Wholesalers selling directly on Amazon

Has anyone come across wholesalers in the directory who sell actively on Amazon?

There is a particular wholesaler whose items I was checking on Amazon to find out my margins. I realized after a while that one particular seller was showing up on almost ALL items that this "wholesaler" has listed on their website. Looking at the price that these items are listed for FBA fulfillment, there is no way I or anyone who is buying from them on their website can compete.

As usual, there is a fluffy review on SaleHoo for this wholesaler. I am not sure whether this wholesaler even needs to be on SaleHoo.

Hello Padma,

It's certainly not unusal for both dropshippers and wholesalers selling on platforms like Amazon and eBay. That said, without mentioning a name, you mention that this is a wholesaler. As such what are you basing your price conculsions on?

Wholesale prices are based on volume purchasing, so if you purchase X amount, your unit price will be Y. So it's hard to know if anyone can compete against them (as you claim) without knowing what their purchase volume actually is.

Regarding the "as usual SaleHoo fluffy review", perhaps you could elaborate on that in more detail as to what it is exactly you mean by "fluffy review". I can then direct your feedback to our head of support to review your concerns about it.

Hi Mark,

Thank you for your quick and prompt response.

I put my question in this forum after about 3 - 4 days of in-depth research on dozens of items by this wholesaler/supplier listed on SaleHoo. For every item that I researched, I tried the following
1 - I looked at the lowest price tier listed on the wholesaler's website linked on SaleHoo i.e. the lowest price that anyone can get on maximum volumes. For eg. there is one item for which the price range is $1.25 per item if you buy 25 or more (bulk pricing only. Lesser items are twice the price). If I look up the item on Amazon, the PRIME price is $4.97. Using the FBA calculator, the final value of this item after fees is $1.33. Take away $1.25 and there is not much of a profit margin even if one buys at bulk rates. But that's okay, the price is what it is, no complaints there.
2 - But I tracked down almost every best selling items in every category listed by this wholesaler on their website and saw that the issue I was seeing in (1) was being repeated again and again and again. And in EVERY case there were one user , let's call it "XXXX", who was selling the item at the lowest PRIME price (eg. $4.97 for the item mentioned in 1). There is only one way that I foresee ANYONE making any margins and that is if the seller is getting the item at about 25 cents ! And the only person I see getting it at this price would have to be either the manufacturer or this wholesaler itself !
3 - One or two items on Amazon may be a co-incidence but 30-40 items (and those are only the ones I was able to check. The wholesaler has hundreds more) by the same seller on Amazon with "0 margin prices" ? No, that's no coincidence. This wholesaler on SaleHoo IS the Amazon seller "XXXX".


My personal experience

The wholesaler can sell any place they want, Ebay or Amazon, but I find it disingenuous that they have not mentioned the fact that they are active Amazon sellers and FBA ones at that, in their seller description provided by them on Salehoo nor on their website. I expect them to mention that they are selling all their listed items on Amazon too. That, I believe, disqualifies them to be true wholesalers. And before I placed my order they demanded that I share all my sales channels info including my ebay and amazon seller IDs before they will approve my application ! Isn't it unethical that they ask my information but fail to disclose their seller IDs on these channels in the interest of full disclosure ?!

I ordered ALL units of an item on their site. The stock showed up as 0 after I ordered all units. I don't expect to ever recover my investment because from what I see seller "XXXX" has around 25 more on Amazon PRIME and I saw that the wholesaler just listed 88 items of the ones I bought on their site ..... at a higher price now that they see that suckers like me are buying it ! So, they are making profits on their site and on Amazon as well.

Thirdly regarding the fluffy review part. I am sorry I did not mean to be judgmental or sarcastic. But the Salehoo review system, in my humble opinion, leaves much to be desired. For this particular wholesaler, for example there is but one review ...... One review after 9 years of being on Salehoo ?! Maybe I am missing something but I expected there to be dozens. There are also no star based reviews so that sellers with lesser reviews can be filtered out.

Again, sorry about the negative experience but my very first transaction (I am a recent member) was not only NOT a profitable one but I am expecting to lose my whole investment. And that too because I feel that all information was not exposed up front by the supplier.

Thank you !

Hi Padma,

Just let me answer you first point as I am short of time at the moment, but I assure you that I will respond to the rest of your message as soon as I can.

OK, your research does in fact show some interesting numbers. However, I honestly think that isn't actually proof that it is the same wholesaler. That said, it is of course quite possible and you may well be completely correct, but it is just conjecture at this point.

Here is the problem as I see it, the part that leaves doubt in my mind at least. Despite this supplier listing their top tier wholesale pricing, I am in no doubt that if they are working with one or even more retailers buying in even larger numbers and moving stock quickly, then a better price will be on the table for them, that's just good business to look after your meal ticket.

So given that posibility, and of course this is only conjecture on my part here of course, but it does leave the opportunity for this reseller to then use a low margin, quick turnover sales strategy to still make decent money, especially if this is a hot seller that we are speaking about here and to be honest that is what I am assuming.

Now that is one scenario, but another that can't be discounted is someone using a loss-leader strategy. Selling the item at cost or just below in an effort to draw traffic to their listing and making money through other items or even by market an independent website. Now that scenario are fass less likely in the instance due to the volume of products this seller is listing at break even pricing, so not very likely.

A third option may well be that this retailer is buying from another wholesale supplier who is giving him a better price than the supplier you are speaking of.. Now this of course assumes that these products are available from more than one supplier, that I don't know so I am only putting this option forward as a possibility.

I guess the main point that I am trying to make is that there are multiple reasons why this might be happening, it may not be completely cut and dry. As I said, it is quite possible that this is a supplier selling direct and if they are selling at a high turn over, then that would also explain why they are selling at the top tier price as well.

So is it possible, absolutely, but there really is no evidence that they are. Of course even if they were, then it really does boil down to that's just business, at least I assume that is what their argument would be.

Should they decalre upfront if they sell to the public direct, well I think that would be great for people to know up front, but how many will put their hand up to doing it?

That's the problem, they could be using multiple accounts selling a range of their products on different platforms at different prices and while we channels for them where they can sell direct, sell cheap and sell fast.

could argue the ethics of it all day, but it's the way that e-commerce is now developing. Suppliers now are seeing these platforms as golden sales OK, as I said, I will get back and respond to your second part later, I just don't have the time to go right through it now. Btw, if you feel it would be beneficial for other members to know who this supplier is that you suspect of doing this, then please feel free to name them. It's full and complete transperancy here on the forum, then others can decide based on all the points of views and of course the supplier named is also free to deny or confirm and explain their point of view as well.

Cheers

Hi

Why don't you padmanapaha just disclose who you are talking about because I would like to know because Iike reading these comments and suggestions on forums as I'am learning and I enjoy the support on here and grateful for Salehoo.

Thanks

Aahchng,

As Mark mentioned, there is "plausible deniability" on the part of the wholesaler. But I don't want to waste time answering and fighting with these people once I put up their name here. That is why in my original question I had generalized my question.

What I can definitely do is suggest how I "unearthed" this not only for this seller but for many others over the years.

If you are a Ebay or Amazon seller, NEVER buy anything from a wholesaler's site without doing in-depth research. That includes doing the following
- Look for exact items on Ebay and see "Seller's other items". If most of these correspond to what the wholesaler is selling on their site, they too are selling stock on these sites. Hence, it is no use buying stock from them.
- Almost ALWAYS, these wholesalers will NOT give you better pricing than the ones they are selling on Ebay or Amazon. Look at my example. Even if I buy at the lowest tier I will get the item at $1.25 and if I sell at the lowest price (which you have to of your product will languish forever iin your house or at the Amazon warehouse) I will not have ANY profit margin. This applies particularly for wholesaler's from India or China.
- Another strong sign is a common user selling the same items on these platforms. Again, in my example, I searched for "XXXX" user for every item that this wholesaler was selling on their website. I found that XXXX was selling EVERY item that this wholesaler had. And that too on PRIME ! Which meant that they were actually shipping items to Amazon for selling. This means that at best the wholesaler has a special relationship with XXXX for which they are receiving special pricing. OR at worst, they themselves are XXXX ! Either ways, it is a waste of time and money trying to sell these items.

Again, like Mark mentioned, it is NOT a crime to do 1, 2 or 3 and that is another reason why I am not disclosing the name. That is how online selling is "evolving" these days. It is a price game. The one with the lowest price wins whether it is the wholesaler or retailer. As small time seller's we will never have the clout like the big-box retailers like Walmart, Target etc. to dictate preferred pricing. So buyer beware !

Hi Padma,

Reading back through the second part of your post, I think I probably covered the gist of it first time round. However, your point about limited reviews is vert valid. The trouble is that all news doesn't travel at the same speed, so while bad news will travel at the speed of light, with people more than ahppy to share a bad experience with anyone that will stand still for more than 5 seconds, good news usually struggles to get out of the starters box.

Good news tends to have to be dragged out and push started because when a retailer highlights that they have a great supplier, what they are doing is inviting competition for themselves because their positive review is a FLAG to others to get in on the action.

So that is always the problem with reviews, not uncommon to find negative reviews, but a lot harder to find positive ones.

I couldn't agree more with your point to researching up front. It's an absolute requirement to know your competition, to understand your market and to have all your sources flushed out before even considering dipping a toe in the water in this business. It's 95% research related and that's not just up front research, it is ongoing research because the moment you lapse in that department, your competition will take advantage and your sales will move next door.

Just trying to think of an option for you here Padma,

I don't know what your items are, but can you think of maybe one or two other items that would really closely retale to that item?

If you can, then perhaps a bundling marketing strategy might be worth trying. I wouldn't suggest wholesaling those bundled items, just dropship maybe 6 of each that you are going to bundle to yourself. That will give you the opportuity to package your bundle offer together and ship as a single order to the customer.

If you put together 6 odd bundles to test the market, you can then invest in more of the dropshgipped items and roll out more bundel offersif you find the market is there.

If you don't think you have a chance of clearing this stock with any sort of margin, then I know this is spending even more, but it may present you with a clearance avenue that may well at worst cover your total investment and at best, make some margin after all.

This is a link to a post I have written on using this marketing technique Link hidden: Login to view

Hello Padma.
I just read your post and the responses. Guess what. You are not the first to experience this and you are not alone. Take heart. All is not lost. It can frustrating. Just know Amazon is not the end all and do all of selling online. I have been selling for years and Amazon has been one big pain in the as*. My best efforts have allowed me to break even.

I have gone with a Pro membership, FBA, Prime, etc...using the 3-3-3 rule, bundling products together as Mark suggested, I have been through the financial ringer with Amazon. As such I cannot recommend it for selling. Sssoooo expensive. Follow Mark's bundling article. It will prove to be fruitful for you.

For a selling channel you may want to consider Link hidden: Login to view. I know of a guy using only Link hidden: Login to view for sourcing and linkdin for selling. He is making six figures.

Also recently I found this. Link hidden: Login to view.

Load your product to a free store and they upload it to social media and you manage it all from one site. Other people will tell you to get a store and promote the store on social media. I guess that could work too.

Also search Youtube. HUGE HUGE amounts of information on every aspect of everything.

Keep in there. Success is waiting for you.

Dale

Beachdisney/Mark,

Thanks for your responses and encouragement as also the tips. You always learn something new everyday and this was very educational.

I had a conversation with a representative of the above mentioned wholesaler,
- She was evasive initially when I asked whether they also sold on Amazon. That confirmed my suspicion.
- She then admitted that they were actually part of a parent company which was retail operations and THEY sold on Amazon.
- She did not deny when I asked that the user "Galactics" on Amazon, was actually they or their parent company. So, while people are checking Amazon for competitive pricing or researching a break even pricing, beware when you see this user near the top with the lowest prices. In all likelihood, this user will not simply sell their stuff and move on (like we online retailers do mostly), but will have an endless supply of items. Thus it would be wise to stay off these items (You have been warned !).
- I also came to know that they offer better prices to some "special" retailers. These prices are even lesser than the top tier prices that are offered to us ordinary mortals ! For some of he items, it means that they will run into thousands of dollars.

Anyways, I realize that this is not fair and there was no fair disclosure. But from what I have learned from online retailing, you "live and you learn" ! Fortunately, my initial order was of a small amount and I can break even easily, I think.

Thanks again !
- Padma