For Amazon beginners, the wholesale model is a sweet spot with lucrative benefits and lesser risk. That’s why it’s the choice for novice entrepreneurs. You get to cash on the pre-established reputation and customer base of famous brands. The advantages are countless compared to launching a private label business.
However, you need to be smart and strategic to succeed on Amazon as a wholesaler. Check out the Top 5 product research mistakes that most new Amazon sellers make. Avoiding these can help you thrive in this largest online marketplace.
1. Not creating a product selection checklist
Finding a profitable product is the most important step in starting an Amazon wholesale business. Many new sellers make the mistake of not having a product checklist. This can be most costly product research mistake. Not every product is a winner for the FBA wholesale model. This is risky because not every product will make you money on Amazon. A checklist helps you think carefully about each product before you invest. It guides you toward the best choices.
For instance, the Best Seller Rank (BSR) is an important metric in product research. It helps you to assess how well a product is selling on Amazon.
Your checklist must include some of the following metrics, like Sales history, return ratio, product reviews, rating score, buy box price, weight or size measurements, and variations details apart from best seller rank. Make sure the values of each factor are significant so you can mitigate hazards related to your product.
2. Ignoring competition analysis
Amazon Wholesale business is competitive. But it doesn’t mean you should jump into the heavily crowded listings without prior competition analysis.Many new FBA sellers mistakenly think more competition means guaranteed success. Analyze your competition carefully before deciding if a product is right for you.
Understanding competitor pricing is crucial for Amazon wholesale success. Remember, the Buy Box (the prominent ‘Add to Cart’ button) often goes to the seller with the best price. Here’s what you need to consider:
- Competitor Analysis: Don’t just count sellers. Analyze their individual prices. Can you offer a similar, or even lower, price while maintaining profitability?
- The Amazon Factor: Is Amazon itself a direct competitor for the product? If so, it might be extremely difficult to win the Buy Box, as they often have the best prices.
- Profit Margins: Before choosing a product, meticulously calculate your costs (product cost, fees, etc.). Only proceed if you can compete on price and still make a healthy profit.
3. Choosing trendy but unsustainable products
The overnight positive stats and high sales on a product put most Amazon’s new sellers into the shiny object syndrome. You shouldn’t go after items that are trendy or seasonal. While they do have the potential to help you make some quick cash. But if you are looking for long-term benefits, these can also push you into a deep pit of failure.
To excel in Amazon and make a stable income from selling – you must choose evergreen and sustainable products. We recommend you run a Google trend research when conducting product research for the Amazon Wholesale model.
4. Confusing Private Label and Wholesale Listings
One critical mistake new Amazon sellers make is confusing private label and wholesale listings. This misunderstanding can lead to serious consequences, including account suspension. Here’s the breakdown:
Private Label: These products are owned and sold exclusively by a single brand/seller. Amazon has strict rules against reselling them under the wholesale model.
Wholesale: These are established brands that you source from authorized distributors and resell on Amazon.
How to Tell the Difference: A simple rule of thumb – listings with only 1-3 sellers are likely private labels. To be safe as a beginner, focus on products with a larger number of sellers or with products from well-known brands that allow resellers to sell through their listings.
Product research tools like Keepa, Helium 10, and Jungle Scout can provide valuable data to help you identify legitimate wholesale opportunities and avoid private label listings.
Understanding the difference between private label and wholesale listings is crucial to protect your Amazon business.
5. Entering into a gated category
Lastly, the gated category on Amazon attracts a lot of beginners because the competition is quite minimal compared to the ungated ones. This is where newcomers get stuck, and lose motivation, waste time and energy.
Amazon requires the sellers to submit multiple documents and get approvals to kick-start their wholesale business in a gated category. Categories like food, beverages, automotive, medical parts etc look lucrative to the onlookers but are gated.
Therefore, we’d suggest you to stay away from these in the beginning of your selling journey. Once you’ve tested the waters, then moving towards restricted products can be a good idea
Conclusion:
Amazon is a popular online selling platform where you can establish your wholesale business over time. If you are serious about establishing your Amazon wholesale business, then you must not make these 5 product research mistakes. Mistakes like not setting up checklist criteria, overlooking competition, selecting a trendy or private label product, and purchasing inventory of a product from gated groups. If you stay clear of these errors, we are sure you’ll not run into any product-based failures.
Frequently Asked Questions (FAQs):
Here’s a list of general questions that you might have about Amazon wholesale mode as a beginner.
1. Is Wholesaling on Amazon Worth it?
Yes, Amazon FBA wholesale is a good option for newcomers. It’s not only cost-effective but speedy. The profitability margin is also exceptional. According to Jungle Scout, dedicated sellers can expect 26-50% profit margins using the wholesale model. You have a huge chance of success here.
2. How Can New Sellers Make Wholesale Business Profitable?
As a new seller you must be vigilant about 2 things first one is budgeting and the second one is pricing. Ignoring hidden costs and setting up an inadequate budget for a business launch can land you in trouble. Also, if your pricing strategy is not right your sales and profits will take a hit and business will become unsustainable.
3. What Are Other Common Mistakes You Should Keep Away From?
You might encounter other errors apart from the mentioned 5 product research mistakes in your Amazon wholesale journey. For example, not following the Amazon policy – if you’re asked to adhere to some rules, like putting warning signs on parcels, then you must do so.
Also, rushing into finding a supplier may let you sleep on money; hence, conduct proper research before binding into a contract. Furthermore, buying lots of wholesale products is a pitfall.
Generating Millions in 
