Learn how to build a profitable business by purchasing products in bulk and reselling them on Amazon with minimal risk and high scalability.
Jens Vittrup
Starting a wholesale business on Amazon can be an effective way to enter e-commerce without developing your own products. In this guide, we explore what Amazon wholesale is, how to get started, and how you can create a profitable business by selling established brands on the Amazon platform.
For many, wholesale is an attractive business model because it combines lower risk with the possibility for rapid scaling. However, there are also challenges and details you should be aware of before getting started. Let’s take a closer look at Amazon wholesale so you can make an informed decision about whether this sales channel is right for you.
Amazon wholesale is a business model where you buy products directly from manufacturers, distributors, or authorised wholesalers in large quantities at wholesale prices, and then resell them on the Amazon marketplace for a profit. Unlike private label, where you create and brand your own products, wholesale is about selling established brands.
As a wholesale seller on Amazon, you act as an intermediary between manufacturers and end customers. You buy goods in bulk, often at discounted prices, and then resell them through Amazon’s large marketplace. This gives you access to millions of potential customers without having to worry about product development.
One of the main advantages of wholesale on Amazon is that you can “piggyback” onto existing product listings. This means you do not need to create new product descriptions, take photos, or build customer reviews from scratch – all of this already exists on the platform. You just need to make sure you win the so-called “Buy Box” to secure sales.
The wholesale model has become popular among Amazon sellers for several reasons, especially as it offers a good balance between start-up costs, risk, and scalability. It is less capital-intensive than developing your own products but offers better growth opportunities than, for example, retail arbitrage.
There are many benefits to choosing wholesale as your business model on Amazon. Here are some of the most important:
One of the most underestimated advantages of Amazon wholesaling is the opportunity to build a diversified product catalogue. Instead of relying on the success of one or a few products, as a wholesale seller you can offer dozens or even hundreds of different products. This spreads your risk and makes your business more resilient to market changes.
Additionally, the wholesale model allows you to take advantage of seasonal fluctuations in demand. You can buy seasonal products cheaply off-season and sell them for a high profit when demand rises. This flexibility is a clear advantage compared to being locked into a limited product range.
Starting a wholesale business on Amazon requires systematic planning and execution. Here are the basic steps to get off to a good start:
The first step is to create a professional seller account on Amazon Seller Central. This gives you access to all the necessary tools to run a wholesale business. A professional account allows you to sell an unlimited number of products and provides access to advanced reporting and analytics tools.
When creating your account, make sure you have the following details ready:
Ensure all information is accurate and up to date, as Amazon can suspend accounts with incorrect information. Once your account is set up, thoroughly review Seller Central to understand the various features and reports available.
This is a critical phase for your wholesale business. You need to identify products with the potential to deliver good profits on Amazon. Here are some important factors to consider:
Use tools like Helium 10, Jungle Scout or Keepa to analyse product data and identify promising opportunities. These tools can provide insights into historical pricing, estimated sales, and competition levels. This helps you make data-driven decisions instead of relying on gut feeling.
Once you have identified potential products, the next step is finding suppliers. Here are some ways to locate wholesalers and manufacturers:
When contacting suppliers, it is important to present yourself professionally. Have the following ready:
Be prepared for rejections, especially in the beginning. Many suppliers are hesitant to work with new Amazon sellers. Be persistent, but always professional, and focus on building long-term relationships rather than quick wins.
Once a supplier is willing to work with you, it is time to negotiate terms. Key elements to negotiate include:
Be realistic in your expectations and remain professional, especially with your initial orders. Once you have built a relationship and proven yourself as a reliable customer, you can often negotiate better terms over time.
Once you have secured your products, you need to create or “match” them to existing product listings on Amazon. This involves:
If you choose to use FBA, you will need to send your products to Amazon’s warehouses. Amazon will then handle storage, packing, shipping and customer service. This can be a major advantage, especially as your business scales, as it frees up your time to focus on sourcing new products and suppliers.
Pricing is a crucial element in Amazon wholesaling. You need to find a balance between being competitive enough to win the Buy Box while maintaining a healthy profit margin. Factors to consider include:
Many wholesale sellers use automated repricing tools to dynamically adjust prices based on competitors and to maximise their chances of winning the Buy Box. The Buy Box is awarded not only based on price, but also on inventory availability, delivery speed, seller metrics and customer service.
To determine whether wholesale is the right strategy for you, it is useful to compare it with other popular business models on Amazon:
Private label involves developing and branding your own products, often manufactured by contract manufacturers. This gives full control over the product, branding, and pricing strategies, but requires significant start-up capital and carries higher risk.
Wholesale, on the other hand, offers:
The downside of wholesale is that you have less control over the product and its presentation, and you are competing directly with other sellers for the same Buy Box.
Retail arbitrage involves purchasing products from retail stores at discount prices and reselling them on Amazon at higher prices. This requires minimal start-up capital, but is time-consuming and difficult to scale.
Wholesale offers the following advantages over retail arbitrage:
The main disadvantage of wholesale compared to arbitrage is higher start-up costs and the need to establish formal business relationships with suppliers.
With dropshipping, the supplier ships products directly to your customers, so you never physically handle or own the goods. This requires minimal start-up capital, but usually results in lower profit margins and less control.
Wholesale offers the following advantages compared to dropshipping:
The primary disadvantage of wholesale is that you need to invest in inventory and manage logistics, either yourself or through FBA.
As with any business model, there are challenges in Amazon wholesale that you should be aware of before you start:
When selling wholesale on Amazon, you compete with other sellers for the same Buy Box for identical products. Amazon awards the Buy Box based on several factors including price, inventory availability, delivery time, and seller metrics. In highly competitive categories, this can lead to price wars, which reduce profit margins.
To manage this challenge, focus on finding products with less competition or differentiate yourself through service, faster delivery, or outstanding seller metrics.
Wholesale requires more capital than models such as arbitrage or dropshipping. Many suppliers have minimum order requirements, and you need to invest in inventory before you see a return. This ties up capital and creates risk if products do not sell as expected.
To minimise this risk, start with a limited number of products and gradually reinvest profits. You can also try to negotiate favourable payment terms with suppliers or seek alternative financing options.
Many brands are hesitant to work with new Amazon sellers or have exclusive distribution agreements. This can make it challenging to find reliable suppliers for popular products.
To overcome this, you can start with lesser-known brands to build a track record, attend industry-related trade fairs to establish personal relationships, or collaborate with other sellers to meet minimum order requirements.
Amazon restricts sales in certain categories and for specific brands. To sell in these “gated” categories, you must apply for approval and often submit additional documentation. This can include invoices from suppliers, product images, and proof of authenticity.
Stay up to date with Amazon’s policies and requirements for the categories you wish to sell in. Build relationships with authorised suppliers who can provide the necessary documentation to get approval from Amazon.
Profit margins in wholesale are typically lower than in private label, and they can vary significantly depending on competition and seasonal fluctuations. This can make planning and budgeting challenging.
Focus on volume and efficiency to compensate for lower margins. Diversify your product portfolio to spread the risk and take advantage of seasonal fluctuations. Use price automation tools to maximise your profit based on market conditions.
To build a successful and sustainable wholesale business on Amazon, you should implement these strategies:
Not all products are suitable for wholesale on Amazon. Focus on finding products with the following characteristics:
Use data and analysis rather than intuition when selecting products. Tools like Keepa or Helium 10 can give you historical data on prices, sales volume, and competition, making your product selection more informed.
Your relationships with suppliers are crucial to your success in selling on Amazon. Here’s how you can build strong, long-term relationships:
Remember, good supplier relationships can give you access to new products, better prices, or exclusive agreements over time. Treat suppliers as partners, not just sources of products.
Good inventory management is essential for balancing having enough stock to meet demand and avoiding tying up too much capital in unsellable inventory:
Amazon FBA can significantly simplify your inventory management, but also comes with costs. Balance the benefits of FBA (Prime eligibility, simpler logistics) against the costs (fees, storage charges for slow-moving goods).
Even though you sell on existing product pages, you can still optimise your presentation and visibility on Amazon:
Optimising product pages for Amazon SEO can help your products rank higher in search results. This benefits all sellers on the product page, including yourself. Focus on relevant keywords, detailed product descriptions and high image quality.
As your wholesale business grows, you need to think strategically about scaling:
Scaling is not just about selling more of the same, but about making your business more efficient and robust. Invest in systems and processes that can handle higher volumes without a corresponding increase in workload.
Finding the right suppliers is crucial for your wholesale business. Here are different methods for identifying and approaching potential suppliers:
There are several online platforms and databases that connect wholesalers with retailers:
These platforms can give you a quick start, but remember to verify the legitimacy of suppliers, and be aware that the most accessible suppliers often already have many Amazon sellers.
Trade shows are excellent opportunities to meet suppliers in person:
Personal meetings often yield better results than online enquiries, as suppliers can form a personal impression of you and your professionalism. This can open doors that would otherwise remain closed.
An effective but often overlooked method is to contact manufacturers directly:
Even if the manufacturer does not sell directly to you, they can often refer you to authorised distributors, saving you time finding legitimate supply sources.
Use your professional network and industry associations to find suppliers:
Other Amazon sellers can be a valuable resource for finding suppliers, but be aware that not everyone will share their sources. Focus on building mutually beneficial relationships and consider sharing supplier information in non-competing categories.
Amazon FBA (Fulfilment by Amazon) is a service where Amazon stores, packs, ships, and handles customer service for your products. Combining wholesale and FBA can be highly effective:
There are several advantages to using FBA for your wholesale business:
FBA frees your time to focus on finding the right products and suppliers, which is the core of the wholesale business. This allows you to scale faster and more efficiently.
To maximise the benefits of FBA, wholesale sellers should implement these strategies:
For wholesale sellers with many SKUs, FBA can be a game-changer, as it significantly simplifies logistics. However, you must carefully calculate all costs to ensure that FBA makes financial sense for each product in your range.
In a competitive niche like Amazon wholesale, it is crucial to find ways to differentiate yourself from competitors. Here are some effective strategies:
Instead of trying to compete broadly, you can focus on specific niches:
By specialising, you can build a reputation in your field, which can give you access to exclusive products and better negotiating opportunities with suppliers.
Offer something beyond just the product to differentiate yourself:
Although Amazon standardises much of the customer service experience, there are still areas where you can differentiate your business and create customer loyalty.
Use data to gain a competitive advantage:
Data-driven decisions can give you a significant edge over competitors who operate on intuition. Invest in good analytics tools and learn to interpret the data correctly.
To run a successful wholesale business on Amazon, you need to manage the financial aspects. Here are the most important financial considerations:
Wholesale typically requires more start-up capital than other Amazon business models:
It is important to budget realistically and have a financial buffer. Start on a smaller scale and reinvest profits to grow organically if you have limited start-up capital.
Wholesale profit margins on Amazon vary significantly but are typically lower than with private label:
To maximise profit margins you can:
Remember, success in wholesale often has more to do with volume than with high margins on individual products. Focus on total profit rather than percentage margin.
Liquidity management is critical in wholesale, where you need to pay suppliers before you receive payment from Amazon:
Many otherwise profitable wholesale businesses have failed due to cash flow problems. Always have a buffer and plan carefully for high seasons, where you need to invest in stock before sales come in.
When your wholesale business begins to show consistent profit, it is time to consider scaling. Here are strategies to grow your business effectively:
An effective way to scale is to expand your product range:
By expanding your range, you can increase your average order size and reduce dependence on individual products or suppliers. This makes your business more robust to market changes.
Amazon operates globally, and you can expand your wholesale business into international markets:
International expansion can give access to new customer bases and reduce seasonality. However, it also adds complexity in terms of language barriers, tax obligations and logistics challenges.
To scale effectively, you need to automate and systemise as many processes as possible:
The more you can automate routine tasks, the more time you have to focus on strategic decisions that drive growth. Good system building also makes it easier to onboard new staff as your business grows.
At some point, you will reach a limit to what you can handle alone:
When building a team, it is important to start by delegating tasks that do not require your unique expertise or are not central to your business. This frees up your time to focus on growth and strategic opportunities.
When running a wholesale business on Amazon, there are a number of legal and tax aspects you need to be aware of:
Choose the right business structure for your company:
Regardless of the structure you choose, you must register your business correctly:
It can be a good idea to consult an accountant or solicitor to ensure you choose the optimal structure for your situation.
Formal agreements with suppliers protect both parties:
It is best to have written agreements, even if the supplier prefers verbal agreements. This minimises the risk of later misunderstandings or disputes.
As a retailer, you can be held liable for product issues:
Consult an insurance adviser to ensure your business is sufficiently protected against relevant risks.
Amazon has strict rules for sellers, and violations can lead to account suspension:
Stay updated on changes to Amazon’s policies through regular review of Seller Central and participation in relevant Amazon courses.
Amazon’s marketplace and e-commerce in general are constantly evolving. To stay competitive, you should keep an eye on these trends and adjust your wholesale strategy accordingly:
Technology is changing the way wholesale businesses are run:
Keeping up with technological advances and implementing relevant solutions can give wholesale sellers a significant competitive advantage.
The e-commerce market is constantly changing, and wholesale sellers must adapt:
By keeping an eye on consumer trends, you can adjust your product range to meet changes in demand before your competitors do.
Amazon regularly changes its policies and features, affecting wholesale sellers:
Stay updated on Amazon’s changes through official announcements, seller forums and Amazon marketing resources. Be prepared to adapt your strategy in line with the platform’s development.
Smart wholesale sellers diversify to reduce their dependence on Amazon:
A diversified approach protects your business against unforeseen changes in Amazon’s policies or market conditions and creates more opportunities for growth.
Amazon wholesale offers an exciting opportunity for e-commerce entrepreneurs who want to sell established products without the complexity of product development. It is a business model that balances risk, investment, and scalability in an attractive way for many sellers.
To succeed with wholesale on Amazon requires thorough research, strategic product selection, strong supplier relationships, and efficient operations. It is not a “get-rich-quick” model, but a real business that requires dedication, patience, and continuous optimisation.
By focusing on finding the right products, building solid processes, and adapting to market changes, you can create a profitable and sustainable Amazon business based on the wholesale model. Remember to keep up to date with changes in Amazon’s policies and market trends to remain competitive in the dynamic e-commerce landscape.
With the right strategies and a long-term approach, Amazon wholesale can become a valuable part of your e-commerce strategy and a significant source of income for your business.
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