Bulk buying is the purchase of multiple units of a product for a lower price per unit. It is a common practice among Amazon sellers as it offers benefits such as:
- Cheaper pricing: Wholesalers and factories will be willing to give you a discounted rate on your bulk items purchase. Selling more helps their margins and a satisfactory experience means repeat business for them.
- Sufficient inventory: Buying multiple quantities of a product makes sense when the lead times for production are longer for that product. You can keep inventory reliable and accept customer orders without thinking twice.
- Discounts on repeat purchases: Bulk buying from the same supplier can make you eligible for discounts on repeat purchases. You needn't buy a large quantity at a time; you can buy multiple quantities from time to time to receive discounts.
Do you buy in bulk from a factory or a wholesaler?
Wholesalers exist to buy and sell in bulk. It's their business model. Generally, in the UK or USA, it is easier to buy in bulk from wholesalers and distributors than brands that make the products. This is because the brands may receive orders from several other customers and will prioritise based on factors like seller reputation, years in business and order volume. A new business may luck out or it take longer to buy.
When it comes to buying bulk products from China, large Chinese manufacturers have the ability to meet the demand from multiple customers at a time. The quantities you can buy will depend on the type of product, lead times and production capacity.
Factories specify a minimum order quantity (MOQ), which as the name suggests, is the minimum number of units of a product you can buy. It is possible to negotiate cost and MOQ if it strikes you as being large. And it is recommended when you're getting started. If the products sell well, the factory will be willing to sell you the same MOQ next time. You, of course, can buy in bulk this time if you're confident of sales.
Where do you buy bulk products from China?
As an Amazon seller, FBA sourcing from China is quite important. if you want to If you want to buy bulk items from China, you can buy products at China wholesale websites that have manufacturers, wholesalers and trading companies. There are a number of B2B sourcing portals for international buyers looking to buy China-made products at attractive prices and sell them for a profit in a different market. Examples include Alibaba, Ali Express, DHgate, Chinabrands, Made-In-China, Global Sources and LightInTheBox.
When does bulk buying work best?
Buying in bulk is profitable only if people are willing to buy your products or else you'll be left with unsold inventory. If there's one advice we'd give Amazon sellers it is to do extensive product research. The FBA site has sales tracking tools that tell you how many units of a particular product are sold each day. Anything outside of the top 50,000 sellers would not help your margins.
Also consider the expected return on investment (ROI). A product that gives you an ROI of at least 25-30% would be worth considering. So, if you buy in bulk for $10 per unit, you should be assured of $2.5 to $3 on each sale. For a product that costs you $1 per unit, a 30% ROI comes up to 30 cents and this is too small a margin for all the effort you make.
Should a new Amazon seller buy in bulk?
Amazon sellers tend to opt for a small order volume to help them get started. You can ramp up volume when you build sales momentum. That said, avoid asking for a large reduction in MOQ as the supplier will likely reject your request as they'd prefer focusing on those who can bring them more sales.
How do you know how much to buy?
Underestimating or overestimating how much you need can leave you with too little or too much inventory. It is easier to keep track of a product and determine if it is at or below the desired inventory levels. It's tough for different types or categories of products. You can make the job easier by determining the reorder point for each product, and using a software that alerts you when the stock drops below this point.
Inventory management is not a problem for dropshippers that don't need to purchase and stock inventory. Amazon FBA sellers have the Manage Inventory page on the site that offers tools to create a customized display of their FBA inventory.
Is there is a risk to buying bulk products from China?
One of the risks of placing a bulk order is receiving many defective products that you cannot sell. It leaves you with lesser sellable products and prevents you from getting the desired returns from your bigger investment. There are two ways to address this risk - get a sample first and inspect product quality, ideally throughout production.
Getting a sample
Always ask for a sample before you order bulk products from China. If the sample doesn't look like the one on Alibaba, 1688.com or the supplier's website (if they have one), continue searching for another supplier rather than giving the previous business another chance. However, if you're having a Chinese custom product and everything checks out during the factory audit, giving the supplier another chance at revising and refining the sample to your exact specifications should not be off the table.
Arranging quality inspection
Amazon sellers using FBA and dropshippers need to pay closer attention to product quality. While this fulfillment method is a hands-off way of doing business, it reduces some of the control you have over quality as the products are shipped directly to your customers. Get a sample for every product before you buy or dropship. See how you can control quality despite the geographical distances of buying bulk products from China. Increasingly, western importers are engaging sourcing agents for assistance with quality inspection.
Why use sourcing agents for bulk purchases?
The China sourcing ecosystem has many players. Virtually all have an online presence and offer e-procurement, though the scope of services differs across agents.
Good product and brand management increase your chances of making a profit on Amazon. On the product side, you have to determine what can sell well and have it made to an acceptable quality for a low cost. Customising the product is always a great strategy as it allows you to stand out from the competition. Effective marketing includes using high-quality product photos and videos, selecting the best keywords to increase the overall quality of your Amazon product page, and pay-per-click/sponsored ad tactics.
Whether Amazon FBA is a full-time job or a side hustle, you'll need to get a couple of things straight about what you can and cannot do, as well as what you want or don't want to do. There are sellers working full-time jobs that also manage to put in 40-60 hours into their Amazon business. Amazon sellers also include those who spend about an hour a week on their business.
Clarity about how you want to manage your Amazon business, based on the goals you have from it, will allow you to take the right decisions and avoid taking on too much and the stress that comes with it. Can you manage sourcing and marketing on your own? If you don't have a business partner, what is the anticipated impact of managing all aspects of your Amazon business on your personal life? These are some of the questions to ask.
Using a sourcing agent to buy bulk products from China: Pros and Cons
Sourcing agents have an office in China and their local presence allows them to manage your Chinese suppliers, monitor your order, inspect the quality of your product, and prepare your order for air or ocean freight. Understand the impact to your business from hiring a sourcing agent. In our opinion, the pros outweigh the cons, and a reliable agent is important to building a successful Amazon business.
Don't like sourcing? Outsource it.
If you don't enjoy sourcing, might as well leave it to a professional. You don't have to bring on a business partner for this. You can outsource the function to a sourcing agent with boots-on-the-ground in China.
Have a different skillset? Leverage it.
If you're a digital marketer or have another skill that your Amazon business can use, focus on that. It is bound to be enjoyable and empowering.
Have no import experience? Utilize an agent's!
An experienced sourcing agent will help you figure out sourcing, shipping, payment and import duty from China to USA.
Tap into supplier networks
A key reason to hire a sourcing agent to buy bulk products from China is to access the suppliers they know and work with. You may find that fantastic custom manufacturer that turns your innovative product design into a profit machine.
Your sourcing agent will request quotes from different factories and conduct factory audits for you. Handing off these tasks can save you a significant amount of time for other areas of business or personal commitments.
A sourcing agent's assistance helps organize shipping more efficiently and cost-effectively. For example, they can bundle multiple orders from multiple suppliers in one freight, saving you more on shipping costs than if you were to ship each one separately.
You lose control
Working directly with a supplier gives you more visibility into their work and service. But this is also challenging and time-consuming when you're buying from an overseas supplier.
You lose relationships
When you connect with a supplier through a sourcing agent, it is the agent that owns the relationship and advantages within the relationship.
You lose direct communication
The agent is the go-between for all communications such as product specifications, feedback, delivery times and expectations. But this may be for the best given the language and culture differences.
If you determine that a sourcing agent can help your business buy bulk products from China more easily, quickly and cost-effectively, the next step is to find a reliable agent that can make a positive impact to your business. Use this list of questions to make an informed decision:
1. Are you willing to share the factory address?
Without knowing which factory your product is made in, you will have no control when your supplier switches to a different factory.
2. Are you a 1-person service provider or a team?
There is a real risk that a solo agent may lose motivation or suffer a loss, and disappear overnight, leaving you in the lurch.
3. How many years have you been in business?
An agent with five or more years of experience is more dependable and resourceful than one that has been in business for a few months.
4. Do you specialize in sourcing a certain product or in a specific industry?
The production processes are quite different for different products and industries. A sourcing agent that understands the ins and outs of making your product can be expected to provide reliable service.
5. Can you give me customer referrals?
If the agent's website doesn't have customer reviews, make sure you ask them for testimonials. You need to know the experiences of their past customers to review their services.
6. How do you qualify the factory?
The agent should be able to provide you with factory inspection and product inspection checklists.
7. Do you perform quality inspection or hire a third-party?
Some offer only sourcing, which means you'll have to hire a QC agency and this can cost you more time and money.
8. How do you charge?
Some agents charge a flat fee. Other ask for a commission on the order value. One is not better than the other but usually a percentage commission indicates that they're interested in a long-term relationship.
9. Do you accept a discount or referral fee from the factory?
While this is a sensitive topic and you may not get an honest answer, it doesn't hurt to ask. A good sourcing agent will not accept a kickback from the factory and also charge you a commission.
10. Define the scope of service based on the fee you charge
For a detailed review of the fee the agent charges, you need to know how the cost is being distributed across their services and extent to which they assist you.
If you're interested in learning more about the experience of buying bulk products from China using a sourcing agent, talk to us today. We're happy to take you through our services, capabilities and the unique benefits we bring for your business.