Hi All. Welcome to my $5,000 Amazon journey as I step in for Clyde.
Let’s talk suppliers.
My Amazon business (and yours) rely on good suppliers. The supplier is the middle of a long chain of businesses that rely on each other to get a product into a customer’s hands.
The top of this chain is a manufacturer -- this is a company that creates the product from raw materials. The manufacturer sells their product to a major distributor, who farms it out to many small distributors and suppliers. Sometimes those suppliers sell to other suppliers...you get the idea.
The chain can be long, even 7 or 8 levels. Each distributor makes a profit, so by the time it gets to final seller (you and I) margins can be abysmal.
As a new Amazon seller, I’m at the bottom of this chain. My margins aren’t anything to fawn over yet, but I also recognize the process doesn’t happen overnight -- starting low allows me to build credibility and learn the market as I go.
My goal is always to find out who is selling to my current supplier. Everytime I eliminate a piece of the chain, my profit margins increase. The ultimate, most elusive goal is to get straight to the manufacturer. This rarely happens (and mostly to big businesses), but it’s always what I aim for.
I’ll be frank: I don’t have hours to spend calling suppliers every single day. I have a day job and a family -- digging through the internet to narrow down good companies is a job within itself.
I use ProfitGuru’s Popular Brands Tool to identify brands and products with most potential. It cuts 7 or 8 hours of work into 20 minutes. I use the Brands Database to make lists of brands with the most potential, then cut out those who aren’t likely to work with me.
Here’s my 3-step process:
1. Filter the unicorns
Filter the unicorns Right off the bat, I know there are major companies that won’t want to work with me. I call these unicorn brands, because I’m as likely to see a unicorn in my backyard as I am to land a wholesale account with them. These are generally major companies that sell high-end products (for example Nike, Sony, and Apple). I can eliminate them with a couple steps. First, I set the “# of popular products” filter between 10-1000. This can be adjusted for bigger categories, but it does a pretty good job at eliminating mega-companies, while weeding out companies that have a tiny selection of popular products.
2. Eliminate duds
I avoid products that only have a few sellers -- any product with under 3 sellers indicates the brand is most likely selling directly (meaning, they have their own Amazon storefront) or they’re very strict with opening new accounts. As I grow my business, it may be worth it to contact some of these suppliers, but for now I’m limited on time and short on money. I only want to deal with suppliers who are likely to work with me. On the flipside, I also eliminate any brand that averages more than 8 or more sellers per listing. Too much competition reduces my chances of winning the buy box and making sales.
3. Cut out Amazon
I don’t want to compete with Amazon itself, so I make sure to set the “% of listing with Amazon.com as a seller” filter between 0% (or empty) and 40%. Amazon doesn’t share the buy box well, and their profit margins are cut throat. Sometimes they even lose money on products, just so they can carry them. There’s no competing with that.
I start my search with these filters and narrow it down as I go. Once I’ve honed in on a specific brand, SupplySpy often provides more information, including product statistics and contact info. The info makes it simple to create a list of potential companies for me to reach out to.
This being said, it’s important to keep in mind there’s no software that can provide all information about all brands, so a little manual research is always involved. SupplySpy is simply a launching pad for me to do research -- the real challenge comes with actually landing U.S. wholesale supplier accounts. Stay tuned, because we’ll go over that in next week’s post.
Keep earnin’ and burning this week,
P.S. If you missed my video, catch it here.