Let me explain this further Why the Wholesale FBA business is the safest business on Amazon!
So the challenge in the Wholesale business model is, how to create a wholesale account with a brand directly as many of them will refuse you as Amazon Seller! It is simple! People play diplomatic and use words (Not Lie) in a way so the suppliers will want to work with you. We also prepare our business in a way to be presentable to the US or UK brands (wherever you are selling).
Indeed, it is a challenge still but it pays off for the long term business. Having wholesale accounts with good brands is an asset. So if you flip your whole business (LLC or Corp) to someone, you will provide access to these brand wholesale accounts and it will help you make more money during your exit.
Now let’s run some numbers and calculate your profit and earnings during your wholesale FBA business.
We look for products that would pay us at least $300 net profit in a month through its sales. Assuming you got a product selling for $15 per unit and the net profit is $3 per unit, that means you must be able to sell at least 100 units of that product in a month. Now, check the BSR (90-day sales rank) of the product and find out the estimated sales of the listing through fbatoolkit.
So let’s say fbatoolkit shows you estimated monthly sales as 500 units of this product. Now you should check the number of FBA sellers on that listing. Whatever number of FBA sellers you find there, +1 yourself in it and divide 500 (estimated monthly sales) into the number of total FBA sellers of that listing including you.
Scenario 1 – Say there are 9 FBA sellers and +1 for you. So 10 in total. 500 / 10 = 50 units per seller per month sales. So if you now calculate 50 units profit (50 x $3), it will be only $150 monthly profit for you. To me, it is not worth dealing with this product or brand. Unless the same brand has other items that are worth trying and selling.
Scenario 2 – Say there are 4 FBA sellers and +1 for you. So 5 in total. 500 / 5 = 100 units per seller per month sales. So now if you calculate 100 units profit (100 x $3) = $300, this is perfectly fine and may get you, your required monthly profit. Know that some months might be higher or lower for many reasons, but it’s okay.
Now when you manage to get 10 products making $300 per month each within the first 3 months of your business, you are already at making $2500 to $3k per month in net profit. And you are still a one-man show in this business unless you purposely hire a VA to do the daily tasks for you.
As I always said, Learn to multiply. Keep adding the products, keep adding the profits. So in 6 months, if you have 20 products from different brands, you are at $6k per month profit. In 9 months, if you have 30 products, you are at making $9k per month net profit in a year, you would be at making $12k per month profit. Isn’t it lucrative?
Do you have this potential in any other business model on Amazon?
Join the Facebook Group of Pakistani Amazon Sellers – https://go.hozyali.com/AmazonPakistan