WHAT IS THE PROFITABILITY POTENTIAL AND RISK OF THE AMAZON WHOLESALE MODEL?
WHAT IS THE PROFITABILITY POTENTIAL AND RISK OF THE AMAZON WHOLESALE MODEL?
Hey everyone! Hope you'll be doing good. Today I'll be guiding you regarding earning potential of Amazon Wholesale model since this is the most common question of an investor and as a VA, you can convince your client on this point too.
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Technically speaking, Amazon wholesale model is the safest business model to work on. I'm assuming that you might know how a wholesale model works on Amazon but still if you're unaware, let me tell you that in this model, we sell an item which is already being sold on Amazon and has an established customer base. Hypothetically speaking, take the example of Pepsi. Now Pepsi is being sold on Amazon so we will just take approval from PepsicoCompany and start selling Pepsi along with our sellers.
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The most important thing here is sales. The more the sales, the higher your profits since sales have to be divided among all other sellers too. So this is the reason we go for the USA marketplace to do wholesale as it is the most populated e-commerce market in the world. Here are the stats: Amazon as a whole has touched the 1 Trillion Dollar mark and USA’s market alone holds more than 50% of its share. In May 2022 alone, there were 3.3 Billion visits on Amazon (USA) which simply means that selling on Amazon’s USA marketplace is the most profitable amongst all other markets in terms of Wholesale business.
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Now comes the RISK PART. I will say this model has a very low risk associated with it and will prove my claim. See, for the product hunting part in the wholesale model - We already select those products which show promising stats so the sales are already present. I'll explain it again with the Pepsi example. Now you've taken approval to sell Pepsi. Think yourself, if for some reason you're unable to sell Pepsi on Amazon could be that Amazon itself has entered the listing and started getting all the sales and you don’t get any share so due to the high demand for your product - you can liquidate your inventory on any other eCommerce website even at a breakeven price. Although we actually don’ liquidate it right away instead, we have other strategies for this but the point is that you can never go into a loss since almost all of the investment in the wholesale model is spent on inventory buying. You don't do marketing like Private Label. Hence your money is safe here and in return, you can earn reasonable profits. Profit margin lies between 5%-25% and your earnings keep on increasing with time. You can start with an investment of around $5k in USA.
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