Amazon Seller: Brands VS Distributors VS Wholesalers

Amazon Seller: Brands VS Distributors VS Wholesalers

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Amazon sellers make sure you know who you are buying from and if Amazon will accept their invoices to get ungated / ungating or if you get an IP complaint or other seller issue. Amazon wholesale is the lowest risk highest reward option to sell on Amazon but you will need to know the different terms to succeed.

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If the business of Amazon wholesale is anything, it’s a business of relationships. To build those relationships, you must understand the key players. In Amazon wholesale, the most important players are the people selling you products. Why? Suppliers control discounts, contacts, and access to their product line. They’re the key to profitability and if you can learn to speak directly to a supplier’s needs, you’re one step closer to completing the first step to success – opening an account.

How can you figure out the needs of people you’ve never met? Well, most suppliers fall into three key categories with pretty clear-cut needs. To speak to these needs, you must understand how a supplier functions in the grand scheme of wholesale. You need to understand their world, their goals, and most importantly, their problems.

So let’s get into it. When you pick up that phone to cold call a supplier, who’s on the other end? It will always be a representative from one of three entities: 1) Brand, 2) Distributor, or 3) Wholesaler. With business knowledge comes business power, so let’s break down all the knowledge that you need to do powerful business with top suppliers and jumpstart your Amazon venture.

Brand

What is a brand? A brand is an entity that creates the product you’re buying. For instance, Nike is a brand because they own their products and sell products to consumers, distributors, and third-party sellers like us.

What do you say? Brands are invested in the reputation of their product. Accordingly, when speaking to a brand on the phone, highlight your plans to improve their listings, increase sales, and, above all, maintain the quality of their product.

What’s beneficial and what to be wary of: Brands and distributors are a safe place to start with Amazon wholesale. When Amazon flags one of your products, brands will provide proof that your products are legitimate with a paid invoice. Because they create the product, Amazon will almost always accept their invoices.

On the other hand, because brands are more emotionally invested in their products, they’re choosier about who they bring on – especially if you’ve got the word “Amazon” in your selling title. While brands may offer cheaper pricing, open rates are often much lower – typically 5% to 10%.

Nevertheless, everything on Amazon comes back to relationships. If you can earn the trust of a brand and maintain a strong relationship, you’ll have an easier time getting discounts and expanding your product line down the line.

Distributor

What is a distributor? Distributors are entities that sell many different brands to third-party sellers like us. Distributors have a direct relationship with brands and their goal is to make them happy.

What do you say? Emphasize how much product you plan to purchase and how often. Be honest about your strategy but remember that your purchasing habits are a distributor’s main concern.

What’s beneficial and what to be wary of: Buying from a distributor allows you the opportunity to sell multiple brands through a singular supplier. Because they’re less protective of a product, distributors are usually easier to open accounts with. Distributors may also provide cheaper pricing because they’re buying product in bulk. It’s not always the case, but something to be mindful of.

Not to mention, while legitimacy issues can feel like a problem for the future, once your account (and source of income) is suddenly shut down, the problem becomes real! It’s easier and more common than you realize and it’s even happened to Todd! Similar to brands, if you do run into legitimacy issues, Amazon will accept paid invoices from most authorized distributors. When your business is threatened, the safety net that brands and distributors provide can be invaluable.

Wholesaler

What is a wholesaler? Wholesalers are business-to-business companies that do not have direct relationships with brands. They acquire products from closeouts, customer returns, and other instances where stores are just trying to get rid of products.

What do you say? Because wholesalers will sell to about anyone, there’s not much craft to these calls. Of course, you should take every lead seriously, but don’t sweat the specifics with wholesalers.

What’s beneficial and what to be wary of: As you might have guessed, open rates are favorable. You’ll likely pull off a 100% open rate with wholesalers which could mean a hefty profit IF they have good products!

So what’s the catch? Well, unlike brands and distributors, if you’re hit with a trademark violation, if you’re gated from a particular category, or if you receive any warning from Amazon, Amazon will not accept invoices from wholesalers as a form of rectification.

And it makes sense. Wholesalers don’t have a direct relationship with brands so what proof do they have that products are legitimate?

In general, buying products from wholesalers is a better opportunity farther down the line when you’re an established seller with a stronger eye for legitimate products. But if you’re just starting out selling Amazon wholesale, stick to brands and distributors.

What next?

Before you hop on the phone with a supplier, ask yourself a few questions: What does their world look like? What questions will they ask? What problems do they have and how can you offer viable solutions?

Now that you know who you’re speaking with when you pick up the phone and cold call suppliers (at least five times per day!), it’s time to fine-tune your business spiel with answers to those three questions. After you’ve got a few calls under your belt, include what they’re saying into your website and all future calls. What problems do they always mention? What keywords do suppliers use? If you’re anticipating their needs before you even pick up the phone or before they open their mouths, every supplier who stumbles across your profile or catches you on the phone will know you’re capable of defying the Amazon-seller stereotype.

Nervous to cold call? You’re not alone! Selling to a stranger will always feel nerve-wracking, especially when you’re just starting and have everything in the world to prove. With a better understanding of the faceless supplier, hopefully your next phone call will feel less like a prank call and more like a chat with an old business partner.

Hungry for more Amazon insight? Check out Todd’s templates for contacting suppliers and schedule a 1-on-1 video coaching call! Everything else you need to jumpstart or grow your entrepreneurial venture is here.

Happy selling everyone!

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