When I first started out on Amazon, I started with Online arbitrage. It wasn’t too bad, there were hits and misses, but I guess that’s just part of the learning process. I did online arbitrage for about one month before I realized I’m running out of profitable stuff to buy.
After a few frustrating days of spending hours of searching on the internet and finding nothing worth buying, I decided to just go Wholesale.
Wholesale sounds wonderful really, you just have to find the gold, and keep replenishing it. Sounds good? I thought so.
However, as it is with everything in life, there’s always pros and cons.
There’s usually more where that came from 😉
Unless the manufacturer or wholesaler decides to retire the item or stop selling them to you, that is. Unlike Retail Arbitrage or Online Arbitrage, it’s usually not a problem with replenishing your stocks.
Less SKUs In Inventory To Manage
Also since it’s replenishable, you won’t be needing to create new listings over and over, therefore reducing the amount of listings you have. Unlike RA or OA where you will likely end up creating new listings for each new items you find.
Other than the fact that less listings makes it easier to manage, you also save time and effort which you would have spent on creating new listings if you are doing RA or OA.
This is debatable. There are items you could get cheaper when they go on clearance elsewhere. Wholesale ROI is usually not that great but since that is usually the source, you should get a good price.
No Sales Tax
No sales tax on wholesale orders! The Prep company which you ship to will no longer have to be in a sale tax free state!
If you’ve ever done online arbitrage before, you will know how difficult it is to find a good prep company in sales tax free state.
Bookkeeping gets way easier when you only have to do a few orders every month. So far, it’s less than 10 orders in a month for me.
Contrast this to loads of messy receipts from doing RA or OA.
And if you are doing RA, you still have to convert those receipts into soft copies.
No Free Shipping
Most of them do not offer free shipping on wholesale orders. Some do though and I love those who do 🙂
For those shipments which you have to pay freight on, do check their rates first. Some have great freight rates, though I’ve encountered a few who don’t. Imagine paying more than $3UD each to ship a 4 inch figurine, which cost $3.75. It almost doubled my cost, and it was a no go.
You Have To Be A Registered Company
You have to be a registered company to work with wholesalers. They will ask for your business registration if you are located outside of the US, or they will ask for your Resellers’s permit if you are in the US.
I don’t do this or advocate this. But there are people who will return items which don’t sell back to the retail outlet when doing OA or RA. You can’t do this with wholesale. Some of them may take back items but they charge a restocking fee.
Dealing With Wholesalers
Dealing with wholesalers is definitely a skill set I need to master. For some reasons, wholesale customers are simply not given the same respect people give to retail customers.
My point of view : A good working relationship is important to me. Even if the item is a number one seller, I would rather not give myself that much headache to work with unprofessional parties.
Of course there are a few very efficient ones whom I work with, and I’m totally grateful for them! They process orders within a few days, send you tracking information and invoice without you asking for it. And when there is any issue with the order, they get back to you within a day or two.
And really, that’s all I ask for. No prizes for guessing where my largest orders go to 🙂