What’s the main difference between a failed and a successful Amazon business?
Most often it boils down to the products you sell. The answer here is to find profitable products with decent margins.
This comes down to finding the best supplier that fits your Amazon FBA business. How can you find the right supplier for your business? How do you research and source your products? We answer all these questions in this article.
Types of Suppliers for Amazon
Let’s look at the popular types of suppliers: wholesale suppliers, manufacturers, and dropship suppliers.
Wholesalers provide sellers with the opportunity to buy a large number of products at a much lower price. If you purchase more products, chances are high that you receive a better discount for an order.
- Low cost – Cost is one of the driving factors for Amazon sellers. Wholesalers offer huge discounts and competitive prices. If you choose to buy in bulk, wholesale suppliers will lower the per-item cost. This allows you to offer more competitive prices on Amazon. Besides, most of the wholesalers are open to negotiation, so you can save a few more bucks as well.
- Simplicity – Sourcing from wholesale suppliers is easy and straightforward. You also get to explore different products from a single supplier.
- You’ll require a hefty amount to start sourcing from a wholesaler as you need to purchase more items at once.
- Inventory management and storage: Since orders are sent in bulk, you’ll need to look into sustainable storage options to manage your inventory.
You also have to sell your inventory without building up the costs. If you’re confident that your product will generate enough sales, then it shouldn’t be a problem. On the other hand, if your product is subjected to seasonality, then you’ll lose money as the inventory costs keep growing.
Dropship suppliers are the most popular choice for e-commerce sellers. These suppliers maintain your inventory and send your products to customers.
- No inventory: Managing inventory can be daunting if you have a busy and profitable Amazon store. Maintaining your inventory along with the additional effort to track the shipping process can be extensive. The dropshipping model will get rid of this hassle.
- Low overhead costs: You don’t need to pay for bulk products and won’t feel the pressure to empty the inventory. You only pay the supplier as you sell the products. This implies low overhead costs and financial risks.
- Variety: Dropshipping is quite adaptive. You can change your Amazon store to suit your customer demand. Based on customer requests and shopping trends, you can carry products that will reap profits.
- Less Control: With dropshipping, you give control to the middleman over your shipping process. If the supplier is trustworthy and verified, this shouldn’t be a problem. However, there will be room for mistakes and you have less control over it when compared to handling your own inventory.
- Stock issues: Since the availability of the stock is under the supplier’s control, it might result in out-of-stock.
- Per-item costs: Since dropshipping is convenient and you are not buying in bulk, the per-item costs tend to be higher when compared to other models. Therefore, it is harder for you to offer competitive prices on Amazon and be profitable.
The manufacturer is the one who produces the goods. When you purchase directly from the manufacturer or producer, you will have great offers on prices but you need to purchase massive minimum orders. Meaning, more investment up front. Sourcing from manufacturers is more beneficial for established sellers compared to new sellers.
- Like wholesalers, manufacturers can also offer you a low cost per item. However, they can be reluctant to negotiate prices.
- You can ask the manufacturer to personalize the product according to your specifications. This can definitely add to your advantage while selling on Amazon.
- Large Minimum Order: If you are going to purchase from the manufacturer, you should be ready to pay them a hefty amount upfront. So the minimum order can get expensive.
- Reluctance to work with SMEs: Most of the time, manufacturers will be less willing to work with small-scale Amazon businesses. They are more open to working with bigger brands.
Best criteria to find suppliers and make your sourcing easy
Here are the criteria to ease the process of finding the right supplier.
- Your sourcing process must be easy and flexible.
- The cost of goods sold (CoGS) must be low enough to ensure good profit margins.
- Your products must have high quality. They should be tested and reliable.
- The manufacturer should be able to scale if you grow your business.
What to consider when comparing suppliers
While searching for a product supplier for your Amazon FBA business, you need to inquire and compare certain factors amongst the suppliers. Here’s a list of things you should ask the suppliers.
- Shipping duration of the products
- How they track the packages
- Shipment mode (what shipping company they use)
- Return policy
- Liability insurance certificate
- What happens if the product doesn’t arrive?
- Standard documents and product certificates if applicable
- References from other sellers who have used their services
Tips for finding the right products
If you don’t spend enough time to hone your product research skills, you will be unable to spot the potential products. If you are an Amazon seller who is looking to source products from global suppliers, here are a few tips to keep in mind while trying to find the right supplier for your Amazon product.
Market research: Perform some market research to find the items that sell considerably well online. Find a product that can solve your customer problems. You can use Google trends to find popular keywords and product trends.
Validate your idea: So you have a product idea. That’s a start. Now, you need to validate if it’s an actual problem that you could solve and build a business out of it. How do you go about it?
- Search through the customer reviews on e-commerce websites
- Look through the seller and consumer forums
- Talk to your friends and relatives
- Use SellerApp chrome extension to find the opportunity score, reviews, and average sales of a product. This will help you understand the overall potential of the product.
Understand what your target customers want. This will not only help you create a target audience but will also help you while working on your listing so you can address the customer pain points in your bullet points, product description, etc.
Profit Margin: If you want to run a profitable business, you need to have a good profit margin on your product. Products with decent prices and sales volume will turn out to be more profitable than the others. Try to find products that fall under the $15-$50 range. At this price point, the customer wouldn’t think much to make a purchase decision as long as they know that the product is a good fit. Also, pick a product that has a considerably good sales volume in your niche.
Product demand: Finding a best-selling product with good demand isn’t rocket science. Does your product have year-round demand? It’s an important question to ask before finalizing a product. Try to avoid products that are seasonal. You can start brainstorming ideas for the kind of products you want to sell. Try to find top-selling products on Shopify, Amazon best-sellers, Amazon wish-list, and similar e-commerce sites to find profitable products within a specific niche.
Look for the items that have good demand and good competition.
Competition: Any product with low competition and fair demand is perfect to sell on Amazon FBA. So you must ace your product research while finding a perfect product for your Amazon FBA business.
Categories to avoid: If you are planning to sell under a private label, then you need to understand that not all products undergo the same selling process. You need to avoid complex products that have health risks and depreciating shelf-life like food, skincare, health care items, and electronics like cameras, home appliances.
Avoid huge items that have complications with shipping and manufacturing as they also come with issues involving liabilities, quality assurance, reviews, etc.
Find the best suppliers using the SellerApp Product Sourcing tool
There’s no shortage of platforms where you can find suppliers to launch your next product. However, it’s important that you find the ones that are reliable and verified. SellerApp makes it easy for you. Powered by the retail giant Alibaba, our product sourcing tool processes supplier data from Alibaba and offers you the top suppliers from across different countries.
Go to SellerApp dashboard → Product sourcing
Type in your product name or a relevant search term of your choice and hit ‘Enter.’
SellerApp will show the top suppliers for a given search term. You can also refine the results by using the filters based on your country, supplier country, minimum order quantity, product type, price range, etc.
You can further narrow down your options based on ‘verified’ and ‘trade assurance.’ Once you finalize a product, click on the product to go to Alibaba’s product page. It’s as simple as that.
Alternatively, you can also download SellerApp’s chrome extension to find the best suppliers in your niche. Go to the product details page or search results page on Amazon and click on the chrome extension, you’ll be able to find the relevant suppliers.
Arishekar N has over five years web development experience and is the senior digital marketing strategies at SellerApp, Specialist in SEO, SEM and best conversion rate optimisation strategies that deliver industry leading ROI. Arishekar has helped companies through more effective search engine marketing and SEO strategies. He is most passionate about working with e-commerce companies.