Amazon Wholesale Business - $80k since July

[WadeBoggs4]

Hey guys! I've been a lurker here on the forum for about 3 years, but I decided to take some action back in June (right after graduation) and finally dove head first into the Amazon model.

I have a 9-5 but I work on this part-time with a friend from school. It's still early but I truly believe we will be able to grow this to 50-60k/month by March. Our pipeline is solid and we're ramping up - forming new relationships and getting better at the process every day.

I'll continue to post updates here and am free to answer any questions along the way.

 

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[Siberia]

What do you sell?

 

[lowtek]

that's awesome news and congratulations.

As your lawyer, I'd advise you not to reveal your niche or products, unless it's extremely difficult to copy and execute. It wouldn't be the first time someone had their idea jacked on this forum.

 

[lowtek]

What do you sell?

Better question is: what was your process for finding a niche with high demand, and a solid product to sell?

 

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[TonyStark]

What do you sell?

Propane and propane accessories

 

[Raoul Duke]

What do you sell?

IMPORTANT! - Why All The Secrecy? Here's Why...

 

[WadeBoggs4]

Better question is: what was your process for finding a niche with high demand, and a solid product to sell?

Haha thanks for the advice. So we actually don't do private label - it's all wholesale. We sell in Grocery, Health, Sports, and a few others. It's all about the hustle. I spend hours every day combing through distributors and products. 99% of products won't work for us.

 

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[Hai]

Do you differentiate through value creation or is it purely arbitrage?

 

[Scot]

What do you sell?

Why do people think this is an ok question to ask?

 

[WadeBoggs4]

Do you differentiate through value creation or is it purely arbitrage?

It's arbitrage, but it's the same thing that pretty much all retailers do (I think). We go straight to brands and get access to wholesale price sheets. From there, we find products that will sell well and begin selling them on Amazon. It's a super simple model, and honestly something I've been struggling with lately as I want to create a more sellable asset. We're about to start selling on our own Shopify store, and we have some private label products ready to launch when Q4 is wrapped up. I hope that will make the business more sellable, as e-commerce businesses are fetching some nice multiples on Empire Flippers right now.

 

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[NewYorkCity]

Most important question: I don't care what it is, What are your margins?

 

[Siberia]

Most important question: I don't care what it is, What are your margins?

500% of course

 

[Deleted50669]

What do you sell?

Gas-powered anal beads

 

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[Envision]

What do you sell?

lol

 

[WadeBoggs4]

Most important question: I don't care what it is, What are your margins?

Depends on the product, but usually around 20-25% after everything is taken into account.

 

[C-Jay]

Gas-powered anal beads

Shit...I thought I had this market cornered.

On to the next idea, I suppose

 

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[Almantas]

What do you sell?

He has already mentioned - products!

 

[NewYorkCity]

Depends on the product, but usually around 20-25% after everything is taken into account.

Super legit.

 

[WadeBoggs4]

Hey guys! A quick update with a few (hopefully) helpful hints.

Spent a good portion of the weekend searching for new products and opening up new accounts. For those who aren't familiar with wholesale, here's the high-level overview and what you'll need to approach Brands and Distributors.

Essentially, we purchase products at wholesale prices (usually around half of retail) and get those shipped to our house. From there, we package them and send the products to Amazon FBA. The key is that we list under already popular listings. We find products that sell well (BSR under 40k primarily), reach out to that brand, and then sell the product once we have access at wholesale prices. That's all there is to it.

It's a little complicated because some brands don't want you to sell on Amazon, etc. but in the end if you reach out to enough companies you'll find someone that will give you a wholesale catalog.

Now - a couple of things that you'll need to approach wholesalers. First, you'll want an actual company. I have an LLC. This is pretty self-explanatory and there's a ton of info on how to form one. Get a bank account as well.

Second, you'll need a Resale ID from your State. Also known as a Sales Tax Permit. These are free or pretty cheap, depending on your State.

Once you have those two things, you can open a wholesale account with probably 80% of all distributors and brands out there. The other 20% is a little more tricky.

Progress note - we have some great products in the pipeline and will probably need a cash infusion at some point. Has anyone here used a Kabbage loan before?

 

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[MidwestLandlord]

Nice hustle, congrats.

Questions:

Are you worried that the brands will see you doing well on amazon, cut you out, and sell on amazon themselves? Maybe they already are selling on amazon themselves?

Are you only sourcing in the USA? If so, why?

Are you buying direct from manufacturers, or through a wholesaler? If through a wholesaler why are you leaving margin on the table and not buying direct?

It sounds like these are off the rack products that anyone could have access to sell. Have any current sellers started a race to the bottom on prices to compete with you yet?

 

[WadeBoggs4]

Nice hustle, congrats.

Questions:

Are you worried that the brands will see you doing well on amazon, cut you out, and sell on amazon themselves? Maybe they already are selling on amazon themselves?

Are you only sourcing in the USA? If so, why?

Are you buying direct from manufacturers, or through a wholesaler? If through a wholesaler why are you leaving margin on the table and not buying direct?

It sounds like these are off the rack products that anyone could have access to sell. Have any current sellers started a race to the bottom on prices to compete with you yet?

Thanks! So we only sell products where the brand itself doesn't sell on the listing. So think a lot of big brands - Dove, Crest, Aussie (just examples) that don't sell direct to consumers in any capacity. Their business model is to sell through distributors and big stores like Walmart. They couldn't care less that we sell their products (at least in my experience so far). Other smaller brands operate on a wholesale only model as well.

Occasionally we have sold on a listing where we have been told to get off, and we comply. This usually comes from the brand itself.

We do both. We buy from distributors and from the manufacturers directly. We could go direct and save a bit, but oftentimes the manufacturers will be a bit tougher to open an account with (high minimums, physical store, etc.) so we just look to the distributors.

These are products anyone could have access to. To be totally honest I don't think it's all that sustainable long-term, but for the time being it's working well. Races to the bottom occasionally happen and have killed a couple of our products.

Hope that answers your questions!

 

[Ben Taylor]

Hey guys! A quick update with a few (hopefully) helpful hints.

Spent a good portion of the weekend searching for new products and opening up new accounts. For those who aren't familiar with wholesale, here's the high-level overview and what you'll need to approach Brands and Distributors.

Essentially, we purchase products at wholesale prices (usually around half of retail) and get those shipped to our house. From there, we package them and send the products to Amazon FBA. The key is that we list under already popular listings. We find products that sell well (BSR under 40k primarily), reach out to that brand, and then sell the product once we have access at wholesale prices. That's all there is to it.

It's a little complicated because some brands don't want you to sell on Amazon, etc. but in the end if you reach out to enough companies you'll find someone that will give you a wholesale catalog.

Now - a couple of things that you'll need to approach wholesalers. First, you'll want an actual company. I have an LLC. This is pretty self-explanatory and there's a ton of info on how to form one. Get a bank account as well.

Second, you'll need a Resale ID from your State. Also known as a Sales Tax Permit. These are free or pretty cheap, depending on your State.

Once you have those two things, you can open a wholesale account with probably 80% of all distributors and brands out there. The other 20% is a little more tricky.

Progress note - we have some great products in the pipeline and will probably need a cash infusion at some point. Has anyone here used a Kabbage loan before?

Congrats on your success! Question though: you mentioned that you list under already popular listings. What do you mean by this? Is it that you use an already popular listing and then are one of the "other sellers?"

 

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[Ben Taylor]

Also, how do you go about doing your niche research and product selection? Or, better yet, do you know of any resources/courses you could direct me to to learn how to do so?

 

[WadeBoggs4]

Congrats on your success! Question though: you mentioned that you list under already popular listings. What do you mean by this? Is it that you use an already popular listing and then are one of the "other sellers?"

Thanks! You've got it for the most part. We find popular listings and list under that listing to try to win the Buy Box for that listing. We don't want to be one of the "other sellers"

If you're not sure what that is, on essentially every Amazon listing there is a fight to make the sale through the buy box. Amazon rewards the seller with the best metrics and price with the buy box, so when someone clicks add to cart, you're the one making the sale.

 

[Diracdelta]

Why do people think this is an ok question to ask?

Because no one executes...

 

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[ecommercewolf]

Hey guys! I've been a lurker here on the forum for about 3 years, but I decided to take some action back in June (right after graduation) and finally dove head first into the Amazon model.

I have a 9-5 but I work on this part-time with a friend from school. It's still early but I truly believe we will be able to grow this to 50-60k/month by March. Our pipeline is solid and we're ramping up - forming new relationships and getting better at the process every day.

I'll continue to post updates here and am free to answer any questions along the way.

No idea if you are still active since I'm reviving an old thread but I'll ask my question here anyways.

So I'm doing 10k plus a month on Amazon currently, just through online arbitrage but I know wholesale is something I want to do since it is more sustainable for the long term.

Are you running this operation out of a warehouse? I noticed that on a lot of applications online, to access wholesale prices they want a business address. I currently do everything for online arbitrage out of my apartment. Wanted to see if that warehouse address is necessary.

 

[WadeBoggs4]

No idea if you are still active since I'm reviving an old thread but I'll ask my question here anyways.

So I'm doing 10k plus a month on Amazon currently, just through online arbitrage but I know wholesale is something I want to do since it is more sustainable for the long term.

Are you running this operation out of a warehouse? I noticed that on a lot of applications online, to access wholesale prices they want a business address. I currently do everything for online arbitrage out of my apartment. Wanted to see if that warehouse address is necessary.

Hey, sorry yeah have not posted here in quite a while. Went through a very busy patch in the business but still monitor FLF for notifications occasionally.

To answer your question - yes, we have a warehouse that we use, but it is a 3PL company that handles all of the prep, pack, and inbound shipments into Amazon FBA centers. I would look around for some of these in your area. Just google "Amazon FBA Prep" or something along those lines. Found one in my city and have been using them ever since.

That said, at scale it definitely makes sense to have your own warehouse. For example, we usually get charged around $1-1.5/item. In the beginning this was fine, but with thousands of items monthly it actually starts to make sense to just rent out a warehouse and bring on contractors/employees to prep items.

The only other thing I'll say about this business model - be prepared for a lot of churn. It's absolutely the worst part of the business, and I've started to look more into private label lately as around 10% of items aren't suitable for reorder the following month due to a variety of reasons (amazon killed price, other sellers, brand stops being okay with amazon, etc.)

 

[patrickx]

Hey, sorry yeah have not posted here in quite a while. Went through a very busy patch in the business but still monitor FLF for notifications occasionally.

To answer your question - yes, we have a warehouse that we use, but it is a 3PL company that handles all of the prep, pack, and inbound shipments into Amazon FBA centers. I would look around for some of these in your area. Just google "Amazon FBA Prep" or something along those lines. Found one in my city and have been using them ever since.

That said, at scale it definitely makes sense to have your own warehouse. For example, we usually get charged around $1-1.5/item. In the beginning this was fine, but with thousands of items monthly it actually starts to make sense to just rent out a warehouse and bring on contractors/employees to prep items.

The only other thing I'll say about this business model - be prepared for a lot of churn. It's absolutely the worst part of the business, and I've started to look more into private label lately as around 10% of items aren't suitable for reorder the following month due to a variety of reasons (amazon killed price, other sellers, brand stops being okay with amazon, etc.)

Are you guys keeping your pipeline full? Churn is a big problem, we are looking to ramp up the top of the funnel by start mass emailing suppliers instead of calling. What are your thoughts?

 

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[ecommercewolf]

Hey, sorry yeah have not posted here in quite a while. Went through a very busy patch in the business but still monitor FLF for notifications occasionally.

To answer your question - yes, we have a warehouse that we use, but it is a 3PL company that handles all of the prep, pack, and inbound shipments into Amazon FBA centers. I would look around for some of these in your area. Just google "Amazon FBA Prep" or something along those lines. Found one in my city and have been using them ever since.

That said, at scale it definitely makes sense to have your own warehouse. For example, we usually get charged around $1-1.5/item. In the beginning this was fine, but with thousands of items monthly it actually starts to make sense to just rent out a warehouse and bring on contractors/employees to prep items.

The only other thing I'll say about this business model - be prepared for a lot of churn. It's absolutely the worst part of the business, and I've started to look more into private label lately as around 10% of items aren't suitable for reorder the following month due to a variety of reasons (amazon killed price, other sellers, brand stops being okay with amazon, etc.)

Thank you for the 3PL tip because I have not even thought about that. As you know the FBA grind is a constant grind and even though my sales numbers look good on paper, I don't take a cent out & I use it all to pay for more inventory or to pay off inventory from the previous month. Getting a warehouse right now and adding that on top of my current bills probably is not the best option so the 3PL option seems more feasible.

I heard that with the wholesale model, the brands actually have a minimum price that you have to maintain?
How true is that? Do other sellers just disregard the minimum price asked by the brands and hoping they don't get caught

Thanks again for the fast response.

 

[WadeBoggs4]

Thank you for the 3PL tip because I have not even thought about that. As you know the FBA grind is a constant grind and even though my sales numbers look good on paper, I don't take a cent out & I use it all to pay for more inventory or to pay off inventory from the previous month. Getting a warehouse right now and adding that on top of my current bills probably is not the best option so the 3PL option seems more feasible.

I heard that with the wholesale model, the brands actually have a minimum price that you have to maintain?
How true is that? Do other sellers just disregard the minimum price asked by the brands and hoping they don't get caught

Thanks again for the fast response.

No problem, yeah still struggling with that myself. Great sales numbers but most of it being reinvested back into the operation. I don't really see that changing until we hit 100k/mo consistently, but I have been reading through this book called Profit First lately which gives a solution for managing cash flow. May be worth a read.

Yeah, many brands will have MAP pricing, but it's also true that many sellers will break this MAP pricing, and Amazon can't enforce it. So it's really case-by-case.