Amazon Wholesale in 2024: Ultimate Guide to Sourcing and Selling

Virginia Miller

August 26, 2024

In this article

Amazon's wholesale program, also known as the Amazon Vendor program, is a strategic initiative designed to streamline the sourcing and distribution process for third-party sellers on the Amazon marketplace. By participating in this program, approved sellers gain access to a vast array of products directly from brands and distributors at discounted wholesale prices, enabling them to offer a diverse range of competitively priced merchandise to their customers.

Eligibility Criteria and Application Process

To be considered for Amazon's wholesale program, sellers must meet specific criteria and undergo a rigorous application process. The primary requirements include:

Established Business: Applicants must have a legally registered and operational business entity, typically a corporation, limited liability company (LLC), or sole proprietorship.
Valid Resale Certificate: A valid resale certificate, also known as a seller's permit or sales tax ID, is mandatory to demonstrate the seller's authority to purchase goods for resale purposes without paying sales tax.
Successful E-commerce Sales History: Amazon evaluates the applicant's sales history, focusing on factors such as sales volume, customer feedback, and adherence to Amazon's policies. Typically, a minimum of one year of successful e-commerce sales experience is required, with consistent positive performance metrics.
Professional Amazon Seller Account: Applicants must have an active and well-maintained Professional Amazon Seller account, which involves a monthly subscription fee.

The application process involves providing comprehensive business details, including legal entity information, resale certificates, and a detailed sales history. Amazon thoroughly reviews each application to ensure the seller meets the program's standards and has the capability to maintain high levels of customer satisfaction and operational efficiency.

Benefits for Sellers

Participating in Amazon's wholesale program offers several advantages for sellers, including:

Access to Discounted Inventory: By purchasing directly from brands and distributors at wholesale prices, sellers can potentially increase their profit margins while offering competitive pricing to customers.
Expanded Product Selection: The program provides access to a vast inventory of products from participating brands and distributors, allowing sellers to diversify their product offerings and cater to a broader customer base.
Streamlined Supply Chain: Amazon's wholesale program simplifies the sourcing and procurement process, enabling sellers to focus on other aspects of their business, such as marketing, customer service, and order fulfillment.
Increased Credibility: Being an approved seller in Amazon's wholesale program can enhance a seller's credibility and reputation, as it demonstrates their ability to meet Amazon's stringent requirements and maintain a consistent level of performance.

Fees and Commissions

Like other Amazon seller programs, the wholesale program involves fees and commissions that sellers must consider. These may include:

Referral Fees: Amazon charges a referral fee, typically a percentage of the product's selling price, for each item sold through the marketplace. The referral fee varies depending on the product category.
Subscription Fees: Sellers must maintain an active Professional Amazon Seller account, which requires a monthly subscription fee.
Shipping and Fulfillment Fees: If sellers choose to use Amazon's fulfillment services, such as Fulfillment by Amazon (FBA), additional fees for storage, pick and pack, and shipping will apply.
Other Fees: Depending on the seller's operations and sales strategies, additional fees may apply, such as those for advertising, product promotions, or third-party service integrations.

Seller Responsibilities and Metrics

Once approved for the wholesale program, sellers are responsible for maintaining high performance standards and adhering to Amazon's policies. Key responsibilities include:

Competitive Pricing: Sellers must price their products competitively while ensuring profitability and adhering to Amazon's pricing policies.
Inventory Management: Sellers are responsible for managing their inventory levels, ensuring product availability, and maintaining accurate product listings.
Customer Service: Providing exceptional customer service is crucial, including prompt response times, accurate order fulfillment, and efficient handling of returns and refunds.
Seller Metrics: Amazon closely monitors various seller performance metrics, such as order defect rate, cancellation rate, and late shipment rate. Maintaining high seller metrics is essential to remain in good standing within the program.
Policy Compliance: Sellers must strictly comply with Amazon's policies and guidelines, including those related to product quality, intellectual property rights, and customer data privacy.

Unlocking Growth Opportunities through Amazon's Wholesale Program

In conclusion, Amazon's wholesale program presents a unique opportunity for established e-commerce sellers to expand their business and tap into a vast network of brands and distributors. By meeting the eligibility criteria and successfully navigating the application process, sellers gain access to discounted inventory, a diverse product selection, and streamlined supply chain operations.

However, it's essential for sellers to carefully evaluate the associated fees, commissions, and seller responsibilities to ensure profitability and long-term success within the program. Maintaining high seller metrics, providing exceptional customer service, and adhering to Amazon's policies are critical factors that can make or break a seller's participation in the wholesale program.

For ambitious e-commerce entrepreneurs seeking growth and diversification opportunities, Amazon's wholesale program offers a compelling platform to leverage the power of the world's largest online marketplace while benefiting from the advantages of direct wholesale sourcing.

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FAQs

What is Amazon wholesale business?

Amazon wholesale business involves purchasing branded products in bulk from manufacturers or distributors at wholesale prices and then reselling them on Amazon's marketplace.

What are the main benefits of Amazon wholesale?

Key benefits include easy startup, built-in Amazon traffic and brand recognition, fulfillment and storage handled by Amazon, and high profit potential from buying at wholesale prices.

What are some risks with Amazon wholesale selling?

Risks include high competition on popular products, extensive research required, large upfront inventory investments, and getting brand approval to resell their products.

How much does it cost to start an Amazon wholesale business?

Initial costs can range from $5,000-$10,000 to purchase inventory, secure suppliers, register as an Amazon seller, and cover other startup expenses. Ongoing costs are for purchasing new inventory.

How long does it take to become profitable?

Many Amazon wholesale sellers report turning a profit within the first 3-6 months. But timing can vary greatly based on factors like your launch strategy, selected products, and more.

What products should I focus on as a beginner?

Good starter products include smaller items in categories such as electronics accessories, kitchen gadgets, toys, beauty supplies, and books. Avoid oversized/heavy items.

Should I choose branded or private label products?

Branded products are recommended when starting out as they have existing demand. Private label allows more control but requires handling design and marketing.