How to Transition into Wholesale from a Retail Arbitrage business

This is such a great question to have because it means you have made progress in your Retail Arbitrage business. Being in the Amazon space we constantly see the other 2 methods of selling products on the marketplace.

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In this post I will focus on transitioning into wholesale from retail arbitrage.

My journey in the e-commerce space started in 2015 on eBay. After some small success there I moved to selling on Amazon. My sales took off and we hit $1,000,000 in revenue in 2016…I was shocked.

I never expected to have that type of business honestly.

I quickly set my eyes on other methods of selling. One of them being wholesale.

Apparently, it seemed like 5 million other people did also. It became clear to me that brand owners were being flooded with the same requests as mine.

I would reach out to brands and hear things like

“We don’t want anymore Amazon sellers”

“We don’t want Amazon sellers at all”

“ I hate Amazon and don’t want my products on there”

Every time I found a decent lead I would always get told “NO”.

Photo by Jon Tyson on Unsplash

The ones that said yes had already been beaten to death by price wars on Amazon and I wanted nothing to do with that.

Transitioning into wholesale is about more than just having the money to do it.

Getting capital is easy.

Selling products easy.

Sourcing product simple.

Building relationships with brand owners, providing value, and negotiating….NOT EASY!

I quickly realized I had to shift my mindset from the sketchy guy wearing a hoodie with 8 carts in a retail store to the more professional business owner that was focused on providing value to brand owners. So that really is Step 1.

You can have all the money in the world but if you can’t hold a conversation with a potential client, you’ll never even get to money part. It may seem daunting at first and it was for me, but I quickly realized I was in my element. I just needed to refine my relationship building skills a bit. I have a whole blog post on this topic so you will want to check that out if it seems like something you need help with.

Step 2: Let’s get down to the money. This part is actually so simple. There are so many companies out there that want you to spend their money. Already have a business bringing in decent cash flow?

Things just got easier for you!

Companies like AMEX, Stripe, and Brex will give you a line of credit based on your business revenue.

Let’s use Brex as an example. They are new player in the game and have really shook things up.

I got my Brex card a few months ago. It has a 60 day no interest, yes, NO INTEREST, card that is based on your previous month of sales.

Brex will look at your Amazon account and give you a credit limit between 50–75% of your past 30 day sales on Amazon. Brex will give you a limit of up to $5,000,000. They have the capacity to fully fund your business. With your Brex card you can use a service like Plastiq to send wires to wholesalers that do not take a credit card. Brex also has a great rewards and perks programs that competes with the top AMEX and Chase cards on the market.

Sounds to good to be true? Well there is a catch, you have to have at least $100,000 deposited into your bank account over the past 30 days and you have to pay off your balance every 60 days. If your business fits that then go sign up for Brex right now!

If you are not quite there yet you still have some options. I would look at the AMEX Plum, AMEX Business Gold, AMEX Business Platinum, or the Chase Ink for Business.

These are all great options to fund your business while getting great travel perks and other rewards. You can still use the Plastiq service to send wires and ACH transfers when needed.

I recently got the Chase Ink business card with 12 months no interest. I suggest looking for a card that has that option because there is almost one out there running that promotion.

The final option is a traditional line of credit. Those usually require a personal guarantee and people are hesitant to use those but the interest rates are usually very good. Go talk to a local bank and see what they can do for you.

If your operation is running smoothly, your accounting is good, and you have a set of Standard Operating Procedures for your business then you should feel more comfortable taking a line of credit.

So there you have it, that is how you fund a wholesale venture while keeping your RA business running. Don’t give up your RA business and don’t take money away from it. Stack your profits there, pay your bills, do whatever you need to with it but keep it running. Arbitrage is one of the fastest ways to make money on Amazon.

Get yourself another line of credit through one of options I mentioned above and begin working on wholesale. Just remember it’s a different hustle and you may need to consider bringing on an employee either locally or a virtual assistant overseas to help with your day to day work.

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