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The 3 Major Advantages to Sourcing Wholesale (Guest Post)

compare wholeasale to private label and retail arbitrage

Ed. note: Below is a 'plain english' overview of how sourcing wholesale is different than other sourcing methods, courtesy of Vendrive. Vendrive provides inexpensive CRM (Customer Relationship Management) software. That's a fancy name for software that helps wholesale-sourcing Amazon sellers stay organized and make the right product decisions. You probably don't need a CRM if you just dabble in wholesale. But if you are sourcing multiple SKUs from a few different manufacturers, a CRM Solution can help in spades. No Vendrive links in this article are affiliate links, and I am not compensated at all if you sign up for their service here. Vendrive did not pay a fee for posting the below article.


Guest post by Dillon Carter of Vendrive:

 

Selling on Amazon can mean so many different things, from writing books for Kindle Publishing to building massive brands using private label. It can seem a bit daunting when you're first introduced to selling on Amazon given all of these options but I’d like to help you make that decision much easier.

Most of us take a very similar path - we hear about selling on Amazon either online or on some podcast and quickly jump into a course to learn how to get started. The easiest path is the retail arbitrage or online arbitrage model, but after a grueling time trying to scale this model, we begin looking at either wholesale or private label.

For some reason, wholesale seems to have a much larger barrier to entry, but compared to private label it's much easier. I personally believe the wholesale business model is the sweet spot for many sellers and I want to break it down simply for those considering getting started with wholesale that may be hesitant to do so.

 

1. How Wholesale is Different Than Any Other Amazon Selling Model

The simplest way to describe wholesale is that it's somewhere between retail/online arbitrage and private label, taking benefits from each.

Retail/online arbitrage is super easy to get started with, requires low capital to get going but ultimately is much harder to scale as it requires more people. And let's face it, what deals you were able to get this week won't necessarily be there next week or the week after. In other words, the work you do this month will not help you next month. You are constantly chasing new profits.

compare wholeasale to private label and retail arbitrage

On the other side is private label, which takes much longer to get started and has a very high capital requirement but is ultimately more valuable as the brand grows. So if you're looking for a large exit at the end of the tunnel and have a year or more, private label is your model.

Wholesale takes both the low capital requirements of arbitrage and the longevity of private label by tapping into products that are already doing well and will yield profits for years to come. This presents an amazing opportunity where the work you do this month will pay dividends for a long time which leads me to my next point.

2. Wholesale is Incredibly Easy to Scale
Each selling business model is either easy to get started with and harder to scale or the opposite. Wholesale, being more in the middle of these means it's incredibly easy to scale compared to the rest.

Once you're effective at opening profitable wholesale accounts it's incredibly easy to grow. The only difference between a six and seven-figure wholesale business is how much you can spend on inventory and even better, this can all be done with a VERY small team (if one is needed at all).

As mentioned above, retail arbitrage is difficult to scale because it takes either more time in the day or more people sourcing each day, increasing your expenses quite a bit. Private label on the other hand, although easier to scale, still has a ceiling based on the products you bring to market. However, with wholesale we're able to consistently add new products week after week and are only limited to how much capital we can spend each month on new inventory.

3. Wholesale Can Easily Be Outsourced, Automated or Streamlined

With such an already streamlined business model, going even further is a breeze. There are a few systems we personally use to reduce our time spent on the business each week without having to hire a ton of people.

Systems to manage wholesale sourcing

The first system we use is a combination of a part time or full time virtual assistant ($4 per hour) using either our reverse sourcing or competitor research sourcing strategies and having them add everything to our own wholesale tool Vendrive. This simple system ensures we have 80+ potential new supplies week after week without us doing the legwork. (Ed. note: Vendrive states they have $4/hour virtual assistants. My experience shows that quality Virtual Assistants can be more like $5 to $10/hour, but I can't speak for everyone. There certainly may be Amazon sellers who pay that lower rate. I use Freeeup to find my freelancers).

The second system we love using is Restock Pro which does all of the calculations based on your selling data to tell you exactly when to place a restock order with each supplier and when to place the order so you never run out of stock again. We typically check reports on Thursdays for about 30 minutes and quickly place restock orders with suppliers. This whole process takes roughly 45 minutes each week to restock thousands of units of inventory. (Ed. note: I am not compensated if you click through the Restock Pro link to buy their service)

Lastly, and because we're super nerdy, we add a sprinkle more of automation to each system. Using our Restock Pro process above, we use Zapier which will trigger an email to our prep center every time we place a restock order with a supplier letting them know everything needed for a smooth transition, which is one less task for anyone to do each week as the process works time and time again. Ed. note: A further explanation of how Zapier works in this scenario is here.

With our systems in place, we can easily process 10,000 units of inventory just as easily as we can 100.

If you're still on the fence with wholesale I strongly urge you to reconsider it. It's a very unique business model that works perfect for those working full time, have families to take care of and want a business that is both easy to scale while simple to grow.

Ed. Note: If you're asking "How can I start learning about sourcing Wholesale products", see the below resources:

  • Free Wholesale primer from my trusted partner Robyn Johnson is here
  • Free Wholesale product sourcintg tips from another trusted partner Skip McGrath is here
  • Proven Wholesale Sourcing ($297) is an easy to follow system from my trusted partner Jim Cockrum. You get it free when you buy the entire Proven Amazon Course ($399)
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