Is Amazon a wholesale marketplace? What are the pros and cons?

Among cross-border e-commerce platforms, Amazon is considered to be relatively well developed. Many merchants have settled in this platform. However, there are some doubts among consumers. They want to know whether Amazon's cross-border e-commerce platform belongs to the wholesale market? The following is an introduction for everyone.

Amazon is probably not the first platform that comes to mind for developing a wholesale business. However, you can buy products in bulk directly from suppliers and resell them on Amazon. As a wholesale reseller, you will not add any value to the products, nor will you sell them under a different brand name. You need to set up your business in the right way to ensure that you become a successful Amazon wholesaler.

Although wholesalers typically sell to retailers or other businesses, the fact is that before you can be approved to buy in bulk directly from manufacturers, you are required to register your wholesale business first. (Specific licensing requirements vary by country and state or local jurisdiction.)

Wholesale is not the same as retail arbitrage. It’s similar to finding a few cheap products and reselling them at a higher price, but below other Amazon listings. However, retail arbitrage is usually only for one-off items and small quantities, and often requires a smaller upfront investment than wholesale.

Private label sales on Amazon are also similar to wholesale in that it sources directly from manufacturers. However, private label sellers either contract with manufacturers to produce products under a private label or add value or features to an existing brand. In contrast, wholesalers are simply a channel to sell the manufacturer's brand. However, just like private label sellers, wholesalers also have the benefit of Amazon home delivery.

Advantages of Amazon Wholesale:

As a wholesaler, it is recommended that you work with well-known brands with a large product catalog. There is no need to build your own brand identity. In addition, unlike retail arbitrage, wholesalers have a fixed profit margin and do not need to stock up by referring to sales data. The potential profit margin is as high as 50%. Of course, each case is different.

If there is demand, you can use your buying power to replenish inventory, unlike private arbitrage, where once you sell out, you can’t sell it again unless you can find the same product at a similar discount. And you can avoid price wars like retail arbitrage, because prices from manufacturers are less likely to fluctuate wildly.

You’ll also have more control over costs, as you can better plan your inventory levels and shipping expenses. Or, as mentioned before, you can still choose FBA.

Wholesale business is scalable. The model of suppliers buying, stocking and distributing products wholesale is the same. You can have hundreds of products and be able to sell them at a relatively fast pace.

Disadvantages of Amazon Wholesale:

Brand owners who already sell on Amazon won’t lower their own dropshipping prices through wholesalers, so finding a brand manufacturer willing to sell wholesale will require some effort on your part.

Many products require bulk purchases to get meaningful discounts, so the initial capital investment is high. If you don’t go the Amazon FBA route, you have to add costs, add employees, and build a warehouse inventory as well as ship the products yourself.

Another risk is that the manufacturer may work with other wholesalers. Competition between multiple wholesalers selling the same product leads to a reduction in price margins.

Through understanding the above content, you should know that Amazon is a platform with the nature of a wholesale market. It has been positioned in this way from the beginning. Of course, if you want to sell some scattered goods here, that is also possible.

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