As an experienced Amazon seller, one of the most common questions I get is: "What‘s the best way to outsource products to sell in my Amazon FBA business?"
It‘s a great question, because finding profitable products to sell is truly the lifeblood of any successful Amazon business. But doing it all yourself can be extremely time and resource intensive.
The good news is, by outsourcing certain aspects of sourcing and product fulfillment, you can scale your inventory and product offerings far faster without burning yourself out.
In this comprehensive guide, I‘ll share the insider strategies and proven techniques I‘ve learned over my 10 years as an Amazon seller for how to smartly outsource products and supercharge your FBA business.
Let‘s get started!
Why Outsourcing Products is Critical for Amazon Sellers
As an ambitious Amazon seller, you simply can‘t do it all yourself. That path leads to frustration and stagnation.
To really unlock growth and profitability, you need to tap into the skills, inventory and capabilities of others through outsourcing.
Here are some of the biggest benefits outsourcing products delivers for Amazon sellers:
- Access to Experts: Work with specialists who focus exclusively on sourcing, manufacturing, shipping and other competencies. Their expertise will far surpass trying to do it alone.
- Lower Costs: By tapping into economies of scale from wholesalers, liquidators and manufacturers, you gain access to deep bulk discounts. This significantly lowers your product costs.
- Faster Scaling: According to Jungle Scout, 82% of Amazon sellers outsource some or all product sourcing. Doing so allows you to grow your product catalog and sales far faster than handling everything in-house.
- Improved Cash Flow: When you don‘t have to pre-purchase and hold all inventory, your working capital requirements are substantially reduced.
- Focus on High-Impact Activities: Outsourcing gives you time and resources to focus on critical revenue-driving tasks like new product development, branding, marketing, and sales channel expansion.
Clearly, there are compelling benefits to strategically outsourcing vs. trying to self-source all your Amazon products. Now let‘s explore proven strategies to make outsourcing work for your business.
6 Effective Strategies for Outsourcing Amazon Products
In my decade plus of selling on Amazon, I‘ve tested every product outsourcing method under the sun.
These six strategies have proven most effective for consistently sourcing profitable products at scale:
1. Wholesale Suppliers
Purchasing inventory wholesale from distributors or manufacturers is a primary way large Amazon sellers scale their product portfolios.
- Bulk pricing – Wholesalers provide volume discounts of 40-60% off retail pricing.
- Wide selection – Choose from thousands of product options from one supplier portal.
- Fast shipping – Most wholesale orders ship within 24-48 hours.
- Low risk – No upfront payments required. Only pay for what you order.
I recommend wholesale suppliers primarily for established sellers already seeing >$5K+ in monthly Amazon revenue. Minimum orders typically start around $1,000+.
2. Liquidation Stock
Liquidation describes excess inventory and customer returns purchased from retailers and manufacturers at steep discounts.
While the quality can be hit or miss, liquidation allows new sellers to start with minimal upfront investment.
- Ultra-low cost – Products priced at 10-30% of retail value or less.
- High upside – Many liquidated goods are new/unopened with $50+ retail pricing.
- Variety – Access consumer electronics, apparel, home goods, personal care, toys and more.
- Arbitrage opportunities – Resell liquidated products on Amazon or other channels at sizeable markups
With dropshipping, you sell products stored and shipped by third-party suppliers only when a customer places an order. This greatly reduces your inventory costs and overhead.
Benefits of dropshipping products for Amazon include:
- Low startup cost – No need to pre-purchase inventory.
- Easy to add products – List new products from supplier catalogs in minutes.
- Scalability – Grow your product portfolio faster without managing inventory.
- Flexibility – Switch suppliers or pivot product offerings easier.
4. Private Label
Developing your own products to sell under your own brand via private labeling represents an advanced but highly profitable model, once you have sufficient capital and sales volume.
- Brand recognition – Greater customer loyalty to your own brand over time.
- Higher margins – Typically 3-4X more profitable than reselling name brand products.
- Exclusivity – Opportunities for exclusive product innovations and features.
- Long-term stability – Once ranked, your own products are less susceptible to competition.
I suggest waiting until you have at least $25K in working capital and are selling $15-25K a month on Amazon before pursuing private label. Minimum orders are often 500+ units.
5. Retail Arbitrage
Retail arbitrage involves sourcing inventory from department stores, big box retailers and mom-and-pop shops to resell online at higher prices.
- Low barrier to entry – Start sourcing immediately with minimal upfront investment.
- Flexibility – Buy only the products you want without minimum order sizes or commitments.
- Profitability – Average margins of 20-45% based on opportunistic purchases.
The key is using scanning apps like ProfitBandit to identify profitable arbitrage opportunities where the retail price is lower than Amazon‘s current listing value.
6. Used/Vintage Goods
Finally, a niche but lucrative option is to source used, vintage and antique products to resell on Amazon. These could include collectibles, furniture, jewelry, cameras, arcade games and more.
Benefits of sourcing used or vintage goods include:
- Lower acquisition costs – Used goods can be sourced cheap from garage sales, auctions and thrift stores.
- Unique products – Vintage items are inherently one-of-a-kind.
- High margins – Collectibles and vintage goods command higher premiums.
- Steady demand – Diehard collectors actively search for rare items online.
eBay and Craigslist are top places to find sellers offering used, vintage or collectible goods. Flea markets, antique shops and estate sales are another option.
How to Select Profitable Products to Outsource for Amazon
The key to sustained Amazon success is consistently sourcing profitable products shoppers actively search for and purchase on Amazon.
Follow these proven tips for identifying profitable products:
Research Best Sellers in Specific Categories
Study the best sellers rankings in your chosen category. Are certain brands and products always at the top? This signals strong demand.
Analyze Keyword and Sales Data
Ensure Adequate Supplier Inventory
Before sourcing a product, vet suppliers to ensure they can support your sales volumes, have sufficient inventory depth, and can scale as your business grows.
Calculate Your True Net Margin
Factor in all costs – product, shipping, Amazon fees, returns, etc. – and aim for 30-50%+ net margin for each product. Avoid razorthin margins.
Evaluate Shipping Cost Impact
Prioritize easy-to-ship products that won‘t eat into your margins. Supplement FBA with inexpensive solutions like ShipMonk when advantageous.
Thoroughly Check Product Quality
Before committing to a large order, carefully inspect product samples and packaging yourself. Don‘t cut corners on quality.
Following these guidelines will steer you towards profitable products shoppers are actively buying that you can competitively source at scale.
Mistakes to Avoid When Outsourcing Amazon Products
While outsourcing your Amazon product sourcing provides immense advantages, there are also pitfalls to avoid:
- Relying on a single supplier – Diversify with multiple suppliers to lower risk exposure if one has quality issues or stock shortages.
- Not properly vetting new suppliers – Rigorously check references, online reviews, quality control and fulfillment reliability before committing.
- Overordering slow sellers – Resist temptation to overorder. Start small and scale up based on sales velocity and reviews.
- Ignoring shipping costs – Keep an eagle-eye on product weight and dimensions. Bulky, heavy or hazardous products will ravage your margins.
- Assuming product quality – Thoroughly inspect each new batch of inventory yourself rather than blindly trusting suppliers.
- Delaying private label – Consider launching your own brands once you hit $15-25K in monthly Amazon revenue. Those higher margins are game-changing.
Avoiding these key mistakes will keep your outsourcing efforts profitable and minimize risk exposure.
If you‘re looking to scale your Amazon business, outsourcing product sourcing provides huge advantages versus trying to do everything in-house.
Leveraging seasoned experts across wholesale, dropshipping, private label manufacturing and other models allows you to vastly grow your product selection, lower costs, and focus on high-return activities.
Just be sure to thoroughly vet suppliers, maintain diversity in your supply chain, inspect product quality routinely, and run the numbers to choose profitable products aligned with demand.
Outsourcing enables ambitious sellers to build a highly profitable, scalable Amazon FBA business. Use the strategies in this guide as a blueprint for your own outsourcing efforts.
I wish you great success and growth ahead! Now go take action on these outsourcing techniques to drive your Amazon sales to the next level. You‘ve got this!