There are a lot of factors to take into consideration when becoming an Amazon wholesale seller. In today’s episode, Stephen and Rebecca run through the 8 key elements which will ensure that you start this journey on the right foot.
Among other things, they explain the importance of setting up an Amazon Pro account and selling wholesale items via FBA (rather than FBM), the benefits of creating an official business and business bank account, and why you need less sourcing capital than you may think. Also, Rebecca and Stephen are going to be holding a workshop which will help you identify the most profitable wholesale products, and it’s free, so be sure not to miss it!
Listen on the podcast player below.
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Key points from Episode 92:
- A simple first requirement is a computer with stable internet connection.
- Reasons that you should have an Amazon Pro account and sell via FBA.
- What the buy-box is, and why you want to be given more time in it.
- Why Stephen and Rebecca recommend setting up an official business and a business bank account.
- An EIN is essential for dealing with wholesale brands.
- The importance of acquiring a sales tax certificate, and how this will benefit you.
- Common misconceptions around wholesale sourcing capital, and what the truth really is.
- A workshop that Rebecca and Stephen are holding that will help you figure out which wholesale products are the best for you to resell.
- And more!
Links and resources mentioned in this episode:
- Free access to the live online Wholesale Training Workshop (limited-time opportunity)
- Free webinar: The Best Way to Get Started with Wholesale on Amazon (limited-time opportunity)
- The Wholesale Formula course
- Sign up for a Pro Seller Amazon account
- Legal Zoom – Setting up an official business
- Apply for a sales tax certificate
- The Beginner’s Guide to Wholesale Kindle book
- Free Kindle reader apps for smart phones/tablets/computers
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Discover the Secrets of Profitable Wholesale Sourcing
For the longest time I wanted to add wholesale to my Amazon business. I had actually gone through 3 different wholesale courses to teach me how to do it. Each time I went through a new wholesale course I would try what was taught, but I kept coming up empty. It was extremely frustrating… then I scheduled a phone call with Dan Meadors from The Wholesale Formula. That conversation opened up my eyes to things about wholesale I never thought about before (and was never taught). I took his advice and began to find multiple wholesale accounts. Not only did I find wholesale accounts, I was actually able to successfully land the wholesale accounts.
Would you have wanted to listen in on that conversation? Unfortunately, we didn’t record the call, but Dan and his team have created something even better: a free webinar series focused on successfully adding wholesale to your Amazon FBA business. The content in this free video series is the same content that I heard in my phone call with Dan… and more!
Unfortunately, this free webinar series is currently closed, but if you want me to tell you when the doors are open to the free wholesale workshop again, then sign up for the wait list where I’ll email you the moment the free wholesale workshop videos are available again. This free video series that will open your eyes to what is possible with selling wholesale items on Amazon, so take a moment, and sign up for the wait list.
Episode 92 Transcript:
[0:00:01.8] ANNOUNCER: Welcome to The Full-Time FBA Show. In each episode, it’s our goal to help you turn part time hours into a full-time income, selling almost anything on Amazon. Now, your hosts of the show, Stephen and Rebecca Smotherman.
[0:00:21.7] REBECCA: Welcome everyone to this episode of The Full-Time FBA Show. We’re so glad you’re here with us today, we’re going to be talking about the eight things you need to start selling wholesale items on Amazon. We think that wholesale sourcing is a great way to build up an Amazon business that is successful for the long term and so there are eight things that you’re going to need before you can get started selling those wholesale items and we’re going to cover that with you.
Covering that topic with me today is my co-host, Stephen Smotherman, hello Stephen.
[0:00:52.2] STEPHEN: Hello Rebecca Smotherman, how are you doing today?
[0:00:55.6] REBECCA: I’m doing great.
[0:00:56.8] STEPHEN: Yes, wholesale is awesome, we love selling wholesale items. I’ve been selling wholesale stuff on Amazon for about five years now or so, and Rebecca started selling for this past year and we just know we love wholesale and we would know there’s a lot of other people out there who want to start selling wholesale, so that’s why we’re talking about the things you need to get started to sell wholesale on Amazon.
[0:01:22.1] STEPHEN: In this episode today, we’re going to talk about eight things. Some of them are 100% crucial. Others, you can pick or choose if you want to do it or not but we think these are the eight things that you need to sell wholesale items on Amazon and to kick us off. Number one, it’s pretty simple, you need a computer with an Internet connection. You need to connect with other people and you need to have that computer send up shipments to Amazon and communicate with your wholesale companies and all that type of stuff but a computer with an Internet connection is a “gotta have.”
[0:01:54.5] REBECCA: Yeah, I would agree. If you don’t have that, you could probably still do it but it’s going to be more difficult and so having that stability of that connection is important.
[0:02:04.5] STEPHEN: Yes.
[0:02:04.7] REBECCA: I would say the second thing that you need is going to be an Amazon seller account and again, it seems pretty basic but there’s some particular things you want to make sure about your seller account that you have set in place before you get started selling wholesale because it will make your business easier to do in the long term and that is, you really need to have a pro account and you really need to be selling via FBA, fulfillment by Amazon, rather than fulfillment by merchant.
You’re going to want a pro account for several reasons. If you sell more than 40 items a month, you’re going to be saving money on that. The basic fee of selling and also, there are some third-party services that are just not going to be available to you if you don’t have a pro account and there are also just some features within Amazon selling itself that are not going to be available to you if you have an individual account rather than a pro account. Things like paid per click ads and things like that, you’re not going to be able to do that unless you have a pro account.
Also, we also think that selling via FBA is really the way to go. You can sell wholesale items via fulfilled by merchant for sure and a lot of people do that but we think that it is a lot easier to get started by doing FBA because why not outsource all of that work in the storage and the shipments to Amazon if you can?
[0:03:27.8] STEPHEN: yeah, there’s some other benefits of selling via FBA, which include more time in the buy box. I mean, Amazon usually prioritizes FBA sellers over merchant fulfilled sellers. In most cases, by giving them more time in the buy box. And if you don’t know what the buy box is, it’s that little box in the corner of an Amazon sales page where over 80% of customers buy their stuff. They click right there in the buy box to add it to their cart or to buy it and you want your inventory in that buy box, so via FBA is the way to go with that.
The third thing that you need when you’re starting to sell wholesale items on Amazon is an official business. This is like an LLC or S Corp, some type of business entity that you’ve set up. Some people do it via a sole proprietorship. It’s possible to not have an official business and just kind of have a sole proprietorship but we recommend LLC, S Corp. There’s a lot of legal protections when it comes to that, you want to talk to a legal professional to understand all that, you can look that up online as well.
An official business is a big deal, you want to make sure that you are doing things the right way and the way that protects you in the long run as well.
[0:04:31.2] REBECCA: Along those same lines, we think that number four, you should also have a business bank account. Again, you don’t have to, some people will use their personal bank account. We think there are a lot of really compelling reasons not to do that, to keep your banking separate, business and personal. And some of that comes down to reporting to the IRS and some of it is just related to – it’s easier to keep it separate and to know what’s what for yourself and to be able to know your numbers and to know whether you’re actually making any money off of this venture that you’re getting into.
It’s just really a good protection for yourself legally and also just to keep track of everything to have a separate business bank account. And those are very easy to open. Once you have an official business and you have a little bit of money, a bank will open up a bank account for you as a business bank account and get you started with that.
[0:05:24.8] STEPHEN: Yeah, this is huge, I think it’s going to help you out in the long run because you don’t want to accidentally spend your grocery money on inventory or you don’t accidentally spend your inventory money on something else that’s not business related. Definitely a business bank account.
The fifth thing that you need is an EIN and that’s short for employer identification number. You’ll get this when you incorporate and get your official business set up, your LLC or S Corp and you’ll get this number and this is the number you absolutely 100% need to do when it comes to wholesale because this is one of the requirements that almost every wholesale company, every brand, asks for when you sign up for an account, “What is your EIN?” They want that number and that number just is the number that recognizes, it’s connected between you and your business.
You are able to give this to a wholesale brand and get that wholesale relationship going because they know they are dealing with a professional, someone who actually has a real business account setup and not just someone off the street trying to buy stuff at wholesale prices.
[0:06:27.6] REBECCA: Yeah, I was just filling out an application for a new wholesale account this morning and they had in big bold letters on their application form, “You must have an EIN. We only sell to companies, we will not sell to individuals.” Be sure and get that EIN.
I would also add to that, for our number six item on our list, along those same lines, you need to make sure that you have a sales tax certificate and this is something, again, that once you have your business setup, you can then apply in your state for a sales tax certificate. The reason for this is that when you are buying wholesale items, if you have a sales tax certificate, you will not have to pay sales tax on those items because you are going to be passing that sales tax along to your retail customers. In fact, Amazon will take care of that for you at this point but you don’t want to have to pay that sales tax on your purchase and the wholesale company doesn’t want to have to deal with that either.
So if you are reselling those items, you will need that sales tax certificate to prove that you are reselling and you are a retailer who is passing along the sales tax to another customer. So we have a link, you can go to fulltimefba.com/states and that will give you information about where to get your sales tax certificate depending on which state you are living in or you could just Google your state’s name and the words “sales tax certificate” and that would also take you to the link where you could apply within your own state, which department in your state handles that for you.
[0:07:58.1] STEPHEN: Yeah, definitely something you want to do. You do not want to pay sales tax when you are buying via wholesale. You want it tax-free, because that is how you’re supposed to do it. The next seventh thing that you need when starting to sell wholesale items on Amazon is sourcing capital. Now, there’s a lot of misconceptions, a lot of people who believe, “Man, I got to have $10,000 in sourcing capital to buy via wholesale. I mean, I will be buying so much inventory and I am going to be so deep and I am going to have to buy thousands of items at a time.”
Well, that’s just not true. The sourcing capital is necessary, yes, but it is not as big as a lot of people think. You can actually get a wholesale account and maybe do a $300 opening order with a wholesale account and sometimes their minimum orders are even lower than that, $200. I think the largest opening order I’ve ever seen is a $500 opening order. You can do really well and not go too deep and still test the waters out on different wholesale products by just doing like a 300 or $250 opening order.
Whatever the wholesale brand needs, you should be able to come up with a pretty good order of items to sell on Amazon. You need that sourcing capital but it might not be as much as you think you need.
[0:09:04.7] REBECCA: Then to wrap up our list, number eight is, you need profitable wholesale products. You need something to buy and I think that’s where a lot of us run into problems. We can do all of these work to get all of these other business entities setup, the numbers that you need, the sales tax, all of that you can get it in place but then what do you do when it comes time to actually start reselling items? You have to find those items to sell.
You need to know where to go to get profitable products that are selling well on Amazon that you can resell. Not all wholesale products are profitable and that is part of the conundrum too. There are plenty of wholesale companies that you can find on the Internet but they may or may not have products that are going to make you any money selling them on Amazon and so you need to figure out, how do you kind of look for that needle in a haystack to find the products that are going to be just wonderful for you to sell and make money, make some good solid profits on Amazon?
We want to offer a way for you to learn how to get started with finding those wholesale products that really are profitable and that really are going to be able to help your business. We have a free wholesale workshop coming up that you can learn some of those basics and get started on this. You can find that at fulltimefba.com/wholesaleworkshop. Head over to that link and get signed up and you’ll be able to get started learning.
[0:10:26.2] STEPHEN: Yeah, it’s a free workshop that we’re putting together with some of our friends that are really into wholesale and selling like multi million dollars in wholesale on Amazon. We wanted to teach you their strategies. It is called reverse wholesale sourcing and you can learn all about it at that workshop. Again, the link, fulltimefba.com/wholesaleworkshop.
These are the eight things you need. It’s not a whole lot, and some of them are kind of even optional but these are the eight things that we recommend that you need to get going when you want to start selling wholesale items on Amazon.
[0:11:01.7] REBECCA: Well, thank you for being here with us for this episode of The Full-Time FBA Show. The links that we have mentioned in this episode can be found in the show notes at fulltimefba.com/92 because this is episode number 92.
[0:11:16.0] STEPHEN: Next week on the show, we’re going to continue talking about wholesale. We’re going to talk about Amazon sellers top wholesale sourcing mistakes and we want to make sure that you avoid these mistakes, and with me to talk about it is going to be Dylan Frost. He’s been on our show before and was a really good interview and can’t wait to share this interview with you next week on The Full-Time FBA Show.
[0:11:38.5] ANNOUNCER: That is all for this episode of The Full-Time FBA Show. So head over to fulltimefba.com/podcast, where you will find the show notes and links from this episode. While you’re there, subscribe to our newsletter where you’ll get several free downloads of our popular and helpful Amazon FBA resources. Now, take action on what you have learned today so you can find success at turning part-time hours into a full-time income with Amazon FBA.