As a full turn-key 3P solutions agency, we buy, sell, and ship your items to provide your brand with the opportunity to scale without the headache of order fulfillment.
Who does the wholesale selling model work well for?
Maybe you are a traditional brand that is great at B2B and traditionally shipping pallets, but you’re just not operationally set up for Amazon. You understand the importance of Amazon or ecommerce as a whole and want all the same benefits of being a B2C seller, so you are considering your options.
Or perhaps you are a brand selling directly to Amazon but not quite ready to open your own seller account. With this selling strategy, there are several disadvantages encountered when selling directly to Amazon that your team may not be prepared for – suppressed Buybox, MAP concerns, pricing disparities, vendor negotiations – just to name a few.
When a brand is on ecommerce but distributing through other online retailers (take Zappo’s for example), although there’s a balance of the operational support aspects, the downside is the lack of end consumer data provided to the brand.
This is where an experienced wholesale agency can come into play.
Benefits of Blue Wheel's wholesale model
There are several advantages to a 3P preferred selling model.
- The agency is an extension of your team
When looking to expand your ecommerce presence, you have the option to directly hire one or more individuals to manage your account on Amazon. By hiring an agency, you receive the expertise of a team of experts who act as an extension of your team. This saves you time and money when expanding your business.
- Saves your accounting team from headaches
When a brand is used to only dealing with POs, dealing with lost inventory by Amazon, customer returns, chargebacks, and accruals can be a major shift in accounting needs. When managing this process on their own, it often puts added pressures on the finance teams as it is a much different process and experience to handle these Amazon-specific requirements. When considering this shift in business, we as the agency takes care of that process for the brands – so their accounting teams only have to worry about reconciling POs to invoices, much of which they are used to doing already.
In addition to that, for publicly traded companies who must track inventory closely, doing so with Amazon is nearly impossible with inventory across hundreds – if not more - fulfillment centers. This is again an added benefit for these brands.
- Serves as a good option for kitting or bundling
If you’re considering the wholesale model, but your products have a low average order value – that doesn’t necessarily mean that this model cannot work for you. However, selling a 1 pack of lip balm on Amazon just does not make sense. To increase value when selling in the CPG category or low AOV products, selling 3-packs, variety packs, or bundles can be done through your agency partner before sending into FBA to reach that required revenue goal.
Remember, long-term bundles on Amazon through FBA have to be sent in with their own UPC. Having an agency partner, again, is a major benefit in this situation.
- Ability to test new product lines with customer insights data
When testing a new product line, going through an agency partner versus Amazon allows the exclusive seller to do the packaging and send into FBA, while also receiving the consumer data to which can identify how the customer is responding to the product. This data can then be used to go back to their Brick and Mortar stores showcasing how it performed through ecommerce.
- Flexibility in managing the catalog based on clients’ products
Choosing a fulfillment option that works best for a product catalog or set of SKUs is an important part of choosing an agency partner. For example, a clock company that sells on Amazon that has large, hundred-pound grandfather clocks as a part of their catalog need to be drop-shipped, while they may also have hanging clocks that go directly to FBA. Having the flexibility in this model is important for those brands that have various-sized products in their catalog.
Contrary to some belief, brick and mortar stores are not dead - they’re simply evolving. Offering the BOPIS model into retailer business plans can provide a new customer experience, delivering convenience while saving money for both the retailer and its customers.
Are you a good fit for the wholesale model?
To determine if your brand is a good fit for the 3P preferred wholesale model, we start with a margin analysis. From there, we can quickly understand if this model would be mutually beneficial.
We take cost, MSRP, and MAP into consideration along with what we pay directly (FBA fees, cost of product, advertising, etc.) to determine gross margin. Let’s use a bowling ball for example. If the bowling ball sells for $20 but FBA fees alone are $30, that margin just isn’t going to work.
Why work with an agency? We’re communicating with Amazon teams and staying up to date with new updates – if one brand tries it, it may also be a good fit for another client.
Amazon can be intimidating, but it is also be a lucrative opportunity for brands. If you are a brand looking to expand on ecommerce through this model, reach out today to learn more about partnering with us.
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