Amazon Wholesale Guide: Find Your First Supplier

Table of content
1. Introduction
- Overview of Wholesalers in the Distribution Network
- The Role and Importance of Wholesalers

2. Understanding the Basics
- Definition of a Wholesaler
- Difference Between Retail and Wholesale

3. Advantages and Disadvantages of Working with a Wholesaler
- Access to a Wide Range of Products
- Cost Efficiency and Large Quantities
- Market Knowledge and Business Relationships
- Dependence and Quality Concerns
- Potential Delays and Larger Upfront Investments
- Risks of Large Product Batches

4. Optimal Categories for Wholesale on Amazon
- Electronics
- Home and Kitchen
- Health and Personal Care
- Toys and Games
- Clothing and Apparel
- Beauty
- Automotive
- Sports and Outdoors
- Office Products
- Grocery and Gourmet Food

5. Comparing Wholesaling to Retail Arbitrage
- Sourcing Strategy
- Quantity and Pricing
- Supplier Relationships
- Inventory Management
- Risk and Investment
- Business Model

6. Establishing Contact with Wholesalers
- Conducting Online Research and Preparing for First Contact
- Making Initial Contact and Requesting Product Data
- Analyzing Product Data with ProfitPath
- Reviewing and Buying Products
- Receiving Products and Ensuring Profitability

7. Building a Successful Wholesale Strategy on Amazon
- Analyzing Market Trends and Competitor Strategies
- Understanding Amazon’s Policies and Marketplace Dynamics
- Calculating Fees, Expenses, and Potential Profit Margins
- Paying Attention to Seasonal Trends and Long-Term Success

8. Conclusion
- Recap of Key Points on Working with Wholesalers
- Final Thoughts and Encouragement to Start Building a Portfolio

9. Joining ProfitPath
- Invitation to Join ProfitPath for Enhanced Arbitrage Opportunities
- How to Join the Waitlist and Learn More

The role of a wholesaler

Wholesalers play an important role in the distribution network of many companies. They act as intermediaries between producers and retailers or other end users. Like any business relationship, working with a wholesaler has both advantages and disadvantages.

What is the difference between retail and wholesale?

A wholesaler is someone who buys products in bulk from manufacturers or distributors and then sells them to retailers or customers at a higher price. Wholesalers are usually large companies and play an important role in the supply chain as they provide a link between manufacturers and retailers. By buying products in bulk, wholesalers can receive discounts from manufacturers or distributors, which they can then pass on to their customers.

A retailer is a person or company that usually buys goods or services from wholesalers or distributors and then sells these goods or services to customers. Retailers are also an important link in the supply chain because they bring goods and services closer to the end consumer.

Why should I consider a wholesaler - Advantages vs disadvantages: Advantages:

1. Access to a wide range of products:
   1. Wholesalers usually offer a variety of products under one roof, which simplifies procurement. Through ProfitPath it is possible to scan the entire product range with an Excel, CSV or TXT to directly recognize which deals might suit you. Use our Private Search feature and upload your received files directly from the wholesaler.
      
2. Cost efficiency:
   1. By buying in bulk, retailers can benefit from lower prices that wholesalers receive due to their large order quantities from manufacturers.
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3. Large Quantities:
   1. With wholesalers there are no Quantity restrictions like there are with many Online Retailers now a days.
      
4. Market knowledge:
   1. Wholesalers often have in-depth knowledge of the markets and products they distribute and can offer valuable insight and advice.
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5. Building a Business relationship:
   1. If you start buying more frequently at a wholesaler they will recognize it and you can slowly build a relationship, to get better prices, exklusive deals and grow your network.

Disadvantages:

1. Dependence:
   1. Heavy dependence on a wholesaler can be risky, especially if there are supply shortages or quality issues.
      
2. Quality problems/replica warning:
   1. You have to look for really reputable wholesalers. Especially in the perfume industry there are often fakes and replicas, which is dangerous for you, amazon account and logically your customers. So check your wholesaler carefully before you buy anything. He may also have a big and good name in the scene.
      
3. Potential delays in delivery:
   1. Depending on the efficiency of the wholesaler, deliveries may be delayed, which can lead to stock-outs at retail. We do not recommend simply selling goods if they are not yet with you and checked.
      ​
4. Larger upfront investment:
   1. Many brands require customers to meet minimum order quantities (MOQ), and these quantities can be substantial. Consequently, it's essential to be prepared to invest a significant amount of money.
      ​
5. Higher risks due to large product batches:
   1. Losing money on a few individual products can be inconvenient, but it's not the end of the world. However, experiencing significant losses in wholesale transactions can have a serious impact on your business.
      

What Are the Best Categories to Sell Wholesale on Amazon?

The best categories to sell wholesale on Amazon can vary depending on market trends, competition, and your own expertise and interests.

However, some categories tend to perform well on Amazon due to their high demand and potential for profit. Keep in mind that Amazon's policies and marketplace dynamics can change, so it's essential to conduct thorough research before entering any category.

Here are some popular categories to consider:

1. Electronics: Products like smartphones, accessories, headphones, and smart gadgets often have a strong demand on Amazon.
2. Home and Kitchen: This category includes various items such as cookware, home appliances, furniture, and home decor.
3. Health and Personal Care: Products like vitamins, supplements, skincare, and fitness equipment have a consistent demand.
4. Toys and Games: Especially popular during the holiday season, this category includes toys, board games, and other entertainment products.
5. Clothing and Apparel: Fashion items, including clothing, shoes, and accessories, can do well if you can navigate the competitive landscape.
6. Beauty: Cosmetics, skincare, and beauty products can be lucrative, but they also come with stringent regulations and competition.
7. Automotive: Auto parts and accessories, such as tires, batteries, and car care products, have a steady demand.
8. Sports and Outdoors: Items like sporting equipment, outdoor gear, and activewear can perform well, particularly during specific seasons.
9. Office Products: Supplies like stationery, office furniture, and electronics can have a consistent demand.
10. Grocery and Gourmet Food: Non-perishable food items, gourmet products, and snacks can be profitable on Amazon.

When considering a category, it's essential to analyze the competition, calculate fees and expenses, and understand Amazon's rules and policies for that category.

Additionally, you should pay attention to seasonal trends and consider the potential for long-term success. Conduct thorough market research and, if possible, seek advice from experienced sellers or consult with an Amazon specialist to make informed decisions about the best category for your wholesale business.

Difference between Wholesaling and Retail Arbitrage

Wholesaling and retail arbitrage are both methods of sourcing products for resale, but they differ in their sourcing strategies and business models. Here are the key differences between wholesaling and retail arbitrage:

1. Sourcing Strategy:

• Wholesaling: Wholesalers purchase products directly from manufacturers, distributors, or other wholesale suppliers in large quantities at lower prices. They typically establish ongoing relationships with suppliers and buy products in bulk, aiming to sell them at a profit.
• Retail Arbitrage: Retail arbitrage involves buying products from retail stores, either brick-and-mortar or online retailers, at regular retail prices or on clearance, and then reselling them on platforms like Amazon or eBay at a higher price. Retail arbitrage relies on finding discrepancies in pricing between the source and resale markets.
  

2. Quantity and Pricing:

• Wholesaling: Wholesalers typically buy products in bulk, which allows them to negotiate lower prices per unit. They aim for lower margins but make up for it through higher volume sales.
• Retail Arbitrage: retail arbitrage involves buying small quantities of products, often single items or limited quantities, at retail prices or discounted rates. The profit margin per item can be higher, but the volume is generally lower compared to wholesaling.

3. Supplier Relationships:

• Wholesaling: Wholesalers establish ongoing relationships with suppliers and often have agreements or contracts in place. They rely on consistent sourcing channels to maintain inventory.
• Retail Arbitrage: Retail arbitrage does not require ongoing supplier relationships. Arbitrageurs rely on finding products on a one-off basis, based on clearance sales, promotions, or discounts available in retail stores.

4. Inventory Management:

• Wholesaling: Wholesalers manage larger inventories since they purchase products in bulk. They need to store and distribute these products efficiently, often in warehouses or storage facilities.
• Retail Arbitrage: Retail arbitrage involves smaller inventories, which can be stored in a home or small storage space. This method is less capital-intensive in terms of inventory storage.

5. Risk and Investment:

• Wholesaling: Wholesalers typically make significant investments in inventory upfront, which can tie up a substantial amount of capital. There is less reliance on finding individual profitable deals.
• Retail Arbitrage: Retail arbitrage requires less capital upfront because you are buying individual products at retail prices. However, it involves more time spent searching for profitable opportunities.

6. Business Model:

• Wholesaling: Wholesalers focus on building a long-term, sustainable business by establishing relationships with suppliers and consistently selling products over time.
• Retail Arbitrage: Retail arbitrage can be more opportunistic and short-term, with a focus on finding individual deals that provide immediate profit. It may not require the same level of commitment to long-term supplier relationships.
  

Both wholesaling and retail arbitrage have their advantages and disadvantages, and individuals may choose one approach over the other based on their resources, goals, and preferences. Some sellers even combine both methods in their e-commerce businesses to diversify their sourcing strategies.

How do I make initial contact with a wholesaler and how do I find one?

Step by step with our Wholesale Guide

1. Conduct online research with:
   1. Online search engines: Use search engines to find wholesalers in your desired sector. You should think about which sector you want to gain a foothold in - is it perhaps cosmetics or toys? Or perhaps electronics? (or through recommendations from business partners: Ask business partners or industry colleagues for recommendations).
      
2. You have several wholesalers: in your sightsand would like to receive the initial contact including product files in order to scan them with ProfitPath:
   
3. Preparation for the first contact:
   1. Find out about the wholesaler: Before making contact, find out about the company, its product offering, terms and conditions and reputation in the industry.
   2. Make a list of your needs: Define what you want from a wholesaler, including product types, quantities, price points and delivery terms.
      
4. Make initial contact:
   1. Check the website: First check the website carefully if there is the possibility to register online for a B2B wholesaler access. If this is not the case, the following points can be decisive:
      1. Direct call or email: Contact the wholesaler by phone or email. Be clear and precise in your request. If you want to be look more professional get a catchall, with your company name in it. Get your first catchall here!
      2. Video Call or personal meeting: If possible, arrange a face-to-face meeting to build a stronger business relationship.
         
5. Request product data:
   1. You have now been accepted as a B2B buyer and would like to check the product catalog, now see if you can download it directly from the retailer or have to request it by email.
      
6. Analyze product data (Gain access to ProfitPath here):
   1. You have now received a CSV, EXCEL OR TXT, now use the Private Search tool from us and import this file. Make sure that it does not exceed 50,000 lines and 20 MB per file. If this is the case, you will have to cut the file a little.

• After the scan, filter it according to your metrics.

• With the filtered data you will real insights what products turn into profit. We recommend to check your lists carefully with time to make sure you checked every possible deal and set them to your favorites.

7. Review your deals:

1. Now review your selected favorites in the favorites tab and decide that you would like to buy.
   

8. Buy products:

1. Through ProfitPath you have now found some good products, you are ready to buy them in bulk and order directly from your wholesaler.
   

9. Receive products:

1. Now you receive the products in the desired quantity and deliver them to the FBA warehouse or sell FBM. If all your calculations work out, you should now be making a profit and building a strong relationship with the wholesaler. We recommend analyzing the wholesalers' data on a weekly basis to find the best deals.

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We hope this little guide has helped you find and contact your first wholesaler. Start now to build a portfolio of different arbitrage products. If you have further questions or encounter any difficulties, please do not hesitate to contact our support team.

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