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
- Introduction to finding wholesale leads
- Tracking Leads / Customer Relationship Management (CRM)
- Demand Based Sourcing
- Niche and Trade Show Sourcing
- Bulk Product Sourcing
- Relationship 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, 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!
Niche and Trade Show Sourcing
Are you an avid snowboarder? Do you spend your weekends playing disc golf? Do you train for half marathons? Do you know everything about every movie that comes out? There is something you are into that others are not – and you know a lot about it! This is your “unfair advantage” you have over others. This means you can talk to brand owners deeply about the specific type of products they carry. In addition, you can talk to your customers in the same language.
What exactly is “Niche Sourcing”?
Niche sourcing is a strategy where you target a specific niche, and you attempt to land every wholesale account within that niche. When someone searches for anything on Amazon, you want to have an offer on as many products as you possibly can in that niche.
Who should use the niche based sourcing strategy?
When you created your long term strategy, is part of that strategy to sell off Amazon and create your own website? If so, niche based sourcing is for you. When you create a website, you have to be able to drive traffic to it. The easiest way to drive traffic to a website is to market to a specific niche. This is nearly impossible if you are using the demand based sourcing model. If you are coming from a private label or marketing background, this is also a good sourcing strategy for you. If you have an “unfair advantage” in a specific niche, this is also the way to go.
Some pros of using this sourcing method:
- It’s much easier to create an audience of customers outside of Amazon with this method. Facebook pages / groups and other social media marketing methods are much easier.
- Once you start landing suppliers, it’s much easier to land other similar suppliers. Brand owners want to know you are going to represent their brand well. If you are already carrying other brands within the niche, they know you are more likely to represent them better than the company that randomly sells products on Amazon.
- Margins tend to be higher, and the competition is less.
Some cons of using this sourcing method:
- You will likely be selling product that moves slower than other sourcing methods. This makes working capital a little more of a challenge as you won’t be able to easily liquidate product if you need to.
- Creating listings is a big part of this strategy. There is more overhead when you have to create new listings vs. attaching to existing listings already in the Amazon catalog. Plus, it is riskier to create new listings vs. attaching to existing listings as you have no visibility into the demand for that exact product.
- Marketing is a skill that you need more in this sourcing method than other sourcing methods.
What value propositions work best for this method?
- Having audiences outside of Amazon. This can be Facebook pages / groups, a stand-alone ecommerce store, Instagram following, podcast followers, etc.
- Ability to market products that are not currently on Amazon.
- Ability to find bundles that can increase the sales volume for brand owners. Since you’ll know the niche well, you’ll know exactly what customers are looking for.
- Distributing to other companies. If you are targeting products in a specific niche, there are likely tens of thousands of small brick and mortar stores across the United States you could potentially distribute this product to.
Here are the basic steps of what we will do for niche based sourcing:
- Determine the niche you are going to target.
- Find a trade show for the niche you are interested in.
- Log each brand found on the trade show website into a spreadsheet.
- Do a search on Amazon to determine viability of each brand.
- Once done with a brand research session, start researching contacts for each product.
- Log the contact as a lead in your CRM.
Before we get into Niche 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:
- Jungle Scout or Market Intelligence
- Keepa Chrome Extension (free)
- AMZ Seller Browser (free)
In addition, you will want a spreadsheet to log your supplier finds into as mentioned in step 3 above. You can create your own, or you can download the one below:
1. Determine the niche you are going to target.
If you’ve done some long range planning that includes a website, you may already have a target niche in mind. If you have the “unfair advantage” for a specific niche, that’s the one you may want to attack first.
What if you don’t have any idea of a niche you should target? You may want to try the demand based sourcing method or the bulk product sourcing method. In both of these methods, you are scouring Amazon’s website for products in many different niches. If you end up landing a few different accounts in the same relative niche, you may have found a niche to start building off of.
Another option? Go to the mall, Walmart, Target, Best Buy, Cabelas, Guitar Center or other chain retailers. Just start looking around at products and find something that catches your eye. As mentioned in the Distributors / Wholesalers vs. Manufacturer Direct section of the course, you can physically look at products to find brand owners. Doing some research physically at stores can sometimes kill two birds with one stone!
2. Find a trade show for the niche you are interested in.
Once you’ve figured out your niche, now it’s time to find some brands in your niche. One of the easiest ways to find brand owners in the niche you selected is to find a trade show for your products. If you are unfamiliar with a trade show, it’s an exhibition organized so that companies in a specific industry can showcase and demonstrate their latest products and services, meet with industry partners and customers, study activities of rivals, and examine recent market trends and opportunities. Usually these shows are held in large conference centers and there are rows of booths with each company showing off their wares:
In the days before the internet, you would have to go to the trade show itself to find all these contacts. These days, all you have to do is go to the trade show website to see all the vendors at the show. That’s the method we use to find sources in a niche.
Since a lot of people know I used to sell Halloween costumes and accessories, we are going to use that niche as an example moving forward. Keep in mind, this is not a niche I would specifically rely your entire business on. It’s incredibly seasonal, and a large chunk of products customers just don’t buy after Halloween. Who needs a Donald Trump costume after Halloween? First, we want to find a trade show. Easy enough – let’s do a Google search! The easiest way to find a trade show for your niche is to use the niche name with “trade show” at the end. For Halloween, we will do a Google search for “Halloween trade show”:
Let’s go to the first result. What we are looking for on the website is a link somewhere called “exhibitor list”. I found it quite easily under the “Exhibitor” drop down:
On the exhibitor list page, it’s showing they don’t have a new list up for the next trade show yet. But, they do have the last trade shows list up!
Just like that, we have a massive list of potential suppliers.
We can do the same thing on the other trade show website we found, but I think this is plenty to get started. Time to move on to…
3. Log each brand found on the trade show website into a spreadsheet.
It’s time to copy and paste that entire list of suppliers into our niche supplier spreadsheet. In the first column under “Company name”, paste in the company names from the website. Under the “where found” column, paste in the URL source you found the company so you’ll know where you found it later.
I haven’t cleaned up those booth locations after the company name. I could just leave them there, but let’s use some Excel magic to remove them. Do a Find and Replace for ” |*”, which will get rid of the pipe | and everything after it (the * is a wildcard, and grabs everything). It will look like this:
Now that our spreadsheet looks good and we have a bunch of leads, it’s time to move on!
4. Do a search on Amazon to determine viability of each brand.
Now that we have a massive list of companies for leads, we should just start calling them right? Well, not exactly. When you contact a company, there is a lot of time involved: Emails, phone calls, filling out applications, getting price lists, etc. We want to make sure the companies we are contacting are companies we can make a profit with AND they fit our long-term planning. A little bit of research on Amazon ahead of time can save us time in the long run. Some things you would like to know to determine the viability of an account may include:
- Does Amazon sell items from that brand? If so, is it all of them? Just a few of them?
- Do some of the items from that brand have decent sales volume?
- Do the items sell for well below standard retail pricing, or are they relatively in line with retail pricing?
- Is this brand represented on Amazon at all?
Depending on your overall strategy, each of these things can be important in determining the viability of a lead. Maybe your strategy is to not sell any items Amazon sells. You won’t want to move any further with a lead if most of the items on Amazon is carried directly by Amazon. If your strategy is to create unique bundles or bring products to market – maybe you are fine with Amazon carrying items as long as there is enough volume. If your strategy is to only carry items that sell at least 30 times per month, you’ll want to see if some of the listings for the supplier meet that criteria.
You have no idea what the wholesale pricing is for these items. But there is an industry standard that can give you a good estimation. It’s called “keystone pricing”. Generally, keystone pricing is half of the “Manufacturer Suggested Retail Price” (MSRP). If the pricing on Amazon is close to the price of the same item on other websites, it’s likely close to the MSRP. An item that sells close to the MSRP will likely have 30-70% ROI, depending on Amazon fees. If your ROI guidelines are in that range, then you want to find items that generally are close to the MSRP. If your ROI guidelines are a little more aggressive, you can stomach the Amazon Price being less than the MSRP a little bit. Finally, if your ROI guidelines are a little looser (you will only buy if you can get 100% ROI or something similar), you want items to generally be higher than the MSRP.
It’s also possible you may stumble across some brands that don’t have any representation on Amazon at all. If your strategy is to create listings, these may be perfect targets.
Let’s do an example with these guidelines (which may not align with your own guidelines!):
- Amazon doesn’t sell MOST of the items.
- At least 5 items sell at least 15 times per month.
- Pricing is close to MSRP. I’m OK with it being a little less, but not drastically less.
- I’ll be OK with a brand that doesn’t show any items on Amazon.
Now that we have these loose guidelines, it’s time to do some research. The plan is to use Amazon to research the brand, and use the Market Intelligence Chrome Extension to see if items meet the guidelines shown above.
Let’s start with the first brand in our spreadsheet – 1031 Effects. Go to Amazon, and do a search for “1031 Effects”. There are absolutely no results. Since this meets the guideline “I’ll be OK with a brand that doesn’t show any items on Amazon.” above, I will say this brand is viable for additional research. Mark “Yes” or “Y” in the “Viable” column on the spreadsheet. In the “notes” column, I’m going to leave a note saying “No listings on Amazon”.
Ok, let’s move on to the next one – “13th Ward FX”. Go to Amazon, and do a search for “13th Ward FX”. Again, no results. We’ll log that into the spreadsheet too. The next few are the same until I come across “Action Lighting”. When doing a search for that keyword, I notice that multiple items show up that have the same brand name as listed for the search. That’s good!
Now, to clean up the results a little and make sure we receive results for ONLY Action Lighting branded items (instead of other items with the search term action lighting), we want to go to the brand page. To do so, click on one of the listings, and then click on the brand itself.
Now that we’ve gotten to the brand page, it’s narrowed the results. Instead of 12,366 search results like we found initially, now we only have 65 results.
Now we have only the items for that brand. Time to validate! Run Market Intelligence on this search results page. Market Intelligence can immediately tell us if Amazon is selling these items, and what the estimated sales volume is for these items.
We can immediately see that no items sell more than 15 units per month, and Amazon doesn’t sell any of the items. Since this one doesn’t meet our criteria, we would mark “NO” in the viable column in our spreadsheet. I’ll also leave myself a note “Not enough volume”, in case I want to check back another time to see if the volume has picked up. Time to move on to the next one!
We will continue to do research on as many suppliers as we can. Going further down the list, we see a company called “Billy Bob Teeth”. Running Market Intelligence, here’s what we get:
Great! This supplier meets the sales criteria, and the Amazon criteria. Now we need to check to see if the pricing is in line with MSRP. Let’s do a search on Google to find some other websites that sell these items. You can search specifically for the brand name, or for one of the items on the list. I’m going to do a search for the first item listed: “Instant Smile Comfort Flex Billy Bob”. I added the manufacturers name to the end of the name of the item to make sure I can find it. Scrolling down the search, I find the manufacturers website that has this item listed. This is usually the best source to look, as they will usually have the items at MSRP on their website.
The manufacturer has this item for sale on their own website for $17.99, and it sells for $21.95 on Amazon. That’s great – it’s selling above MSRP. We then look at a few more items on the list, and notice it’s a pattern – most items are close to or above MSRP. That ticks the final box in our guideline list:
- Amazon doesn’t sell MOST of the items. (YES. They do not sell them).
- At least 5 items sell at least 15 times per month. (YES. More than 5 items).
- Pricing is close to MSRP. I’m OK with it being a little less, but not drastically less. (YES. Multiple items close to MSRP or above).
Since this brand meets our guidelines, we will mark the “Viable?” column as YES. Since we are already on the brand owner’s website, it’s a good time to log the contact information for this supplier.
5. Once done with a brand research session, start researching contacts for each product.
If you happen to be on the brand owner’s website already, it’s wise to log the contact information immediately since you are already there. If you aren’t on the brand owner’s website, we went over some ways to find the websites in the Demand Based Sourcing part of this module.
For the example we are working with, we can easily find contact information by clicking on the contact link.
Now, log that contact information into your spreadsheet:
Continue to enter in the information for any other companies you have in your spreadsheet.
Now that you’ve completed all the research, it’s time to enter the info into your CRM.
6. 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 them 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:
- Importing leads to Streak
- Importing leads to Salesforce
- Importing leads to Zoho
- Importing leads to Bitrix24
- Importing leads to Insightly
- Importing leads to Apptivo
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.