Wholesale and Private Label budget breakdown

Wholesale and PL budget breakdown is necessary because you must've to understand that how things works and where our money is going to invest in.

Wholesale FBA budget breakdown:

Many of us are being told that 5k to 6k$ are required for wholesale business on amazon but clients are mostly concerned about budget breakdown that when and where their investment is going to be spent.

lets do mathematics for budget breakdown

Wholesale in USA:

For USA wholesale you needed to have a company (LLC) registered and a website with domain same as of company name whole budget required for this would be around 800-1000$

After that client will hire a VA

Now you have to get brand approval after finding some profitable products , it may take some days to hunt profitable products and brand approval

Once you shortlist brands now you've to select 2,3 good products and order their inventory

Initially you've to order 30 units of each for testing purpose suppose average cost of each is 10$ so for 30 units of each product and total 90 units you have to pay around 900-1000$

Next step is to send inventory for prep suppose for each unit they are charging 0.5$ so for 90 units it would be 45-50$

once products are live you have to select one profitable product whose sales are good and order bigger inventory of 200 units this time because after price, inventory also matter for buy box rotation now this inventory would cost you around 200*10=2000$ and its prep would cost you around 200*0.5=100$

Conclusion:

LLC and website=1000$

initial inventory of 3 products for testing=1000$

initial prep=50$

1 profitable product inventory=2000$

prep=100$

1000+1000+50+2000+100=4150$

I haven't included VA salary because it all depends on client and VA rather they planned for monthly salary or profit basis.

PL Budget breakdown :

This may give benefit to both Amazon sellers and Amazon Virtual Assistants to understand about Launching Budget in very simple way. When a client approaches to any Virtual Assistant and asks for “suggest me first launch budget for PL” then never reply straight ward to his question like $15K, $20K or $25K with respective Market. Best approach is that you reply them with your Critical Thinking by evaluating his selected product or niche. You may ask to your client give me first some information about your product. Which type of info you need first from your client to finalize launching budget, a brief description on this topic I have explained in the below,

There are three costs you may bear as amazon sellers while going for PL

1. Inventory Cost

2. 2. Reviews Cost

3. 3. Ranking Cost ( Giveaways+ PPC+ other attributes)

4. Inventory Cost

5. How much inventory you should be ordered first, it depends on only 2 things,

6. i. CPR 8 days Giveaways ( without PPC)

7. ii. No. of sales to gain 15-20 reviews before ranking

8. A) If you want to rank against specific keyword of your product then focus on Giveaways against that keyword. Suppose such keyword has 160 giveaways mean you need to sell 160 products within 8-14 days. By dividing 160 sales over 8 days, 20 sales are required on daily basis to rank on first page.

9. B) With the help of Listing Promoters, on 60 sales, almost 15 reviews you are able to gain.

10. Conclusion

11. CPR 8 day’s giveaways + No. of sales to gain 15-20 reviews before ranking

12. 160+60= 240 sales mean 240 products

13. Suppose per unit price = $4 (Landing Price)

14. So Total Inventory Cost= $4*240= $960

Reviews Cost

Before going to ranking strategies, some pre-requisites you have to fulfill first. You need 15-20 reviews with 5 stars rating to go for ranking in order to build trust in your customers in sense of quality and social proof. Reviews are social proof that you gain with more than one search term of customers with the help of listing promoters. As already  explained in above paragraph “with the help of Listing Promoters, on 60 sales, you are able to gain almost 15 reviews.” Later you refund 100% to your customers.

Suppose,

Your Competitive/Selling Price= $25

Required Reviews= 15

Total sales to get 15 reviews= 60 sales

Listing Promoter fee per review = $5

Listing Promoter Commission = $75

So Total Reviews Cost= $25*60= $1500 + $75 (Listing Promoter Commission)

= $1575

Ranking Cost

It includes Giveaways, PPC and other launch services costs like promotions, coupons etc. But here we discuss about only Giveaways and PPC. If you want to rank against specific keyword of your product then focus on Giveaways against that keyword. Suppose such keyword has 160 giveaways mean you need to sell 160 products within 8-14 days. By dividing 160 sales over 8 days, 20 sales are required on daily basis to rank on first page

Totals sales required to rank on first page through giveaways = 160

Your Selling Price = $25

Total Giveaways Cost = $25 (Your Selling Price)* 160= $4000

PPC Cost

A rough estimated is $2-3K.

So Total Launching Cost= $4000 (Giveaways Cost) + $3K (PPC Cost) = $7000

Total Cost

(Inventory Cost) + (Reviews Cost) + (Ranking Cost)

($960) + ($1575) + ($7000) = $9535

Note: Same amount of money you need for 2nd round of inventory.

Stop Here:

So what you learn from my post? You just have to know about 2 things,

No of giveaways of your selected product?

Landing cost of your product?

What should be your selling price?

These 3 questions you may consider in your mind as amazon seller or may ask to your client as a Virtual Assistant to calculate the whole budget for Private Label model of business.