September 07, 2019
Wholesale on every budget: Selling on Amazon with $100 (or less!)
By Allee Evensen
The FBA Facebook groups have been buzzing this month. With an increasing amount of restrictions put in place by well-known brands, as well as a surge of new Amazon sellers, people everywhere are claiming Amazon FBA is dead.
The good news is, anyone who tells you Amazon wholesale is dying doesn’t understand economics. Amazon is simply a platform. As long as there are buyers (which there are, as long as 100 million is enough for you) there is room for you to make serious money, no matter what your initial investment is.
Here are the top objections we see from new Amazon sellers trying to find wholesale products:
- There’s no profit margin!
- I don’t have enough money to start buying wholesale FBA products.
- I don’t know how to open a wholesale account.
- I don’t know know which suppliers to contact.
- I don’t know where to start.
Wholesale - the selling of goods in large quantities to be retailed by others.
Keep reading to learn how to tackle these issues no matter if you’re budget is $10 or $10,000.
Starting from Scratch: $0 Budget
Starting any business, nevermind an inventory-based one, is challenging in the first place. Starting one without capital may seem impossible, but there are a few things to keep in mind.
Search for wholesalers who offer net90 terms
Search for wholesalers who offer net90 terms based on your personal credit. In short, this means that you don’t have to pay back the supplier for 90 days after you order the product. Don’t think about doing this with shorter terms, as net30 and net60 terms generally won’t give you enough time to receive the product, ship it back to Amazon, sell it, and get paid. Most suppliers won’t give you a 90 day term without being an established customer, but they may be more willing to budge if you have a strong credit history. It never hurts to ask.
Search for a short-term lender
Search for a short-term lender. Some lenders, such as Behalf, partner with specific wholesalers to offer lines of credit for inventory.
Are you a marketer, web designer, or graphic artist? Hard skills are always in need, and cash-less trades have an enormous amount of appeal to small business owners. This won’t work with huge corporations, but small, local wholesalers or manufacturers may be willing to negotiate a barter agreement. Try to set up in-person meetings over phone calls -- it will be easier to make a deal.
Building up: $100 Budget
With limited money, your key is to search for small, light products that sell quickly. Even if your profits are small, make sure your margins are healthy -- at least 50%.
Let it build-up
If you found 100 different $1 products with a 100% margin, reinvesting over 12 months would build to more than $100,000. This may seem outlandish, but the math doesn’t lie.
Don’t pay for shipping
With a low budget, you don’t have a dime to spare. Use ProfitGuru to search for the wholesalers closest to your location. This will allow you to pick up an order, rather than shelling out freight dollars.
Look for items that you can sell in packages of multiples (replenishable household items are best). Your fees will be lower, allowing you to turn your money more quickly.
Small capital: $1000 Budget
You’ve got a little money to work with, so use it carefully.
Don’t focus on unicorns
Right off the bat, you should know there are major brands that won’t want to work with you. We call these unicorn brands because you’re about as likely to see a unicorn in your backyard as you are to land a wholesale account with them. These are generally major companies that sell high-end products (for example Nike, Sony, and Apple). Spend your time searching for mid-size companies, where you can get an accessible sales representative to walk you through creating an account.
Invest wide, not deep
If you throw $1000 into a single product, it puts your whole business at risk. Only purchase what you can turn in 60 days. The cost of sitting inventory isn’t just lost sales -- Amazon storage fees add up quickly.
Ditch the instant approval applications
Ditch the instant approval applications: If you can apply for a wholesale account online and have it instantly approved, so can everyone else. As frustrating as it is to fill out pages of paperwork, you’ll get better margins and less competition from companies who put you through the wringer.
Big wallet: $10,000 Budget
This is the start of the big leagues. You have enough cash to work with 2-3 suppliers and grow your product base quickly.
The bigger you can order, the more likely a supplier is to give you a discount. These discounts almost never show up online -- you have to ask. With bigger orders spread your inventory horizontally rather than vertically. If you run out of profitable products, inquire about new items that aren’t in the catalog yet.
Ask about exclusives
Ask about exclusives: If you do order deep on a single product, ask your supplier if they would be willing to sell exclusively to your business. This eliminates competition and provides price stability.
Find the niche you want first, then search for wholesalers that supply directly to that product category. Many suppliers would rather work with a specialist company than one with a broad Walmart-type mentality.
In short, it doesn’t matter how much your budget is. Almost anybody can build a wholesale business on Amazon with a little grit and a willingness to learn. Just remember the basics:
- Choose the correct products
- Price for profitability
- Build relationships
- Master the art of customer service
What kind of budget do you have? Drop a line and let us know below.