Influex Michael

6 Easy Steps for Non-U.S. Residents Who Want to Sell on Amazon.com

The truth is: selling on Amazon has NEVER been easier. Amazon makes it easy because they want to introduce more sellers to serve the needs of their gigantic customer base, and create a more competitive marketplace.

This may seem daunting, but it really is not, and I wanted to help dispel some of the myths that might prevent you from taking action and getting started.

Here are some common questions we receive about selling on Amazon using the wholesale business model.

1) What information do American-based suppliers, brand owners, and wholesale companies need to do business with me?

If you are a resident of the US or have a US corporation, they will need a resale certificate. The purpose of the resale certificate is to demonstrate that you are a business making a business to business purchase. This allows for the purchase to be made free of sales tax (because the final customer is the one who is to pay the sales tax).

If you are NOT a resident of the US or do NOT have a corporation, this may NOT apply. Instead, you can often use your country’s documentation that you are a real business. Of course, this means you must be incorporated as a business in some capacity in your home country.

2) What do I need to create an Amazon account in the US if I am not a US citizen?

To sign up for an Amazon account, you will need the following:

A) A credit card that can be charged internationally (typically Visa or Mastercard are perfect).

B) A local bank in your country that supports ACH (Automated Clearing House). This means your bank accepts electronic transfers.

If you choose to go this route, check out the Amazon Currency Converter for Sellers (ACCS):

https://sellercentral.amazon.com/gp/seller/registration/participationAgreement.html?itemID=200497780&language=en_US

Similarly, you can set up a US-based bank account and potentially save money on currency transfers. Two companies that make it very easy for foreigners to create US bank accounts are

Payoneer.com
Worldfirst.com

C) Your local address.

D) A phone number (with your international prefix). As an alternative, we suggest setting up a US-based phone number through a service like Skype or Google Voice.

E) A US Employer Identification Number(EIN).

An employer identification number (EIN) is a unique number assigned to businesses in the U.S. in order to identify them. You don’t have to be a US corporation or of any legal status in relation to the US to get this number.

To obtain an EIN as a non-US resident, follow these steps

Step 1 – Call the IRS (Internal Revenue Service) at 267-941-1099 (not a toll-free number), 6:00 a.m. to 11:00 p.m. (Eastern US time), Monday through Friday, to obtain an EIN.

Step 2 – On the call, be prepared to provide the information to the best of your ability that is found on this form
https://www.irs.gov/pub/irs-pdf/fss4.pdf

3) What do I need to do to be in compliance with US taxes/laws?

Disclaimer: We are not a tax professional, and this is not professional tax advice

An American tax professional instructed us that you should not worry about getting compliant with US tax laws as an international seller until you doing at least $300,000 in sales per year. But you should do your own research on the subject.

When that time comes OR you would like more info on officially forming your business and establishing it officially in the US as to become compliant with US tax laws, then you must work with a US-based tax professional.

Here are a couple online based tax professional agencies
https://www.apriocloud.com/

https://www.salestaxandmore.com/

4) How will I store and ship my inventory?

Now that you are set up, the next challenge is actually storing and shipping your inventory.

We handle all of our shipping to customers through Amazon FBA, and HIGHLY suggest the same to everyone regardless of whether they are US-based or based internationally. At that point, your only challenge is getting your product from the supplier to the Amazon Fulfillment center.

Many suppliers will ship direct to Amazon, and this can be considered as an option. If the item has “prep required”, we generally suggest having this shipped to a US-based prep center to handle that, as Amazon’s prep fees are quite high.

Prep centers are also an option if your suppliers will not ship to Amazon directly. Prep centers receive your product, inspect it for damage, perform necessary prep to ensure its safety for Amazon, and then the journey to the customer.

Some recommendations are PrimeZeroPrep.com and PrepitPackitShipit.com

These companies have very detailed onboarding processes, and can get you set up with ease in minutes!

5) What happens if I get returns?

Now…

We are selling, and are hopefully doing really well. That being said, there is one last complication we have to tackle: returns.

Returns are certainly a part of business. In fact, they are generally between 1-2% of your sales. Many of those products can be resold, and Amazon can make that determination if you choose to let them do that (this is an account setting in your Amazon account).

Whether or not you choose to let Amazon sell your applicable return items, you will have some amount of returns that cannot be resold. There are a few options for what you can do with these.

You can:

A) Contact US-based charities to see if they may be interested in receiving your returns (we donate a good portion of our returns because it is easier and we can write off some amount of that on taxes). That may be more difficult for you, as you will be operating internationally, but some charitable organizations will receive shipments. I would talk to a CPA in your country to see how that can be handled with your personal taxes.

B) You can have Amazon destroy these. I believe Amazon charges $.10/per item to destroy these. However, this prevents you from paying storage fees, and would simply come as a loss against money you had made.

C) You can have the items shipped to a returns center and processed/sold. Here is one of those services (we have not personally used this service, but have heard good things from other people – please check it out and see if it is right for you):

gogambit.com

6) Have you had international students be successful?

Absolutely! All kinds and from every corner of the world! Check out this interview with one of them. His name is Chris Thomas from Australia – Click Here to Watch The Video

Selling on Amazon from outside the United States has literally never been easier. There can be HUGE advantages to selling outside the country as well! The processes may appear daunting but most of the things in this article can be done in minutes. The rest, are just part of owning your own business and being an entrepreneur.

Please bear in mind that we are neither attorneys nor CPAs, and this should not be construed in any way as professional advice. We ALWAYS suggest that you verify and discuss any information with your own legal or tax professional.

Hopefully this helped put in perspective what you need to do to get started!

Do I Need A Warehouse To Do Wholesale?

 


Who says time can’t be bought?

Wrapping up 2016 is an exciting time for us. We are going to land around $7,000,000 in sales, currently have 10 full-time employees, operating a 10,000 sq. ft. warehouse, and are sending and receiving inventory on the FTL (full truckload) level. Things couldn’t be going any better!!

“It’s unfortunate that, despite being an experienced Amazon seller, you won’t be able to reach our level of success because getting there requires infrastructure and, more importantly, a warehouse.”

Perhaps that’s what you expected me to say next but I won’t because I believe that statement couldn’t be more wrong.

Make no mistake — our success is largely attributed to our ability to process thousands of items each week and our warehouse is what allows that to happen. After all, retail is a high volume business model that requires a high volume of products being sold to be successful.

BUT the emergence of prep centers over the last few years has completely changed the landscape. By outsourcing the prep of your products to one of these facilities you are able to fully scale your Amazon business without the prerequisite of a processing team or warehouse facility.  Today you are able to buy and sell tens of thousands of products without ever having to handle, prep, or pack a single product so, in that regard, prep centers have done to the Amazon wholesale business model what Fulfillment by Amazon did for 3rd-party marketplace sellers.

There are plenty of times I’d wished I had known about prep centers when we began because there is no doubt I would have utilized their services instead of having to manage employees and a warehouse. In fact, I’m rather envious of the opportunity available to sellers now. Being able to scale to (and even beyond) our level without ever having to lug boxes, adhere to labels, manage employees, carry workman’s comp and business insurance, upkeep maintenance….I mean, I could go on at nauseum about this! Not realizing the immense burden that comes along with operating a warehouse is often overlooked by sellers aspiring to get to our level.

Here’s a list of just some of the expenses, to help you understand some of the monetary cost of processing in-house:

  • Rent
  • Utilities (which are substantial, especially with “business” internet)
  • Building and equipment insurance
  • Workman’s comp and unemployment insurance
  • Forklift/pallet jacks
  • Electronic equipment (computers, printers, scanners)
  • Prep materials (bags, labels, boxes)
  • Employee payroll
  • Tables, chairs, standing mats

Consider, still, that all these don’t even take into consideration the time investment of handling employee issues and overseeing operations.

What’s more, what if you hit a downturn or have a period of time without products coming in?  Unfortunately for you rent, utilities, and salaries all still have to be paid while you aren’t processing.  With a prep center, you are only paying for products that are being processed and if it goes ten days or two weeks without products being processed, you won’t be paying anything.

With so many different expenses of operating a warehouse, it’s difficult to quantify the cost of processing per unit. With a prep center, this is a known constant and takes a great deal of guesswork out of sourcing because you know exactly what it will cost you to have each unit processed and sent to Amazon.

As you can tell, I am very pro-prep center and encourage anyone thinking of scaling their Amazon business to, at the very least, research the possibility before diving straight into opening a warehouse. Beyond prep centers, it is not uncommon to have your vendor ship your products directly to FBA centers for you. Many vendors are versed in doing this already, but even ones who aren’t are generally receptive to the idea and learning how to do it for you, creating huge savings on shipping to your facility or prep center and any prep cost.

Since we don’t actively use a prep center, I reached out to someone that does to share their experience. Check out this take from The Wholesale Formula Alumni, Suzanne McDuffee:

“When I was learning the mechanics of FBA I did my own prep to learn. But as soon as I had experience packing and prepping in a variety of product categories, bundling and multi packing, etc., I outsourced 95% of my prep work to prep services. I’ve never looked back. I have used five different services to date, and I would say that pretty much all of them have been great to work with – some more than others. I would encourage anyone considering investing in running their own warehouse to try prep services before making that commitment. Not only do I value the freedom and flexibility it gives me, but they actually do a better job, and it is more cost-effective for my business.

Thanks to my prep service partners, my VA, Google Apps, and some other tools, I am 100 percent location independent. I can run my business from anywhere in the world as long as I have an internet connection. At first, I would travel domestically in the United States to make sure everything went smoothly. But I just put my business to the test internationally by traveling to Spain for 3 months. It went great with no major issues, and I plan on making more trips abroad regularly, which has always been a dream of mine. I’m pretty sure I would not have been able to pull this off if I had a warehouse to run. Next up I plan on visiting Cuba, Argentina, Singapore, and who knows where else. It has been by far the most fun, challenging and satisfying year for me in a very long time. It’s a really exciting time to be in business – even just 5 years ago prep services were not so widely available to small businesses like mine. I still can hardly believe I can live this way – I love it!”

– Suzanne McDuffee

Suzanne McDuffee enjoying a trip through Europe while her Amazon business operates back in the states thanks to a prep center.

Outsourcing is designed to provide a solution that you are unable to do or, in the case of prep centers, are too valuable to do. Prep centers grant you freedom and time to focus on the highest level tasks of your business, eliminating constraints normally reserved for operations and infrastructure of in-house processing, thus serving as a catalyst for growth.

Ultimately, deciding which manner of processing and prep is best for your business should be evaluated and determined by you. Be sure to consider alternate solutions and methods you otherwise may not have for scaling your business to our level without making the substantial investment of capital and time we have. While time may not truly be able to be bought, by outsourcing prep, time spent on your business can be and if you are driven toward success, the price paid will be minuscule compared to the return gained.

Your Business Will Grow If You Would Just Work Less

Congratulations!!

You’ve set out and started your very own online business.

No more boss or timeclock or annoying co-workers.  You are the master of your own destiny.  You’re the Big Cheese, Head Honcho, Chief Executive Officer.

Which begs the question, why are you not acting like it?

If you’re like the vast majority of online entrepreneurs, you have already or inevitably will fall into a pattern of repetitively performing low-level tasks that should be outsourced.  This can stem from any number of reasons such as comfortability with the status quo, the crippling fear of giving up control, or assurance that no one can do the tasks as well as you (spoiler alert: you’re probably wrong).

We are guilty of it too. In fact, we should have outsourced our labor at least 6 months earlier!

The glaring problem with these fallacies is they significantly reduce the ability of your operation to scale from a well-paying job to a true business.  Dan and I were relegated to this reality for nearly 3 years, making good money but in direct ratio to the amount of work we put in.  Soon, we ran out of time available in the day, reaching a scalability threshold, and came to realize that if we want to ever to build a perpetuating business, which we could remove ourselves from, we would have to outsource some of the low-level tasks we were performing.

Now, for us the answer was employees to handle prepping, packing, and shipping our products to Amazon, allowing us to spend the majority of our time researching and buying more profitable products.  As you might imagine, our business experienced explosive growth. During our three years of just Dan and I, we had revenue of $890K, $920K, and 1.3 million.  Now that’s not shabby, by any metric, but compare that to $3.9 million in 2015 (our first full year with employees) and $6.6 million in 2016.

I realize the primary reaction to this is “That’s great but you have a warehouse and employees.  I have no interest in either of those, so guess it’s not for me”.  Think again.  While it’s true we utilized a warehouse and employees to outsource and scale, that’s primarily because we had never heard of or knew of any other options, so if you believe a warehouse is imperative to growth, I’d invite you to read one of our previous blogs on exactly this topic:

https://wholesaleform.wpengine.com/work/do-i-need-a-warehouse-to-do-wholesale/

With the monumental growth of Amazon in the last few years, third-party solutions have been created and developed to make outsourcing more convenient than ever. From prep services that will handle your FBA shipments to Amazon to software that will automate pricing and restocking and even virtual assistants that you can assign to product research.

Obviously, you don’t have to outsource anything in your business and continue wearing every hat in your day-to-day operations but I would advise you to figure out what your value to your company would be if you were able to do only the highest value-adding task, eliminating everything else.

Is it $20 per hour? $50? $100? More?

Once you grasp this value, the opportunity cost of every task you perform is the difference between what you could outsource it for and that amount.  For instance, if your value is $50 per hour then every time you spend an hour labeling, prepping, or packing a box you are leaving between $35 and $40 on the table since these tasks can be handed off for easily $10-15 an hour.

The converse way of looking at this is, you are effectively paying $50 per hour for that task to be performed. This means that you make a profit of $35 to $40 per hour by paying someone else the suitable wage to do that specific task.

I know this is largely theory-based and you can’t be expected to spend every minute of your day doing only the highest value tasks but it’s a thought-invoking concept, challenging you to take a holistic look at and begin to realize the big picture potential of your business’s capability.

If you have never sold on Amazon or are just getting started and feel a bit intimidated or confused, don’t worry because this post is intended for an intermediate to advanced Amazon seller, as I would never suggest outsourcing anything in your business until you fully understand it and can properly train and entrust it to someone else.  But even for beginners, it’s a concept to be mindful of for taking your business to the next level.

Now that you have an idea of what your true value to your business is and how outsourcing lower-level tasks is the only way to achieve exponential growth, the first and most important step in transitioning your business is changing your CEO title from Conducting Everything Officer to Chief Executive Officer.

Wholesale 101: The 6-Step Guide to How I Made $6,496 Last Night While I Slept

You’ve finally found it…

This article is designed for those that want to learn how to make money online.

Even if you have no idea how or where to start, that is okay – because I am going to be showing you.

This is a blueprint; a blueprint to building an online revenue stream that makes you money even while you sleep. As a matter of fact, I did $6,496 in sales last night while I was snoozing.

$23,521 in sales for the entire day, but a whopping $6,496 came in the hours while I slept as you can see from the chart above. Did you notice the yawning emoji around the 10:00 AM mark? I put that there because it’s around the time I wake up each day. Sometimes earlier, sometimes later.

I get up when I wake up.

I’m afforded this luxury because I don’t have a job. I have a business.

I don’t miss my daughters’ gymnastics practices anymore, I don’t suffer through restless nights worrying about rumors of company downsizing, or feel as though I am underappreciated and underpaid.

What kind of business do I have that affords me these things?

An Amazon business.

Put quite simply, I sell physical products on Amazon. A lot of them. And this page is here to show you the exact business model step-by-step so that you can copy it.

8 years ago my business partner Dylan and I were working regular office jobs. We made a living and nothing more. And then one day we were presented with information about the opportunity of selling on Amazon just like this article is about to teach you about that same opportunity.

Naturally, we were skeptical, but we felt we had nothing to lose and everything to gain.

The problem was we had no money.

Like many Americans, we were living paycheck to paycheck. There just wasn’t extra money laying around to start a business with, but we didn’t let that stop us.

I had basically no credit history at the time. That means we got started with a $600 limit credit card in my name (the most I could get approved for) and that was it.

We worked nights and weekends building our Amazon business.

6 months later we were earning enough to leave our jobs.

8 years later and we’ve sold over $25 million dollars on Amazon.

WARNING

Before we dig in, I’ve got to warn you about something that’s critically important. Not paying attention to this will virtually guarantee you never make real money online.

Up to this point, I have mostly talked all sunshine and rainbows. If you honestly think that you are going to read this 6 step guide and make $5,000 over the next 30 days…then you are on a fool’s errand.

It’s true that my business generates well over a half-million dollars in revenue each month and I work 6 hours a week at most, but I had to work my butt off over the last 5 years to get to this point. I am not an overnight success and this is not a get rich quick scheme.

This is a “put in the hard work, dedicate yourself and build a viable online business that will stand the test of time”…actionable plan.

Also, please realize that this is just a blueprint. I can’t break down everything I know and have learned about starting and operating a 7-figure Amazon business in a single blog post. What you will gain, is the knowledge and direction you need to get started building an online income for you and your family. Everything else after that is up to you.

You have now been thoroughly warned. If you fully understand that successful businesses are built not by chasing unicorns, but with sweat equity…then you should continue reading.

So let’s get started…

The System

The system my business partner Dylan and I have used to create a multi-million dollar online business is not new or revolutionary in any way. Actually, it has existed pretty much forever.

It’s the same system used by Wal-Mart, Target,  and Costco.

The system, in its simplest form, is this:

 

It really is that simple. We buy low (wholesale prices) and sell high (retail prices).

We call this process wholesale.

Now here is the secret sauce; the thing that makes the wholesale business model possible for just the average person like you and me to replicate.

Amazon.com

I repeat. Amazon.com

For decades, the hardest part to replicate in the business model for the average Joe was part C.) putting products in front of enough customers. It required a lot of money to have enough retail space to store and display all that product and even more money for the marketing and promotion to get people into your store and buying.

Amazon has completely revolutionized online business forever because their massive marketplace will do that part for you.  This makes it possible for almost anyone at any level, people like you and me, to start an online retail business.

This leads us right into the first of our 6 steps…

Step 1 – Understand the Amazon Marketplace & Opportunity

(AKA – Amazon.com is where you are going to sell your sh*t)

If you are going to be selling stuff on Amazon, it is important to understand what exactly Amazon is and how it works.

You might roll your eyes at the fact that this is a step at all, but I fully believe this is the most important step there is. The opportunity for people to totally change their life is right at their fingertips, 24 hours a day, 7 days a week and they don’t even know it exists.

Let’s break it down.

Amazon is the world’s largest online marketplace. That means more stuff is bought and sold on Amazon.com than anywhere else online (and it isn’t even close).

The keyword here is “marketplace.”

When you shop on Amazon and purchase a product, there is a really good chance that the product you bought was not actually sold by Amazon. Yes, you bought it on the Amazon website, but the real seller (the person who listed the product for sale on Amazon.com and gets paid for the sale) is just an average Joe. Heck, it could be me. It could be the guy or gal down the street. And after finishing this blog, it could be you!

About half of all products sold on Amazon.com are sold by 3rd party sellers like me.

HALF!

Ready to have your wig blown off?

Amazon did over 300 billion dollars in revenue for 2018 and they are still rapidly growing.

Do I really need to do the math for you? 100 billion in revenue, 50% of sales coming from 3rd party sellers like me and Joe down the street.

WOAH! That is a lot of money.

Amazon is basically waving around BILLIONS of dollars just begging people to come claim it.

If you are wondering what it costs or how hard it is to sign up as a seller…well…it is FREE. You can complete the application process in about 15 minutes and BOOM, you are live to start selling. It is so easy that it would be hard for you to make up an excuse NOT to do it.

But there has to be a catch, right? Well, sort of. Amazon takes a commission on every sale that is made on their website (and we gladly pay it).

Remember a second ago when I said for centuries the hardest part about owning a retail business was getting your products in front of as many people as possible? If you owned a physical retail store in your local city, on a good day you might have 50 people come into your store to browse.

By comparison, over 100 million people shop on Amazon each month.

WOAH! That is a lot of people.

Amazon provides the customer base so that you can easily sell tens, hundreds, or even thousands of products every single day.

But what about the delivery of those products? Even if you were able to sell that many products, how would you actually go about shipping out all those orders?

Well…Amazon will actually do all that for you too.  And more.

This leads us to our next step…

Step 2 – Understand the Amazon FBA Program

(AKA – How you can sell millions of dollars worth of products without ever having to physically see or touch them)

FBA stands for Fulfillment by Amazon.

It is easily one of the most revolutionary leaps forward for business in the last half-century. It is exactly what has enabled Amazon to generate half of its retail revenue from 3rd party sellers.

To explain what exactly FBA is, I will let you hear it straight from Amazon themselves with this 90-second video.

With FBA, Amazon will store all your products in their warehouse, prep, and ship the products to customers for you, and handle all customer service and returns.

This means you can have your product suppliers just ship directly to Amazon’s warehouses. You can literally sell millions of dollars’ worth of product without ever having to physically see or touch it.

With FBA, you can accomplish by yourself from your living room what would have taken a warehouse and a team full of employees just 10 years ago.

So, what does it cost to enroll in FBA?

This is the crazy part. Enrolling in the Amazon FBA program costs you nothing upfront. You only pay a per-item fee for products when they actually sell.

Step 3 – Create Amazon Seller Account and Sign Up for FBA

(AKA  – Take 15 minutes of time out of your day to change your life)

This is the fastest and easiest step. I have already gone into detail about the benefits of selling on Amazon and using the FBA program.

All you have to do here is commit. Commit to whatever it is you want to accomplish. With Amazon FBA, you can go as big or small as you want.

Whether you just want to make extra money to save up for that vacation your husband/wife always wanted, or you want to build a highly profitable business that will serve as a lasting legacy for you and your family, it is all possible with FBA.

To get started making those goals a reality, all you have to do is set up an Amazon seller account.

You can create your seller account right here:

https://www.amazon.com/sell

Step 4 – Find Products to Sell

(AKA – Don’t reinvent the wheel; find the most popular wheel and sell it!!)

So, what do I sell?

The answer to that question is very simple. You sell what people are buying.

Picking the right products is the key to a successful e-commerce business. You make the wrong move here and you will end up spending your money on a bunch of junk that never sells.

Our framework for identifying products that will sell fast and make you money is a huge pillar of our training program The Wholesale Formula.

I have some good news and bad news about that.

The bad news is that you likely can’t get into The Wholesale Formula right now. We only conduct the program a couple of times per year and enrollment generally only lasts about a week. The program is also not cheap. We don’t just go around giving away ALL of our business secrets for free.

The good news? I will give you a summarized version of how we source products right here.

Sourcing = The process of searching for products to sell

There are two ways people traditionally source for products to sell on Amazon:

  1.  Going to tradeshows or signing up for accounts with distributors and wholesale companies. They will then go through those companies’ giant catalogs of branded inventory to find products they can buy to profitably resell on Amazon.
  2. Contacting Chinese manufacturers and having them put your own brand name on generic products that you will launch on Amazon. This process is called private label.


We don’t do either of those things.

Both of those strategies for sourcing products are harder, more time-intensive, and riskier.

How we source starts with our Reverse Sourcing concept. It is one of the major things we have developed that allowed us to succeed where many others have failed.

With Reverse Sourcing, we do things the safe and easy way.

You don’t have to take big risks to make big money. Not on Amazon.

Enter our method of Reverse Sourcing.

We start our search for products on Amazon itself. Remember when I said that you want to sell what people are buying? Well, Amazon actually tells you how often people are buying a product right there on the product page. It is called Amazon Best Sellers Rank.

bsr

And with some quick math, you can even estimate how many of that product you can sell per month. It’s really is a formula to success and is a hallmark to how we came about the name The Wholesale Formula.

After we have used our formula to identify great potential products comes the next step, which again is VERY different from conventional wisdom in the industry.

We don’t go to major distributors or wholesale companies to purchase those awesome potential products we just found on Amazon. Instead, we cut out those middlemen and go straight to the source.

We reach out to the brand owner to open up a wholesale account with them directly.

When you buy direct, you get the best possible price. And when you get the best price, you make the most money!

Step 5 – Learn How to Buy Products Brand Owner Direct

(AKA – Buy a cow from a farmer instead of milk from the store) 

This may be the trickiest part of our blueprint.

It makes perfect sense that cutting out the middleman and buying direct is going to make you more money, but if it were that simple, everyone would be doing it.

Oftentimes, brand owners won’t approve just anyone to sell their products on Amazon. Their brand is their entire life’s work and they don’t entrust it to just anyone. They are looking for certain qualities and attributes in their online sellers.

This part of the process is what we call The Great Filter. That’s because this is where the majority of people fail with this business model. They never figure out how to break through and get approved to sell these amazing products.

Luckily, we have cracked the code.

There are 2 primary attributes brand owners are looking for

They want sellers who:

  1. Appear professional & trustworthy
  2. Add value to their products and brand

Let’s analyze these a little deeper. How do you appear more professional and trustworthy? Well, for one you have to remember that this will be a business to business relationship, so you actually want to appear and present yourself as an actual business.

(You know, don’t send emails using a Hotmail address; stuff like that.)

Having a professional business website that represents your company is a great way to help legitimize you in their eyes.

When it comes to adding value to their products and brand, it is pretty simple. They want sellers that will contribute to the growth of their brand. They don’t want a leech that is going to sell their product and nothing more.

You add value by doing things like improving the product page on Amazon, running pay-per-click advertising, and a myriad of other ways. Some of these may seem daunting but trust me, they really aren’t. We learned them on our own and have taught hundreds of The Wholesale Formula students how to successfully add value to brands, so don’t worry, you can figure it out too.

You just have to ask yourself a simple question – “What is one thing I can do that will increase the sales, perception or exposure of this product/brand?”

The answer to that question is how you add value, and it is how you will convince a company to approve you as a seller.

Once you’ve mastered this, it is like having a license to print money.

Step 6 – Sell Products on Amazon

(AKA – Imagine having the world’s largest 24- hour convenience store fully ran by robots)

This is the fun part. Checking your phone to see how many products you have sold, and how much you’ve done in sales. It seriously becomes addicting. You will be doing it constantly.

Because you are using the power of Amazon FBA, you have a full-scale business operating around the clock. After you watch a movie on Netflix, you check your phone and “Oh, I did $1,100 in sales during that movie”. Maybe you hit the beach for a few days, come back, and check your phone “Bam! I did $8,430 in sales while I was catching that surf and sun.”

If this sounds totally cheesy and ridiculous, that’s because it is. It is absolutely ridiculous, but it is all true and it is all real.

Private Label and Wholesale Selling on Amazon: Two Sides of the Same Coin

 

Imagine, if you will, a wildly successful gold miner who has spent months(perhaps even years) refining his technique and has become well-trained and experienced in all the intricacies of gold mining, from necessary equipment to the best prospects for finding the precious ore.

One day while having a conversation with a fellow miner our gold miner is asked, “Why don’t you also collect the platinum and silver while mining for gold?  I mean, you’ve already put up the site, primed the location, and set up the mine for retrieving gold, so extracting the silver and platinum while already that far into the earth would only require a very small amount of effort!”

If you are a Private Label seller on Amazon you are the gold miner in this story, and not utilizing wholesale sourcing in your business is the equivalent of leaving the other precious metals behind.

As I hope you realize by now, we are successful Amazon sellers who leverage a unique wholesale business model. We are here to tell you the majority of work and skills you have as a private label seller are well-served in application to the way we buy and sell millions of dollars’ worth of goods on Amazon each year.

Your ability to see inherent problems with listings and how to address them is an invaluable skill. It took us months to develop and is likely leaps and bounds ahead of any level of thinking or recognition an arbitrage-model seller could even begin to understand.

You may not realize it but this skill alone makes you attractive to nearly every brand in the world because you know firsthand the power of having your brand be relevant on the world’s largest and fastest-growing marketplace and, more importantly, how to accomplish it. Brands are becoming increasingly more selective in who they partner with and your skillset will give you quite the leg up on your competition.

Take a moment to think about it: what’s the primary goal as a private label seller? Become relevant and convert as many sales as possible, right? Every brand in the world wants the exact same thing and you have already honed skills to achieve those marked improvements, putting you as a prime candidate for any brand currently selling on Amazon.

Private label enjoys some advantages over wholesale to be sure, but there are distinct advantages to wholesale as well:

  1. No need to create a product listing.
  2. No need to spend thousands of dollars in giveaways or advertising to make your product relevant. There is already built-in demand.
  3. No need to place HUGE orders from China and have to wait weeks or months for the products to arrive.

For us, finding products that already have demand and proven sales history eliminates any of the guesswork involved with private label. Not to mention the large capital investment of inventory and advertising further compounds the risk! We tap into existing demand and by utilizing methods similar to those you would incorporate in your private label business

  • Improving search terms
  • Optimizing pictures
  • Revising listing details
  • Amazon sponsored ads

We make ourselves more valuable to the brand owner and set ourselves out from the competition.

Before I get too far along into convincing you how easy mining silver and platinum can be, I want to address some of the concerns or objections you may have in your head right now.

“Competition stinks!! I don’t want to have to compete for the Buy Box.”

This objection is far and away the most common from any private label seller we have ever talked with when we broach the subject of adding wholesale to their business and completely understand the underlying misconception.

Properly understanding how the Buy Box works is the key to debunking this logical fallacy.

The wholesale products we target have very consistent sales and with that data, along with knowledge of how the buy box works, you will be able to easily figure out what your share of sales on that product and be able to consistently and repeatedly order that number of units each month, creating a near-constant stream of revenue.

Think of it like this, there are thousands of products on Amazon selling thousands of times each month and you can be one of a handful of sellers on that product getting hundreds of sales each month. It’s basically a mathematical certainty since competition and sales volume are predictably constant with products we target and are able to reliably order and re-order these products to get our hundreds of sales, month over month.

Remember: part of a watermelon is more filling than a whole grape.

“I don’t want a warehouse.”

Unfortunately for us, there weren’t other options when we began. If there is one thing we can wholeheartedly say (having operated a 10,000sq.ft. facility for nearly two years now), having to do it all over again we wouldn’t have a warehouse either. Fortunately for you, these days there are a couple of options you can use to handle the processing and outbound shipping of your wholesale inventory. First, you can have your supplier ship directly to Amazon fulfillment centers on your behalf. This practice is much more common now and many vendors already understand the process and will do it at little or no cost to you. Secondly, you can use a prep center like Prime Zero Prep to receive, process, and ship your items to fulfillment centers, all without having to ever touch your own inventory. Outsourcing the prepping aspect of wholesale in one of these ways means you can run the entire operation from a laptop!

“Why wouldn’t brand owners just sell the products themselves?”

The primary disconnect here for private label sellers is they are unable to understand the scope of operations of most manufacturers. As a private label seller, you have developed a product to sell into a specific market, whereas the companies we work with have developed their products to be marketed and sold in EVERY major marketplace.

For our manufacturers, their efforts are focused on marketing their brand to be relevant to consumers, regardless of which marketplace or retailer it’s purchased from. To put it in perspective, did you buy your Tide detergent from Procter & Gamble? Of course not! You picked it up at a retailer, like Walmart or Target, and in that sense, we are asking manufacturers the opportunity to serve as a conduit to increase traffic and sales on the Amazon marketplace, where we are experts.

To help bring this all together and explain how you are leaving the silver and platinum behind while mining for your gold, I want to present some of the primary aspects where the private label and our wholesale model overlap. Unlike traditional wholesale models, we don’t attend trade shows or spend hours poring over huge catalogs, trying to find the needle in a haystack or diamond in the rough, to continue the mining analogies. Rather, we target products that meet our model’s criteria, then contact the brand owner of the product.

We spend a great deal of our time sourcing and sifting through product pages on Amazon trying to locate products that meet our criteria or specifications. This sound familiar? As a private label seller, you are likely poring over page after page of products and categories looking for products with high demand that you can then manufacture and private label in direct competition to these items.

There is a high likelihood that these products you are trying to emulate, we would be contacting to sell on Amazon. So, this is where you mine the silver and platinum; you have already put in the work to identify a product type with high demand, and instead of emulating the product and hauling your gold off, you could source the product itself and make off with all the precious profits!

Imagine getting tons of sales from your sweet new private label product as well as from the brand owner’s product that was your original inspiration!

There is one other benefit I feel I should mention that adding wholesale to your private label business will provide and that’s insulation. As a private label seller, your entire revenue stream is invested into a handful of SKUs and if you are ever unfortunate to have one or all of your listings shut down, it will likely be catastrophic to your business. Adding wholesale as an additional income, which as I’ve highlighted well here is not a far stretch from what you are already doing, will create diversification and provide operating revenue for your business in the unfortunate scenario you face listing restrictions.

I think you can easily see how adding some wholesale products to your private label business is like adding platinum and silver to your gold haul allowing you to bring up tons of extra profits while implementing minimal change to your current workflow. Now, get your equipment fired up and start mining!

BONUS: If you want to learn more about how wholesale aligns perfectly with private label, check out this webinar that Dan held with JungleScout creator Greg Mercer

Our Product Analysis “Formula” Revealed (And The Tools We Use To Do It)

It all starts with the buy box.

The Amazon Buy Box is a key component in maximizing your sales in the marketplace. In fact, the vast majority of sales (most estimates being 80%+) happen from inside the Buy Box. When you take that factor into consideration, you quickly begin to realize the importance of increasing your share of the Buy Box, and the impact that it can have on your sales.

So, what is the Buy Box exactly? 

 

The name buy box is pretty literal. As you can see in the picture it is the area on a product detail page where a customer actually clicks to add a product to their cart.

So the question is if there are multiple sellers on a given product, who gets the sale when a customer clicks “add to cart” using the buy box?

The answer is that Amazon automatically selects the seller using a set of metrics that for the most part, they try to keep a secret. Fortunately, we have figured out most of those metrics and will be sharing them with you in this guide along with strategies to help increase your buy box exposure, increase your ability to analyze products so you make better buying decisions, and ultimately…increase your sales.

What Factors Determine Buy Box Percentage?

It is important to mention here that Amazon does not give the exact recipe for success in maximizing the amount of time each seller gets in the Buy Box. However, they do give examples as to some of the factors that they consider in determining the Buy Box percentage for sellers. Through experience and years of study, we have learned more factors that help to increase your Buy Box percentage and help to give you an edge in maximizing your sales.

Here are the known factors that Amazon uses to determine who gets the Buy Box:

Fulfillment Method

Buy Box Impact: Very High

We believe this to be the KEY factor in determining Buy Box eligibility. Selling on Amazon allows for two different methods of fulfillment:

Fulfillment by Amazon (FBA) & Merchant Fulfilled

You can see Amazon’s preference of FBA offers in two fashions:

  1. FBA Offers are Prime Eligible – it is only recently that they allowed a select few Merchant Sellers to become eligible to offer Prime Shipping (in an Invite Only Pilot program).
  2. FBA Offers (more appropriately Prime Eligible Offers) – are able to be priced higher than traditional Merchant Fulfilled offers and receive Buy Box eligibility. This varies by percentage as to how much higher and is generally decided by the other factors like Seller Metrics. We have, however, seen offers as high as 25% higher than the Merchant Fulfilled offers and still be Buy Box eligible.

Either way that you look at it, Fulfillment Method plays a HUGE role in determining Buy Box eligibility. In a nutshell, FBA is the superior method for selling to gain buy box control most frequently.

Price

Buy Box Impact: Very High

Amazon focuses on delivering extreme value to their customers. Amazon believes that lower prices help to create better customer experiences for their customers, which helps to drive more traffic to their site. We personally believe that this is the second most important factor in determining Buy Box eligibility.

For more information about how Amazon perceives price to be an integral part of their system – review the Amazon flywheel diagram below.

Feedback Score

Buy Box Impact – Medium

This particular facet is rather self-explanatory. Feedback serves as an indicator of customer experience when buying from you. It is very important that you, as a seller, work as hard as possible to improve your customer’s experience. This means making sure that customer inquiries are answered in a timely fashion, that your products are carefully matched to the Amazon detail page and that you work diligently to resolve any customer issues.

Likewise, it is very important that you monitor your feedback and contest any feedback that goes against the Amazon guidelines. In instances where your feedback may not be eligible for removal by Amazon, we suggest that you work with the customer to get the feedback removed (within Amazon’s rules of course).

To understand how important customer experience is at Amazon we have included a link to the 14 Leadership Principles at Amazon for your review.

https://www.amazon.jobs/en/principles

Feedback Quantity

Buy Box Impact – Medium

This is an indicator to Amazon of the volume of sales that you do, as well as provides them with a long-term gauge for customer experience. Their goal is to perpetuate sales from sellers who are likely to provide a positive customer experience. To help increase the amount of feedback that you get – you can look at using a customer correspondence service like Salesbacker, Feedback Five, or Feedback Genius. These services can be used to prevent bad feedback by encouraging customer interaction in the instance of a problem and similarly to promote buyers to leave positive feedback.

Perfect Order Score

Buy Box Impact – Medium

These are comprised of: Customer Inquiry Response Time, Order Defect Rating (ODR), Return %. These are all great metrics for Amazon in helping them understand how you interact with customers. The great news is that all of these factors are within your control (directly or indirectly).

Quantity of Product Available

Buy Box Impact – Low

You will get the Buy Box with a higher percentage the more inventory that you have available. Amazon likes competition, as competitive markets generally have downward price pressure as sellers compete to get more sales. Looking at this intuitively, the longer they keep sellers on a listing – the more competition that will exist, which can inherently lead to downward price pressure.

This is an interesting conundrum as having more inventory leads to higher Buy Box percentages and consequently higher sales, but likewise has higher fees involved. It’s important that you play a balance here, as you certainly don’t want to encounter Long Term Storage fees in hopes raise your Buy Box percentage by a small amount.

Proximity of Product to the Customer

Buy Box Impact – Low

This factor is important to Amazon on several levels. Their goal is for customers to receive the product as quickly as possible, and secondarily it certainly helps their freight costs to not ship products across the country. We aren’t sure how important the factor of stickered vs. commingled in this regard is, but one could assume that having commingled inventory would mean your inventory is inherently closer to the consumer as it doesn’t have to be your inventory, but that is unconfirmed and speculatory.

Accurately Estimating How Often A Product On Amazon.com Sells

It is possible to look at a product on Amazon and get a pretty good idea of how fast, how often and how many times you can sell a product (assuming you are actively competing for the buy box). The best part is that you can do all of this with free tools.

The first step is to figure out how many times a product on Amazon sells per month.

To do this, you can use JungleScout’s free estimator on their website here. Simply plug in the Amazon Best Sellers Rank and it will give you a readout:

www.junglescout.com/estimator

Through extensive testing and our own data, we have found the tool to be an incredibly accurate estimation. If you want to see how we use Jungle Scout in our wholesale sourcing (although it can be great for Private Label research as well) then check out our video here:

JungleScout Webinar with Dan Meadors & Greg Mercer

Tip: It can also be beneficial to view the average sales rank of a product and run it through JungleScouts free estimator, just in case there have been any recent fluctuations. Camelcamelcamel.com is a great website to see the sales rank of products charted over periods of time.

Estimating How Fast and How Often YOU Can Sell A Product on Amazon.com

Now that you can determine how many times a product sells in total every month, with just a couple more steps you can determine around how many of those sales YOU are entitled to.

(All calculations here assume you are always competing for the buy box based on criteria we previously mentioned and your fulfillment method is FBA)

Let’s assume you are looking at a product that JungleScout determines will sell 100 times per month. To figure out how many you can sell out of that 100 in a month, our next step is to figure out how many sellers on the product are eligible for the buy box.

The game really changes whenever you realize you aren’t competing with the multitude of sellers who are on the listing. In fact, the vast majority of these sellers have NO shot in their current capacity on the listing of actually making a sale. This will make products that you have previously skipped over appear much stronger when you realize the sales potential that you might have previously been overlooking.

The first thing that we do, in general, is only consider Prime eligible offers to be competitive. There are caveats to this, where the merchant offers are significantly less than their Prime eligible counterparts. One great way to realize whether a Merchant
Fulfilled (MF) offer is Prime Eligible, is to look at the current Buy Box, are they the featured Buy Box merchant. If their price is cheaper, and they are not the featured merchant, then it is fairly reasonable to assume that they are not Buy Box eligible.

The next thing that we will look at is which of those Prime eligible offers are competitively priced. We define competitively priced as being within two percent of the lowest Prime eligible offer. We have found that the majority of the time, those sellers will have some amount of Buy Box eligibility when they are within two percent of the Buy Box. While, if they are priced higher than the lowest FBA offer – they will get a lesser percentage equity in the Buy Box – they will still, in many cases, get some of those sales.

So what does this look like?

As you can see, you simply look at the offers tab to view all offers and then locate the lowest Prime Eligible offer. We simply take that initial Lowest Prime Offer and multiply it by 1.02, which will give us the highest price that we consider to be competitive.

In this example:

$17.89 * 1.02 = $18.25

Therefore, any seller above the price of $18.25 is highly unlikely to get shares of the buy box.

If you came onto this listing priced at under $18.25 you would be the 3rd competitive seller. Assuming all buy box metrics are equal among sellers, and this product sells 100 times per month, you could expect to sell this product 33 times in a month. Or once per day. So for instance, if you only sent in two units of this product, you could expect to sell both of them in just a few days.

What if your buy box metrics outside fulfillment method and price aren’t great? There is no exact science for that, but the worse your metrics are, the worse of a percentage you can expect to gain.

Now of course the landscape for a product can change between when you look at it and when your product arrives at Amazon’s fulfillment centers, but this method gives us the best idea of what to expect with the data we have available to us.

This might all seem complex, but I have got good news for you. We have developed a Google Chrome Extension that does all this calculating and counting for you. It is called the TWF Buy Box Scope and you can download it here for free:

This extension simply does the above calculation for you and helps to automate the process of determining which offers are competitive, such that you can move forward in your product analysis in determining your projected quantity that you will sell-through.

Now no matter if you are making a Retail Arbitrage, Online Arbitrage, or Wholesale purchase…you can easily and accurately estimate how many you should buy and how long they will take to sell.

So let’s recap all this into simple steps:

Step 1: Use JungleScout to determine the monthly sales of a product

Step 2: Use The TWF Buy Box Scope to determine how many competitive sellers it has and add one more (which will be you)

Step 3: Divide the monthly sales by the number of competitive sellers (plus you) and that should be your monthly sale through of the product.

Final Thoughts

This was really revolutionary in helping us understand the Amazon marketplace, and has led to several breakthroughs in growing our business. Knowing that you have the ability to make sales is certainly a great feeling, but truly understanding how and why sales occur can give you a HUGE advantage in the Amazon marketplace.

The key to our growth has not only been learning these things about the marketplace but studying to learn how we can use them to grow our business. After reading this article, you should have a much better understanding of how you can affect your own sales – the ways that you can improve your business strategy to improve your Buy Box percentage, as well as determining what might be a great prospective product. I wanted to make it abundantly clear that this information is not only applicable to wholesale, on the converse it applies to any volume purchase situation (where you can control the amount of product that you buy) like Retail Arbitrage, Online Arbitrage, or purchasing Liquidation. It should give you an idea about how you can project your cash flow, and when you should invest your money.