadvantages though is the difficulty of being able to find good offers with a good return on investment (ROI) which you can buy in quantity. If you’re struggling with finding suitable arbitrage opportunities you may want to look into wholesaling if you want to more easily scale your Amazon business and have predictable cash flow.
- 1 What is Wholesaling?
- 2 Who Can Buy from Wholesalers?
- 3 Where Can I Find Wholesalers?
- 4 What to Do Before Purchasing Stock from a Wholesaler?
- 5 7 Top Tips for Buying from Wholesalers
What is Wholesaling?
Wholesaling allows you to buy in larger quantities directly, from a manufacturer or middleman at trade prices which you can then later sell on for a higher price elsewhere such as Amazon.
One of the main advantages of wholesaling is as you’re buying in higher quantity, this will mean you’ll be able to get lower prices which in turn will mean higher ROI’s. Unlike sometimes with retail arbitrage, once your product has sold out, you can just reorder from your wholesaler again. Wholesalers will also supply a greater range of products, this allows you to quickly scale up your business and sell more types of products. Many of them also allow you to buy on credit, therefore it can help you if you’re facing cashflow problems.
Although there are benefits, wholesalers will expect you to buy in bulk. Some will impose minimum order quantity’s (MOQ) which means you will need to spend at least a few hundred pounds/dollars on some items. As you’ll be buying in larger quantities, you will need to make sure there is a demand for the products, you don’t want be placing an order and then finding out no one wants them and you’re stuck with a load of stock which you can’t shift.
Who Can Buy from Wholesalers?
Don’t assume wholesalers will only sell to large retailers. You should therefore not be scared of approaching them even if you are just a sole trader starting up your new Amazon FBA business. Many will want to build a rapport with their customers, so they’ll do their upmost to build a lasting working relationship with you.
Some wholesalers may require proof that you’re a legitimate business, so they will need some sort of evidence that you do indeed run a business and you’re not just purchasing products for your own personal use. Proof may include a copy of your business bank account, invoices from other wholesalers or headed notepaper displaying your business name. You may also be required to complete an application process asking about your business and where you plan on selling the products you’re buying.
Where Can I Find Wholesalers?
When looking for a wholesaler, you first need to decide the type of products you’re looking to sell and whether there are any particular brands you’re interested in. There are lots of wholesale companies out there who supply all types of products and there are some which specialise in a small niche, it is vital that you find a good quality wholesaler/distributor.
Many wholesalers/distributors may not advertise so a great way to find them is by attending trade shows. There are trade shows out there for all types of niches including toys, pet products, wedding shows, electronics, homeware, crafts and many more.
Once you’ve located a wholesaler, check their website and ask for a price list to see how competitive they really are.
|Lists global trade shows. Allows you to filter by countries and categories.||Check it Out|
|An events and exhibitions directory focused for the UK market.||Check it Out|
|Find trade shows, events around the world.||Check it Out|
|Dedicated to trade fairs around the world.||Check it Out|
|Lists international exhibitions around the world.||Check it Out|
|One of UK’s largest directories of wholesale suppliers, dropshippers and trade leads.|
You can contact wholesalers free of charge but for a premium membership there is a cost.
With a membership, you get access to more suppliers (over 150,000+ verified suppliers). They also provide customer support.
|1 month @ £20|
6 months @ £50
12 months @ £75
|Check it Out|
|A wholesale directory of products where you can find up to 95% off RRP. New deals are added daily to the site.||Free||Check it Out|
|The wholesaler directory was established in 1999 and is free to for all buyers (suppliers pay to list on the site).|
All registered wholesalers on the site are verified before they are listed.
|Free||Check it Out|
|A free directory set-up in 2004 which list a wide range of wholesalers It also has a messageboard where you can find new leads and ask any questions you may have.||Prices range from £14.99 a month to £69.99 a year||Check it Out|
|A directory of European companies. The site provides free access to 3 million companies within the EU.||Free||Check it Out|
|A directory of manufactures and suppliers from Europe.||Free||Check it Out|
|Is a paid directory with over 8,000 suppliers.|
One of the best directories out there (has 5 out of 5 starts on Trustpilot), all the suppliers are screened so only genuine suppliers are listed.
It has over 1.6 million branded products so you won’t be lost for choice.
Once you sign-up, you get free access to the Market Research Labs tool which allows you to see demand for a particular product as well it allows you to spot trends.
|$67 annually (€55.8 per month)|
Has 60-day money-back guarantee
|Check it Out|
|A supplier site where you can purchase surplus or bankrupt stock from other companies. Useful to find stock that is being sold below cost.||Free||Check it Out|
|Like SaleHoo it’s a paid directory of screened suppliers.|
Not only can you search for suppliers you also have access to market research tools, training videos, wholesale protection and much more.
|$299 one-time payment||Check it Out|
|A free wholesale directory of wholesale suppliers and products.||Free||Check it Out|
|Stock is sourced from a range of retail closeouts both in the US and Canada. Great site to find branded products.||Free||Check it Out|
What to Do Before Purchasing Stock from a Wholesaler?
Deciding on what wholesale products to purchase largely follows the same steps you would perform when doing retail arbitrage (see our retail arbitrage article).
Below we have outlined some of the important considerations you will need to make before purchasing a product:
1. Know Your Profit Margins
Use Amazon’s free Fulfilment by Amazon Revenue Calculator which allows you to enter your product costs and will calculate your selling fees and potential profit. If the product is competitive on Amazon make sure you have higher ROI’s in case you may need to bring the price down on Amazon to compete with other FBA sellers.
A good way to automate this process is to upload your wholesaler’s inventory list which includes the products prices and UPC’s as a CSV to either one of the following tools OAXray, Tactical Arbitrage or FBA Wizard. It will automatically output the ROI and BSR. This literally will save you hours of time and effort.
2. Check Out the Product’s BSR
Find the products you’re intending on selling on Amazon and check their Best Seller Rank (BSR). Ideally you’re looking for BSR’s of under 30,000 which means the product should at least sell one to a couple a day. You don’t want to be paying long term storage fees to Amazon if there’s not sufficient demand.
3. Be Careful with Seasonal Products
If you’re purchasing seasonal products, make sure you order only the quantity that you expect to sell before the season ends. You don’t want to be raising removal orders as this will incur charges.
4. Know the Product’s Price History
Always use a tool like CamelCamelCamel or Keepa to check the price history and sales rank of the product. The product you’re thinking of selling might not be as profitable as you first thought it is so always check what the average selling price is on Amazon.
7 Top Tips for Buying from Wholesalers
1. Ensure Your Wholesaler is Reputable
Before ordering any products from a wholesaler make sure they are reputable. Always perform a search for the company and check whether there any negative comments/reviews about them. Check their contact details on their website and call them up and speak to them to ensure they are genuine.
2. Check Payment Terms
Although many wholesalers allow customers to buy on credit, don’t assume they will offer this facility as soon as you have an account with them. Initially you may need to pay in cash and after a few months you can then ask if they could offer you a credit account.
3. Check if they Price Match
Don’t be scared to haggle with your supplier. Some wholesalers may be happy to price match with others especially if you’re placing a large order or you’re purchasing more than the MOQ.
4. Sign-Up to their Mailing List
Don’t forget to sign-up to their mailing list, this way you will get notified of any new products and you may be able to purchase them before others do.
5. Find Less Well-Known Wholesalers
Find wholesalers who do not advertise on the internet. Ideally you’re looking for wholesalers/distributors who very few people know about. That way you will have less competition on Amazon and your profit margins will be higher. Trade shows can be great place to find wholesale/distributor leads.
6. Check the Product’s Condition
Make sure you are aware what you are buying and the condition as some places sell returned customer goods such as electronics. Wholesalers will mark their items according to their condition, such as, ‘as new’, ‘unchecked’, ‘damaged’ etc
7. Avoid Poor Exchange/Commission Rates for International Payments
If your wholesaler/distributor is based in another country, we would recommend using a company like TransferWise for international payments. Don’t use a bank transfer or PayPal, otherwise you may face exorbitant costs such as poor exchange rates, transfer and bank fees which will damage your margins. TransferWise use the real mid-exchange rate (the going rate) so you won’t get ripped off. When you make the transfer, you will only pay a simple fee which is laid out plainly on their website.