Lessons Learned In Business

Demand Based Wholesale Sourcing – Wholesale Course Module 4 Part 3

Free Wholesale System - Finding Wholesale Leads for Amazon

This Post is part of the “FREE Wholesale Training Course”.  You can view the entire course listing and introduction to the course here.

You are here:

Module 4: Wholesale Research

You can click on each of the links above to go directly to the area of the module the best interests you.  That being said, let’s get right into the content!

Want to skip reading the massive wall of text?  After the entire course is released, I will make videos for each of the sections for easier consumption.  Make sure you are on our mailing list to be notified when it’s released!

Demand Based Sourcing

It’s finally time to find some wholesale sourcing leads!  Yay!  The rest of this module is designed to help find leads to contact, which will ultimately allow you sell those amazing profitable products.

We are starting this off with something I like to call “Demand Based Sourcing”.  Demand Based Sourcing is a method where we find leads by researching the best-selling items, and then tracking down the sources for them.  The sources we are looking for are the actual manufacturer / brand owner of the product, not the distributor or wholesaler of the product.  If you are unaware of the differences, I go over this in detail in the Distributors / Wholesalers vs. Manufacturer Direct section.

Who should use demand based sourcing?

Anyone starting out selling wholesale on Amazon can use this strategy, as it depends on finding products that already are selling on Amazon.  Your goal is to take a portion of the sales that are already happening on Amazon.  Also, if you don’t really have any idea of what kinds of products to sell, demand based sourcing is a good option.

Some pros of using this sourcing method:

  • You will learn about products in many different categories.
  • When you do find products you are able to source, risk of being stuck with inventory is low.  Items sell quickly, and you can liquidate if you have to.
  • You’ll get used to using many different tools to make buying decisions.

Some cons of using this sourcing method:

  • High demand products generally have lower margins.  This means you’ll need more working capital to generate profits.
  • There is a LOT of competition with other sellers using this method.
  • It makes it difficult to properly operate either a brick and mortar store, or a website.  You’ll likely end up sourcing products that are only loosely related to each other (if at all).  You really don’t have a target market to advertise to.

What value propositions work best for this method?

The more your value propositions align with the brand you are working with, the better of a chance you’ll have of landing the wholesale account.  Here are a few value propositions that will align best when demand based sourcing:

  • Having a lot of working capital available.  With larger volume items, you may need to buy significant amounts of product to secure pricing that aligns with your buying guidelines.
  • Listing Optimization.  There are still a lot of poor listings on Amazon that aren’t converting well.  Even high-volume listings.
  • Amazon Pay Per Click (PPC) Advertising.  If other competitors are not utilizing PPC advertising, the brand owner is missing out on potential traffic to the listing.
  • Selling on other marketplaces and internationally.  Items that sell well on Amazon will likely sell well elsewhere.  Being able to expand the reach of the product for the brand owner is quite valuable.

Here are the basic steps of what we will do for demand based sourcing:

  1. Set specific criteria of product you are looking for.
  2. Start searching on Amazon.com for product that meets the criteria.
  3. Individually look at each product to determine if it meets your criteria.
  4. Log the item in a spreadsheet for later research.
  5. When you find a good item, look for similar items by using searches or looking at the items recommended by Amazon.
  6. Once done with a product research session, start researching contacts for each product.
  7. Log the contact as a lead in your CRM.

Before we get into Demand Based Sourcing, there are some tools that are strongly recommended to make this method easier. We’ve previously discussed the different tools available, but I’ll narrow down to the tools that are specifically for helping you find leads:

In addition, you will want a spreadsheet to log your product finds into as mentioned in Step 4 above.  You can create your own, or you can download the one below:

FREE SPREADSHEET: Download a FREE Wholesale ASIN Research Tracker that you can use to keep track of ASINs you need to do additional research with! Watch a free video on how to use the tracker here.

1. Set specific criteria of product you are looking for.

You need to determine if a product is a good lead or not.  To do so, you must have some sort of specific minimum criteria for the types of product you are looking for.  There’s no way for me to specifically give you exact guidelines, as everyone’s business, risk tolerance level, and working capital is different.  If you haven’t already figured out what your minimum buying criteria is, I would suggest looking at the setting buying criteria section of the course.

For training purposes, we will be using bare bones buying criteria.  By all means, these guidelines do NOT need to be your exact buying guidelines.  Please set your own.

Here’s the guidelines we are going to run with:

  • Amazon has not been a seller for at least two months.
  • Our share of sales is likely to be 75 sales per month or more.
  • Item is not a private label item.

2. Start searching on Amazon.com for product that meets the criteria.

Since you are looking for items that likely will give us at least 75 sales per month, we need to start our research in places that are most likely to find items that have high enough volume to support that many sales.  In general, Amazon tends to show the best-selling items first when doing searches or going through the categories.  For this example, we are going to use the Amazon Best Seller lists to start our research.

To find the Amazon Best Seller lists, navigate to any category on Amazon.com, and look for the link that says “Best Sellers”:

Amazon Best Seller List Example

Once you are on the Best Sellers page, you will start to see products you can immediately do research on.  You can start on the “root” page (whatever category you started out with), and also drill down into sub categories below the root.  It’s your choice where to start, but eventually you’ll likely hit most of the sub categories.  Here’s an example of a drill down to the Toys & Games > Puzzles category:

Drill down to sub category of best sellers example

If you want, you can also do a search for products by using a keyword in the search box.  This works well if your “share of sales” criteria is a lot less than 75 units per month.  The more specific your search is, the less results you will be returned, which means the volume of the items shown are likely to be lower than if you are using an Amazon Best Seller list.  Since our base criteria is that we want at least 75 sales per month, we prefer to use the Best Seller lists for this form of sourcing.

3. Individually look at each product to determine if it meets your criteria.

Now – it’s time to start doing some research on the specific products.  Here’s the steps we are going to take to see if a product meets our buying criteria:

  • Check to see if Amazon has been a seller over the last two months.
  • Verify the item isn’t a private label item.
  • Check a sales estimation tool to see if our share of sales is at least 75 sales / month.

Here’s how we do each step:

Check to see if Amazon has been a seller over the last two months.

We are still on the Best Sellers list for Puzzles.  Using the Keepa Chrome Extension saves a LOT of time for this step.  There is a setting in the extension that allows you to see Keepa graphs when you hover your mouse over a product:

Hovering over product for keepa box example

This allows you to easily see the Keepa graph without needing to go directly to the product detail page.  This is extremely helpful, as you can determine if Amazon is a regular seller of the product just by looking at the Keepa graph.   If you are unfamiliar with Keepa graphs, I went over this in the Understanding How Amazon’s Best Seller Rank (BSR) Works section of the course.  To determine if Amazon has been a seller over the last two months, we are looking specifically for orange in the graph:

keepa amazon in stock

In the above example, you can see Amazon has had the item in stock over the last two months (and still currently have it in stock).  Therefore, we would automatically disqualify this item from moving forward in our search.

Hovering over the next item in the list, it looks a little different:

no amazon keepa graph

As you can see on this graph, there is no orange.  This means Amazon is not a seller on this item.  We’ve found an item that meets our first criteria: Amazon has not been a seller for at least two months.

Verify the item isn’t a private label item.

The next step is to see if the item is a private label item or not.  If you are unfamiliar with the term “private label”, I’ll give a quick explanation.  Private label items are listings that are created by the brand owner, and they likely only sell on Amazon.  They may be an entrepreneur just like you, and do not wholesale their product to anyone else selling on Amazon.  If there is a high probability the item is a private label item, we don’t want to waste our time contacting the supplier of the product.  We can spend our time on more higher leverage tasks than going into that dead end.

There are some common signs that you’ll see on private label listings.  The more of these signs you see, the higher of a likelihood the listing you are looking at is a private label item:

  • There is more than one image for the product.  The more images you see, the higher the likelihood it is a private label product.
    • images for private label
  • The title of the product is long, and describes the product instead of just being the title of the item.
    • titles for private label
  • The bullet points are long as descriptive.
    • bullet points for private label
  • The brand name / manufacturer of the product matches the seller holding the buy box.
    • brand name for private label
  • The brand name / manufacturer of the product is the only seller on the listing.
    • only seller for private label
  • Keepa consistently only shows one seller for the product.
    • keepa for private label

There are cases where non-private label items will carry some of these features.  If the product is borderline, and you aren’t entirely sure, assume it ISN’T a private label product, and move on to the next step.  You can always remove it later when you try to find the supplier information.

If you are fairly certain the item IS a private label item, disqualify it and move on to the next product.

If you are fairly certain the item ISN’T a private label item, move on to the next step!

Check a sales estimation tool to see if our share of sales is at least 75 sales / month.

The next step is to figure out if our potential share of sales is 75 sales per month or higher.  In the Analyzing Potential Sales Volume section of the course we showed a few different tools you can use to estimate the total sales of a product.  It also shows you how to calculate the estimated share of sales if you are unfamiliar with it.

 

Going through the best sellers list, it took us until #48 to find a product that Amazon didn’t carry, and wasn’t a private label product.  It can take some time and effort!

To ensure I don’t specifically “out” any smaller brands, I’m going to show you an example of an item that everyone likely has heard of: LEGO.

I’m going to run the Market Intelligence chrome extension on this product to see if we could potentially gain 75 sales per month.

monthly sales lego item

The monthly sales estimation for this product is 437 units.  Now, we need to check how many FBA sellers are TRUE competitors.  Let’s use a recent addition to RevSeller to easily give us the number of TRUE competitors:

lego true competitors

With the true competitors being 1, we add ourselves to that, which makes 2.  Since there are 437 units per month sold, divide that by 2, and we get 218.5.  This would qualify above our 75 units we are looking for.  We can now move on to the next step.

If the number doesn’t meet your criteria, keep looking for product!

4. Log the item in a spreadsheet for later research.

Assuming you are using the spreadsheet above to log this information, here’s what the spreadsheet would look like after we found this product:

lego entered into tracker

You can see the note I put in the spreadsheet “Huge name brand, may not be able to land account”.  I put this in there because it’s true – it’s unlikely we would be able to land this account.  I put this in there so that when we are reaching out to the suppliers later on, we can prioritize other companies over this one.  That way we ensure we spend the time we have with companies we have the highest chance of landing.

5. When you find a good item, look for similar items by using searches or looking at the items recommended by Amazon.

Now that we’ve found a good item, let’s not stop there.  Scroll down to the area labeled “Customers who viewed this item also viewed” and start the process over again.  Hover over each of the items and see if Amazon has carried the item in the last two months – just like we did in the best sellers list.

amazon not on listing lego

We found another item, unfortunately it’s the same supplier.   Bummer.  One thing I did notice about this item is that it’s a bundle.  I would probably log this item in the spreadsheet anyways, just in case we are able to land this supplier.  At times, already created bundles are hard to find.  Since you already found it, I would log it in the tracker and in the notes put “bundle”.  This is what it would look like in the tracker after finishing off the research:

lego entered into tracker 2

Go through the entire list.  Sometimes you’ll find other suppliers in the list you potentially can add to your list.

6. Once done with a product research session, start researching contacts for each product.

I would recommend continuing your research until you get a certain amount of good leads.  Maybe start with a goal of 20.  Once you’ve hit that number, it’s time to start finding contacts for each supplier listed on your Wholesale ASIN Research Tracker.  On the example we’ve been working with, I added a few additional smaller companies to our spreadsheets.  These are all companies that I know will not allow Amazon sellers (or are already selling directly to Amazon), so don’t attempt to contact them.  I’m using them only as an example.

example companies in asin tracker

For each company that is listed, your goal now is to find contact information.  The easiest way to do this is to Google search the company name.  We’re going to skip LEGO for now, since we know they are a massive company.  Let’s try to find info for Mindware.  Usually just using the company name as a search term in Google will bring up the company information.  Let’s see if it does:

mindware google search example v2

Looks like we found the link!  If you are unable to find it that easily, follow some of the methods we show in the Distributors / Wholesalers vs. Manufacturer Direct section of the course.

Now, let’s go to the website and see if we can find some contact info.

mindware contact

I ended up finding a phone number to contact them.  There is also an option to Chat, so it’s possible I could ask their live chat for a wholesale contact.  Let’s log this in the spreadsheet:

mindware contact info example

Once that’s complete, you would continue to do research on each additional supplier.  Once all the research is done, it would look something like this:

finished asin spreadsheet

Now that you’ve completed all the research, it’s time to enter the info into your CRM.

7. Log the contact as a lead in your CRM.

Take all the leads from this spreadsheet, and enter them into your CRM.  If your CRM is a separate spreadsheet, copy / paste the info into the correct spreadsheet.  If your CRM has an import function, use it.  Here’s links to instructions for some of the common CRM’s to import your leads:

It’s time to start contacting your leads!

Once you have compiled leads, it’s time to start contacting the leads and landing wholesale accounts. Building relationships with suppliers is in module 5.

Need help with sourcing?  We can help with our Mentoring Program.

Continue on to Module 4 Part 4: Niche and Trade Show Sourcing

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Chris Potter

Chris Potter is an internet entrepreneur that loves working on businesses and helping others with their businesses. He has operated businesses that have sold over $25 million in retail sales, bought and sold a blog design business, and started websites from scratch. Skyrocket your business by joining his Mentoring Program!

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