When it comes to Amazon FBA, sellers usually don’t have to worry about the front end of their businesses. For instance, an individual seller doesn’t have to deal with processing orders, packing a parcel from inventory, and delivering it to consumers’ doorstep— thanks to Amazon’s enormous fulfillment machinery.
However, managing the backend of Amazon FBA is still the responsibility of a seller, and product sourcing is one of its most integral parts. Whether you run a private label or operate on a wholesale business model, how you manage your sourcing plays a vital role in defining the product quality, you offer and the margins you get.
If you’re new to the FBA game and not sure how to go about wholesale sourcing, we’ve got you covered. What are the different types of suppliers, the qualities of a good one, and the best avenues to find them— we will discuss everything that can help you with wholesale sourcing for your Amazon gig.
Before we delve deep into the details of wholesale sourcing for Amazon, it is imperative to know what type of suppliers are there. In the context of Amazon selling, you can find these types of suppliers for your sourcing.
If you want to use Amazon as a platform for your dropshipping gig, you have to look for specialized dropship distributors. This type of supplier is a combination of wholesale distributors and FBA. They don’t just provide you with the products you list on Amazon for sale. They also manage the inventory and fulfill the orders of end-consumers on your behalf.
You can also do your FBA sourcing directly from a manufacturer. The advantage of doing your wholesale sourcing from manufacturers is you can easily commission customized products. Moreover, manufacturers manage to offer the best possible prices among all other types of suppliers.
However, sometimes it is not easy for small-time sellers to team up with manufacturers for multiple reasons. For instance, manufacturers only agree to partner when a seller manages to place a large Minimum Order Quantity (MOQ). Also, many manufacturers remain reluctant to work with individual sellers and even small and medium-scale enterprises due to their smaller business scopes.
Wholesale suppliers are like liaisons between manufacturers and retailers (including Amazon FBA sellers). They usually work closely with manufacturers and handle extensive product inventories in any given niche. As an Amazon seller, you can reach out to them and order a bulk of products at discounted rates to set up and replenish your FBA inventory.
Liquidators are contractors who buy clearance items, overstock inventory, returns, and recalls and sell them wholesale. By sourcing from liquidators, you can ensure good margins. However, finding a liquidator that offers the same product bundle you're looking for is pretty challenging. Also, you can’t be sure of product quality with each individual item while working with liquidators.
Among all these different types of suppliers, manufacturers and wholesale distributors seem like the best bets for wholesale sourcing of goods.
Once you find profitable products for your Amazon listing, you can go to manufacturers or wholesalers for your FBA sourcing. Any good manufacturer or distributor offering wholesale supply will have the following attributes.
Seasoned manufacturers and wholesalers have a flexible work regimen where they remain open to working with anyone, be it a big store chain or an individual Amazon seller. Moreover, they also show flexibility when it comes to price negotiations. They always keep room for a bargain.
For instance, you may manage to improve your margins after having some back and forth on per-unit price with your wholesaler. Similarly, increasing your order by a particular quantity of units may get you a blanket discount on the entire order.
This flexible approach to work makes it easy for both parties to click and have a long-term working relationship.
A reputable manufacturer that directly serves retailers can offer a good variety with product type, price, colors, size, and other characteristics. Similarly, well-established wholesalers work in close coordination with manufacturers. Often, they work with more than one manufacturer while offering different price points and quality gradients.
It is worth mentioning here that a single wholesaler may help you when you want to diversify your FBA seller portfolio by adding different products since they can offer items across different niches. Getting this range with price, quality, and product type is usually impossible while working with a single manufacturer.
Manufacturers and wholesalers are now used to dealing and interacting with Amazon FBA sellers. They have understood how FBA operates and the relevant seller requirements. Moreover, suppliers who offer wholesale sourcing for FBA have improved their turnaround times and other operational features to ensure they can match up to the fast-paced activity of the platform.
For a first-time FBA seller, it proves to be a great relief when they don’t have to explain to suppliers every step of their business operation and instead develop an understanding from the get-go.
The popularity and prevalence of Amazon's private label have also changed the dynamics of how suppliers work. Many of them now also offer their clients on-demand product customization. You can send them samples and prototypes, and they can get back to you with a wholesale lot of the given product.
You can find multiple FBA wholesale suppliers with the above attributes. However, a supplier having all these qualities may still not prove to be a good business partner due to numerous operational limitations and incompatibilities.
So, how to pin down suppliers that are ideal for your FBA sourcing?
You need to factor in a couple of conditions and parameters to find a perfect supplier match for your Amazon business.
One of the most significant things you need to consider while finding wholesale suppliers is the Cost of Goods Sold (COGS) they offer. COGS is all the expenses related to the sourcing of a product. It includes per unit cost, shipping expenses as well as import fees. Having a low COGS is essential so that you can take care of additional expenses (FBA and other Amazon fees) of running your business while still having a good room for profit. In short, low COGS creates profitable wholesale products.
If a supplier also offers to ship orders, then what they charge for the product and its shipping will primarily make the COGS. Therefore, you must find a supplier that can offer a good price package for inventory and its shipping that can keep your COGS low. On the other hand, if you take care of the shipping on your own, make sure the unit's price is low because it can still make a lot of difference to the COGS.
It is essential to go for low COGS because you can’t jack up prices on Amazon to make up for thin margins. Low COGS are also crucial since the operating costs associated with Amazon are not in your control, and you can’t negotiate them.
If you’re venturing into Amazon FBA with long-term prospects, you need to factor in things that might not be an issue in the present but can create problems in the future. For instance, sellers often sign up suppliers just because they offer good prices/low COGS without considering their production/procurement capacity and scaling capability.
In the beginning, suppliers’ capacity to scale doesn’t bother sellers who have just started their journey on Amazon. However, the problem begins when a seller or private label starts thriving and makes their name in the given niche with bumper sales. Suppliers with poor scalability protocols often fail to catch up with the surge of orders you need to fulfill.
This disparity between demand and supply will result in depleted stock and subsequently long queues of unfulfilled orders. This will not just dent your potential bottom line but also stain your reputation in the marketplace. Therefore, always try to rope in manufacturers and wholesalers who can cater to your growing business needs with a robust scalability regimen.
One way to determine the scaling capability of a supplier is to look at its list of clientele. If they already provide inventory to a long list of clients with a substantial footprint in respective markets, you can trust them for your long-term endeavors.
Many suppliers also offer shipping facilities. This bundle makes them a great potential sourcing partner for new sellers who don’t want to deal with shipping on their own. If you also want to pick suppliers that offer to ship the ordered stock, find out to what extent they agree to deliver your inventory. Incoterms define different shipping levels in terms of buyers' and sellers’ responsibilities.
In the above chart, you can see different types of shipping that a supplier may offer. For instance, some suppliers may only provide Free Alongside Ship (FAS) on your ordered stock. Then, there are ones who serve their clients with Free On Board (FOB) or Delivered Duty Paid (DDP). The shipping charges are also in line with the level of responsibility (EXW, FCA, DEQ, DDU, etc) a supplier promises.
If you don’t want to deal with any hassle of shipping and imports and customs details, make sure your chosen supplier offers DDP shipping. Also, ask and confirm their average lead time (shipping duration). This information will help you in mapping out your supply chain ahead.
It is important to mention here that suppliers that also offer DDU or DDP shipping often charge more than a regular 3PL (3rd Party Logistics) service would. Therefore, if you can handle shipping on your own via a 3PL, it may prove to be better in keeping the COGS low.
Every trader brands their services as best with flexible policies and adaptable TORs (Terms of Reference). However, the devil is often in the details. Therefore, it is vital to diligently go through all the details, including the fine print terms and conditions of your contract. In addition, you must be completely aware of their stipulations on minimum order quantities, payment requirements, and return and recall policies.
Even if you can’t find them in the written documents, ask them directly. Try to work with suppliers who have a hands-on return policy where you can easily return the inventory if it is damaged or not being sold as expected. Similarly, make sure the minimum order quantities are not subjected to strict terms and conditions that may lead you to compromise on profitability.
Last but not least, make sure the manufacturer or distributor you want to work with possesses a valid liability insurance certificate. This insurance coverage primarily protects the supplier and sellers from third-party lawsuits and claims. Almost every reputable manufacturer or wholesaler has a liability insurance certificate. Having this coverage further proves that a supplier conducts their business and operations with utmost professionalism.
Now that you know the qualities of a good wholesale supplier and factors to consider while picking one, it is essential to list down places you need to look in to find them. There are several ways and avenues through which you can eventually find your FBA sourcing partner.
If you know Amazon sellers who are partnered with some reliable wholesale suppliers, you can ask them to hook you up with those suppliers. Referrals can prove to be excellent in such scenarios. You are most likely to get the required product quality and good COGS. However, this will only work if the referred suppliers offer inventory in the niche you want to get into.
Online Business-2-Business (B2B) platforms can also come in handy when looking for a supplier for your Amazon FBA sourcing. Alibaba is arguably the most extensive hub to find wholesale suppliers for everything under the sun right now.
Then there are names like eWorldTrade, Global Sources, and DHgate, where you can find reliable manufacturers and wholesale suppliers. You can even explore Amazon Business, a B2B subsidiary of the platform, to find wholesale suppliers of items sold on Amazon’s marketplaces.
You can also find information on hundreds of reliable wholesale suppliers in relevant online directories. You can pick their contact details from those directories and then reach out to them via phone calls and emails. Some even share the street addresses of their physical offices. So, if they are in your proximity, you can visit them to see their facility. You can also initiate negotiation if their prices, quality, and terms deem suitable.
You can find online forums and communities where sellers/buyers and wholesale suppliers interact. Google searches with relevant keywords (e.g. Amazon suppliers’ forum, FBA wholesaler community) can get you there. You can also find entire Facebook groups dedicated to the communication between sellers and suppliers. Become a member of such groups, start following the activity and conversations there, and you may eventually come across a supplier you would like to partner with.
You can find professional accounts of manufacturers and wholesale suppliers on LinkedIn as well. In the LinkedIn search bar, type keywords such as “Amazon supplier”, “FBA supplier”, “FBA wholesaler” etc, and you will eventually find candidates offering the inventory you’re interested in.
ZonGuru’s Easy Source lets you find top-rated suppliers of your selected product/product category from Alibaba. It also provides average prices, MOQs, lead time and lets you refine your search through various filters.
If you don’t want to get into the hassle of vetting suppliers and go through various rounds of unsuccessful negotiations, you can rely on any reputable sourcing tool. Such tools are essentially part of the seller toolkit that lets you get the list of best suppliers for any possible niche and product from any reputable B2B platform (e.g., Alibaba). In addition, you can set various filters (years active, supplier type, rating, etc) to further refine your results. These sourcing tools can prove to be significant timesavers and spruce up your to-do list.
You can take this traditional route to meet potential suppliers for the wholesale sourcing of your FBA business. In the last couple of years and especially during the pandemic, many trade shows and symposiums are now held virtually or semi-virtually. So, you can join them online as well.
You may get spoiled for choices by having many suitable candidates as your potential sourcing partners. However, you have to pick a single or shortlist 2-3 candidates from a pool of suppliers. To do that fine-filtering, you will need to compare them head-to-head for these attributes.
You should make a comparative chart in Excel to get a quick look at your options.
We can’t sign off from this article without going through how you should approach and negotiate with Amazon wholesale suppliers and manufacturers. So we will outline here the tips and tricks you need to be mindful of while corresponding with suppliers.
In the light of these points, you can craft an email and reach out to the list of your potential wholesale sourcing partners. You can also use the following template or customize it to create your first message.
Dear [Recipient Name],
My name is [mention name], and I am an Amazon FBA seller and sell under the name [your seller name or private label]. I/We have been in the e-commerce business for [mention years]. I/We recently came across your profile/portfolio on [mention platform name e.g. Alibaba] and like your operational/business details and product catalog [mention product name and details]. They’re in line with what we’re looking for.
Can you please provide us with the basic outline of the terms and conditions like per-unit price, MOQ, shipping options, lead time, payment details, and return policies? All this information will help us transform this first correspondence into a partnership.
If you can provide us with a product sample, that would be great. If the provision of samples is subjected to remuneration, please do let us know, we’ll take care of it.
You can reach me/us at [mention phone number] or through an email at [mention email address]. You can review our portfolio at [mention website/platform and link to the portfolio].
We are looking forward to hearing from you.
We hope that the above discussion helps you take care of the sourcing of your private label or wholesale FBA business from the best available suppliers. The key to ace wholesale sourcing for your Amazon gig is to carry out rigorous research on the available options and compare them with each other. Moreover, how you reach out to potential manufacturers and wholesalers and build correspondence will also decide if you can bag a good contract.
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