Wholesale refers to the Amazon business model wherein you buy products in bulk and then resell those to customers. Wholesaling can be a great start of your Amazon business before moving on to private label. Ultimately, the choice to do wholesaling depends on your resources and goals.
On Amazon, sellers are 54% private label sellers while 26% are wholesale sellers as of 2022 according to sellerapp. Perhaps the remaining consists of arbitrage sellers, handmade, dropshippers, etc.
The private label business model has the highest risk in terms of monetary investment. It requires a huge upfront investment to develop a brand and source products. At the same time, marketing the private label brand will also require PPC advertising (pay-per-click ads) and even some off-Amazon promotions.
Nowadays, it’s rare to start a private label brand with only $3000 as the investment. But in wholesale, you can already start with that amount.
Buying products directly from manufacturers or distributors can be cheaper because you are buying in several cases to several hundreds, and even thousands of the same unit.
And with the large quantities that wholesalers deal with, it is a no-brainer to work with a warehouse that is spacious enough for all your stocks and the capacity to prep your products.
Benefits of Wholesale
Before we tackle how working with a prep center can benefit your Amazon business, let’s review first the advantages of wholesale.
Aside from the lower cost of investment, here are some other benefits of wholesale:
- Existing brand-aware customers: You will spend less in promoting the brand because you will be selling under an established brand that already has built brand authority. This also translates to a proven, existing demand for the products.
- Fewer inventory problems: With the brand or manufacturer working with you, then, it is highly probable that you’ll have enough inventory and not go out-of-stock due to unavailability from your supplier.
- Easier to start and scale: Unlike a private label that requires time and money to introduce to the market, wholesalers can skip this step and proceed with selling the products already.
- Lower risk: Since you are not the brand owner, you are not likely to have direct competitors. But also, since you’re authorized to sell, you assume lower risks of IP complaints from brands – a daily struggle among arbitrage sellers.
Understanding Amazon Wholesale
It’s important to remember that no business model is perfect. Even in wholesale, there is competition. Market can reach saturation. Product research can still be challenging. A huge capital is needed.
But when done right, you could very well be on the road to reaching your revenue targets. When paired with a working prep center and warehouse, your wholesale business can flourish. And a huge part of the success is by working with a trusted warehouse and prep center.
How Wholesale Works
You can look up products that are already selling on Amazon that you are allowed to sell, have demand, and can be profitable.
As a wholesaler, you look for distributors or manufacturers of those products that would allow you to open an account with them. They may require you to present business documents so they can entrust their brand with you.
Once approved, you can then proceed with buying your products according to their imposed minimum order quantity.
Providing Warehouse Value-Added Services to Wholesale Clients
Now that you have products, these may be too many for your own home or office to store. This is where your prep center comes in. Note that prep centers can act as warehouses, but not all warehouses are prep centers. In this discussion, both terms can be interchanged.
Here are several ways that a trusted and reliable warehouse can help you in your Amazon business:
- Receiving and Inspection: Once delivered, the warehouse can receive your products on your behalf and check them for completeness, quality condition, and accuracy to what was ordered.
- Storage and Inventory Management: Instead of products taking up space in your house or office, take advantage of the vast area that warehouses allocate for their customers. At the same time, you can make use of a third-party warehouse to store a chunk of your inventory instead of sending everything to Amazon. This can be cost-effective if Amazon’s storage fees are too high. This is also helpful if you have limited storage allocation at Amazon.
- Picking and Packing: You can then instruct the warehouse to collect, prep and label the products for sending to Amazon. The trained staff of the prep center will pack your products according to the prep instructions of Amazon.
- Customized Packaging and Branding Solutions: Should you need a customized bundle of several products or put inserts, you can send the related materials and instructions to the prep center.
- Shipping and Order Fulfillment: Once prepared for shipping, the warehouse/prep center can ship the items to Amazon. Also, if you’re selling to other e-commerce channels, then, you can also instruct the warehouse to ship the items directly to your customers.
With all these services, you can then scale your business. No more prepping units in your garage, no more training your own staff, and no more additional investment on your own packing equipment.
Partnering with a Reputable Warehouse
Understanding all the services that warehouses or prep centers can provide to your wholesale business, you must then look for a reputable one that can help you scale your business.
Here are some factors to consider.
Price
Wholesale deals with a high number of products. So, one of the most important things to consider is the per unit price. The cheaper the prep fee for each unit is, the higher will be your savings. And this would impact your profitability in the long run.
In terms of price, familiarize yourself with the prep center’s pricing of the following:
- Prep Fees: While the process could be the same with arbitrage products, usually, wholesale has a cheaper prep fee as long as the minimum quantity per ASIN is observed.
- Storage Fees: Some warehouses charge storage fees by the cubic feet depending on how big your shipments are.
- Monthly Fees: Some prep centers have monthly subscription fees, so you need to add that to your costing. Sometimes, too, they charge a fixed monthly fee rather than per unit.
- Extra Charges: Different prep centers have different inclusions in their Amazon FBA prep fees. Take note if there are extra charges for FNSKU labeling, bubble wrap, picking, etc.
Location
This is a factor because location also affects speed and profits. Here’s how.
Some prep centers are located in sales tax-free states which make deliveries to these sites cheaper. But of course, you need to also consider the prep center’s pricing matrix in order to arrive at a decision when it comes to your overall cost of goods sold.
Also, when you’re shipping from Asia, the West Coast is a better location to ship your products to. A prep center in the area, say in California, will be nearer to China and other Asian countries.
This is true not just for wholesalers, but also for private label sellers who commonly source their products from China manufacturers. And the nearer it is, the cheaper (and faster) the importation is.
Location of the prep center with respect to nearby Amazon fulfillment centers is also something to consider. If the prep center is near these Amazon warehouses, then, the shipping and check-in times would be faster.
The faster that your products are received by Amazon, the sooner that you can also make sales. Not to mention, your products will not be as damaged if the destination is farther and the waiting time longer.
Turnaround Time
As explained earlier, the faster that the products are received by Amazon, there is a higher chance that you can replenish your inventory and make sales. Since time is money, aside from the location being a factor, the turnaround time of the prep center is also a factor.
Generally, the average turnaround time for most Amazon FBA prep centers is 24 to 48 hours. Some can go faster than that depending on the number of units. But definitely, avoid ones that will make you wait for weeks.
Facilities
Eye prep centers that have a huge space for your products. This will allow you to store as many units as you can in their facilities without the worry that you will not . At the same time, if you have temperature-sensitive products, choose a warehouse that can provide the specific temperature for your products. A temperature-controlled storage facility comes in handy for meltables like chocolates.
Customer Service
Ultimately, the goal of scaling your business is achievable with proper communication and teamwork between the seller and the prep center.
Timely updates and replies to inquiries can be beneficial so that everything runs smoothly from receiving to shipping your products to Amazon.
Fast and Forward Prep Center as Your Warehouse of Choice
At Fast and Forward Prep Center, we cater to different sellers including wholesalers. We understand the challenges that wholesalers face and how our expert prep center services can help you in your business.
For as few as 20 units of a single product, you can get the wholesale pricing for the prep fees.
Our pricing is also simple. For as low as $0.90 per unit, you can already get the basic prep fee with all the inclusions from receiving to polybagging and labeling. For more information, please refer to our pricing guide.
Aside from our Florida warehouse, we also expanded to the West Coast to cater to more clients who need our top-notch service.
Should you need one that is temperature-controlled, spacious, and near an Amazon fulfillment center, you can check out our San Diego, California warehouse.
We commit to 24-48 hours turnaround time so you can get your products checked in at Amazon in no time.
Questions? Contact us now for any prep and storage services to experience our unmatched customer service.
