Source
r/FulfillmentByAmazon•
vethlock

Realistic for someone with no experience to build a large wholesale or private label business?

[WS]

Hi, new to this sub and FBA businesses in general and I have some questions regarding my specific situation.

I'm a young entrepreneur and professional gambler that has been fortunate enough to find financial success over the last couple years after starting with a relatively small amount of money. Right now, I'm looking to diversify my risk and income streams and I just recently stumbled upon the idea of an amazon FBA business.

Now, I'll be honest, the idea of shipping massive quantities of jump ropes and t shirts from my house doesn't appeal to me. So I'm curious if anyone here knows how likely it would be for me to find serious profitability via wholsale? I understand that this would present far more risk than starting with retail arbitrage or something like that, but I am looking to make considerably more than a few hundred bucks a month off of this while also spending as little time in the trenches as possible, cause like I said scalping bars of soap is less appealing to me than what I currently do.

I have enough capital and broke/young/smart/motivated enough friends to where I'd consider either hiring one or two of them or splitting the business, and ideally letting them handle the day to day while I can focus on my other projects and big picture stuff. But for now lets assume that its just me.

I understand that these are broad ideas and questions. I know that the answer to all of them will be "it depends". What I'm really looking for is to get a feel for the landscape of FBA businesses so I know whether or not pursuing this would be right for me and how I could get started. I'm really open to any ideas where I can use my capital to bring in cash every month....

I appreciate any advice at all, thanks.

Posted Sep 20, 2017, 11:25 PM UTC

1312
Lupin934•
  1. get a resale certificate/tax id from your state
  2. learn what Keepa.com is, and how to read their graphs. Downloading the Keepa plugin for chrome is great since it puts the information on the Amazon page for you.
  3. learn what the BSRs are for each category. Using junglescout.com/estimator is great for figuring out roughly how many units will sell in a month. There are others, but that's what I use for our business
  4. find wholesalers/supplier for any given product. I suggest doing a small orders with suppliers before getting larger orders. Even if you know the numbers and think it will sell X amount in a month, do a test order. You'll be surprised at how often you're wrong because competition will come in. The more you utilize Keepa the better you'll be at hedging against this.
  5. if you don't want to Prep the items you can send it to a Prep company. (Disclosure: I own a Prep company).
  6. get a repricer and set the limits so it will do the pricing for you. I recommend appeagle. I've used a lot of repricers out there, including expensive ones that cost $2k a month. Appeagle works great if you set it up correctly.
  7. figure out how to manage your inventory so you don't run out of stock.

Tips:

  1. don't compete against Amazon. They will win almost every time.
  2. don't go all in on one product.
  3. fully expect to make bad buying decisions and get stuck with product you have to dump.

I've been doing wholesale for 3 years now, and have a multi-million dollar Amazon business. It's very possible. You don't really need to partner with people. If you spend a few hours a week on it finding products and utilizing a Prep center, most other things can be automated.

7
Kimcha87•

When you say “multi-million business” is that revenue or profit?

If it’s revenue, what’s your profit margin like?

3
beaucrabill•

you do not need a prep-center. I work with authorized brand name suppliers and they all ship directly to amazon. Also do not repricer as amazon has a free repricer in sellercentral

2
Tymalightnuous•

Is there any rules you go by when using a repricer like appeagle? For instance, do you always go .01 cent under the lowest price to get the buy box or have it set to match the lowest price to get the buy box?

1
Lupin934•

I usually just set match the lowest FBA as long as it's within my acceptable price range. If it's mf, I will toggle my price max to make it get the buy box.

Don't use Amazon's repricer like someone said. It's designed to go to your minimum price as quickly as possible.

2
Tymalightnuous•

Thank You. That second option to toggle price max if you're the only FBA seller seems extremely valuable. You can do that in Appeagle?

For wholesale sourcing, is there a strategy for you that works best: like Alibaba, or googling, or using a wholesale directory, etc.?

1
[deleted]•

[deleted]

1
Tymalightnuous•

How "small" do you think test orders should be? The point is just to see how quickly you can sell the product?

1
vethlockOP•

Thank you so much this is great info! That's really impressive to hear about your company, I would love to be able to build and grow a business like that. Did you have a business background before getting into amazon whole specifically? I have no business background myself, but I am a trader and poker player so I have a much higher risk tolerance than most people and definitely understand that I will burn capital making mistakes.

How big of a problem have you had with sellers not allowing amazon sales? Do you see it as a growing problem in the future?

1
Lupin934•

I have an MBA, but have not owned a business before this one.

Are you meaning how big of a problem have you had with vendors not allowing Amazon sales? If so, yes. But you just keep looking. Most vendors don't understand that Amazon isn't their enemy. But there are a lot of suppliers who don't care so you just keep looking.

1
crazybelarusian•

my 2 cents

  • splitting the business (partnership) may be your buggest gamble yet, I suggest hiring your friends that way you maintain full control and ownership over the business
  • I've been a seller of my private label products for many years and began wholesaling earlier this year, if you have the money to invest in inventory and meet their MOQ it's relatively easy money
  • you will spend "time in the trenches", either figuring out how to prep the inventory for FBA, shooting out emails to dozens of companies to carry their products, etc.
  • building a wholesale FBA business that runs itself is definite possible with employees, meaning that you'll have to grow it to the point where you can pay them and have a worthwhile amount left for yourself. To do that you'll need to invest hundreds of hours of your time building the business (ymmv you might get lucky again :p )
3
vethlockOP•

Thanks for the advice!

1
Masspiker•

great summarized advice

1
140414•

I've been a seller of my private label products for many years and began wholesaling earlier this year, if you have the money to invest in inventory and meet their MOQ it's relatively easy money

I'm looking into PL and I have a decent amount of money I could invest. However, Amazon seems saturated and I'm afraid of being stuck with 1000 units of a product that won't sell or that I'll have to price lower than what I spent....

Why do you say it's easy money? Do literally all products sell?

1
crazybelarusian•

The easy money comment was regarding wholesaling, since there's a lot more certainties it's all just a matter of getting approved to be a vendor for the company and working with the margins.

There's a lot more to PL

1
Mrkatov•

Depends on your state but I would start by applying for a resale certificate. Many companies will ask for this when you want to buy wholesale. Next up you need to find a product and someone who will sell it to you. More and more companies do not allow selling on Amazon so you may need to talk to a lot of suppliers before you find one that doesn't prohibit it. (Or you could find a brick and mortar to partner with but the supplier will eventually find out.)

1
TheHumanSoloCup•

My two cents: Don't split with a partner 50/50, keep at least 51/49. Work into it slowly like with anything. Never shoot a hole below the water line

1