Discover how to build a profitable business by purchasing products in bulk and reselling them on Amazon with minimal risk and high scalability.
Jens Vittrup
Launching a wholesale business on Amazon can be an effective way to enter e-commerce without having to develop your own products. In this guide, we explore what Amazon wholesale is, how to get started, and how you can build 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 potential for rapid scaling. However, there are also challenges and important details to understand before you begin. Let us 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 purchase products directly from manufacturers, distributors, or authorised wholesalers in larger quantities at wholesale prices, then resell them on the Amazon marketplace for profit. Unlike private label, where you create and brand your own products, wholesale focuses on selling established brands.
As a wholesale seller on Amazon, you act as an intermediary between manufacturers and end consumers. You buy goods in bulk, often at reduced prices, and then sell them through Amazon’s extensive marketplace. This gives you access to millions of potential customers without the need to worry about product development.
One of the main advantages of wholesale on Amazon is that you can “piggyback” on 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 simply need to win the so-called “Buy Box” in order to make sales.
The wholesale model has grown in popularity among Amazon sellers for several reasons, particularly because it offers a good balance between start-up costs, risk, and scalability. It requires less capital than developing your own products, yet provides greater growth potential than, for example, retail arbitrage.
There are many benefits to choosing wholesale as your business model on Amazon. Here are some of the main advantages:
One of the most underrated advantages of Amazon wholesaling is the ability to build a diversified product catalogue. Rather than relying on just one or a few products, as a wholesale seller you can offer dozens or even hundreds of different items. This spreads the 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 purchase seasonal items at a low price out of season and sell them at a higher margin when demand increases. This flexibility is a clear benefit compared to being tied to a limited product range.
Starting a wholesale business on Amazon requires careful planning and execution. Here are the basic steps to get started:
The first step is to set up 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 setting up your account, ensure you have the following prepared:
Make sure all your information is accurate and up to date, as Amazon can suspend accounts with incorrect details. Once your account is set up, explore Seller Central thoroughly to understand the various features and reports available to you.
This is a crucial phase for your wholesale business. You need to identify products with the potential to deliver a good profit margin on Amazon. Here are some important factors to consider:
Use tools like Helium 10, Jungle Scout or Keepa to analyse product data and spot promising opportunities. These tools provide insights into historical pricing, sales estimates, and competition. This helps you make data-driven decisions rather than relying on gut feeling.
Once you have identified potential products, the next step is to find suppliers. Here are some ways to source wholesalers and manufacturers:
When contacting suppliers, it is important to appear professional. Have the following ready:
Be prepared for rejections, especially at the beginning. Many suppliers are reluctant to work with new Amazon sellers. Be persistent, 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 points to negotiate include:
Be realistic in your expectations and behave professionally, especially with your first orders. Once you have built a relationship and proven yourself as a reliable customer, you can often negotiate better terms over time.
After securing your products, you need to create or “match” them to existing product listings on Amazon. This involves:
If you choose to use Amazon FBA, you will 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 part of Amazon wholesaling. You need to strike a balance between being competitive enough to win the Buy Box and maintaining a healthy profit margin. Factors to consider include:
Many wholesale sellers use automated repricing tools to adjust prices dynamically based on competitors and maximise the chances of winning the Buy Box. The Buy Box is awarded not only on price, but also on stock availability, shipping speed, seller metrics, and customer service.
To determine whether wholesale is the right strategy for you, it is helpful to compare it to other popular business models on Amazon:
Private label involves developing and branding your own products, often manufactured by contract producers. This gives you full control over the product, branding, and pricing strategies, but requires significant start-up capital and carries higher risk.
Wholesale, by contrast, offers:
The downside of wholesale is that you have less control over the product and its presentation, and you compete directly with other sellers for the same Buy Box.
Retail arbitrage involves buying products from retail stores at clearance prices and reselling them on Amazon at a higher price. This requires minimal capital but is time-consuming and difficult to scale.
Wholesale provides these advantages over retail arbitrage:
The main disadvantage of wholesale compared to arbitrage is higher initial 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 stock. This requires minimal capital but typically offers lower profit margins and less control.
Wholesale offers these advantages over dropshipping:
The primary drawback of wholesale is that you must invest in inventory and manage logistics, either yourself or via 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 are competing with other sellers for the same Buy Box on identical products. Amazon awards the Buy Box based on several factors, including price, stock availability, delivery speed and seller metrics. In highly competitive categories, this can lead to price wars, reducing profit margins.
To address this challenge, focus on finding products with less competition or differentiate yourself through service, faster shipping, or outstanding seller metrics.
Wholesale requires more capital than models such as arbitrage or dropshipping. Many suppliers have minimum order requirements, and you must invest in stock before seeing 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 your profits. You can also try to negotiate favourable payment terms with suppliers or seek alternative financing options.
Many brands are reluctant 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, start with lesser-known brands to build a track record, attend industry trade shows 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 provide additional documentation. This may include supplier invoices, product images, and proof of authenticity.
Keep 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 for Amazon approval.
Wholesale profit margins are typically lower than private label margins, and can vary considerably depending on competition and seasonality. This can make planning and budgeting a challenge.
Focus on volume and efficiency to compensate for lower margins. Diversify your product portfolio to spread risk and take advantage of seasonal trends. Use automated pricing tools to maximise profit based on market conditions.
To build a successful and sustainable wholesale business on Amazon, you should implement the following strategies:
Not all products are suitable for wholesale on Amazon. Focus on finding products with these characteristics:
Use data and analytics rather than intuition when selecting products. Tools like Keepa or Helium 10 can provide historical data on prices, sales volume, and competition, making your product choices more informed.
Your relationships with suppliers are crucial for success in selling on Amazon. Here is how you can build strong, long-term partnerships:
Remember, good supplier relationships can give you access to new products, better prices, or exclusive deals over time. Treat suppliers as partners, not just sources of products.
Good inventory management is vital to balance having enough stock to meet demand while avoiding tying up too much capital in unsellable items:
Amazon FBA can greatly simplify your inventory management, but it does incur costs. Balance the benefits of FBA (Prime eligibility, easier logistics) against its fees (including storage fees for slow-moving items).
Even though you are selling on existing product listings, you can still optimise your presentation and visibility on Amazon:
Optimising product listings for Amazon SEO can help your products rank higher in search results. This benefits all sellers on the listing, including yourself. Focus on relevant keywords, detailed product descriptions and high-quality images.
As your wholesale business grows, 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 function at higher volumes without a corresponding increase in workload.
Finding the right suppliers is crucial for your wholesale business. Here are various methods to identify and approach potential suppliers:
There are several online platforms and databases that connect wholesalers with retailers:
These platforms can provide a quick start, but always verify supplier legitimacy and bear in mind that the most accessible suppliers often already have many Amazon sellers.
Trade shows are an excellent opportunity to meet suppliers face-to-face:
Personal meetings often yield better results than online enquiries, as suppliers can form a direct impression of you and your professionalism. This can open doors that would otherwise remain closed.
An effective but often overlooked approach 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.
Leverage your professional network and industry associations to find suppliers:
Other Amazon sellers can be a valuable resource for finding suppliers, but 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 with FBA can be highly effective:
There are several advantages to using FBA for your wholesale business:
FBA frees up your time to focus on sourcing 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 the following strategies:
For wholesale sellers with many SKUs, FBA can be a game-changer, as it greatly simplifies logistics. However, you must carefully calculate all costs to ensure that FBA is financially viable for each product in your range.
In a highly competitive space like Amazon wholesale, it is crucial to find ways to set yourself apart from competitors. Here are some effective strategies:
Rather than trying to compete broadly, focus on specific niches:
By specialising, you can build a reputation in your field, which may 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 build customer loyalty.
Use data to gain a competitive advantage:
Data-driven decisions can give you a significant edge over competitors operating on intuition. Invest in quality analytics tools and learn to interpret the data correctly.
To run a successful wholesale business on Amazon, you need to manage the financial aspects carefully. Here are the most important considerations:
Wholesale usually requires more start-up capital than other Amazon business models:
It is important to budget realistically and have a financial buffer. If you have limited capital, consider starting on a smaller scale and reinvesting profits to grow organically.
Wholesale profit margins on Amazon vary greatly, but are typically lower than private label margins:
To maximise profit margins, you can:
Remember, success in wholesale often depends more on volume than on high margins per product. Focus on total profit rather than percentage margin.
Liquidity management is critical in wholesale, where you pay suppliers before receiving payment from Amazon:
Many otherwise profitable wholesale businesses have failed due to liquidity issues. Always have a buffer and plan carefully for peak seasons when you need to invest in stock before sales are realised.
When your wholesale business starts to show consistent profits, it is time to think about scaling. Here are strategies to grow your business effectively:
An effective way to scale is to expand your product selection:
By expanding your range, you can increase average order value and reduce dependence on individual products or suppliers. This makes your business more resilient to market changes.
Amazon operates globally, and you can expand your wholesale business to international markets:
International expansion can give you access to new customer bases and reduce seasonality. However, it also brings increased complexity in the form of language barriers, tax obligations and logistics challenges.
To scale efficiently, automate and systematise 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 systems also make it easier to onboard new staff as your business grows.
At some point, you will reach the limit of what you can manage alone:
When building a team, start by delegating tasks that do not require your unique expertise or are not core to your business. This frees up your time to focus on growth and strategic opportunities.
When running a wholesale business on Amazon, there are several legal and tax considerations to be aware of:
Choose the right business structure for your company:
Regardless of structure, you must register your business correctly:
It is wise 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 misunderstandings or disputes later.
As a retailer, you may be held liable for product issues:
Consult an insurance adviser to ensure your business is adequately protected against relevant risks.
Amazon has strict rules for sellers, and violations can result in account suspension:
Stay up to date on changes in Amazon’s policies by regularly reviewing Seller Central and attending relevant Amazon courses.
Amazon’s marketplace and e-commerce as a whole are constantly evolving. To remain competitive, you should keep an eye on these trends and adapt your wholesale strategy accordingly:
Technology is changing the way wholesale businesses operate:
Keeping up with technological developments and implementing relevant solutions can give wholesale sellers a significant competitive advantage.
The e-commerce landscape is constantly changing, and wholesale sellers must adapt:
By tracking consumer trends, you can adjust your product range to meet changing demand before your competitors do.
Amazon frequently updates its policies and features, which impact wholesale sellers:
Stay informed of Amazon’s changes through official announcements, seller forums and Amazon marketing resources. Be prepared to adapt your strategy in line with platform developments.
Smart wholesale sellers diversify to reduce reliance on Amazon:
A diversified approach protects your business from 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.
Success with wholesale on Amazon requires thorough research, strategic product selection, strong supplier relationships and efficient operations. It is not a “get-rich-quick” scheme, but a real business that demands dedication, patience and ongoing optimisation.
By focusing on sourcing 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 revenue stream for your company.
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