How to source products for Amazon FBA
Once you decide which product(s) you want to sell on Amazon, sourcing becomes the next hurdle you have to clear. Finding the most profitable suppliers for your business depends on several factors, but it’s a key element of success on Amazon FBA (Fulfillment by Amazon).
You need to consider availability, affordability, favorable terms, and convenience. If you don’t manufacture your own product, you need a reliable supplier who can fetch you good deals. It greatly determines your success on Amazon because the cost of sourcing is essentially what dictates your profit margins. The more the product costs you, the higher your prices will aim to be.
Sourcing is a tight walk between getting products at an affordable rate while also meeting quality standards. To survive and thrive on Amazon, you need both.
In this article, we’ll discuss a mix of several traditional and creative ways in which sellers source their products. You might be familiar with some of them. Others are relatively new ideas that emerge as the market evolves.
We’ll also deal with the question of which is better when it comes to sourcing products: the local market or foreign outlets.
How to find suppliers for Amazon FBA
The first thing you need to remember about sourcing is that inventory isn’t hard to find. You can find mass production and distribution centers just about anywhere. Dealers and suppliers for just about every conceivable item are present in every city.
Most often, availability isn’t the issue. The problem is the price. The question most sellers have on their minds is how much the product costs and how much profit they can make out of it.
This is why when we talk about finding products for Amazon FBA, we’d like to focus on cost-effective and affordable options. After all, sellers are always willing to explore new ways to cut back on costs without compromising the business.
There are essentially two major places where you can find inventory. One is a physical store or center where you actually meet with the supplier and discuss terms. The other is online. Both have their own pros and cons. And we’ll get into that.
Let’s first begin with a list of great places to find inventory on a budget:
Clearance aisles at your local supermarket
If your product is a general household item or something you’d get at a convenience store, your natural instinct might be to browse the clearance aisle of local stores. It’s a great strategy.
Look for better wholesale deals and products that are available with a huge discount. You’re likely to find a few that fit the bill. Even if you don’t find anything promising, it’s worth staying updated on local rates and available opportunities.
But you aren’t ready to make a decision yet. First, you need to check and see what the product’s demand is on Amazon and craft a general sales projection. If it does look like a good prospect, start out small. Don’t spend your entire savings on a huge bulk order. It could cost you if the business doesn’t work out.
Clearing aisles in leading stores across town can open up a world of options for you. The way products are grouped help you get familiar with local trends that drive business forward. Eg: when baby bottles and baby sanitization products are grouped along with toys and children’s clothing.
Remember, you have to compare the local discounted price with the product’s current rate on Amazon. This will give you a sense of how much you can make on the deal once you deduct all the selling costs.
If you work with clearance items long enough, you’ll develop a niche of profitable products. Eventually, a trend or a pattern emerges, allowing you to predict when a certain item will be going on a clearance sale again. This is something you can take great advantage of.
The most obvious thing is to also not limit yourself to a single store. You might find a good deal for grocery items at one outlet and a great offer for children’s toys on another. The smart thing to do is stay updated and aware about where you’ll get the best deals for each category. In other words, map out each store based on merit.
A discontinued product with loyal customers is a great money-maker. You’ll find that customers are willing to pay extra for a favorite product that’s unavailable in their local market. This could be anything, like a special brand of perfume or a particular shade of lipstick. It happens in grocery items all the time. When the season ends and the stock runs out, certain fruit prices go up because of scarcity.
This is why surplus stores are a great place to discover amazing deals. Let’s break down what a liquidation store is really quick:
Have you ever wondered what happens to clearance items for discontinued products? The chain store owners set a fixed time period for sale. Once that ends, the leftover items are then moved to another location, where they are sold to liquidation stores, who proceed to sell them to local mom and pop stores. This is where you can find the products, at less than 50- 70% of the original price.
However, what makes this such a great opportunity is customer loyalty. There are many buyers across the country and abroad who are fond of those products and would gladly pay a little extra for them. In other words, scarcity makes the demand go up.
This is one of the perks of selling online. You’re instantly exposed to a wider audience base. This makes it easier to quote a higher price without losing any customers, because of the surge in demand for scarce products.
Online sourcing has become a go-to alternative for sellers who live in locations where the choices are limited. It is also super convenient when you have a steady full-time job and are only starting out on Amazon. Part of the appeal lies in the fact that you don’t have to physically visit the store or spend so much time traveling in search of the perfect deal.
A basic Google search can bring up a wealth of information about wholesale suppliers close by. However, unlike a trade event, you’ll have to verify how reliable they are by yourself, which is time-consuming.
Similarly, you can visit certain wholesale websites, social media pages, and YouTube channels to find the information you might have missed.
Testing out products
A lot of beginners start out initially by purchasing a limited number of product units from a wide variety of categories.In other words, they do a real-time test to decide which ones end up being profitable. The faster a product runs out, the more you’ll focus on replenishing stock and adding it to your fixed inventory.
To keep it short, it is basically a process of elimination, where you test products in the real world and decide what to keep based on concrete results. A lot of sellers find this a lot more reliable method than the complicated world of estimates and predictions where numbers keep changing.
Buying in bulk is a common strategy, but also comes with a great deal of risk. Many sellers would only attempt a wholesale deal once they’ve tried and tested the product enough times to their satisfaction.
For bulk purchases to work, you need to find a good supplier, a very favorable discount and an increase in demand. Some sellers buy popular items during a clearance sale and store them in wait for the price to go up. This can only work for non-perishable goods.
You can find some of the most unique and appealing deals at local auctions and thrift stores for products that you might never have even expected. These venues are great because of how flexible the rates are. There are rarely any fixed prices and sellers are often open to negotiating prices. This is part of the allure thrift shops. You can find everything here from retro items to vintage T-shirts, fashion accessories and so much more.
The demand for such items on Amazon is wildly unpredictable. A lot of customers appreciate alternate options and unique, non-branded items, whether they’re from another era or a different stream.
What’s great about this is that modern audiences are highly diverse and many are receptive to counter-cultural products. So no matter how distinct the products you’re selling are, you’ll likely find interested customers. The key is to attract them through carefully optimized listings that target just the right crowd you’re looking for.
Even while you create listings on Amazon, don’t forget to promote your brand and sell prospects on other social media platforms. This is a key way to find customers.
At present, China has become the leading production center for a majority of the world’s goods. Lower manufacturing costs coupled with inexpensive labor has made it a go-to choice for the world’s top brands. This is why a lot of sellers often turn to the Chinese market for wholesale supply.
Alibaba and Aliexpress are key competitors for an e-commerce giant like Amazon. If you’re looking for ways to source a product and get cheaper quotes, this is one of the most key resources online (if you’re interested in foreign imports at least). The upside to it is you can purchase directly from producers and manufacturers. This means you get a highly favorable rate. The downside is that you’ll have to fill a certain large quota of units when you order wholesale.
Aside from leading e-commerce platforms, be sure to check B2B sites and service platforms where you can find third-party listings featuring a goldmine of favorably priced products
Trade show events
Trade shows for wholesale suppliers are a niche unto itself. They are one of the best places to discover and meet with new contacts, negotiate rates, and strike deals. They are a great way to contact suppliers you’ve never met before. You can find such events in other countries as well as locally. Web conferences are also quite common meeting places where suppliers and buyers can get in touch on a completely virtual platform.
An added bonus of such events is that you don’t have to go to extreme lengths in verifying your contacts. The fact that they’re invited to a legitimate trade event in itself speaks to their reliability. The crucial thing is to build a network of contacts and maintain a good relationship with all of them. Even if you aren’t ready to buy from anyone just yet, it helps when you know people.
Why should you establish a good relationship with suppliers?
Be on good terms with suppliers from different countries. First of all, it gives you access to industry knowledge on a much deeper level.
Secondly, when you’re acquainted with suppliers from all around the world, you can leverage that to negotiate better prices. (You’ll be more aware when a supplier is overcharging you).
Thirdly, they’ll mention you to their own contacts whenever a good deal comes up, in exchange for a commission fee on the transaction, if it goes through.
Part of your research should include the latest trade events, be it an actual venue or an online conference. Make sure you check who’s going to be attending. That way you’ll be better prepared.
A good way to go about it is by visiting the right websites and creating a schedule for all the upcoming trade show events you can attend. This is so that you can plan ahead and make sure you’re free to attend.
Another additional benefit of attending trade shows is the industry knowledge and experience you gain by interacting with actual suppliers up close. You learn about how demonstrations work, what makes a good presentation and so much more by simply exposing yourself to such events.
Event websites are also a great resource for getting contact information for major suppliers in the area. Even if you can’t attend, you can still try to contact them and request a chat whenever they are free.
Product sourcing agencies
There are also plenty of agencies that put you in touch with third-party suppliers and help you import products at ideal prices. However, you might want to save this as a last resort once you’ve tried everything else. At the same time, if you do come across a reasonably good deal with an agency, it could save you the hassle of having to research and reach out to contacts yourself.
The major reason why sellers rely on sourcing agencies is that they can rest assured that the suppliers will be up to standard. Beginners often hesitate to strike a deal with strangers out of fear that they’ll be scammed or the products will be subpar. An agency takes care of vetting the supplier and the products so that all you need to worry about is the cost.
The key to succeeding in how you source products are all about finding great wholesale suppliers. That’s essentially at the heart of this matter. All you need is to find suppliers who offer you products in bulk so that you can resell them at a profit. Now the price should be just enough that you can make a profit even after deducting the Amazon charges, shipping costs, etc.
Not all manufacturers have the time to talk to potential sellers. Some leave this entirely to their local distributors, who make their own cut-off of wholesale products. This is why finding the right balance between profit and price is important.
Online directories offer the same benefit as trade show events. You get contact access to many of the reputable, prominent suppliers in any area. However, most online directories charge a certain amount as a fee for their services. Aside from that, they are a pretty useful resource because all the contacts listed will have already been vetted by them.
Contacting manufacturers directly
If you find a product that you’re interested in selling, look for the manufacturer’s name and contact information on the packaging. You’re likely to get it from there.
Obscure product categories open up a lot of possibilities, precisely because they have little to no competition. So if you find something that’s worth marketing to a wider audience, get in touch with the local producer and discuss terms. Local food items, toys, trinkets, etc are all examples of unique local products that might appeal to a wider customer base.
Reaching out to suppliers
So far we have talked about how to find suppliers. Now let’s cover how to approach and contact them to find out whether they’re interested in your business proposition.
Before you reach out
First things first. Before you even attempt to contact the supplier, make sure you already have an Amazon wholesale account set up. You have to view each call you make as a potential business opportunity. If the supplier has other prospects lined up, they’ll want the assurance that they can start working with you right away.
In that case, they’ll need details like your sales Tax ID and EIN (Employer identification number) to verify that you’re legit.
The next thing to do before you contact the supplier is research them. Be thorough with the details.Look up their background, their experience and their partnerships. If they’re selling to other parties, get to know the terms of the deal. Being well-informed gives you additional leverage. It makes them obliged to be open with you about prices and costs. You can also plan your strategy to win them over if you know what kind of deals they’ve favored in the past.
You also need to know who’s in charge at the company and who you’re supposed to contact regarding the products, distribution and shipping. Bigger companies will have separate departments to manage each aspect. You need to be well-aware of all this before you even begin a conversation.
Direct, face-to-face meetings are the best way to instill confidence in your supplier. You get to ask important questions and get direct answers. It also adds a personal dimension to your interaction. If you make a good impression, they’ll feel better about working with you. On the other hand, you can decide whether you feel like trusting them once you meet them in person.
However, if they’re unable to meet you directly, then a telephonic conversation will suffice, at the very least. If both options don’t work out because of your busy schedule, then email would be the next best option. However, make sure this is your last resort and keep it professional.
When you do make your pitch, keep it brief and straightforward. If you need further clarification about anything, don’t hesitate to ask, because its your business that’s on the line here. If you aren’t convinced about certain aspects like distribution or revenue projections, ask for a proper demonstration. You’re not obliged to buy in every claim the supplier makes. Neither are they.
After you reach out
Don’t get worked up about a supplier if they reject you. It happens, way too often. Move on to the next prospect and make the most of your time. Additionally, you don’t have to feel obliged or committed to work with someone just because they’re being keen. Until you draw up a contract and sign it, you’re free to back out of the deal if it doesn’t feel right.
Deciding how many units to order
The first thing you need to find out is the minimum requirement for you to get a discounted rate. There’s a certain limit that most suppliers set. When the order crosses this threshold, they’ll be willing to offer you the product at a much lesser rate per unit. So find out how large your order needs to be. But don’t jump in on the deal if you aren’t you can sell that many products units. Again, take a balanced approach. Check how much inventory you’re willing to hold and how much that’s going to cost you. It’s okay to make small compromises here and there, but not so much that you end up with a meagre profit margin.
At this point, you might have realized that finding a good wholesale supplier is equal parts challenging and time-consuming. However, it is a necessary aspect of doing business on Amazon, unless you manufacture your own products.
But as your business grows and you gain more experience, things do become easier. It might seem like the most difficult thing, but it eventually ends up being very rewarding. As long as you keep an open mind and are ready to learn, you can succeed in building an enduring partnership.
3 thoughts on “How to source products for Amazon FBA”
This blog is an invaluable resource for anyone looking to stay informed and educated on the topic.
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