Benefits and Challenges of Working With Amazon Product Brokers
Some of the suppliers you might work with for your Amazon business are what we call Amazon Product Brokers.
Amazon Product Brokers are suppliers that don't necessarily have products in their warehouse. Instead, they source products from other suppliers and then share the best deals they find for Amazon sellers with their customer like us. You still still pay and deal directly with the Product Broker as if they were a traditional supplier and the biggest difference is where the product is physically located when you buy it.
There are a lot of benefits and some challenges to working with Amazon Product Brokers.
Benefits of Working With Amazon Product Brokers
Pre-Screened Products - Amazon Product Brokers understand Amazon so they usually only share deals that they think will do well on Amazon. They are essentially doing a lot of the product analysis for you by sifting through thousands of products from multiple suppliers and then only sending you deals they think can work for Amazon. These suppliers will usually send 1 to 20 pre-screened deals out via email each day.
Easier Logistics - Because these suppliers understand Amazon, logistics like shipping and ungating are a breeze! With traditional suppliers, you might need to explain how shipping to Amazon works but these suppliers ship products to Amazon every day making them very easy to work with.
Low MOQs - Because these suppliers specialize in one off deals, they usually have low "take all" MOQs (Minimum Order Quantities). These can range from $250 to $5,000+ but being able to place a $250 order make these suppliers very accessible no matter how much capital you have.
Challenges of Working With Amazon Product Brokers
Order Competition - Product Brokers usually send out their deals to big lists of Amazon sellers and make them available on a first come first serve basis. For the best deals, you can have less than 10 minutes to respond to your supplier and take a deal before some one else does!
PRO TIP: One way to beat out competition is to build a relationship with these suppliers so they send you deals before they send them to their big lists. We go over exactly how to do this in our ALGO Online Mastery Program.
Sales Competition - Because these supplier almost exclusivity sell to Amazon sellers, if you don't buy all of their available inventory you can almost guarantee they will sell their extra inventory to another Amazon sellers that will compete with you.
Your supplier shares a product with a 100 unit MOQ and 1,000 units available.
You do your research and see the product sells 300 per month and there are currently 2 Buy Box competitors so you assume that you can sell 100 in 1 month... that's great!! Right?
Well, it would be great if your supplier didn't have 1,000 available. Remember, this supplier exclusively sells to Amazon sellers so there are probably 9 other sellers like you doing the same analysis!
So, by the time you get your inventory to FBA, these 9 sellers will each have sent 100 units to FBA and now you have 13 competitors for the Buy Box instead of 2 (you + the 2 original competitors + the 9 new buyers)! Now you can anticipate getting 25 sales and a lot more price competition from the 12 other sellers!!
Lack of Consistency - These suppliers will constantly send you products but, because they are buying from a wide range of suppliers, the type of products and quality of deals can vary drastically. That means they will send you bad products and you need to be willing to pass on those and wait for them to send you good stuff. For most of these suppliers 1 of the 10 products they send you will be good so keep that in mind.
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