#242: The Amazon Wholesale Business Model

Norman Farrar   0:01  

Hey everyone, it’s Norman Farrar, aka the beard guy here and welcome to another lunch with Norm, the Amazon FBA and  Ecommerce podcast.

Norman Farrar   0:21  

Oh, okay, so today we got a great episode, we’re going to be talking about Amazon wholesale. And it’s just another business model that if, you know, I know most people are on the podcast, like to hear about Amazon private label, but this is definitely an area that we got to talk about. Our guest is an Amazon wholesaler and mentor. He’s got a great course out there. He’s breaking all the barriers when it comes out to building massive Amazon wholesale businesses. Now, as you know, we’ve had people talking about wholesale on this podcast before, and one of the guys had a $100 million account so you could really grow your businesses with wholesale. So I can’t wait to get to our guest today’s first time on the podcast, Eric Castellano, but before we get to him, let’s have a quick word from our sponsor. Thank you Zee.CO for sponsoring this episode of lunch with Norm. Are you looking to take your ecommerce business from local to global, you can with the help of zee and their brand new app. That’s right, you can track live shipments with push notifications. Get detailed lead times for each stage of your shipment, and store all compliance and VAT reclaim documents in the palm of your hand. All while listening to lunch with Norm. Ready to expand your Ecommerce empire. And take your Amazon FBA business global. Use the link in the description to learn more about Zee’s new app that’s now available on desktop and mobile. That’s zee.co. ZEE.CO or if you’re in Canada, Zedee.

Kelsey  2:04  

That’s right, Hello. Hello. How are you?

Norman Farrar  2:08  

I’m doing pretty well. How about you sir?

Kelsey  2:10  

I’m doing fantastic.

Norman Farrar   2:12  

I am freezing. Actually.

Kelsey  2:14  

I know. It’s so cold here.

Norman Farrar  2:15  

No one left the door open when she went to get some stuff. And oh my god, I froze.

Kelsey  2:23  

I’m glad I’m here. Yeah. Okay, so welcome to the show. Everyone. Welcome read. Andre. Jeff, we have Manny joining us, Simon. Great to see everyone. If you have questions, concerns, issues about Amazon wholesale. Let us know in the comment sections, get your questions. And we will do we will be doing a q&a session at the end of it as well as we have a great giveaway from Eric as to so stick around for more information about that. And before we get started, make sure you smash those like buttons give us those thumbs up. And yeah, it’s gonna be a great show. And we can kind of jump into it.

Norman Farrar  3:01  

Fantastic. I you know, I see. Jeff is already on to hashtag we’ll have Kelsey.

Kelsey   3:08  

Yeah, he is first on it.

Norman Farrar   3:12  

Okay, so if you do have any questions, like Kelsey said, just throw it over in the comment section. So sit back, relax. Grab that cup of coffee, or for Simon maybe a cup of tea, and enjoy the episode.

Eric Castellano  3:28  

Norm What’s up, brother?

Norman Farrar   3:29  

Hey, how’s it going? Eric?

Eric Castellano  3:31  

I’m doing well. My friend. How about yourself?

Norman Farrar  3:33  

I’m doing okay, eight. If, and I’m sure there’s a lot more to you. Why don’t you give us a little bit of a sample of what you do who you are.

Eric Castellano  3:43  

Yeah, absolutely. So first of all, appreciate you having me on the show problem be here. My name is Eric Castellano, I’m the owner of Amazon lit. I’ve been selling on Amazon for about eight years ago, I built a business out of my best friend’s basement. And now we have you know, 20,000 square foot warehouse about 50 employees right below me producing Amazon inventory. We average about four or $5 million a month in sales. And what we do is we leverage that experience of building and continuing to operate this very large business and we teach other people who are doing wholesale how to do the exact same thing.

Norman Farrar  4:24  

Okay, fantastic. You know, I, strangely enough, coincidentally, I was just talking to my wife who really knows nothing about Amazon private label or wholesale. And she just went out and she brought back these this coffee. Ah, and she these coffee is probably about $10 container. She got 50 cents. It was liquidating and I went this is perfect. Yeah, I’m talking to a wholesaler today. You know, you should get into wholesale buy all the stock up and let’s see what we could do with this bloody coffee. But anyway, How did you get started in Amazon?

Eric Castellano  5:02  

Um, so my best friend also my business partner, Sebastian, hit his ont, at the time this was in 2013. She knew a family who was doing exactly what you just said norm, you know, they were going to these retail stores, finding things discounted and selling them for a margin on amazon.com. And kind of the light bulb went off. And we started doing the same exact thing, going to Costco, Sam’s Club target, buying what’s called retail arbitrage and kind of got into the game a little bit.

Norman Farrar  5:35  

So we do have a lot of new intermediate and advanced sellers that listen to the podcast, wholesale is that retail arbitrage or online arbitrage? No, no.

Eric Castellano  5:48  

So I think that the best thing would just be give a definition of wholesale. So what Amazon Wholesale is, is when you buy large volume of products at a discounted price from a distributor wholesaler manufacturer or brand to relist for a markup on amazon.com. So you just find products for cheaper selling for a couple bucks higher.

Norman Farrar   6:12  

Okay, very good. I’m just curious, how tough is it to find these wholesale products? Oh, you’re froze? Eric.

Eric Castellano   6:24  

Yeah, I’m back.

Norman Farrar  6:26  

Okay, good. So did you hear the question? No, no, it was. Okay. I was just asking, how hard is it to go out and find these wholesale products?

Eric Castellano  6:36  

Yeah. So one of the hardest things you’re absolutely going to experience is opening up the wholesale accounts, you know, because for a few reasons. The first one is a lot of people, they don’t know what to say or how to say it. So they just say the wrong thing in the email or the phone call they make to them. But if you can get to two to five decent accounts, you can really, really start to purchase enough products to grow your business rather large at about 20%

Norman Farrar  7:03  

profit margins at that I 20%.

Eric Castellano  7:06  

Yeah, that’s pretty par for for the wholesale standard. Some companies, usually they start off a little less, and then as they get better at buying, they’re able to kind of master their profits a little better and get closer to that 20 20% mark,

Norman Farrar  7:22  

because most of our listeners are private label sellers. And they might have some experience or they might know a little bit about wholesale. Yeah. Let’s talk about the differences between private label wholesale, you know, what can they expect? What are the costs involved? And let’s start off with the differences between PLL and or private label sellers and wholesale.

Eric Castellano  7:47  

Yeah, absolutely. So I do sell private label as well. It makes up about 10% of our business so with those products, we research an industry right and then we kind of niche down a little bit find an opportunity with a product that has room for growth so not super saturated products don’t have ridiculous amount of reviews, there’s not two or three companies just dominating and then we purchase those products from usually overseas Alibaba also some other sites we use. And that’s really but then you got to pay for advertising shipping all that stuff, right you guys know the label primary pipe, primary podcast, then absolutely, you guys know all that. And girls buy wholesale it’s just a it’s it’s a quick way to generate capital. So what I usually suggest is if you have zero experience, start with wholesale build up some funds because you can make 1020 $30,000 in a couple months and then use that profit to then go invest in private label products unless you got the five to $15,000 laying around to just do it yourself. Yeah, right.

Norman Farrar   9:01  

Who knows? I know Simon does but anyway, uh, so one of the fears I would have and maybe you can put my fears to ease would be going out there buying a whack of product and then it’s just not selling.

Eric Castellano   9:22  

Yeah. Now that’s that all comes in with product research. So the same way you know you don’t buy a private label product and 20 minutes after looking at it you dive deep into it. These products you got to understand keep the charts you got to look at the competitive sellers the ranking analyze it so you know when you do buy it, it will sell no matter what.

Norman Farrar   9:44  

What’s the success rate? Is it an 8020 rule or what are your finding?

Eric Castellano  9:50  

Like for Amazon wholesale sellers are

Norman Farrar   9:52  

no no for wholesale sellers. What’s the success rate when they they go do the research and they throw up that price?

Eric Castellano  10:00  

product? Yeah, yeah. So if they’ve done the research properly, they’ll have 100% success rate, you know, and the average profit, like I said, 20%, average selling price is about 20 $20. So you’re looking at $4 profit. So if they’ve done the research correctly, there’s 100% chance that it will sell. If they messed up Mr. Price dip on the keeper char didn’t realize the seller had 10,000 units in stock, then those those odds start to decrease.

Norman Farrar  10:29  

Now, do you ever go back? So let’s say you’ve got a product that was very successful for you. Do you go back and didn’t negotiate terms with a distributor or with the manufacturer?

Eric Castellano  10:41  

Yeah, absolutely. I think that’s really where the business begins to grow. I’m in two ways, one requesting volume discounts from wholesalers and distributors. You know, sometimes we’ll get full truckloads, half truckloads of one SKU, because we know it sells well. And the other thing is building relationships with some of these brands who are good at building brands, but not good at selling on Amazon and opportunity opens up there’s

Norman Farrar  11:07  

right. Okay. I’m just looking. I forgot to talk about your giveaway today, which is a fantastic giveaway. Yeah. So Eric, why don’t you just let everybody know what the giveaway is today?

Eric Castellano  11:19  

Yeah, absolutely. So what we’re giving away today, courtesy of Amazon let sellers Ri and lunch with Norm is our beginners bundles. So what that includes is everything you need to know all the software’s covered in detail, how to package ship, your first products, how to put in the shipment, everything is included in that. And additionally we’re throwing in our product or our distributors fine product distributors module. So you’re able to understand how exactly to contact these distributors, where to find them what to say to them, email templates, phone, scripts, everything.

Norman Farrar  11:55  

That’s fantastic. If somebody is looking to get into wholesale, there you go. I think it’s an a really excellent opportunity for people to get in to start to understand this market, because it’s a huge market. Everybody talks about private label. But there, they don’t talk about wholesale. I mean, it’s good for you, because nobody talks about it.

Eric Castellano  12:16  

Yeah, there’s definitely a definitely a big market there. Listen, I’m a firm believer, I’m a multiple business owner. So I like additional streams of income. That’s why I do private label. And I do wholesale, you know, because it’s just like if I can make some additional money here or there. Right now, our business is 90%, wholesale, 10% private label, if someone who’s doing private label wants to do the complete opposite and do 10% wholesale, they’ll be able to make an additional couple $1,000 a month.

Norman Farrar  12:44  

Nice. So if you’re interested in this, getting that beginner package for the whole set, and I love the idea that there’s it’s templated you know, it’s a no brainer. But it’s hashtag Willa Kelsey, tag two people, and you’ll get an extra entry. And we’ll be reminding people a little later on the podcast as well. Now, I’d really like to know about the cash that you need to invest to get the ball rolling here. So right now, for private label sellers. We used to say, oh, invest 2500 bucks, and you’re good to go. Ad doesn’t work anymore. Oh, you’ve got a much higher? Well, it’s just so much more competitive. Your Cash, like once you get your inventory, I always like to put about a three to one, what your cost of goods are, you know, if you’re investing 5000 bucks, you got to throw in 15. You know, just to be careful. What about with wholesale?

Eric Castellano  13:38  

Yeah, yeah. So recommended amount to start with wholesale three to $5,000. Okay. And that’s like, that’s right on par. Obviously, if you have more, it’s better. Can you start with less technically, but that’s the sweet spot.

Norman Farrar  13:53  

Yeah, but you know, people, and I see this a lot well, where people will go, especially if they’re new, they’ll go to Facebook ads, and they’ll try to invest $300 in Facebook ad and it’s just a waste of money. Yeah. Right. Is that similar to wholesale? If you start off with 1000 bucks, you’re really kind of throwing your money away, you should have a minimum of 5000 bucks to invest.

Eric Castellano  14:17  

Yeah, it’s it’s similar. But also, I’m a firm believer that a everybody should be investing in some sort of training or there’s options out there that whether you want to do retail arbitrage, private label wholesale, there’s so much opportunity to just buy a course and figure it out in a 10th of the time. And also I think that it’s good. Sometimes it like if you if that’s your only $1,000 No, but if you got a couple grand I think spending $1,000 And breaking even, it’s going to teach you so much about the hustle that you can’t put a price tag on that. So really, it’s like you’re paying for experience, you know?

Norman Farrar  14:55  

Yeah. So on the wholesale side, what can you give us a few benefits? Have it?

Eric Castellano  15:00  

Yeah, absolutely. So replenishable products, I think that’s a huge benefit. So you find a SKU that hits, like, right now we got some excuse selling three 4000 units a month, you know, making three, four hours in profit on every sale. So you find a couple good products that really hit and you just keep reordering them. You’re talking about recurring revenue every single month like clockwork. Also, I would say the relationships you build with these companies, you know, you could partner with a huge brand who has an amazing product takes care of all the social media advertising, the Facebook ads, the Google ads, and you’re just the company that takes a little bit of margin on top, you know, 15 20% on top to sell it on Amazon for them, it opens up a lot of doors that way as well.

Norman Farrar 15:45  

So let’s say you’re selling sparkling ice, you got a good deal with them. And you put it on Amazon, now you’re gonna have other people competing with you on sparkling ice water. Correct. So you’ve got your you’re fighting for that Buy Box? Yes, absolutely. Are you ever putting PPC on it?

Eric Castellano  16:05  

Yes, sometimes. Yeah. Okay. So what we like to run is what I call like a catch all campaign. So I’ll run a I’ll run an ad on all my slower moving skews, let’s say it’s a fourth of our inventory. So 800 900 skews, I’ll run a high budget, low bid campaign on that for maybe 1520 cents, and it will really start it will operate at a 3% a cost, I’ll spend maybe 5000 bucks, and it will generate a nice chunk of change in that month.

Norman Farrar  16:37  

And what I really love about the wholesale model, and PPC is that it’s not first come first serve when when somebody sees your product in PPC, Amazon cookies them? Yes. So they give you the I think it’s a 24 hour cookie, which is awesome. Yeah. So and a lot of people don’t understand that, you know, they think oh, they’re gonna see our product, but they’re gonna go with the lowest, you know, the lowest, the lowest shown price, and you get the you get the sale, like your cookie is going to come up in 24 hours, which is kind of cool. Yeah. All right. Can we? Are there any other benefits to the wholesale

Eric Castellano  17:21  

model? Um, yeah, it’s a, it’s a super quick way to generate cash quickly. You know, you can literally get started, you could start doing read, save the person who wins this bundle today, they could watch that bundle, right, in the next week, finish it, find some distributors and have products in Amazon in the next 30 to 45 days. So it’s quick. It’s a quick startup.

Norman Farrar  17:44  

Yeah. And you don’t have the expense of private label? Yes. A I mean, it’s so expensive, and so time consuming. And I’m a private label. So I love private label. I love building brands. But with this, it’s if you find that, that product or that niche, and it just clicks I, you could be off, like you said, you could be running something in 30 days to 45 days and

Norman Farrar   18:10  

getting cash. Yes. Yeah.

Norman Farrar  18:14  

Let’s talk about, uh, maybe some action steps. So I want to get involved. I don’t have your course. Yes. What do you have to do to get started? Yeah,

Eric Castellano  18:23  

so step number one would be to register an LLC, which is very, very simple. There are services that offer to do it. But you know, there are going to be probably two or 3x the price and it takes 20 minutes to do it yourself. You just go to your local state website and register a business. And the reason why you need an LLC is because that LLC will provide you an EIN, which wholesalers are going to request when opening up wholesale accounts. So right, it’s it’s an EIN is like your business’s license plate. For anybody who doesn’t know what your EIN is. It tells people that you exist as a company, and they use that for tax purposes, and then create an Amazon account if you don’t have one seller account. And then step number one immediately after that would be finding wholesalers and distributors, because if you don’t have products to purchase, if you don’t have a business, you know,

Norman Farrar   19:17  

are there any you were talking at the very beginning about emails that go out? And there’s some definite mistakes when you’re contacting suppliers in China? What are the do’s and don’ts when you’re contacting suppliers for wholesale? Yeah,

Eric Castellano  19:33  

so I would say just the verbiage. So instead of saying, Hey, I’m an Amazon seller, just say, Hey, I’m an E commerce distributor. It’s a little more friendly. A lot of people when they see Amazon seller, they instantly judge you they know nothing about your business, how you operate, how you help them grow, but they see those words and they’re like, Yeah, you know, so I would say definitely just changing your verbiage up a little bit and saying the right words and offering some value to them. It’s a two way street.

Norman Farrar   20:03  

Yeah. And I think that’s so important. I’ve walked trade shows of Pet Expo, you’re selling this product. And I was doing really, it was going really well. It was six figures a month. That’s not bad. And I couldn’t get anybody to pay attention to me, you know, and I, I wasn’t going, they’re saying, I judge people on how they judge me when I go into their booth. And if they’re, you know, not paying any attention, because Oh, you’re an Amazon guy. Okay, that’s fine. But this is I’m just going down another rabbit hole here. But yeah, the person that

Eric Castellano  20:41  

did I think it’s back right now.

Norman Farrar  20:44  

Oh, here we go. There we go. Okay. I don’t know if it’s my end or your end, but hopefully.

Eric Castellano   20:52  

I’m not sure either. But I heard you and I hear you way, especially at trade shows it can be uncomfortable at times, you know.

Norman Farrar  20:59  

But that’s actually a great grounds, a great area to go to go to the trade shows, talk to these distributors and manufacturers and build a relation Elena SARS, I’ve been with her on many occasions, and she’s gone into Elena has been a guest on the show a few times. She goes in and she just starts talking to these distributors and just right out asked if she can be a wholesaler for you know, for the company. And as she exits the the trade show, she’s picked up one or two or three different accounts. She’s awesome.

Eric Castellano  21:36  

Yeah. Yeah, I agree. I think any industry you’re in, and this is this just goes for life in general. So whether you’re listening to this and you like computers, or you like video games, or you sell private label where you do wholesale, I suggest everybody goes to at least five or six tradeshow events throughout the year. Every other month, you should be attending some sort of event in the industry that you enjoy, because it’s there’s so much knowledge to be shared and exchanged events like that.

Norman Farrar   22:05  

Are there Amazon wholesale events?

Eric Castellano   22:09  

Yeah, yeah, there’s one happening in Las Vegas. It’s called ASD. It’s one of the largest wholesale tradeshow events and it’s happened at the end of February. We go out there we host a big event. We walk the show floor with a bunch of our community. We introduced them to brands we’ve been doing business with for years. It’s pretty amazing.

Norman Farrar  22:28  

I think my partner Tim Jordan, and I are gonna go get out there and take a walk of it. Yeah. Or maybe he’ll push me around in a wheelchair or something. But anyways, yeah, we’re definitely gonna go there. You know, I

Eric Castellano   22:41  

think dorm I think we just had an event together and Brooklyn, I want to say, um, did you go to the ASG TG event, and then a dinner afterwards?

Norman Farrar  22:51  

I didn’t go this year. But the last one was the last event they had. I was speaking there. Yeah. Yeah. So so you know what? That is? One of the best events. Yes. In the country. It was it was definitely amazing. Yeah. And and on top of that, the food is excellent. But the two events that I really love, are Kevin kings VDSS. And that one, they’re there. They’re awesome. Yeah. I don’t know when their next one is, but I definitely plan on getting out there. If, if they’ll allow me out of this bloody country. Where are you? i I’m up in Toronto.

Eric Castellano  23:32  

Oh, I’m going to Canada for the first time on on this Sunday coming up. So really? Yeah.

Norman Farrar   23:38  

Where are you going?

Eric Castellano  23:39  

I’m going to Alberta.

Norman Farrar  23:41  

Oh, yeah, that’s a couple 1000 miles away.

Eric Castellano  23:45  

I got a so something we do is we have our a private consulting group called our inner circle and we fly around the country, we help optimize people’s warehouses. Oh, no, we show them how to set it up. What kind of production stations how to run your staff and all stuff.

Norman Farrar  24:03  

Okay. I’m just saying and I don’t know if the guys are listening AMC one step. What’s up? Oh, there’s a huge, really great group out in Edmonton. I thought, Oh, if you’re going out there, you’re probably talking to them.

Eric Castellano  24:18  

No, no, I never even heard them. But I’m going to

Norman Farrar  24:21  

write it down. AMZ one step there. Awesome. Okay, so what have been some of the challenges that that you see in this business model?

Eric Castellano   24:30  

Yeah. Yeah. So I think there’s, I would say two or three main challenges. The first is a lot of people quit before the miracle happens. I wanted to quit. I was maybe nine months in eight months. I just wasn’t seeing the growth that we expected to see. But thank God I didn’t quit because that persistence and that dedication and consistency really paid off in the long run. So it’s not an overnight millionaire business, but put work into it. Guaranteed your business will exceed your hours. expectations. And then really another trial and tribulation, you’re going to experience unless you got money like that is funding, you know, because as your business grows, you need more capital, we all know that. So but Amazon’s very generous they offer Amazon lending, you know, for, it’ll start maybe 20,000 at 7%, then go up to 50,000 at 6% and 100,000. And they’ll offer you up to over a million dollars, multiple times a year, which can really help grow your business. There’s private lending opportunities, there’s bank loans, SBA loans.

Norman Farrar   25:38  

Funding is another one that provides funding that I really like I use. I’m working with them right now. Yeah,

Eric Castellano  25:47  

sellers. Funding is great. So there’s options there. Yeah.

Norman Farrar   25:51  

Yeah. So are you think there’s any other obstacles that you have to look out for?

Eric Castellano  25:56  

Um, I would say just doing thorough research, because you don’t want to get a lot of IP complaints on your account. So something people don’t know is you just can’t go and buy any product that you see selling well on Amazon, especially some red flags to look out for is if it has one seller. And it’s always had one seller, especially if that seller is the brand. And then on the third, keep a chart, there’s a graph that will show you how many sellers are consistently on it. So you just got to be mindful of that. And if you do your research properly, it’s not a problem.

Norman Farrar   26:28  

So you should be Thank you. Coffee delivery.

Eric Castellano   26:32  

Nice idea. Where’s my coffee delivery?

Norman Farrar  26:34  

Sorry, sorry, it’s on its way. But one of the things and I’ll tell you a horror story about this, but do you ever sign a reseller agreements? Or do you get them? Um,

Eric Castellano  26:48  

so we do, but usually it’s us sending them to the company and not the company sending it to us. It’s more of like, okay, this is what we are going to provide for you. We just want the products at the lowest wholesale price, we’ll take care of shipping, receiving returns, customer complaints, reviews, everything. So really, it’s us sharing the agreement with them, not the other way around. All right.

Norman Farrar  27:12  

I’ll give you a horror story after this, but you won’t believe it. But anyways, before we do that, Eric’s got an incredible giveaway today, if you want to learn about wholesale, he’s got the course for you the templates, everything that you need to know, including what is really awesome how to find the wholesaler is a wholesalers list. So I think that’s what you said, right? It’s,

Eric Castellano  27:35  

we show them the process on How to Write Right?

Norman Farrar  27:38  

So that’s, that is such a cool giveaway. So hashtag we’ll have Kelsey, if you’d like a second entry just tag two people. Okay, Kelsey, can we have now get your Kelsey put your hand on that button? Okay, I don’t want you always say I don’t give you enough time. Hit the word from our sponsor, please. Thank you solarize for sponsoring this episode of lunch with Norm solarize is your comprehensive solution for your everyday business needs. Everything you need to grow and scale your Amazon business is just one click away. For more information, contact demon his team over at cellar eyes calm and remember, cellar eyes is with one AR. Okay, so my horror story is one of my clients. They were a wholesaler, they got their product from a distributor. Okay, legit product. The manufacturer said to the distributor that they couldn’t resell. So but he did. He didn’t know. All of a sudden one day, not a knock. All of a sudden a ton of cops come in. They had rifles or they were pointing guns. He said at them confiscated all their products said it was counterfeit. And the manufacturer tried to sue them for 600,000 bucks.

Eric Castellano  29:06  

Yeah. Wow, that is crazy story. You’re

Norman Farrar  29:09  

crazy. So what just led me? Oh, my God. So you know, I at the time, I know, I would never have thought about asking for the reseller agreement from the distributor. But you should put something in writing I think just so you are allowed to sell on Amazon or whatever platform you want to correct.

Eric Castellano  29:33  

If it’s illicit if it’s with the brand direct, then absolutely there should be sort of con some sort of contract. But if it’s with the wholesaler distributor, especially some of these national distributors, that’s their job. And Amazon has something called selective distribution, which essentially says in the terms of service that no brand is able to control or manipulate their listings, making it a free market. So once you start Throwing some jargon like those words around from POS to some of these brands, they’re like, Wow, we were actually doing something illegal here. You know, but most people don’t know that the brand scares them and they step away, when really the brands are just being bullies. Yeah,

Norman Farrar   30:17  

it is a free market. And even though brand registry is out there, and you know what, I just did a video last night about Project Zero. And how you think, oh, you know, Amazon’s giving me the ability to remove every buddy that’s on my listing. Well go ahead and do that and see what happens. Yeah. If you’re, it’s for counterfeit, only. Yeah. And if you’re just removing people left, right, and center, that’s gonna come back and it could bite you. Yeah. So you got to be careful. And you’re right. It’s 100% it’s a free market. Yeah. 100% now, okay, so let’s, let’s just talk about, uh, you know, for these new sellers that are going out there and, and, and, you know, listing on Amazon, sorry, I’m tired. I got too much caffeine in me right now. But for the new sellers that are out there, just about how they’re listing, What mistakes have you seen new sellers make when they’re listing their new products?

Eric Castellano  31:18  

Yeah. So one would be over ordering. You know, they order 990 days worth of inventory, we suggest only ordering about 30 days, or 3030 days, yeah, 30 days. That’s because you’re sourcing them from domestic distributors and wholesalers. And if you need more, you can get them in five to seven days to Amazon. So it’s like, yeah, that this, the Amazon market is no different than cryptocurrency stock market goes up and down, especially with name brand products. So a lot of people they go too deep on a SKU, tie up all their capital, and then they’re kind of stuck between a rock and a hard place. And then the the second thing would probably be not analyzing the listing properly, just not paying attention to price drops, consistency and price drops. It’s no different than reading a graph for the stock market, or it shows you every price and when at and then also not analyzing the competition. You know, if if you miss that one of the competitors on the listing has 10,000 units and the listings only selling 1000 units a month. You just bought inventory on a listing that the person’s has a year’s worth of inventory for they own that listing, they’ll drop the price if they want. They got so much inventory tied up,

Norman Farrar  32:31  

right. Yeah, one of the things that you just mentioned that I really like is its domestic. So you don’t have that supply chain issue. That you know, when ordering from China, you’ve got you know, just the hassle with China right now. The Trump tariffs, just getting it into into Amazon. I mean, it could take months and months and months.

Eric Castellano  32:54  

Kevin, do you know Kevin King? I do. Yeah.

Norman Farrar  32:57  

Okay. So Kevin has a product that he bought for a licensed product, okay. He bought it from China, he put it through Chicago, he thought Chicago would be the best way to solve this issue. Since May. He’s had it in Chicago. And he’s had to pay. So he’s had to pay for storage. Okay, even though it hasn’t been unloaded out of Chicago, and he had to pay the licensing fee, because the product wasn’t he didn’t meet the licensing licensing obligation. So he got hit twice, like to add insult to injury. And this is something that you really don’t have to worry about that because you can turn the inventory a lot more, which helps with cash flow as well.

Eric Castellano  33:43  

Yes, yes. And if you do ever get caught in a product with Wholesale, like something we do is once a month, we’ll go to the flea market, right, and we’ll just sell it all at cost and get the cash back into the company. Or you can wholesale it to other people because say you buy a product. Yeah, it might not sell well on Amazon. But maybe it does great in brick and mortar stores. And you can add, you know, 10 12% to it, and just move it all in one shot to a local company that’s right down the street from you. So it kind of opens up some opportunities as well.

Norman Farrar  34:14  

Yeah. And if you’re trying to just blow it away like that, too, if you do have something that’s not moving and lowering the price doesn’t help. I think by donating the product, if it is something that could be donated, you’re going to be able to get at least the cost back on the product as well if you’re looking at just the cost. So yeah, it’s if you don’t have a winner that, you know, just move out the product or liquidate it as quick as you can. Okay, so Kelsey, do we have any? Well, no, before we get to that, I wanted to talk about the growth opportunities. You’re moving quite a bit of inventory right now. You said that, you know, you almost gave up, you know, one one year into it. What type of growth Did you see after that year?

Eric Castellano  34:58  

So you year one, we did about a million dollars in sales revenue at probably like an 8%. Net. Okay, so it was definitely a learning experience. And after immediately after, right, wherever, when we felt like giving up, we decided to go all in and move out of the basement into our first warehouse. Now, that was a huge decision for us, the warehouse was about 1100 square feet. So it wasn’t big. You know, it was like maybe two or three of these rooms here. But that really allowed us to scale to the next level make a sacrifice for the growth of our business, which was scary. And we had a lot of fear with that decision. But we did it and it was game changer, game changer, because now you got the space. And then we just kept growing from there.

Norman Farrar   35:45  

Yeah, and right now, space shouldn’t be too hard to find space available everywhere.

Eric Castellano  35:51  

Yeah, yeah, the prices are high, though, right now prices?

Norman Farrar  35:56  

Well, you know, right now, also the government, depending on the state that you’re in between, and also depending on the county that you’re in. There’s all sorts of government programs out there trying to stimulate small business again. So you know, it’s not a bad time to take a look at getting into this model, or, you know, getting that getting that warehouse. But anyways, I think it’s a great model. I think Wholesale is is very unique. It’s it’s a different beast than private label. I think you could turn dollars, like you said, you can turn quickly, you’re not talking about a quarterly turn, or a semi annual turn, you could do this on a monthly basis, which is really going to help out with your cash flow, which I really like. Cows. Let’s talk about questions now. Do we have any from the listeners?

Kelsey   36:52  

Yeah, we got lots of questions coming in. So some, some of them we’ve kind of covered before, during the talk, but see from Tony, Tony is asking, what is the average profit margin on wholesale versus private label? Tony, what’s up man? See, Tony a while

Norman Farrar   37:10  

Oh, you know, Tony? Everybody knows, Tony, three years,

Eric Castellano  37:14  

four years. For wholesale? It’s around 20%. Gross. What about what about for, for you norm? What are you seeing with your private label brands?

Norman Farrar  37:25  

It really depends. And for me, I have a different model. Like I’m really looking at things if I’m if I’m buying it for one. I’m wanting to sell it for 10. Yeah, but I would think 25 to 30 would be good for private label. But it’s it’s it can be a uphill battle.

Eric Castellano  37:44  

Yeah. Yeah, absolutely. Absolutely. Absolutely.

Kelsey  37:51  

Yeah, Tony also said he loves your YouTube channel. A big, big fan of you, as well. So next one from Faye. Question. I’m looking for a distributor for a specific niche and haven’t had much luck on Google. Where else can I look for distributors for wholesale in the USA? Is there a directory and any tips on getting the best prices from the suppliers?

Eric Castellano  38:13  

Ah, yeah, so I’m going to change your life right now. Right? What take whatever product you’re looking at, right? Take whatever product you’re looking at, and find the manufacturer on the bottle or the can or the or the package and call them and ask them who their distributors are. And they’ll give you their distributors on a silver platter. All of them. Wow.

Norman Farrar  38:36  

There you go. Awesome.

Kelsey  38:39  

All right. Let me see. For for Mary, are you creating the listings on Amazon? Or do you only go with existing listings?

Eric Castellano  38:48  

So our primary focus is existing listings? A because it’s extremely easy B they’re already ranked and see products already selling very well. So we prefer to go that route.

Norman Farrar  39:01  

And then your you got to invest in the copy the images, so yeah,

Eric Castellano 39:07  

yeah. And we do though, with the caveat of sometimes we create something was called a wholesale bundle. Well, we’ll take an existing product, add a loofa to a shampoo or conditioner, making our own product and sell it like that. Okay.

Norman Farrar  39:23  

So give that added value. Yeah.

Eric Castellano  39:25  

Okay, from Sarfraz, what should the minimum profit margin be or ROI on private label brands is versus retail?

Norman Farrar  39:36  

Oh, we just covered that.

Kelsey  39:39  

Yeah. Okay. All right. And then we have one more. Can you please share the criteria following to find the best products to sell? Second question. Most of the brand owners are reluctant to give accounts and don’t like foreign personalities. How do you deal with that? Yeah,

Eric Castellano  39:55  

so I’ll answer your second question. First. I think the mistake you’re making is going brand new Direct instead of just finding a wholesaler that that distributes their products to the country, and you can you can do this in the country live in if there’s an amazon.com there and amazon.uk or ca or MX or you could do it in us. And your first question is the criteria, we look for minimum profit percentage 10%. That’s gross minimum and minimum dollar amount $2. If it’s if we’re making anything up there, above that $2 mark, we buy it. And then the, the slower moving skews we’d like to make more money on if they’re going to move a little slower. I want to make more like five $6. Every time we sell one.

Norman Farrar  40:40  

Are you still using the same tools that private label seller would would use like helium? 10?

Eric Castellano  40:47  

No, no. So our primary tools is a UPC scrapers. Scan Unlimited is a great one. And then keep the charts. And really that’s, that’s pretty much it. No. Yeah.

Norman Farrar  41:00  

Old Keepa. You’re kicking around.

Kelsey  41:04  

Alright, for many, which software do you use? For that model? I mean, to find a profitable ASINs.

Eric Castellano  41:13  

Yes. Just went over?

Kelsey  41:18  

Yes. All right. From red, if we sell wholesale, can we read a clause for them not to sell on Amazon or Shopify?

Eric Castellano  41:26  

If we sell wholesale, so if you’re selling wholesale to other people, you can absolutely include that when they open an account that they cannot sell on Amazon and Shopify. Something you could do if you own the brand to which we have with some of our brands is something called transparency labels that Amazon provides. That’s a great way to kind of manage Amazon, if you’re going more the wholesale route, and you don’t want other people buying your products to sell them on Amazon as well.

Kelsey  41:53  

Okay, and last question is from Andy, do you optimize listings and PPC of new brands that you’re working with? If so, so do you charge them extra fees?

Eric Castellano  42:03  

Absolutely. So we prefer that the company covers PPC, because we’ll we’ll recommend a budget between, you know, 1000 $3,000 a month and we explained to them that the cost to get in a retail catalog is 10s of 1000s of dollars. And the opportunity that advertising on Amazon PPC allows is really exponential as far as growth goes if you’re allocating your funds properly. And yes, sometimes we do charge them listing fixing fee, but most of the time, we just waive that on the strength of the future of the relationship. Okay. All right. So that was it for the questions. Perfect, man.

Norman Farrar   42:44  

All right. So I think it’s about that time we can get right into the wheel.

Eric Castellano   42:49  

Yeah, let’s do a wheel. I’m excited.

Kelsey  42:53  

Oh, yeah. Get ready for this. Alright, so a last call for hashtag wheel, Kelsey. And here we go. The wheel of Kelsey. Oh, yay. So let me just double check and make sure we got everything. Right, everyone’s been answered. I’ll shuffle these up. Okay. 321. And if

Norman Farrar  43:32  

there’s only one last time Oh, Faye, and look at she just mentioned about how great the podcast was. Great. So we fixed the wheel because you had that compliment their face. So thank you. Alright, so yeah, just like Kelsey just said in FE just, you know, give Kelsey an email K at lunch with Norm calm, and we’ll get you all set up. Eric, you’re off the hook. That was easy. I guess I’ll be seeing yet ASD.

Eric Castellano  44:07  

Yeah, 100% man and I, I can’t think of I swear just like maybe six to eight months ago. I could have sworn I we were at an event together. Maybe I’m losing it over here.

Norman Farrar  44:17  

Well, yeah. I’ve been to a few events over the last few months. But I didn’t get to to Brooklyn this year. Unfortunately.

Eric Castellano  44:25  

Yeah, but what listen, I look forward to it, man. I’ll see it ASD at the end of February.

Norman Farrar  44:29  

Fantastic. You have a good one. All right. Okay. We’ll see you later. Thank you. Alright, everybody, so I hope you I mean, it was a great episode. Eric’s an awesome guy. And he just brought a lot to the table. You know, talking about wholesale. You know, sometimes we just don’t think about it. You know, there are other models within Amazon or even, you know, the Etsy side of things or eBay. You just got to keep your mind open and you don’t want to be too Right. But you’ll always want to think about other ways, like Eric said, you know, other ways to generate revenue. So with that being said, let’s have another word Kelsey button from our sponsor. I wanted to give a quick shout out and say thank you to global wired advisors for sponsoring this episode of lunch with Norm. Global wired advisors is a leading digital investment bank focused on optimizing the business sales process. For more information, please call Chris shuffling and his team over at global wired advisors.com.

Kelsey  45:36  

Squire writes, yes, that was an awesome episode. Great. Yeah. Great session. Thanks, Norm Kelsey. Thank you beer nation. Thank you for watching today. And thank you everyone who entered our giveaway. We do this every single episode too. So if you’re new to the show, come back to our next episode on Wednesday at 12pm Eastern Time, and so you can enter again. And also, if you haven’t yet, please give us those thumbs up. Share this out to any friends and family that might be interested in Amazon wholesale. And let me see to our Patreon subscribers, we have our q&a session with me for social media sessions. So that’s 2pm Eastern time tomorrow. So looking forward to that if you want more information about our Patreon, you can go over to the lunch with norm.com website

Norman Farrar  46:30  

and we call that snacks with Kelsey.

Kelsey  46:33  

Oh, we can we can definitely make it but yeah, that’s lunch with Norm calm. And I think that’s about it.

Norman Farrar   46:43  

Okay, well, frog in my throat. This is happening every episode now. Let’s try this. One more time. I get too many cigars over the holidays. Okay, so thank you for joining today. Join us every Monday, Wednesday and Friday at noon Eastern Standard Time. Thank you for being part of the community. We could not do this without you. We love your support and we will see you Wednesday. Have a great rest of your day.

Transcribed by https://otter.ai