November 12, 2012—One of the most asked questions we get at AmazonGenius is, “How do I find products to sell online?” While the question may seem fairly simple the answer, however, is not. Whether you’re selling online using an e-commerce website or utilizing online marketplaces like Amazon and eBay, the need for wholesale products is in high demand. For a fraction of the retail price, sellers can obtain quality brand name products to sell on their storefront. While finding potential products to sell may seem easy, locating the right manufacturers and pricing is extremely difficult. Many manufacturers, especially in the U.S., have many hoops sellers must jump through before they can buy wholesale. Although the possibilities are endless, we take a look inside the details of buying wholesale and explain what sellers should look for when trying to find products to sell online.
Pricing/MAP– This is one of the biggest pitfalls sellers make when buying products wholesale. Normally, manufacturers or distributors will give sellers their product pricing with both MSRP and wholesale pricing. However, often times this product pricing list require a MAP agreement to be filled out and signed. MAP stands for minimum advertised price which mean this is the lowest price you can sell the product for. If you’re caught selling the item for less than the MAP agreement, the manufacturer or distributor can legally stop selling to you and even prosecute you.
Business and Credit Info– When contacting manufacturers to acquire products wholesale, companies typically require buyers to have a tax ID, business license, and seller’s permit. Many manufacturing companies want to know all your past business and credit history, often times requiring you to fill out a credit report if you want credit limits. Essentially, you have to be ready to divulge your entire business life history from your annual sales figures to number of accounts you have.
MOQ– This question comes up a lot for first time wholesale buyers. What is MOQ and what does it mean? Basically, MOQ stands for minimum order quantity. This is the amount of products you must purchase to receive the wholesale discount and it can range anywhere from 10 products to 10,000. That’s a lot of money for one product! The first time buyers should do when looking for products wholesale is locate the MOQ. This will tell you right off the bat if you should buy from the manufacturer or not. Many times manufacturers and distributors will work with you on the MOQ but more often than not, they won’t. So make sure your product is selling like hot cakes before you buy 10,000 of them or you’ll be giving them away as Birthday and Christmas presents for the next few decades.
Distribution– Another hoop many sellers face when finding wholesale pricing is distributors. These are basically the middle men between you (the reseller) and the manufacturer. Distributors are put in place to distribute a company’s product accordingly to their terms. Many times buyers will have to go through a manufacturer’s distributor to obtain their product, cutting out a portion of your profits in the way. We recommend if possible, never going through distributors and sticking mainly to manufacturers. With distributors, their goal is to distribute the product and saturate the market with it.
Profit Margins-The whole reason of buying wholesale is to increase profit margins. However, when buying wholesale you’ll never fully understand your profit margins until you start researching your product. Before you start buying anything, run a quick search of your product on Google by using the name or keyword of the product. Check out what e-commerce sites are charging and what marketplaces like Amazon and eBay are selling it for. This will give you an exact idea of what the retail price of your product is and what your competition is selling it for.
Overall, buying products wholesale can be very challenging if you don’t know what you’re doing. Many e-commerce and marketplace sellers spend hours and hours researching products and pricing every month to figure out the right products to buy and sell.