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April 17, 2023

How Much Capital Do I Need to Start an Amazon Wholesale Sourcing Business? with Will Basta of Ascend Ecom

Starting a wholesale sourcing business for Amazon can be a lucrative venture, but like any business, it requires some initial capital investment. Ascend Capventures is a company that builds and runs Amazon businesses for people. They offer services covering market and product choices, logistics, Amazon account management, and various business models such as direct from manufacturers, direct from wholesalers, and developing products. In this article, we will discuss the capital required to start a wholesale sourcing business for Amazon, the minimum working capital, and the factors that affect profit margins.

Time Stamps

0:00:00 | “Welcome to the Ten K Collective Podcast: A Conversation with Will Bastard of Ascend Cap Ventures on Building and Running Amazon Businesses”
0:03:12 | “Exploring the Capital Requirements for Starting and Scaling a Custom Product Business”
0:04:03 | Conversation on Estimating Capital Requirements for Wholesale and Direct Manufacturer Business Models
0:05:51 | Heading: Benefits of Investing with Our Company
0:07:27 | Exploring the Benefits of Working with a Wholesale Management Partner
0:11:06 | Exploring Margin Changes in Ecommerce Business Models
0:14:25 | Exploring the Benefits of Private Label and Custom Product Sourcing on Amazon
0:16:10 | Private Label Business: Sourcing Manufacturers and Developing Products
0:16:59 | “Reflecting on the Benefits of Bulk Sourcing with Will Buster of Ascend Cap Ventures”
0:18:53 | Exploring Private Label and Wholesale Sourcing for Amazon Businesses with Will from Ascend Cap Ventures

Starting an Amazon Wholesale Sourcing Business: Required Capital

Starting a wholesale sourcing business for Amazon can be a lucrative venture, but like any business, it requires some initial capital investment. Ascend Capventures is a company that builds and runs Amazon businesses for people. They offer services covering market and product choices, logistics, Amazon account management, and various business models such as direct from manufacturers, direct from wholesalers, and developing products. In this article, we will discuss the capital required to start a wholesale sourcing business for Amazon, the minimum working capital, and the factors that affect profit margins.

Understanding Infrastructure Fees and Working Capital Minimums

Ascend Capventures offers infrastructure fees that start at $20,000, which includes access to their warehouse facilities in the USA and their team of hundreds of employees. This is similar to a franchising cost, and they also offer customized plans for aged businesses. However, in addition to the infrastructure fee, they also require a minimum working capital of $15,000.

Why is the working capital set at $15,000? According to Ascend Capventures, this amount enables them to get the best initial deal from a good supplier and negotiate the minimum order quantity (MOQ) down as low as possible. This is based on their internal data and experiences, and they guarantee a sell-through in 90 days or refund the client. If the working capital is less than $15,000, building a business from scratch will lead to very low margins.

For instance, if you pay $20,000 for infrastructure with a low $15,000 capital, you will only get a 20% margin on $5,000. Therefore, it is crucial to have enough working capital to generate strong profit margins.

Product Sourcing: Essential Working Capital Minimums

The minimum working capital required for products is also essential. Ascend Capventures recommends a minimum of $10,000 to $15,000, depending on the product and supplier. This will enable you to purchase the products in bulk, negotiate better deals with suppliers, and have enough inventory to meet the demand.

Maximizing Profit Margins: Key Factors to Consider

The profit margins in a wholesale sourcing business for Amazon depend on several factors, including the supplier, the product, and the capital investment. Ascend Capventures has over 20,000 SKUs and 3,000 suppliers, and they guarantee a minimum operating profit margin of 10%.

The more you spend on capital investment, the more discount you can get per unit, especially when dealing with direct contacts like manufacturers. Most manufacturers won’t consider deals with less than $5,000, and if you do get them, you may end up with a 15% margin or worse. However, if you invest more, you can get upwards of 30-40% margin.

Business Models and Private Labeling Strategies for Amazon Sellers

There are various business models in the wholesale sourcing business for Amazon, including direct from manufacturers, direct from wholesalers, and developing products. Ascend Capventures covers all these models, and they also offer customized private labeling.

Pure private labeling is a small portion of their work, and it is run by Gerry, their business partner. Will, their sourcing expert, handles most of the work, which includes developing products from scratch based on the needs of the market.

Latin America as the New China

According to Ascend Capventures, Latin America is the new China for manufacturing and trade in North America. Will develops those and depends on the ad spend capability of their clients.

Why Use Ascend Capventures?

Some people have a ceiling on their time, and they want to diversify passive income investments outside of real estate or the stock market. Ascend Capventures offers performance-based services where they share in net profits, not revenue, plus fees.

In conclusion, starting an Amazon wholesale sourcing business requires a certain amount of capital investment to generate strong profit margins. While the exact amount of capital required may vary depending on the business model, market choice, product choices, logistics, and other factors, having at least $15,000 in working capital is recommended to get the best initial deal from a good supplier and negotiate the MOQ down as low as possible.

Using a service like Ascend Capventures can be a smart choice for those who have a ceiling on their time, want to diversify passive income investments, or are looking for expert guidance and support in building and running an Amazon business. With their infrastructure and expertise, they can help clients source products directly from manufacturers or wholesalers, develop customized products, manage logistics, and handle Amazon account management, among other services.

Resources

  • Start your Amazon wholesale sourcing business with confidence by partnering with Ascend Capventures. Contact us today to learn more.

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  1. Ascend is nothing but a poorly run business that does none of what they tout in their sales literature. I wouldn't trust them with a $1 let alone another $30k. You're crazy to tout them on your site.

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