Module 3 - Choose Your Supplier

3.7 Choosing a Supplier

Ok, you’ve done your calls, gathered the necessary information, and now have to do a little bit of math. You just need to take care of these TWO crucial steps and you’ll thank yourself later:

  1. Review the Answers to Your Questions in the Suppliers Sheet
  2. Calculate Your Profit Margin

1. Suppliers Sheet: Review the Answers to Your Questions

At this point, you have all the information you need to pick your favorite supplier. Go to your “Suppliers Sheet” and take everything into consideration, within the context of the products you are researching. Compare the suppliers on your list by answering questions such as:

  • Is it a small and lightweight product?
  • Does it have weight restrictions?
  • What are the manufacturing options?
  • How does the supplier score on flexibility?

When you’re ready, you should have a winner: a supplier which you would like to work with, if he is able to give you a good enough profit margin.

2. Calculate Your Profit Margin

Now that you have selected a final supplier for your first private labeling product, the last thing you need to assess is whether the supplier of your choosing gives you the profit margin you need to be profitable.

In your Suppliers Sheet, go to the Margin Calculation (Pre-Marketing and Giveaways) section. Now look at the last column, called Estimated Margin. The percentage you see here is your gross margin estimate before marketing and giveaway.

You can find your gross margin estimate before marketing and giveaway in the Suppliers Sheet - From Zero To Liftoff Amazon FBA course

Is this percentage 50% or higher?

Remember, we recommend that you do not move ahead with a product that does not have at least a 50% estimate gross margin. This will give you enough wiggle room to absorb the following additional operating expenses to grow your business and dominate your competition:

  • Product Giveaways
  • PPC Advertising Campaigns (Amazon Sponsored Products)

We will discuss those in more detail in Module 10 – Kickstart Your Product Launch With AMZ Tracker and Module 11  – Amazon Sponsored Products – Using Paid Traffic.

If the Estimated Margin percentage is lower than 50%, you should seriously reconsider using this supplier. Are there perhaps other suppliers on your list that roughly offer the same but at a better estimate gross margin? Then this supplier might be a better fit!

Next Up, How to Get a Sample from Suppliers!

You should now have found your ideal supplier! But do you actually know what you are going to sell? You have probably never seen the actual product and felt it in your hands. That’s why we recommend you get a sample first!