It’s more than just growing your business on Amazon. You have to actively contact and cold call retailers in order to sell your products. It’s the next step in the process. You’ve sold on Amazon, you’ve diversified through other channels, and you’ve built up your brand. If you want to become a wholesaler, you have to take the time to build your brand. It’s not an overnight task. It takes a lot of time to build a brand.
It might not be a good idea to start large chains like Tesco or Wal-Mart. The better idea would be to find a smaller one in your area. Make contact with the owner or decision maker, and set up a presentation where you can make a pitch on your products. A fallback would be to create a PDF that goes over all the information. You can them email the document to them and follow up a few days later with a phone call.
You may not have the money to get a booth or a stand, but you can go as a guest. You can find local retails and get their contact information. Then you can send them an email and PDF where you talk about your company and make a pitch. One vital aspect, in order to become a wholesaler, is making these connections.
You can’t go to these retailers and sell some generic widget. It needs to be unique. It also helps to have several products in your catalog before you become a wholesaler. Bear in mind that even though it may take a year or two for your wholesale business to get going, the payoff happens when retailer orders tens of thousands of products at once.
The great thing about wholesale is the potential. It really is possible to to do great things with it. Whether you want to do it to make some extra income or make it into a large operation. Manuel has done this. He currently does about $300,000 on Amazon, and close to $1.5 million in wholesale. When you factor in his consulting and sourcing income, he is making around $2.5 million a year. The potential is there if you’re willing to put in the time and effort.
Get in touch with Manuel at importdojo.com and get a free eBook and newsletter.
There are many things that you have to take into consideration. You have to think of your lead time and everything that goes into it. Also consider receiving time at Amazon. It might take awhile for them to check it in. When planning a strategy for your FBA inventory, you should plan for the worst case scenario. There could be issues with it getting backed up at port or issues with your supplier.
A great thing about using software for forecasting, is that they can keep track of that, whether it’s Jeremy’s Forecastly or another piece of software. It tracks inbound inventory, current inventory, what you have in manufacturing, and true sales velocity.
You also need to consider spikes in sales. You may have consistent sales every day, but a couple times a month your sales spike. This is why you need to build in a safety stock. That gives you a cushion so that if you get a surge in sales, you have enough stock to cover it until your next shipment gets there.
Forecastly has many business that use its service. The software can then use this anonymous data to make predictions about Amazon as a whole. It takes ASIN level data over the past 30, 60, and 90 days to makes prediction about future sales numbers.
Their main focus is demand forecasting. It considers your recent sales including stock out periods. If you were out of stock, it can determine what you would have sold had the product been available. It also tracks the variability of demand which is something you can’t do in a spreadsheet.
The main thing you have to be conscious of when managing your FBA inventory is, what do you need to replenish, when do you need to replenish it, and how many units do you need to replenish. Forecastly tracks all that while monitoring your inventory and will recommend your orders.
Many sellers want to use a 60 day trend to determine their sales velocity which is a bad idea. If you selling in an upward trend, meaning your sales are growing, then your sales were much lower 60 days ago. This will make your average too low. Forecastly uses a 30 day trend to get the most up to date projections.
We, here at Amazing FBA, love a rule of thumb. Unfortunately, when it comes to FBA inventory, many sellers follow a rule of thumb that won’t help them, and could hurt them. It’s the idea that you need to have X amount of days worth of inventory. Whenever they place their order, they bring it back to this magic number.
For example, if you wanted to maintain 90 days of inventory and you order monthly with a 30 lead time. When it’s time to make an order, you have 60 days of inventory. Based on this, you would order 30 days of inventory.
You don’t need that much inventory. You wouldn’t need to order for another month because you have a 30 day lead time and you’re tying up cash in stock you don’t need. The rationale behind this method is security. The attempt to avoid stock outs by keeping a large amount of stock on hand.
Amazon will continue growing their own private label brands. So Amazon is now your competitor. International markets are growing. The European markets are booming. If you’re having success in the US, you’ll want to take those products to the UK and the rest of Europe. That isn’t as easy as it sounds. You have to come up with a separate replenishment strategy as well as deal with the tax regulations. There is an opportunity, though. Especially in Germany where 40% of the sellers are non-German, and very few are American. That means they are willing to buy from foreigners, but not many Americans are there yet.
As Amazon grows, the more warehouse space they will need. They are investing in new space, but they don’t want to overdo it. You will likely see seller-fulfilled-prime see some growth as a solution to this problem though will come with its own issues.
The inbound process is likely to change. It used to be that you would just slap on a UPS label. Then you had to also do the Amazon label. Now you have to do box contents. It’s going to get more and more complicated as Amazon continues handling more inventory.
If you want to receive a free tool for launching new products, head on over to Forecastly.
This is one of the biggest issues with Amazon inventory management. It’s something everyone deals with. Sometimes a product doesn’t as well as you expected. Once again, there is no crystal ball solution.
It might seem obvious, but one thing you can do is to look at it from a marketing perspective. Take a look at what you can do to improve the conversion rate. Can you improve your images or other aspects of your listing? Pay-per-click ads. It’s an investment. It will take time to perfect it. Is there anything else you can do as a last ditch effort to recoup your investment in the stock?
If you have already considered the marketing aspect, you could try a completely different route. You can wholesale it or sell it on a different channel. You’d be surprised how many people will buy lots of inventory on eBay other sites that will help you with that. There are sites that help you with bulk sales. You can work with a service that does flash sales, like touchofmodern.com. They will flash sales household products that are high-quality. If you want to leave it on Amazon, you could lower your price. Even if you take a loss on the sales, at least you’re putting money back into your pocket.
Proper Amazon inventory management is very difficult. You have to think long and hard and it really comes down to a plan. In the case of excess inventory, many sellers just go on a whim. One seller is dealing with excess inventory because they bought 3000 units of a product they’ve never sold before. Their main reason was that they got a good cost on them at 300 units.
The cost isn’t as important on that first order. You’re really trying to prove the product is viable. Then on your second order, you can get the cost right once you know the product will sell. It might be difficult for a first-time seller since your money is tied up but you’re not making much profit. However, you are lowering the risk if the product doesn’t take off.
One tactic that you might consider is ordering small amounts of several different products knowing you are likely to run out. Then you can see which one takes off. This isn’t a great strategy. If you find a good product that takes off, you will jump in the sales rank. Now you have a high ranking product with no inventory. Let’s say it sells out in a week but you have a 45 day lead time. Now you’re going to be out of stock for 45 days unless you can negotiate with your supplier and spend more money to have it expedited.
One issue you might run into is a minimum order quantity (MOQ), where suppliers will require a large order otherwise they won’t accept it. You can try to negotiate with them saying that you will be ordering from them for awhile, but it’s company policy that the initial is smaller.
Brad’s very first day at Amazon, he was working next to a guy named Tor. When asked what he was working on, Tor responded that he was working on the GCID program. It stands for the Global Catalog Identification system. This means that people can have a brand, and put their own brand on Amazon and have these account numbers linked to their brand. Brad says that this was the start of the whole brand revolution that has happened over the past three years. People have discovered that private labeling is much better than competing by the box. Instead of people competing over the same item using the pricing algorithm, many have moved to private label and own the ASIN. Now they get all the sales.
This year, with all the fraud stuff going on, Amazon is figuring out brand protection and brand control, and those are big things coming from inside Amazon; trying to get more brand control and brand protection. Big brands, like Sony, was the originally intended beneficiary. These companies have a lot of products with fraudulent listings. Then they realized they could extend it for a lot of people.
Amazon has gotten more into brand gating, and brand content because of these sellers. This is likely going to be the beginning of a program that sellers love. Amazon will get that feedback and keep building more and more around your brand. This also builds consumer trust.
That’s a big issue. That’s a major differentiator between them and eBay. eBay feels more like the wild west whereas Amazon was more in control with actual brands. So consumer trust is one of, if not the, biggest thing on Bezos’ mind.
When things like that come out, all the big heads come together and institute new programs to solve whatever problem. Amazon is trying to solve the fraud issue with brand gate and brand control.
It’s not so much about where Amazon is heading, but rather the minds of the brand owners needs to be going in. You have a lot of these large brands that really understand brand management because they have been doing it for 50 or 100 years. Amazon has enabled these new sellers and they are powerful and effective at building their brand.
The idea, for the last couple years, is that these people have gotten a certain part of the brand going and now they have to determine where to go from here. Over the next couple years, you’ll see more sophistication in the brands. Who the brand is, who identifies with it, what’s the target audience.
It comes down to what do you mean by compete. If you think about what the Chinese are good at that those in the UK aren’t. They have manufacturing there with some very competitive costs. There are other manufacturers in the world that have better prices, but they’re harder to reach because you can’t look them up on Alibaba.
The bigger question is, if these manufacturers can cut out the middlemen and sell direct to consumer, where does that leave these middlemen that are trying to create a brand? That’s what the majority of these sellers are.
Many of these manufactures don’t have the acumen to be that middleman. They’re not very good at it. The middleman is very valuable. They are doing the work to build a brand and they’re doing the research on what’s going to be a big seller. There is a place for sellers. Remember, just because these manufacturers can make the products cheap, middlemen are still needed to figure out what products need to be marketed.
There is some worry about counterfeit. If a seller does all the research and comes up with a brand idea, and what if someone else takes the idea and sell their own. Brad spoke with some attorneys when he was in Hong Kong. They said that you can actually set rules and regulations of your products with the manufacturer. That way they can’t take your product and sell it to someone else. You can work within the Chinese system and shut down other manufacturers if they copy what you’re doing.
Just remember what they can do, what your can do, where the value lies, and how your brand can gain consumer trust. How often is a Chinese manufacturer gathering emails, and sending emails to their customers. That’s a very western idea and way of thinking.
You can email Brad at email@example.com, or use the contact form on their website, productlabs.net. If you would like to use his video service, please go to amzproductvideo.com.