Many new Amazon sellers start with the same big goal in mind:
To be their own boss.
It sounds like the ultimate dream, right?
Instead of having to punch the clock at some office job, log your hours, and work so that somebody else can get rich, you get to be the own boss of your Amazon FBA business.
As an Amazon FBA seller, all of the hours you work on your business directly benefit you and your business.
This is a huge perk!
But it can also be a con.
In a traditional Amazon storefront (as in my own Retail Arbitrage store), when you stop putting in the work, you eventually stop getting sales.
If I were to stop sourcing, stop shipping inventory to FBA, or even stop repricing, I'd really take a hit in my sales. That's because my income from the Retail Arbitrage business model won't grow unless I'm there doing the work.
Now that's fine for me. I actually like running a Retail Arbitrage business.
But some sellers are looking for something more. A business model that is fully sustainable even when the owner (that's you!) isn't around.
That's possible with the Wholesale Sourcing business model and Amazon FBA. And sellers who create a sustainable Wholesale Sourcing business end up with much more than a steady paycheck from Amazon every two weeks.
They have a sellable business that they could step away from at any time.
An Amazon Job vs an Amazon Business
To understand the beauty of owning a sellable wholesale business, you first have to understand the difference between having an Amazon job and having an Amazon business.
I'll use my own Retail Arbitrage business as a good example of an Amazon job.
First of all, my RA business is a pretty good job. I've used it to generate a six-figure yearly income by working on it less than 20 hours per week. And these days Cliff and I only work on our Amazon business for a few hours each week, but we still get a reliable income from it.
But the business fully relies on me (and Cliff!) to run it. If Cliff and I stopped sourcing, we would still get sales (that's the magic of FBA after all), but they would eventually die off.
Other aspects of the business could be automated. I could use repricing software, hire local help to go sourcing for me, and hire help to pack up FBA shipments. But I still need to be there to oversee operations and make buying decisions.
In other words, this is an Amazon job because if I don't do work, I don't get paid. Even though I get to be my own boss, I still have to show up and do some work!
Now let's take a look at an Amazon business. A business here is its own entity.
As it grows, it can provide work for you and others. Eventually, with a qualified team in place, the business can run without your work or input.
Your Amazon job won't turn into an Amazon business overnight. But you can do it with baby steps by asking “Is this task the best use of my time? Or could my own time be spent on more valuable tasks that will build my business?”
Over time, you as the business owner will only focus on the most valuable tasks. All other business tasks will be delegated to a team member.
In the case of a fully sustainable Amazon business, this means that you are no longer personally involved in sourcing, prepping, shipping, repricing, bookkeeping, or any other day-to-day tasks.
A Business as a Sellable Asset
Have you ever thought about what would happen if you tried to sell your Amazon business or storefront?
Let's rolepay for a minute to paint the picture. Imagine that you're a big shot investor. Maybe you're the next Mark Cuban and you're listening to a pitch for a hot e-commerce business.
Which business would you rather buy?:
A) The rights to an Amazon storefront, but you still have to manage it and oversee the day-to-day operations. In the case of a Retail Arbitrage business, this means learning a lot about sourcing, shipping, and pricing.
B) An entire Amazon-based business that runs itself. You're simply the owner of this business and you know the business is going to continue to make a profit whether or not you put any hours into it.
Ok, Investor. Which one sounds more valuable to you?
If you picked B, you made a sound investment.
Now if you're not familiar with Amazon or you're only familiar with Retail Arbitrage, B may not even sound possible. I know that I get nervous when I send someone out to Big Lots to source for me – maybe they'll miss something good!
But I know for a fact that the “B” scenario is possible. My friends (and former Amazon Boot Camp students) Dan & Eric currently run a 7-figure Wholesale Business.
Dan told me that on some weeks, he only works on that business for one hour. And that's to attend the company meeting!
If you'd like to learn more about them, I interviewed them recently. You can check out the full interview with Dan and Eric here.
I'm sure that they could sell their multi-million dollar business in a heartbeat if they wanted. So let's take a look at how you can use Wholesale Sourcing to create a sellable Amazon business.
Creating a Sellable Wholesale Business
Before we go into the details of creating a sellable Amazon business, I want to make sure you understand the basics of Wholesale Selling on Amazon.
A lot of people naturally assume that being a wholesale seller means that you call up wholesaling companies and buy their products. But that's not what we're talking about today.
To create a sellable wholesale business, you need to use the Reverse Sourcing method. With this, you start your search for profitable products right on Amazon.com.
This helps you find products that are already selling well on Amazon.
Once you have a product in mind, you then contact the brand owner directly to discuss selling their product on Amazon. By skipping the wholesaler middleman, you're able to make more money on your sales.
To learn a lot more about the Reverse Sourcing method for wholesale, check out the blog post Wholesale 101: The Ultimate Guide for Buying Wholesale and Reselling on Amazon.
If you don't have time to read that whole post right now, let me give you the key takeaway. By using the Reverse Sourcing method, you're saving lots of steps in your business.
When you only buy products that are already selling well on Amazon, you don't have to worry about spending money on marketing or advertising.
Plus, you're greatly helping out the brand owners by coming in as an Amazon expert and helping them improve their online sales.
It's a win-win for you and the brand owner.
Automating your Wholesale Business
Once you've started finding products to sell using the Reverse Sourcing method, it's time to start automating your business.
Remember, this won't all happen at once. In the early stages of your business, you will likely do all of the work yourself or with a small team (maybe even a spouse or friend).
But the point is that you are gradually building a sellable business by setting things up the right way.
The reason this works with Wholesale (and not Retail Arbitrage) is because you can do Reverse Sourcing from anywhere in the world. If you have internet access and a cell phone, you can buy and sell inventory all day long.
I'm going to share a breakdown of the different parts of a wholesale business that can be automated.
1. Prepping and Shipping
This is the first thing you're likely to outsource and automate.
Because you're buying much larger quantities of inventory than you do with either Retail Arbitrage or Online Arbitrage, it makes more sense for you to use a third-party prep center to get your inventory to Amazon FBA. You may even find a brand owner who's willing to ship direct to Amazon Fulfillment Centers on your behalf!
This works because it's a lot easier to prep wholesale items than arbitrage inventory. The items are usually shipped in case quantity and without any pesky labels or price tags on them. That means it's quick work for your Prep Center to get them out the door to Amazon.
2. Scouting and Sourcing
Believe it or not, it's not that difficult to turn over the entire product research process to a Virtual Assistant (VA).
Wholesale Sourcing is all about data and numbers. That means most of your sourcing leads will end up on a spreadsheet.
Why not have a VA hunt for inventory that meets your minimum criteria (for sales rank or profit) and then have them add the details to a spreadsheet. A VA could even add contact information for the brand owner.
3. Listing & Amazon Account Maintenance
In my Retail Arbitrage business, I may have 50-200 SKUs active at any time. That's because with RA, I may only find 1-10 quantity of any given item.
But with wholesale, it's common to have a much smaller number of SKUs. Some sellers even run an entire business with just one or two SKUs in their Amazon inventory.
This means that listing and repricing are actually quite easy. You could easily train someone else to list and manage your FBA inventory.
Your next hire (for an employee or contractor) might be someone to handle the purchasing. This is the person who calls or emails brand owners and helps you secure new accounts.
If you have your own sales system down, you could supply your new hire with scripts and templates that will help them succeed.
With a wholesale business, you also need to keep an eye on your inventory supply levels. The fastest way to lose sales as a wholesale seller is to run out of your best selling SKU.
That means that someone needs to be in charge of monitoring inventory levels. They'll need to order more inventory before your Amazon stock runs down to 0. That will give your prep center and Amazon's Fulfillment Centers time to process your inventory.
Of course, you don't want to order too much too soon or you could be stuck paying storage fees.
6. Big Decisions and Customer Satisfaction
These may be the final tasks you hang on to. Even if a VA is handing you a spreadsheet of possible inventory, you may still want to be the one to make the final call.
Remember, for each new inventory lead, you'll need to check for things like Hazmat restrictions, oversized items, total profitability, Keepa data, and other details. You may even be the one to push for extra discounts if the margins are low.
You'll also want to make sure that your customers (that's the Brand Owners in this case) are happy. Check in with them on the phone or by email to make sure they're happy with the relationship.
The Key to Successful Automation
Unless your employees and contractors are mind readers (they won't be!), you'll need to document your processes every step of the way.
Many businesses create a Standard Operating Procedure (SOP) so that they can pass down their workflow to all other team members.
Having a SOP in place will be essential to creating and running a sellable wholesale business. Without it, you won't be able to confidently step away from your business.
I asked Dan and Eric for some advice about SOPs for a large wholesale business. They gave me these three tips:
- The goal of SOPs is to reduce variance in tasks, create consistency, increase efficiency, and control the quality of your products
- To create your own SOPs, begin my documenting your existing process and looking for improvements.
- Even as your business grows and your SOPs become more complicated, don't forget to keep things clear and concise. A confusing, long-winded SOP just makes this worse for your team.
Your Path to Sellable Success
Hopefully you're starting to understand what goes into establishing a sellable business.
If you're brand new to Amazon, this might feel overwhelming. But you can actually use it to your advantage.
You'll have a huge leg up if you start your business with growth in mind. This will help you document the “beginner” steps that your team members might need to know later on.
Building a business like this is a lot of work, but it can be really rewarding in just a couple of years' time.
If you'd like to learn more about how to build a sustainable wholesale business using Amazon FBA, I can highly recommend learning from people who have actually done it before. And for wholesale, there's no one I trust more than Dan and Eric.
Dan and Eric teach their proven formula inside their online course, The Wholesale Formula.
And between now and September 16, The Wholesale Formula is open for enrollment. Which means that this is your chance to learn the exact steps to take to create a sellable business.
Click here to get all of the details about The Wholesale Formula.