This Post is part of the “FREE Wholesale Training Course”. You can view the entire course listing and introduction to the course here.
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Module 2: Wholesale Preparation
- Introduction to wholesale sourcing
- Understanding how the buy box works
- Understanding how Amazon’s Best Seller Rank (BSR) works
- Understanding ROI / Margin
- Analyzing competition and potential volume
- Setting your personal buying guidelines
- Determining your long term strategy
- Distributors / Wholesalers vs. Manufacturer Direct
- Ideal targets for wholesale sourcing
- Tools for wholesale sourcing
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, lets 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!
Determining Your Long Term Wholesale Strategy
A lot of people start their Amazon business with a simple goal in mind: “make some extra money”. 8 out of 10 entrepreneurs fail within the first 18 months. I’m not entirely sure what the failure rate is for Amazon businesses, but I can’t imagine it to be much better. I’ve been around a while in the ecommerce / Amazon industry, and there are few that are still in business compared to when I started. Heck, I can look back into Amazon Facebook groups, and view comments from two years ago. Where are those people at today?
Why am I telling you this? It’s because you need to understand that succeeding long term takes an immense focus and drive in the correct direction. A large key to this is one thing:
Building a Long Term Strategy, and staying focused on that strategy.
A good amount of businesses make business plans. Have you made one? Probably not, I would guess. Is it necessary? If you are trying to get a loan from a bank – it may be necessary. To run your business? It’s not necessary. But, what is necessary is to have a long term vision of what your business will look like in the future. Why?
Hop in your car and drive.
Have you got there yet?
How about now?
Well, you’ve gotten somewhere for sure. Where? Who knows. Is it where you imagined when you left the house?
“I literally have no idea…you didn’t tell me where to go..”
Exactly. If you have no plan of where you are going, you could be driving around in circles. Maybe you drove off the side of the road. Maybe you drove somewhere really cool. But, not exactly the right place. It’s possible you may have just ended up back home – clueless.
This is exactly the same scenario most people operating businesses work on. “I’m just going to start working, make some money, and see what happens.” Sure, maybe you are successful. But, are you hitting your true potential?
In this section of the module, we are going to discuss what type of business models you can run with wholesale. Then, we will work through how to setup your own personal long term strategy. Finally, we’ll show how to set goals to achieve those long term results you are looking for.
What kind of wholesale business model can I run?
The initial thought from most Amazon sellers when it comes to wholesale is to “get as many accounts and possible, and find as many products that have profit as possible”. That is one strategy..but not exactly a long term winning one. What you described is “most Amazon sellers”. Generally these sellers don’t provide any value whatsoever to the supplier. They just try to take a portion of the pie that’s already there.
What can you do to be different?
Provide value to the suppliers.
Interesting concept, right? Actually provide value. Realistically, that should be the main goal of your wholesale business.
Let’s brainstorm some ideas of value you can give to suppliers:
- Increasing sales
- Saving them time
- Solving the problems they have
Sounds pretty simple. If you are providing one of these things, you are already on the way to a successful wholesale business.
Thinking about this deeper, we can start to think of different business models we can use for our wholesale business:
- Service provider. Find a specific service that you can specialize in, and sell that to brands.
- Software provider. Find a common pain point that suppliers have, and solve it with software.
- Amazon account consultant. Take over their existing Amazon account. Instead of selling the items yourself, do whatever you can to increase sales under their account.
- E-commerce brand. Build out a multi-channel e-commerce brand that becomes a destination for customers. You’ll likely want to stick to a specific niche initially to be successful.
- Amazon seller. Just sell wares on Amazon yourself.
Are there other ideas you can think of? Take a few minutes to brainstorm to see if you can think of some amazing ideas on how you can provide value to suppliers. Post them in the comments below!
Building out a Long Term Vision
Now that you have an idea of what type of company you think you can build, lets start to define exactly what you want. I would like you to go to some place where you won’t be disturbed for a little while, and can think. Not your office, not your bedroom, not your bathroom. Go somewhere where you normally don’t go – because you are going to do some creative thinking.
Are you there? Good.
Make sure you have a pen and paper handy, or a laptop to put notes into. Caution – if you are using a laptop, make sure you set it up so you can’t get distracted.
Start writing down ideas of exactly what you want your company to look like in three years. Just what it looks like – not how to get there. Think about everything. What business model you’ll be running, how much revenue you’ll have, how you received your working capital, how many employees you have, what departments you have, what your physical space looks like, supplier relationships. Hold nothing back. What are clients and suppliers saying about your company? What is the media saying? What are your customers saying? What kind of things do your employees say at the water cooler? What is your culture like? Cover every area of the business you can think of: culture, staff, marketing, public relations, sales, operations, finance, warehouse, customer service, etc.
Once you have all your ideas written down, start crafting a 3-4 page document with all this information. Write it out as nice as you possibly can. Write it as if you are handing it to potential employees, bankers, and your mom. Even hire a copy writer if you aren’t good at writing.
Why are you doing this? You want to think hard into the future and determine exactly what you want your company to look like. If you can describe it in amazing detail, it makes it a lot easier for employees, suppliers, media, and any other stakeholders to know where your business is headed.
Here’s a way to look at this. Say you are at a restaurant. You have an absolutely amazing dinner. It’s so good, you can describe it in absolute vivid detail afterwards:
- The setting at the restaurant.
- Exactly what the waitress / waiter did to make your evening so amazing.
- The colors of all the food and drinks you had.
- What it felt like the moment you took that first drink.
- The feelings you had when your taste buds danced at that first bite.
- How your body felt as you ate the delicious food.
- How you savored every last bite.
- How you felt after leaving.
I bet that would sound amazing right? What you experienced was the end of a specific process the restaurant used to deliver that amazing service. They thought about every potential detail of what it would look and feel like to you as a customer.
As a customer, you know how to describe everything..but you have no idea how they did it.
- What were the ingredients they used?
- How did they cook it?
- How did they find such an amazing waiter?
- How did they determine which silverware I should be using?
- Where did they find those amazing pictures on the walls?
- Where did they find that 100 year old wine?
I’m sure you can come up with a long list here. Here’s the point. What you are writing out for 3-4 pages should be equivalent to YOUR experience at the restaurant. Think about what you want the end result to feel and look like – not how to get there.
Now that you have a vision of what you want your company to look like in three years, it’s time to start reverse engineering how to get there. You can’t exactly plan everything out, so lets start breaking everything down by year.
What needs to be accomplished in year 3 to make your vision a reality? You don’t need to be incredibly detailed. What to do in year 2? Finally, what needs to be done this year?
Here’s the areas you should be thinking about:
- Overall Revenue
- Overall Profit
- Customer Satisfaction
- Employee / Contractor Satisfaction
- Strategic Thrust
The one that is probably new to you out of that list is “Strategic Thrust”. Here is the definition: “Strategic thrusts are high-level initiatives arising from the strategic vision and serve to guide the action plans towards some over-arching goals.” More easily described, it’s what high level projects you’ll be working on. You want to be able to give yourself some specific direction each year, which will move you forward towards your goal.
Now that you have a basic outline of what you need to do this year, it’s time to break it down even further. Break it down by quarter. What do you need to do each quarter of the year to accomplish your goals for this year? Now, break it down by month. Finally, break it down by week.
I’m sure you can see where this is going. You’ve effectively reverse engineered your three year plan to know EXACTLY what you need to do THIS WEEK to continue to move forward.
All it is now is a matter of continuous goal setting and execution. Be dedicated and focused on those specific goals. Pull out your three year plan every week and look at it again. Look at your goals – are they actually moving you forward? Is there something you can do today to move forward?
By using this process, you should now have a solid long term plan. May it change? Almost positively it will! Will you 100% achieve everything you write out? I sure hope so. Even if you accomplish 80% of what you set out to do, you are better off than most entrepreneurs.
Now that you have a solid long term plan for your business, it’s time to start thinking tactically in the next section of this module.
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