How To Negotiate Prices With Amazon FBA Wholesale Suppliers
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This guide will help you get started, understand the basics of Amazon selling, and explain in simple words how it all works.
In Amazon FBA wholesale, securing profitable deals depends on finding the right suppliers, talking them into working with you, and opening a wholesale account. This can be quite challenging for Amazon sellers, as many suppliers may be reluctant to work with you.
Negotiation is a key skill that can significantly impact whether the supplier agrees to work with you and under what terms.
In this post, we will help you prepare to negotiate with Amazon FBA wholesale suppliers like a pro and provide some tips and tricks to achieve favorable terms and build strong supplier relationships.
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How Negotiating with Amazon Wholesale Suppliers Work?
The wholesale business model involves purchasing products in large quantities at a lower price from brands or distributors, and then reselling them to Amazon customers at a profit. The profit margin is the difference between the wholesale and retail prices.
As a wholesaler, your primary task is to identify brands or distributors who can offer competitive prices for popular products. This can be challenging, as many sought-after brands have rigid distribution networks. However, your negotiation efforts can lead to substantial profits once you establish these connections.
Steps to engaging with Amazon wholesale suppliers
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How To Negotiate Prices With Amazon FBA Wholesale Suppliers
Step 1. Identify potential suppliers
Research and identify best Amazon wholesale suppliers who provide products within your chosen niche. Suppliers may be brands or distributors. Choose a brand and do brand research with Brand Analyzer by Seller Assistant to identify if a brand is profitable. Brand Analyzer automates brand research and helps efficiently identify if the brand meets your revenue targets and other selling criteria and whether it’s worth reselling on Amazon.
Brand Analyzer allows to estimate how big the brand is and how many products it offers, how much money you can potentially make if you sell this brand, how intense is the competition from Amazon and other sellers, average Buy Box price per product, and review and rating quality. To analyze a brand, type in the brand name you want to research. Once the analysis is complete, review the data.
Note. Seller Assistant is a comprehensive product-sourcing software that helps Amazon sellers quickly find high-profit deals. It combines three extensions: Seller Assistant Browser Extension, and IP-Alert Chrome Extension by Seller Assistant, and VPN by Seller Assistant, Amazon seller tools: Price List Analyzer, Brand Analyzer, Seller Spy, Bulk Restrictions Checker, and API integrations, and features: Side Panel View, FBM&FBA Profit Calculator, Quick View, ASIN Grabber, UPC/EAN to ASIN converter, Stock Checker, IP Alert, and Restrictions Checker.
Step 2. Evaluate potential suppliers
Prioritize suppliers with a strong reputation. Conduct thorough checks on potential suppliers to ensure reliability and product quality. Review their feedback, request references, and verify their business credentials to mitigate future risks.
Step 3. Initiate contact with suppliers
Reach out to selected suppliers via phone, email, or their website. Introduce yourself and your business, expressing your interest in establishing a wholesale account.
Step 4. Submit a wholesale account application
Complete and submit the supplier's application form, typically found on their website. Provide necessary business information, such as your reseller's permit, business license, and contact details. Briefly explain your business and your needs.
Step 5. Obtain approval and open a wholesale account
Once approved, you can set up a wholesale account with the supplier, granting access to wholesale pricing.
Step 6. Request inventory list and prices
Ask for an inventory list from your supplier, detailing product specifications and wholesale prices. This list is crucial for determining which products will be in demand and profitable on Amazon.
Step 7. Conduct product research
Utilize Seller Assistant's Price List Analyzer to streamline product research. This tool automates research of supplier price lists and helps identify the most profitable deals to sell on Amazon. It automatically matches your supplier products to Amazon, calculates profitability for each product, and shows other essential metrics. You can filter the results by any metric you need, and see which deals are profitable, and which have hidden risks or alerts.
Then, confirm if you can sell the products on Amazon with the Bulk Restrictions Checker. Upload the product list to Bulk Restrictions Checker and download a report with the checkup results. If you can sell a product on Amazon, it will be marked with the green open lock. If a product or brand is restricted, it will be marked with the red closed lock. If you can’t sell it on your Amazon seller account, it will be marked with the red closed lock with an exclamation mark.
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Step 8. Negotiate terms with suppliers
Engage in negotiations to secure the best possible prices for the products you selected with Seller Assistant. Aim for terms that are beneficial for both parties, fostering long-term relationships. Order larger quantities to receive bigger discounts and commit to recurring orders for greater savings. Consistent orders can lead to ongoing discounts.
Things to Remember Before Negotiating with Wholesale Suppliers
Negotiation with wholesalers differs from buying products with online or retail arbitrage. Below you can find several things that can be useful to know before you engage in negotiation.
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Opening a supplier can be a challenge
To obtain the best prices, you should buy directly from the brand or manufacturer. However, popular brands often have established sales distribution networks and may be hesitant to add new distributors. As a wholesale seller, you must convince brands to include you as an additional distribution channel.
Tip. If you are not prepared to invest big money upfront, contact brand’s distributors and buy from them. Typically, their contacts are available on the brand’s website. Otherwise, you can contact the brand and ask for the list of their distributors.
Wholesalers may be reluctant to cooperate with Amazon sellers
Suppliers may prefer sellers who trade through multiple channels beside Amazon, including their own online stores, other e-commerce platforms, or brick-and-mortar stores.
That is because they seek to grow their sales and not the number of sellers on Amazon that will, in their opinion, just increase competition, not quantities, and will simply add paperwork by signing agreements and sending invoices back and forth.
Tip. When you contact a supplier, stress that you are an online retailer rather than an Amazon seller. Create your own website and quote it on the application.
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Minimum Order Quantity (MOQ)
Large brands and distributors often have high Minimum Order Quantities (MOQ), which is the minimum number of products you must purchase to complete an order. Be prepared to invest substantial money upfront, as the MOQ can be quite high depending on the brand, and can amount to tens or even hundreds of thousands dollars.
Tip. If you can’t meet the brand’s MOQ, contact the brand’s distributors that have lower entry barriers and not as high MOQ levels as the brand itself. Another option is to contact local brands who typically have lower MOQs.
Building supplier confidence takes time
Establishing a strong relationship with a supplier is a process that develops over time. Use your negotiation skills to demonstrate that you are the best candidate to grow their sales. Showcase your Amazon sales experience and your ability to buy large volumes. As your cooperation strengthens, you can negotiate for better discounts and terms.
Tip. The best potential suppliers often deny your first request to open an account with them. Therefore, it is critical to convince a brand that you will add value to their business and grow their sales.
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How to Prepare for Negotiation with Wholesale Supplier?
Preparation is key to a successful negotiation with Amazon wholesale suppliers. Remember that first impression about you matters. Typically, going the extra mile and researching who is your supplier and their business profile will help you achieve better results.
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Vet a supplier
Make sure that the supplier is reliable and credible. Verify their company registration number, and ascertain they have a verifiable physical address and warehouse. Check the supplier on LinkedIn, Whois, and ScamAdviser. Make sure they have active social media and read their reviews. Proving the wholesaler's legitimacy is crucial because you will invest essential money in this business.
Research the supplier
Before negotiating, research the supplier's business and product offerings. Read the ‘About Us’ section on the supplier’s website and ensure they are a wholesale reseller, not a retailer. Look what brands they sell and make sure they carry the brands you want to source. Learn about their terms and conditions of sale. This information will help you understand their business and what they are willing to offer.
Get a professional email
Having a professional email address is crucial when reaching out to potential wholesale suppliers. Use a domain-based email address (e.g., yourname@yourbusiness.com) instead of a generic one like Gmail or Yahoo. This adds credibility to your business and shows suppliers that you are serious and professional.
Create your own website
A professional website serves as a digital storefront for your business and confirms your credibility. Having a dedicated website helps negotiate with the suppliers who are not willing to cooperate with Amazon sellers.
It provides potential suppliers with an overview of who you are, what you sell, and how you operate. Ensure your website includes essential information such as your business history, product offerings, and contact details.
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How to Write a Wholesale Account Application?
When you choose a supplier, you must contact them and send a wholesale account application. You can do that by email, or by filling in a form on their website. Because this document is a first impression about you, it must be written in a professional manner and without spelling mistakes. Here’s how to write it.
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Keep it concise
Your wholesale account application should be brief and to the point. Avoid lengthy descriptions and focus on delivering essential information clearly and efficiently. A concise application is more likely to be read and considered by busy suppliers.
Include essential seller information
Provide all necessary details about your business, such as your business name, contact information, reseller's permit, and business license. This information helps the supplier verify your legitimacy and understand who they are dealing with. If you have a website, add it to the application.
Clearly state your request
Explicitly mention what you want from the supplier, such as opening a wholesale account, accessing their product catalog, and discussing pricing. Being clear about your needs helps the supplier quickly understand your intentions and respond appropriately.
Customize for the specific supplier
Tailor each application to the specific supplier you are contacting. Mention why you chose their products or brands they resell and how they align with your business. Customizing your application shows that you have done your research and are genuinely interested in a partnership, which can significantly improve your chances of approval.
7 Strategies to Negotiate with Wholesale Amazon Suppliers
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When your wholesale account application is approved by the supplier, the next step is to negotiate the terms and prices. In this process, it can be helpful to decide on a negotiation strategy before you start discussions. Below you can find 7 examples of such strategies.
Strategy 1. Create a win-win scenario
Aim for a negotiation that benefits both parties. Emphasize how the partnership can be mutually advantageous, focusing on shared goals and long-term collaboration rather than short-term gains.
Strategy 2. Build relationships over time
Approach negotiations as an ongoing process. Building rapport and trust over multiple interactions can lead to better deals and a stronger business relationship. Patience and persistence can pay off.
Strategy 3. Leverage larger orders for discounts
Leverage the size of your orders to secure better pricing. Suppliers are often willing to offer discounts for larger purchases, which can significantly reduce your per-unit cost.
Strategy 4. Secure savings with recurring orders
Commit to regular, recurring orders to negotiate lower prices. Suppliers value steady business and may offer discounts for the assurance of continuous sales.
Strategy 5. Maintain consistent orders for better terms
Demonstrate consistency in your ordering patterns. Reliable customers are highly valued, and maintaining a steady order flow can help you negotiate more favorable terms and discounts.
Strategy 6. Add value to your supplier’s business
Show your supplier how you can add value to their business. Whether through growing their sales and diversifying their sales channels, or expanding their reach, offering additional benefits can make your partnership more appealing.
Strategy 7. Provide performance insights on Amazon
Provide suppliers with insights on how their products are performing on Amazon. Sharing sales data and your ideas to enhance product performance can help them see the value of working closely with you and may lead to better negotiation outcomes.
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Tips to Negotiate with Wholesale Suppliers for Amazon
When you negotiate with the wholesaler, you aim to get the best possible price and deal terms, maximizing your profit. Below, we will give some tips to help you get the best supplier offers.
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Know your numbers
Before you start negotiating with suppliers, make sure you know your numbers. Calculate your profit margins, and set a target price that you want to pay for the product. That will give you a clear idea of how much you can afford to pay for the product and how much you can negotiate. Determine at what volume you need the products. Knowing this information will help you negotiate a favorable price and terms of sale.
Use Seller Assistant’s Price List Analyzer to get the estimated number of units sold per month. This helps understand average product sales to plan how many units to order. Additionally, Price List Analyzer shows product Buy Box price and your profit, ROI, and margin for each product. That will give you a clear idea of how much you can afford to pay for the product and how much you can negotiate.
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Set your goals
Outline the key targets for the negotiation. Determine what you want to achieve: a lower price, better payment terms, or a larger order volume. Also, determine your walk-away point where the negotiation is no longer worthwhile.
Be flexible
Be prepared to compromise. Negotiations are often about finding a middle ground that benefits both parties. Be willing to adjust your goals and expectations to reach a mutually beneficial agreement.
Build a relationship
Building a relationship with your suppliers can help you negotiate better prices in the long run. Establish good communication and treat your suppliers with respect. Let them know that you are interested in doing business with them for the long term, and they will be more likely to offer you better prices and deals.
Prepare your bargaining chips
Identify the factors that can give you bargaining power. That may include your order volume, payment terms, or your ability to promote the supplier's products on Amazon.
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FAQ
How to negotiate with wholesalers?
To negotiate with wholesalers, clearly communicate your business needs and demonstrate how partnering with you can be mutually beneficial, emphasizing long-term collaboration. Leverage larger and consistent orders, provide valuable market insights, and build trust over time to secure favorable terms and discounts.
How do you start negotiation with a supplier?
To start a negotiation with a supplier, introduce yourself and your business, clearly stating your interest in forming a wholesale partnership. Begin by discussing your initial order requirements, and express your interest in establishing a long-term, mutually beneficial relationship.
How to negotiate with Amazon wholesale suppliers via email?
To negotiate with Amazon wholesale suppliers via email, start by introducing your business and expressing your interest in their products, clearly outlining your initial order requirements. Highlight the potential for a long-term partnership and req
How to deal with a wholesaler?
To deal with a wholesaler, maintain clear and professional communication, ensuring that you understand their terms and conditions while expressing your business needs effectively. Establish a strong relationship by consistently placing orders, providing feedback, and negotiating favorable terms based on mutual benefits.
Final Thoughts
Negotiating prices with Amazon FBA wholesale suppliers is a critical skill that can help you maximize your profit margins. By using negotiation strategies wisely, you can find a compromise that works for both you and the supplier.
Remember that building a long-term relationship with your suppliers is essential, and treating them with respect and honesty can go a long way in securing better prices and deals in the future.
In addition, when negotiating, you must know your profit margins and have a clear idea of how much you can afford to pay. Seller Assistant will help you with this task. This all-in-one product sourcing software incorporates all features vital for wholesale product research.
It combines three extensions: Seller Assistant Extension, IP Alert, and VPN by Seller Assistant, tools: Price List Analyzer, Brand Analyzer, Seller Spy, Bulk Restrictions Checker, and API integrations, and features: Side Panel View, FBM&FBA Profit Calculator, Quick View, ASIN Grabber, UPC/EAN to ASIN converter, Stock Checker, and other features that help quickly find high-profit deals. Seller Assistant also offers integration with Zapier allowing to create custom product sourcing workflows.
