There are many things to consider while sourcing your Amazon inventory. For instance, the product should be within your budget, in large enough quantities to meet demands, and good enough to appeal to your target audience. It should also fulfill Amazon’s criteria for the products being sold on its platform.
If you are wondering how you can get such products for your Amazon store, then this blog is for you. It details the options available for sourcing products for Amazon so that you won’t be left wanting sellable products ever.
One of the oldest methods of sourcing products for Amazon, retail arbitrage involves buying the required products at a discount elsewhere and reselling them on the platform. While the concept is simple enough on the surface, its execution requires tact on the seller’s part. You should know the places and people that can get you the kind of low-cost deal on products to bring in the profits. They cannot be sources that are easily accessible to the public or else they will be buying from there directly instead of from you.
You should also select the products based on their popularity at the moment. For example, merchandise that corresponds to a movie is best sold around the time of that movie’s release to ride the wave of enthusiasm. Shipping costs too cannot be too high as that will eat into your profits significantly, especially since Amazon’s fee can take a significant share away.
The solution is to use apps that scan item UPC and tally them to present Amazon listings for a particular product on the site. The apps show all the information you need about the product, including how much you’ll profit by selling it after accounting for the deductibles.
By considering the above factors, you can make retail arbitrage a great stepping stone to starting your Amazon seller business. The one downside is that you should always be on the lookout for sources offering your required products at a discounted rate. If the price is hiked by a source during a crucial sale or another such period, you’ll likely have to bear a reduction in profits.
If you are a small-time handmade goods creator or a seller who wants to function in this niche, then you can easily do so under the Amazon Handmade category.
One of the greatest benefits of this niche is that you have complete control over the sourcing of raw materials and the price you set for them. Thus, you will be able to scale your business quickly and gain good returns once you capture a significant market share to raise the prices. You can even use Amazon FBA to stock and ship your products, eliminating your upfront costs for the same. The competition in this category is comparatively lower, so you’re likely to sell your items well.
On the flip side, Amazon’s high fees can hamper your profitability if you don’t choose your sources carefully. You also need to gain approval from Amazon to be able to sell under this category, which isn’t easy.
Wholesale reselling is a sourcing method that has been the norm since trading began. As an Amazon sourcing strategy, it lets you have products in sufficient quantities at a price that’s lower per unit than its retail one. Thus, it provides a clear path to profitability without the trouble of inventory shortages, making it an ideal match for an Amazon business that is just starting up.
The other convenient thing about wholesale procuring is that there is no dearth of wholesalers, both online and offline. There are online wholesalers like Alibaba that give you access to manufacturers of the goods directly and support you with all relevant procedures. Offline, you can get in touch with product makers through contacts, trade show visits, etc.
A great benefit of wholesale procurement is the readily available product options and variety. You also can purchase as much quantity as you like due to low order minimums. Wholesale portals like Alibaba also have well-established systems to provide your goods without problems. Due to these advantages, you can experiment with product varieties to see what works without committing yourself to a large inventory at the start.
The downside is that you need to have an inventory management system to manage everything, especially if you’re sourcing from multiple wholesalers. The price markup is also higher than direct factory sourcing, meaning your profitability is lowered by that much. Adding Amazon seller fees and FBA costs compounds the problem. You may have to add a staff member to manage the orders too if you scale.
As the name suggests, it involves procuring products directly from the manufacturer. It is one of the most profitable Amazon sourcing strategies as it gives you products at prices lower than wholesale rates. You get these goods by directly getting in touch with a manufacturer’s representative. Their contact information will be available on their website or other such sources. You can order as much inventory as you want and it’ll come straight from the factory floor, guaranteeing quality and quantity at once.
Besides the above-mentioned advantage, you can also customize your product to suit your needs. It helps to make your brand stand out from the competition. There is another element of direct sourcing that you can take advantage of-many manufacturers to act as outsourcing agencies as well, producing items under your brand. This is called private label product sourcing.
With this method, you can function as a vendor on Amazon since you’ll be selling your unique brand, giving you exclusivity that’s vital for great conversion numbers. It gives you true customizability options that help build your unique brand identity. Direct sourcing also has a few downsides, most notably the risk of overstocking due to a lack of interest in the product. So, you’ll have to be very confident with your choice before going with direct sourcing.
Dropshipping / Print-On-Demand
Dropshipping is the latest trend in eCommerce that has picked up in recent years due to the advantages offered. This method of sourcing products for Amazon involves sellers outsourcing various functions like procurement, storage, and shipping to a third-party operator, usually a supplier. All you have to do is list the products on your site, monitor the transactions, and collect the revenues while giving a share to the third-party operator.
An example of this is Print-on-demand, where a customer places an order for a product and it gets custom-made for them. The supplier gets the product printed with the custom design/information from either the manufacturer or an agency. Find a POD or dropshipping supplier that works according to your requirements and you’re good to go.
The main upside to this sourcing method is the lack of functions you have to perform as a seller. For a share of the revenue, you have a lot of the workload removed from you, freeing you up to focus on more important aspects of your business. There’s also not much upfront investment involved as you can decide the quantity based on short-term demand, sometimes on a single-unit basis.
POD Amazon sourcing also enables you to have plenty of base products like T-shirts, mugs, etc. that you can acquire on the cheap and print and sell whenever you want. You simply need to have custom artwork available on time to print.
You may also need to invest in custom design software like Adobe Creative Suite for artwork creation, and graphic designers if you can’t do it by yourself. It is also low on profitability as you’ll be paying your share to the supplier along with your Amazon fees.
Selling on Amazon is a great way to grow as an online entrepreneur. Its vast presence and brand value can get you off the ground easily, provided you know how to source the products you need for it. With the right Amazon sourcing strategies, you’ll be on a profitable path in no time by cutting costs and building your brand that helps beat the competition.