No way to make profit on Amazon from wholesale products

by 74 replies
97
It looks like buying products from wholesale sources in the US makes it very hard to make a profit when selling on Amazon (and even worse on eBay). This is my experience with most wholesale sources that I have found.

I would appreciate any feedback on this issue and also any recommendations about how to find wholesale sources that you can make some profit when selling on Amazon (I'm using FBA by the way).

Thanks in advance.

Harris
#ecommerce sites, wholesaling & drop shipping #amazon #make #products #profit #wholesale
  • HA! That's funny. My business is nearly all wholesale and I do FBA as well. And I know DOZENS of other people who do the same (and sell even more than I do).
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    • When you say FBA you mean Face Book Ads
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  • ... I take that back... You are absolutely right. There is no money to be made. You should quit trying.
    • [ 3 ] Thanks
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    • ok now that I know I'm not gonna quit trying

      Thanks James
    • These "provocative words" are a great tool for our motivation, for me first of all. I am new in business, in country (USA), even my English is not as good as I would like. It's really not simply for me to understand all this professional talk on the forum, but I am trying again, again, and again. The more I think, that I can't find good sources for my shop (children stuff), the more something down inside of me tells me" GO ahead, knock in door and it will be opened for you". Thank you, James! Your words make me "running faster".
    • I don't see how your replies can help him.
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  • One of the biggest mistakes I see in online marketing of physical products is that people buy wholesale thinking that is the best price they can get.

    Why not buy where the wholesalers buy? I know that is almost impossible if you are dealing with western manufacturers, but it is easy if you choose to buy from manufacturers overseas.

    If you go to the popular B2B sites you will find multitudes of wholesalers masquerading as manufacturers. They will not be able to give you the best prices. You must buy from real manufacturers.

    There are many people who are happy to work on low profit margins, and because they have a high turnover on eBay or Amazon, they think they are doing very well. In terms of total profit, they could do much better if they bought from manufacturers.

    Manufacturers in China and other countries will welcome you with open arms. Don't forget most of the big name brands are manufactured in China. In fact a huge share of the products sold in western countries is made in China.

    You can buy quality if you want it. Don't just think "cheap" when you think of China. I have been in factories where one production line is turning out big brand products and the next production line is turning out generic products of similar quality.
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    • @ImportExport,

      Thanks for this, a couple years ago my google search would of not brought me close to anything close to this idea. It must be so normal to you and other vets in the manufacturing/import game that it's common know how.. For me I find it quite generous you shared such a basic strategy. Would you mind helping me with a few question through PM? Thanks in advance!
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    • Banned
      [QUOTE=Importexport;9486302]One of the biggest mistakes I see in online marketing of physical products is that people buy wholesale thinking that is the best price they can get.

      Why not buy where the wholesalers buy?

      *
      @importexport:

      your postings have been extremely helpful.

      re amazon FBA, you mean u can have the manufacturer ship DIRECTLY to amazon for fba ? who does the listings ? i assume you trust the manufacturer as far as delivery/ contion etc.
      I have been following skip McGrath and trying 2 learn. high learning curve ! thx you kindly for your posts.
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    • Do you have any recommendations of URLs to start me off besides Alibaba or its subsidiaries? I'd be interested in finding out that information. Thanks ahead of time whether you do or not, I appreciate your time.
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  • I know from experience that it is not easy to find real wholesalers to obtain product from. Skip McGrath has a web site where he shares (at no cost) some good wholesale resources.
    There are many so-called wholesalers who have prices higher than Amazon! That is not going to work obviously. Be persistent and you will find what you need!
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  • I just started on Amazon after they found me through one of my websites and requested I try out Amazon for the Clothing category. I was very excited, but 1 month later I found what @HarrisAndrea to be true. This is business though and we are working in a competitive sport if not the THE most competitive sport, BUSINESS. Still though, I would like to know if maybe there is a tucked away category of items that will sell and just sell 24/7, are these self published items, manufactured items, self branded and promoted items, etc..? So back to work on uploading the rest of the 100,000 items from my wholesale catalog. If anyone has a solution to help with listing those items, please contact me.I suppose, the more you offer the higher the probability of selling, duh right?
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    • We do, designed by specialist architects, but it is so advanced that 99.99% have no idea that they need it - and that's the basic version! Walmart can onboard a new supplier in 30mins which auto-uploads the products with zero code - this does the same.

      For the profit, it depends on how you want to make that profit. Almost all who say it is possible use the 1:1 revenue:effort model, this means for every amount of effort you put in (generally time) you generate one lot of revenue. Now the corporates are 7-10:1. So making 1:1 is actually pretty easy, going above this though it increasingly complex as you get towards the 7-10:1.

      From the way you wrote your comments, we would guess you are looking at the 3-5:1 model than mid size companies use. For that you need advanced technology, yes its possible but highly unlikely - for reference we have acesss to 7-10:1 technology scaled from large enterprise.

      Then you have the next problem, fakes. Finding a wholesaler is stupidly complex if you do any due dilligence (most don't) - you will be surprised the number of fake products in the marketplace being sold on. That's why consumers are starting to move towards department stores - trust. It might cost more - but you are guaranteed the product - go to eBay and who knows - even the OEMs have a hard time knowing if they are fakes or not.

      So it all comes down to perspective - yes it's easy to make enough to survive - but making enough to live with genunie supply chain products - that is one of the hardest things to do - and it needs time, experience and determination to filter out the 99% of rubbish.
  • What categories are you currently working in? How are you going about the process of deciding what wholesale companies to look up for purchasing? Are you just browsing items you like and saying "I'll look up bulk pricing for this" ?
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    • Hi and thanks for your reply. Since I'm from Europe and selling in USA, I'm confined with finding suppliers that are willing to work with international sellers and also to send products to FBA on my behalf. So basically I'm selecting wholesalers based on the above criteria and see if their prices can be profitable in Amazon, which is a rare case unfortunately.
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  • It really depends on what products you are selling and what margin you are wanting to make. Ebay is very hard to make a high margin on as most shoppers on ebay are looking for a bargain, but if you are okay making a small profit per item, it can be done. Amazon you can make a decent profit on depending on the product - it takes some research and testing until you find the right price point though, and I find a lot of sellers assume like you do that it's impossible and give up.
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    • This is why I often buy on ebay and sell them on Amazon for a good margin. It is usually just for a single item but I sometimes find several items to purchase at once.
      Actually the FedEx truck just delivered an ebay item I paid about $25 for a few days ago. It will sell on Amazon for $98.50 within ten days.
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  • So why don't you sell in Amazon UK instead? Save yourself the extra hassle.
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    • Problem solved! Hopefully this thread will end now
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  • You might try asking to become a distributor. Many people who sell on ebay manage to make it because they have negotiated distributor pricing which is typically another 15% or so off wholesale. There are plenty of things you can buy and resell on ebay. I cant comment on Amazon because I have never sold there. Price is not everything and you have build good feedback. If you do that you can demand higher prices. You have to be patient and the key is to list a lot of merchandise.
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    • Thank you all for the great feedback and advice. I believe patience is the key.
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  • Are you using one of those bogus "drop shipping" sites that seems to be popping up all over the place? Those same companies I guarantee are selling the same items on the marketplace but don't have the markup to deal with that you do when you buy from them.
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    • To go along with what ImportExport said, I've bought stuff from manufacturers here in the states that were much worse quality than the same types of items bought from China factories. I love buying from China.
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  • I have no idea about it. I also getting knowledge from you all.
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    • Well that was a very productive comment lol
  • True wholesale is 40% off retail in most product categories.

    Assuming that you're lucky enough to find a product that you can sell on eBay and Amazon at full retail and still be competitive, you only have a 40% mark up.

    You then must pay at least 15% in fees when the item sells, then you have shipping costs (these days in most categories you cannot be priced at full retail plus shipping and have skin the market), you are going to have to offer free shipping.

    After fees and shipping alone, you're looking at all, if not most, if your 40% markup now gone. Not to mention if the customer chooses to return the item...or claims the item is defective...you're now in the red.

    The best way to make money now days is to source overstock and closeout product from liquidators, and purchasing product from clearance racks at your local retailer. You will often find product for 25 to 30 cents on the retail dollar, (way less than the 60 cent on the dollar you pay for wholesale), leaving you more room for profit..

    Remember, you must buy your profit, not sell your profit.
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    • You have some great points. Another way to make money with wholesale products is if you sell them on your own ecommerce store instead of Amazon, so that you avoid their fees.

      Fortunately by being persistent I have found a couple of wholesale sources in which some of their products (with the help of a UPC research software) can leave me a profit on Amazon, so I started selling those for now. Let's see how it goes.

      Thank you all for all the valuable feedback.
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    • You can make consistently higher profits with a reliable and regular supply chain by buying direct from manufacturers in China and other countries.

      Profit margins will amaze you.
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    • The final value fees have gotten ridiculous and then PP hits you with their fee as well, talk about double dipping! Take away shipping fees plus insurance and signature confirmation (if you sell high dollar products like I was) and you are not left with much. Then god forbid the customer has even the SLIGHTEST issue and wants to return the item that was once new and is now used! Don't bother fighting because 9/10 time eBay will side with the customer.
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  • You are very right that's why you see a good number of sellers from China, Hong Kong and other asian countries because their cost of production is low and most likely the quality too coupled with the high fees on eBay, U.S players may not be able to break even easily except selling used items.
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    • The solution is very simple. Buy better!

      If you are working on very high profit margins you can easily carry the costs of selling and still have plenty left over. Those who are stuck in the rut of buying from wholesalers are throwing money away....... Lots of money.

      Please see my post #5 where I wrote about buying from the places where the wholesalers buy. I will be happy to answer questions.
  • There are some apps out there you can download and will automatically let you know the rank of the product on amazon as well as the fba expected profit/(or loss) after shipping and fees. I know some can be $60 a month but its a good investment.

    Not all of the merchandise at the "wholesale" places is going to be profitable.
    Dig deep with your searches with keywords liquidation and shelf pull and the name of your closest major city. Take a day to visit a couple that have the products your interested in selling. They will usually make you a much better deal than the prices they may have advertised on their website.
  • Take your time good wholesalers are available. What I find is that a lot of people give up too quickly when looking for suppliers. What I say to people is that even if it takes you three solid day to find a good product, just think of the long term value of that product to you.
  • I have been doing dropshipping for 3 months but will not purchase anything from China because what happens if the item is defective?? I doubt my customers are going to pay to ship anything back to China.
    Find a good U.S. supplier, or use a directory like:
    gogodropship.com
    salehoo.com

    Some good vendors I work with :
    techdata.com
    albanydistributing.com

    There are also dropship sites like dropshipdesign.com or doba. Haven't used neither but heard good things and bad things about both.
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    • Well there is no reward without the risk, you are also going to get the products a lot cheaper from China. Now if you have a vendor who is constantly sending defective items then yeah it's probably time to cut ties.
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  • You can still find some niches where you can make some money doing this by buying from wholesale sources. I have an e-commerce site that serves this niche, but hadn't really gotten into selling the products on Amazon because I have bigger fish to fry. I just picked a product at random and here's the results:

    Wholesale cost: $16.50
    For Sale on Amazon: $26.50

    It's a small product so the shipping costs each way might break down to .25 each, so my all in costs are $17.00 to get the product/ship to Amazon. If I sell it for $25.99, then I'll clear $19.61 on the sale and make a profit of $2.61.

    So I made money, but you can see pretty quickly that it's not much to get excited about. Remember that this is a product that flies below the radar so the sales aren't stellar. If they were stellar, it'd have more people trying to sell it. So even if I can sell 3 per day, it's only $7-ish in profit.

    So it's not that you can't make a little money, but it's more that time is better spent elsewhere. The products that I import, I can literally clear $13 in profit on a similarly priced product.
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    • As you so well explain, buying wholesale is not the answer if someone wants to make serious money.

      Importing direct from manufacturers in China and other countries can give you huge profit margins compared to buying from wholesalers.
  • Well its not too easy to find a good wholesaler that will work with you but once you do you should be set. In the mean time maybe you should start with finding products to sell that are on clearance to resell on amazon. Everything takes time and hard work. Good Luck
  • Don't go for the low-hanging fruit. It doesn't exist anymore.

    You need to do some deeper searching if you're going to find a wholesaler that you can make a profit with.
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    • Thanks Anna for the feedback. I was looking also into closeouts for reselling on Amazon but since I'm not based in US, the supplier must be able to ship products to FBA on my behalf. Do you know any good closeout suppliers that can offer such a service?
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  • In order to make more money with wholesale products, I would sell them on my own store
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    • I agree I have had the most success with selling my products on my own store. I find with Amazon if you try to sell wholesale products the manufacturer is usually on there and can undercut you. My friends company sells his own product that he developed on Amazon and has seemed to get good traction, especially targeting the "gluten free" market.
    • Thanks for letting me know. I just tested the link and it worked fine.


      I disagree with this for the simple reason that Amazon will always have more buyer traffic than your site. If you are selling at the correct price you will make more money in most cases.
    • Exactly, own store is a must. But remember, third party marketplaces like Amazon could be excellent as a way of marketing your brand/products too.
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  • import/export, i got some samples from china for an item and got whacked for a $130 and $140 brokerage fee for small packages. How do you get samples shipped for reasonable price or is that the norm?


    A twist on wholesaling/dropshipping is going to retailers and manufacturers/distributors and ask them about all their discontinued/obsolete inventory. Tell them you'll list it and sell it for them, they ship and you split revenue whatever you negotiate. Sell off their inventory and they'll do the shipping. It's "free" money to them so they are often flexible to work with. You do the leg work of listing the items in appropriate places. Most of them are too lazy to do it but will split with you 50/50 or better if you get them an order. No out of pocket for you or risk of buying a bunch of inventory upfront.
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    • Someone has taken advantage of you. That sounds way too much, but without knowing more details I can't be sure.

      The usual procedure is to be charged for freight but often the sample will be free if it is a small value item, otherwise you will pay the usual price for the sample also.

      Most genuine manufacturers are quite reasonable about sample costs because they want your business. Where many people get caught is that they start dealing with traders who pretend to be manufacturers.

      There are swarms of such traders listed on the big B2B sites, specially Alibaba, DHGate, Tradekey etc. They can't possibly give you the best deal.
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  • Banned
    Well, according to me, you need to think about to create your own store. Then you can go to Amazon for shipping or third party vendor service. I think, it might be good for you.
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    No way to make profit on Amazon from wholesale products

    It looks like buying products from wholesale sources in the US makes it very hard to make a profit when selling on Amazon (and even worse on eBay). This is my experience with most wholesale sources that I have found. I would appreciate any feedback on this issue and also any recommendations about how to find wholesale sources that you can make some profit when selling on Amazon (I'm using FBA by the way).