If you’re looking for extra income streams for your business, look no further than this week’s podcast episode.
We sit down with wholesale expert Isaiah Fritz who shares a new approach to popular selling method that eliminates competition and protects margin.
We talked about how to find suppliers, what to look for in products, and how to set up carefully crafted exclusive agreements that put the ball in your court.
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- 00:00 – Introduction to Guest: Isaiah Fritz
- 01:46 – Isaiah Fritz’s Background
- 06:22 – Focus of Isaiah’s Business
- 09:11 – Entering the Wholesale Market
- 15:20 – Manual Approach vs. Utilizing Tools
- 17:45 – Common Challenges in the Wholesale Business
- 25:33 – Understanding Wholesale Margins
- 28:41 – Addressing Storage Concerns in Wholesale Operations
- 32:13 – Exploring the Sale of a Wholesale Business
- 34:47 – Private Label Brands and Selling to Wholesale Distributors
- 39:25 – Valuable Wholesale Insights from Isaiah
- 41:39 – Where to Connect with Isaiah
Hey folks, welcome to another episode of The Brand Builder Show. This one is going to be a great episode, we’re going to talk about a little bit of a different topic to some of the other focuses of the show and that is going to be all things wholesale. Can you start a wholesale income stream on the side of your private label brand? How do you do it? What are the things you should be looking out for all of those nuggets coming up? And to talk through that we have a wholesale wizard with us on the show today, Isaiah Fritz. Welcome to the show today, Isaiah!
Isaiah Fritz 00:29
Hey, thank you so much, Ben. I’m excited and not only to talk about wholesale, but taking that to the next level and exclusive wholesale.
Ben Donovan 00:36
Oh, you got me excited there talking about that. It’s gonna be good. I think it’s a topic that, well, I know, in our community, it often comes up because as you’re building a private label brand, you know, the goal is to try and you know, leave as much money in it as possible to snowball it and you know, look towards the exit. And then the issue of cashflow comes up. Why sure would love a maybe a more cash flowing business? And maybe you’re kind of telling me that this is one of the myths of wholesale? It’s not as you know, as good cash flow, as maybe I said, but we’ll get into all that, obviously. But the conversations we have are, could this be like a side hustle on my side hustle? Or could this become even sometimes, the main thing I know, for a lot of people wholesale is a, you know, the main thing and it can grow absolutely massive. So I think there’s, you know, I can set maybe some misconceptions about what wholesale is, and what can be possible with it. So I’m excited to dive into it with you. Before we do get into the meat in the bones of what wholesale is and how to really master it, give us a bit of a background about yourself, what your, you know, history has been and what’s got you to this point now?
Isaiah Fritz 01:46
Absolutely. So Ben, I did not start with private label, I started with buying stuff at yard sales with my mom and flipping it on eBay, right. And then I got into flipping stuff on Amazon. So I kind of was always in just the flipping business. And then kind of gradually doing that more and more, I get into retail arbitrage, which is going to retail stores, buying products on clearance and scanning them with your Amazon app and selling them on Amazon. So then naturally after you do that for a while, the next step is wholesale, where you’re saying, hey, you know, I’m buying this product at retail stores, but I’m limited to the amount of stock that is at my local Walmart or whatever. So I need to be able to have more volume. So that is just the natural next step for a arbitrage seller is wholesale. And so that’s kind of how I got to it. And you know, there was a lot of ups and downs in between. One point in 2018, 17, right in that area, Amazon sent me a notice and said, “Hey, we’ve had a few counterfeit complaints”. And I said counterfeit complaints. Okay, they said, If you can’t prove that these products are not counterfeit, we are completely shutting down your account. And as of right now, there will be a hold on all the money that we are not giving you any disbursements at all. And so I was like, okay, all right. So I went and got invoices from my, you know, liquidation, retail stores all this and Amazon was not accepting it. They were saying, no, we want invoices from the manufacturers or distributors. So I couldn’t provide that. So Amazon had eventually, and two months later shut down my account, held over $40,000 from me, which was everything I had, at that time when I was just getting started in the whole Amazon game. I was only in it for like, a year and a half at that point two years. I was you know, I was building momentum. And, so yeah, I couldn’t get a hold of, of anyone, everything Amazon sent me like was that, you know, robotic response to everything. And so finally, I, you know, I was hiring some consultants and everything. So I was shut down for eight months, I eventually got a hold of an Amazon as many Amazon leadership VPs, directors, whatever I could find on LinkedIn. And because because I didn’t never use LinkedIn before that, but somebody said, “Hey, try LinkedIn”. And so I tried it. And I eventually got a hold of Jeff Bezos, his technical advisor. So what that is, is every year Jeff Bezos would have a technical advisor, which was basically a shadow. So the current CEO Andy Jassy at Amazon was Jeff Bezos, his technical adviser and in the late 90s for a year and would shadow Jeff Bezos and just help him you know, throughout his day and basically Jeff Bezos could download on this person and then this person would be put into some sort of leadership position in Amazon. So I got a hold of his technical adviser that year in 2017 18. And I got a call within two days from Seattle, which from his assistant that said, “Hey, we’re really sorry. We personally apologize what Amazon’s done to you. And here’s all your money. And here’s your account back”. And so I was just like, Thank you. Thank you so much. I was crying. Yeah. So anyway, so that really pushed me to say I need to buy from manufacturers or distributors, I have to go into wholesale. That’s my only option, because I’m not going to go through this again, right? Or not do Amazon at all, which I was highly considering not doing Amazon at all, and just doing real estate or something else. But I found out was like, you know, the only thing I’ve ever done with my life is flip products online. So I guess I’ll stick to it for a little longer. So, really, so that’s how I really my journey really started with developing a manufacturer distributor relationship.
Ben Donovan 06:08
And what does the week look like for you now? Are you still doing a lot of wholesale stuff? Now you’ve got sort of different events and stuff, which we can talk about as well. But what’s like an average week for you at the moment? What’s the focus for you?
Isaiah Fritz 06:22
So well, I will say that what I’m currently doing in my business is the last few years, we’ve been transitioning from resale, wholesale, to exclusive wholesale or brand partnership. So the problem with wholesale is that you’re competing against a bunch of other wholesalers. And you’re all in the same ASIN. And a lot of times, it’s a big price war. Because you know, you got everybody’s got stock at FBA, and you’re just trying to sell it and the price is going to the bottom. So yes, there’s always been money in wholesale. There always will be some money in wholesale. But it’s hard to really scale a business that you can’t really predict. You know, this might be a really good seller this month, but it might be really bad seller next month. So we’ve been focusing on exclusive wholesale relationships, where we are going directly to the brands and saying, “Hey, instead of you worrying about Amazon and having all these wholesalers do it or you just putting any thought into it, we’ll just buy your product wholesale, and sell it on Amazon and be the only seller and do all of your advertising, all of your, you know, picture updates, and A+ content storefronts and you know, everything there is with Amazon keyword research, SEO, all that we will do the full package. And they what they’ve done, they’ve already built demand, they’ve already built a brand, they’ve already have the product, they have the customers, we’re just optimizing on Amazon. And we’re getting a sliver of that with margin. Right. And so that’s that’s really where we’re transitioning with online selling partner by brand is to really focus on that model. And what we’ve seen is is that model is way more successful, and it’s also way better for the brands that you’re working with. So I think that exclusive Wholesale is something that is not really spoken about at all, where very much there’s not a lot of companies out there that want to put that much time and energy into a brand that they’re working with to do like a one stop shop, a lot of people just want to, “Hey, I just want to buy a product, you know, from distributor and buy a pallet of it and then throw it on Amazon and boom, I’ll make money”. It’s not that simple. I wish it was you know it okay, it’s that simple, but it never last it never lasts for you’re buying the same product for years and years. It’s always like that product sells really well for a couple months until another wholesale company figures out where you’re getting it from and and the same thing, it’s this constant churn, constant churn. So when we’re in the wholesale business, it’s hard for us to be selling the same product for more than like three to six months unless you have some sort of really deep relationship with the brand at whatever level.
Isaiah Fritz 06:45
Yeah, so if you spoke to someone who has just started to get into this kind of business now then would you say completely avoid the traditional form of wholesale or would you say is a good place to get started and learn the process and then move on to what you’re doing or yeah straight into what you’re doing?
Isaiah Fritz 09:26
You know, I think that if you’re completely new to Amazon, you know, just just starting small and regular wholesale regular go into stores flipping product you got to get you got to get experience under your belt and just get some cash flow going one thing you said before and I don’t think is a myth is with compared to private label wholesale you make money a lot quicker, like with private label, you know, you might be six months a year out until you actually can bring something home because you’re just reinvesting and you’re growing your brand, which is great private label is better in the long run, because you have a brand, you have something that is a sellable asset, something that, that that could cash flow for years and years or whatever, if you really build a brand. Don’t just build a private label business, that is a commoditized product, something, just sell another rubber ducky, right? Build a brand, right? So I think with with wholesale, that it’s a great, there’s always money in it, it’s a great way to just make quick cash, if you find a deal, like it’s an arbitrage, then you say, “Hey, I can buy this at this distributor for this price. And I can sell it on Amazon for for this price, I can make some money in between”. Don’t think it’s going to be like that for years and years, because it probably won’t be but at the moment, you seize the opportunity, you grab it, and you make it happen. And it’s great. And there’s people that do it at scale. But it’s a really hard business to scale profitably, and a very high level. But there’s a lot of people that do and make a couple $100,000 a year. I’ll say one of my best wholesale flips was in 2020. Everyone wanted yeast, because they were making bread at home right. So what I was, what I found out, is I could buy a pound of yeast for $2.50, and wholesale and then sell it. The normal price on Amazon was like $9. But because of the pandemic in the supply and demand, the price was going up to 20, 25, 20 $25. So not like a huge price increase compared to some things but it was enough where all that extra money was just bottom line profit. Because you know, with Amazon fees, if you’re selling something that $8, $9 Amazon fees and shipping, take up most of your profit right there. So if you’re just adding an extra $10 on top of it, that’s just profit in your in your pocket. So I was able to get a hold of like 20,000 plus units of yeast, and sell them all in like a week. Because it was such a high demand, like $45. So I made a couple $100,000 in like less than a week. And I couldn’t find any more yeast because all strippers are sold out, right? So like I said, it worked really well. And then I had back orders for more yeast. And when these when my back orders finally came in, the yeast price on Amazon had dropped back to $10, $8. So then it was a breakeven or loss. I actually lost on some of my second orders. But I made enough profit in the beginning where I was like, wow, this is a lot of money, you know, and just on one flip like that, so So there’s definitely money in wholesale, especially if you could find deals like that. I definitely don’t find deals like that every day. But the best way to find, I know I’m kind of getting into everything. But for me, the best way to find good partners good brands to start working with is look for. I always tell people, is there anything on Amazon that you ever searched for that was either more expensive than normal, or wasn’t there. And so those two things, if you’ve ever had that, in your own experience, or ask your friends, they’re like, you know, I was looking for that on Amazon, I couldn’t find it or it was way more expensive on Amazon than it was everywhere else. Those are opportunities. Those are places where you can go and say, hey, if it’s not on Amazon, it’s a really easy conversation to have with a company, with a distributor that’s, you know, to say, “Hey, I can get that on Amazon”. Or if it’s higher than everywhere else, there’s probably a arbitrage that you can make. And so you might be wondering, how do you build relationships with brands and buy the product, it’s actually really simple. All you have to do is is identify the brand you want to go after, and reach out to them and say, Hey, can I buy direct from you? Or do you have a list of distributors that I can work with? Sometimes the brands are getting way more controlled on their distribution, but if it’s a small brand, which I would recommend starting with small brands or brands that you know, are not on Amazon, they’re a lot more lenient to just let anybody buy. But brands that have more experience and bigger, it’s gonna be harder, like it’s gonna be harder for you to go out and sell Apple phones or KitchenAid mixers and stuff because they have a very, you know, mature business a very, you know, you know, don’t try. So just try to go after the niches because the riches are made in the niches right? So anyway, so it’s very easy. And then I mean, I remember even Hasbro, you know, as big as that company was, they sent me a list of distributors, I just said “Hey, I would want a list of distributors”, and they sent me a list of distributors and I started reaching out to those distributors, and was able to get the hot toys at Christmas time, right? You know, I only made money at Christmas because the Hot Toys, or whatever, and you have to time it right and everything. But it’s so fun, it’s arbitrage is fun, wholesale is fun if you like playing that game, but it’s hard. It’s not like private label words long term money.
Ben Donovan 15:20
Yeah, yeah, do you because one of the things that we would do with private label, for instance, is a fire up one of the tools, you know, is putting certain criteria, you know, X amount of revenue. You know, X amount of reviews, all that kind of stuff, is that something that you would do to get like a wider view for wholesale, or you very much done that manual approach that you mentioned there?
Isaiah Fritz 15:43
There are tools out there that I use now, especially as I’m scaling my business, I’m doing bigger, I mean, if you’re starting out, I would just start with half the tools, because here’s the thing, everybody uses the tools. So those opportunities you find on tools, some bigger wholesale company out there, because there’s some pretty decent sized wholesale companies out there are probably already going after that opportunity. And you’re just a no, you’re behind after it shows up in the data. But a lot of it’s weird in the wholesale, you kind of a lot of them think backwards. First they find a distributor, and a distributor might carry 10,000 different SKUs, they’ll find all the SKUs, which will and they’ll have a list of SKUs that’ll have UPC codes, and then you take those UPC codes, and then you put them through a tool. There’s a lot out there, we use a tool called analyzer dot tools. We also use tactical arbitrage, where you can find you can put in your list of UPCs, thousands of UPCS. And analysts say “Hey, this is profitable, this is not”, you know. And they kind of work a backwards approach, where private label you’re kind of going in the other way. So but there is a tool called Smart Scout that we use that is looking at all the brands on Amazon, and you can put in filters, like “Hey, I want brands that there’s already maybe five or 10 Amazon FBA sellers selling it”. And I think sometimes people think if there’s already five or 10, sellers, then I can be the, the 11th and still make money. I mean, if that’s your model, there is money to be made there or, and you can filter out, “Hey, I want brands with this size, and blah, blah, blah”, and you can do all your filters and come out with hey, here’s here’s a list of brands that you would be that I might try to contact for wholesale. So that’s that’s kind of Scott Needham has a lot of good content.
Ben Donovan 17:46
He’s, he’s great. I love I love his stuff. But on the whole, I don’t know, obviously, as you can probably tell much about the subject on the whole. So I just thought it’d be cool to maybe just throw some myths at, you know, the common things I hear and you can dispel them or otherwise, like the first one that I suppose feared in the past and thought, well, I don’t want to do that, in case it affects my account is, as you mentioned, at the start, you know, counterfeit claims issues with having to prove where you got the product from? Is this like a widespread issue with wholesale? Or are there things you can do to
Isaiah Fritz 18:25
As long as as long as you’re getting good invoices from reputable suppliers, or distributors that in that supply chain can link back to the manufacturing point? Yeah. You have no problems? I haven’t any problem. Like I said, I still sell lots of wholesale today of products. Where you get into issues is if you just buy pallets from a random liquidation supplier and stuff. That’s where you kind of get into more of that shoes.
Ben Donovan 18:54
Have you tried that literally must have been four or five years ago. There was a guy on the Helium 10 podcast years ago talking about how he’d made loads of money doing these liquidation pallets, and it was the next big thing. And I tried because I thought, you know, as we’re talking about now, like a little bit of a side hustle on the side of the private label stuff to help with cash flow. And it was such hard work, man.
Isaiah Fritz 19:17
Yeah. Now it’s hard work. It’s a full time job. But yeah, I don’t recommend getting in liquidation now for Amazon, maybe for eBay or other channels, local selling or something but not for Amazon. Amazon’s just becoming way too controlled, and they’re trying to become more of a brand centric marketplace, which is good for us. But anyway, the other thing that you could do is if you know brands that you like or that are not on Amazon, or you know they have major problems on Amazon, either they’re they’re not even FBA or they only have like one photo on their listings or whatever, you know, those are also good wholesale. opportunities where you can have a brand partnership is what I’m doing, where I’m going to them and saying, “Hey, how about like, let us just sell your stuff. Let us be the only seller. We’ll buy the products wholesale, we’ll sell it on, there’s no Amazon, there’s no real risks to you. This is 100% all upside right?” And, you know, I think like, it’s, it’s easy, it’s fairly easy to convince smaller brands to do that. I mean, it gets more challenging where I’m at, where, like, my minimum brand, I want them to be doing like a million dollars a year on Amazon and such. So it’s, as we’ve gotten bigger, it’s, you know, it’s harder to convince these fingerprints, but the smaller bands, they, they would love for someone to go out there and represent them and, and put the work into it. And, and I think, I think it can be very lucrative. I’ll tell you, the first brand I did it with was a local Candle Company, I literally just typed in manufacturers near me. I went knocked on doors, found this horrible company, and they and and said, Hey, can I sell your products on Amazon? They said, Well, we, we have somebody that’s already doing that. And and I said, well give me a chance. So my first month, I sold 1000, candles, and the other guy sold 18. So they said, alright, we’ll let you represent our brand. And so I ended up building that into a $2 million a year revenue brand. And just a couple years, just and they were already on DTC, they already had the demand, they had a very unique product, and it worked well for a while. You know, obviously, then just like with anything, lots of Chinese competitors came and lots of you know, so that really diluted the market. And it was a lot harder to sell. It was a USA made candle product. And it was hard anyway, the relationship got Rocky, in the last couple of years. But for a while there, it was great. And it was really got my feet wet on how to really represent a brand. And if you’re already doing it on private label, they’ve already there’s a lot of brands that already did a lot of the hard work, they already got the the product market fit, they’re already spending money on ads, they’re already driving traffic and eyeballs to Amazon, even if they mean to or not. Because people you know, 70% of people will choose Amazon, if given the option in America anyway. Because they want that Prime shipping and everything. And so if they’re underrepresented on Amazon, just getting that, that extra channel, you know, you’re just you’re just tapping into a market they’ve already created. And you can maybe optimize it and make it better. So that’s, that’s something that I highly recommend everybody do is to really consider if you’re a private label seller, it’s not hard, it’s a very adjacent territory, to to reach out to other brands and say, like, Hey, I’m doing this for my brand. Look how successful I’m doing it. Yeah, I can also do this for your brand at no cost to you.
Ben Donovan 22:53
And I think that is I always say that to our community is such a good opportunity to increase your income streams, if you get good at selling on Amazon, ecommerce doesn’t have to be Amazon could be, you know, email, it could be paid traffic, what you know, if you get good at certain disciplines with an E commerce, there’s so much money to be made by helping other brands with these services. You know, because there’s lots of big brands, like you’ve mentioned, that don’t want to get into the details of selling on Amazon, the details of running Facebook ads, you know, they’d rather just pay someone to do it well for them, and get off their plate. So there’s, you know, it’s very, like how you said that, that actually you can take the skills that you’ve built up by creating your own listing, creating your own a plus content, you know, all of that stuff, and then bringing it over to wholesale as well. So, yes, it’s interesting to see you then buying the products, you don’t have like a revenue share deal or anything like that you’re simply buying the products in bulk from them at wholesale prices.
Isaiah Fritz 23:56
Yes, we’re buying in bulk at wholesale prices, and we obviously look at the numbers with them. And sometimes, you know, we’re we try not to be greedy, right, we try to take as little margin, that still makes sense, where sometimes it’s cheap, we buy at a better price than some of their other wholesale partners. Because, you know, we know that it’s better for the long term relationship, because they might be we want to have them long term, right? We don’t want them thinking like in three years well, you know, they’re taking so much margin Why don’t we do this ourselves like we want to constantly provide more value that it doesn’t make sense for them to do it themselves. It’s like It’s like why why would I invest all the time and energy when because it does Amazon takes a lot of time and energy and it everybody knows this I mean there’s there’s nothing in wholesale or business that is a get rich quick. It’s just get rich easier. Right. So I think so. So yeah, so I think that if you take your skill sets that you already have, and you can just apply them to another brand. It If you’re setting yourself up for something like private label, it’s long term money, you can deal with that brand for 510 years or whatever, you know, you’ll be able to deal with a product that you love. And it’s just, it’s just a lot better model. And so
Ben Donovan 25:18
how do you how are you ensuring that exclusivity? Are you getting sort of binding contracts?
Isaiah Fritz 25:24
Do we have we have an actual exclusive contracts? And that we’re the only distributor on Amazon and all that stuff? And yeah,
Ben Donovan 25:33
okay, cool. In terms of then just some other myths to try and round out this perception and concepts. You mentioned there about margins, because that was one of them is there’s a common feeling maybe in our private label world that to do wholesale or arbitrage there’s very thin margins. Speaking to that. Yeah, I mean, there’s private label sellers on thin margins.
Isaiah Fritz 26:02
Every, there’s, there’s there’s private label sellers that are on negative margin, and there’s wholesale people that are on negative margins. So it just totally depends. I mean, if you’re getting deals like I was with the yeast, then that’s great margins, right. And we’re turning $2.50 into, you know, $10 profit. I mean, that’s a Forex your ROI, right? So, you know, there is, I’ve always had very healthy margins with Wholesale, I’ve always had, if you look at it from a top down, if I’m always been around 20%, margin 15% at the low end, you know, I mean, you’re always gonna have a bad buy, you’re gonna have something that just flops and you lose money on, I always tell my guys, we just want to win more than we lose, right. So just make sure that we’re winning more than we lose. So I’ve never had, you know, too much issues, it goes into it. At the beginning, I lost money, because I didn’t know what I was doing. You know, it’s like anybody, so you just get some mistakes under your belt. And you can kind of say, hey, you know, I’m not going to do that. Again, I missed it. You know, miscalculated that, or whatever. And I have a little drawer in my desk, not in this desk, but my my home office desk. And it is my mistake drawer. And whenever I make like a major mistake, I put some sort of memorabilia into that drawer that I can open up. And one of the things that I’m thinking of right now was a wholesale mistake. I have a little Microsoft cable, and this cable, I bought wholesale. And you know, I was using those UPC tools. And the UPC tool said, this is a great deal. It’s a great deal. And so I went and I listed on Amazon, everything. Well, turns out, it was a different cable than the asin that was being advertised on Amazon. So everybody was getting the wrong cable. And I ended up you know, losing lots of money on that, because I had to return all the inventory and you know, all that stuff. So it, but it was a lesson for me to say just because the UPC tool says that it’s the right product, doesn’t mean it’s the right product. Double check. Yeah. So like, and then when you’re you know, so there’s just a lot of different mistakes that you make early on. And I’m still making lots of mistakes, but you just constantly get better. I think Dave Ramsey just said something on a podcast where he’s made way more mistakes in number than successes. So his successes are just him standing on a pile of mistakes that he’s made over the years. And so I think that’s pretty general in any business.
Ben Donovan 28:41
Yeah, absolutely. Yeah. Is a quote running around the back of my head that I’m trying to remember about mistakes, but it might come to me in a minute, and the moment will have passed, but still, it might sound good. The other one that I wanted to ask about as you’re sitting there in an office, you got people walking around, you know, that’s, you know, I thought about wholesalers, I’m not going to need a warehouse, where am I going to put all this stuff? How do you deal with that?
Isaiah Fritz 29:07
Well, I’ve always had my own where I’ve had my own, I would say distribution center, even it was just me, like I would buy the product, ship it to my house, you know, and then ship it to FBA. So I’ve always done it myself. There are people now that you use 3PLs to start. There’s 3PLs that are getting a lot better at wholesale than they were 10 years ago, nine years ago when I started. So I think that there’s a big opportunity in that I don’t have a lot of experience using 3PLs for wholesale. I mean, if you’re, if you’re buying a lot of the same item, I can see it very easy to use a 3PL. The problem is a lot of times like I’ll buy like a case of this a case of this or you know like and then you’re testing things out So, it’s not required to have a big warehouse and everything. It’s just the way I started the way I’m doing it. And it works for us. I have good people. But I know like Scott Needham, he was like, Man, if I would do it over, because he had a big wholesale business, he says, I would totally just do 3PLs and just not worried about it, because it’s just having a warehouse and having all that it’s just another headache. And if you could give that headache to someone else, then then great, and that’s, but that’s, anyway, this is the path I chose. And I, you know, thankfully have a good team that that does it. But I always have it in the back of my mind. I could go to 3PLs. And I’m always like getting quotes from 3PLs just to stay fresh and realize, okay, it’s still cheaper for me to do it myself. But yeah, eventually I you know, could do that. But you also, there’s something nice about having control of your products that you’re going to care about it more than other people. So I mean, I would recommend starting off doing it yourself. And so you learn it, so then you can be more comfortable.
Ben Donovan 31:08
I heard someone say many years ago, and it’s always stuck with me that, you know, success in business, as in life is less about resources, and much more about resourcefulness. I think that if you’ve got someone that really does want to start a business, whether that’s wholesale arbitrage, private label, whatever it is, you know, winners find a way to win. And if you’ve got a small amount of money, you know, and you can’t afford a warehouse, then again, correct me if I’m wrong, but there’s, you know, you could always get stuff shipped to your house, right? You know, if you want to start with 500 units, 1000 units of a product, as long as it’s not, you know, a spare wheel for a tractor or hey, is there’s going to be space in most people’s houses for 500 to 1000 units of a product that you can sit there after you get back from work labor up, get it into an Amazon warehouse, you don’t need a warehouse to begin as such.
Isaiah Fritz 32:01
Yeah, that’s right. I worked with my garage for a long time, I actually built a three car garage for my wholesale business. And I thought, Man, I would never never grow out of it.
Ben Donovan 32:13
Yeah, no, that’s awesome, man. That’s awesome. And then final myth I could kind of think of is everyone talks about the benefit of a private label brand is you can sell it, it’s an asset. Can a wholesale business be sold, is it an asset?
Isaiah Fritz 32:27
I’m going to say it can be sold for a lot lower multiples, if I have seen them sold, but very rarely, and a lot lower multiples. So the that is something that I would I would, because it’s such a variable, because you might not be selling the same, but it’s more about the deal than it is about long term. Now, exclusive Wholesale is a different story. If you have exclusive contracts with brands that says hey, I I’m the only person is allowed to sell this product and sell that. Yeah, my business, I believe is a lot higher multiple because of that, because I am the sole exclusive distributor for XYZ companies. Now, at still, even my business is a lower multiple business and private label private label will be the highest multiple business. You know, I know that’s category dependent on the general rule. Yeah. But as a general rule, I would rather have, you know, 10 awesome private label brands and with lower revenues than then what I’m doing. Now, I would say my main goal is you might be asking, Well, why don’t you just focus on private label? I did a few private label brands in the beginning. And I just didn’t focus on brand, I focused on just commoditized products. And the Chinese beat me, you know, very easily. So what I decided is how about I do my model where I can make cashflow quicker, I’m actually making money, you know, quicker. But I’m learning from all these brands I’m working with, because all these brands that I’m working with, they all have built their own private label brands, right, you know, in a bigger scale. And when I launch my private label brands, I want to be able to launch them as successfully as possible. I want to launch multimillion dollar brands, I don’t want to want you know, a, you know, something that I’m making an extra 50 grand a year on it’s like, that’s not exciting to me, it’s like I want to I want to do something that I’m gonna do an extra, you know, million $5 million in revenue. And so that’s, that’s what my goal is. And so that’s the reason behind what I’m doing. So maybe in a couple years after really get educated, it’s like boom, now I have all my resources together a plan and everything where I can just launch a $5 million brand overnight. Yeah,
Isaiah Fritz 34:47
Yeah, absolutely. Yes. Really wise, lots of wisdom in there. Final question then just about for private label brands that maybe want to sell their products wholesale to other distributors.
Ben Donovan 35:00
Yeah, well, I’d love to get your thoughts on it. Obviously, I know the dynamic might be a little bit different, because a lot of our listeners will already be selling on Amazon. So they won’t necessarily be looking for someone to sell on Amazon. But, you know, whether it’s books or retail partners or anything like that, I suppose it was just more of a skew economics, you know, in terms of what kind of prices should people be looking for wholesale, to make it work? Because I know, maybe expectations might be a bit a bit different to reality. And yet, anything else? Sounds like you, maybe you have some warnings for people. So yeah,
Isaiah Fritz 35:32
The biggest thing we see is brands that go in and say, Hey, I’m going to sell to everybody, and I’m going to have this massive distribution, I’m going to make way more money. And then what happens is, they already have a really good Amazon Asin. So then a lot of people come in, they’re like, you know, other wholesalers are like, Hey, I’m gonna buy your product, and I’m gonna sell it on Amazon, and then compete against you, and then lower your price. And then it’s just a mess, right? So really careful on who you’re selling to. And even if you think you’re selling to some reputable, you know, distributor, you never know. So but there’s things you can do, things you can put in place to mitigate that. One thing is selling what you sell wholesale as a different UPC, as a different SKU, even though it’s very similar to the one you haven’t on Amazon, but make it different, so that you can separate those distribution wise. And then if they jump on, you can prove to Amazon say, Hey, that’s not even the right SKU, that’s not even the right product. So I think that’s probably one of the easiest ways to do at the beginning. If you’re gonna go wholesale, I would highly recommend that. And I’ve also would recommend being channel specific on your up season skews, even if you go to Target Costco or etc. Because what’s going to happen is these discount retailers like Costco, Sam’s Club, and there’s BJs, and all the discount retailers, they’re going to want something better, and or a cheaper price than everyone else, because they would want to sell volume, or even Walmart, right. So if you keep a separate SKU, each channel, you can track those things better. And you can also say, hey, well, this is a different SKU, this is a bundle, this is a whatever, to kind of give a better experience to your channels. So that’s something I would recommend if you’re getting into that. And then you ask the question about SKU economics.
Ben Donovan 37:23
Yeah. So just in terms of if someone didn’t want to sell wholesale? Okay, for instance, you buy wholesale? Yes. What are you looking for? Is it you know, 50% of your than target selling price? 40% 30%? What
Isaiah Fritz 37:38
ends on the category? Sure. So electronics is and like, like, appliances and stuff. That can be as low as like, 3% margin for the reseller. Like as low as that, right, which is terrible. There’s no way you’re making money. And that’s why you don’t see a lot of people like wholesaling TVs, or because it just doesn’t make sense. So, but if you’re in something like toys and games, it’s very, the common thing is called a keystone. Which keystoning is 50% off of your retail price, right? And then, so yeah, that’s, that’s pretty common, most like hard goods and stuff. You know, food kind of has its own weird margins. Yeah, like his grocery stores take low margins. So you kind of just it’s very channel specific. And I think you just kind of have to jump in with your product to see what you can get. But it’s like, you want to sell it low enough where your wholesalers can make a good profit, but also same time, you don’t want to, to to mess up your Amazon by having your wholesaler selling that way lower prices than Amazon, which maybe might be a good idea. I don’t know. I mean, it totally depends on you. Because I mean, you know, your Amazon, skew economics, you know, it’s probably going to be 3040 50% after ads, it depends. And so anyway, you just gotta jump off. And that’s a good frame, if you sell to distributors, and then a distributor sells to the wholesaler. There’s also distributor wants some money, too. So there’s there’s a lot of given tables
Ben Donovan 39:25
Things to factor in. Yeah, for sure. Now, it’s good that this has been super helpful in terms of like, an overview. Obviously, we could go way deeper on all of this if we have time. But is there anything maybe that I haven’t asked that you feel would be good to share? Just to round things out? Or have we covered everything that you think we should?
Isaiah Fritz 39:43
Well, like, like you said, we could talk for hours. There’s certainly things in wholesale and experience and depending on where you’re at and what you’re wanting to do. One myth that I would like to talk about is, is people think that they can get into wholesale and just sell something because it sells well.
Ben Donovan 40:04
Isaiah Fritz 40:05
I have so many people, it’s like beginners that just say, “Wow, this product, you know, sells really well online, I can make money on it”. No, just because it sells really well online, there’s a lot of units being sold does not mean you can make money on it. The riches are in the niches. So I want to remind everybody that if it sells really well, there’s a good possibility that that market or that product specifically is already been saturated, and there’s no margin left for you. So so so to definitely focus on the niches and I because I had somebody the other day said, hey, I want to sell, like my own drop shipping brand and sell cereal. And I’m like, What, are you gonna do sell Cheerios? And they’re like, Yeah, and I’m like, No, you’re not, that’s not going to work, right? You’re going to need to sell like some like very specific cereal that is only for bicyclists that are women over the age of 55. Okay, like, that’s the type of cereal you want to sell, like, you want to get very niche on, on on when you’re starting, right? And because then you can charge a higher price, you can have those margins and also serve more of a better customer. So anyway, that’s, that’s my biggest recommendation, everyone.
Ben Donovan 41:23
Yeah, that’s good. I’m really helpful. And I think that, you know, there will be loads more that people will want to learn, I’m sure. But the good thing about that is you’re a genius at this stuff. So where can people find out more about it, learn from you more connect with you is the best place for people to find you.
Isaiah Fritz 41:39
Absolutely. So LinkedIn, I’m Isaiah Fritz. Also on Twitter, I’m Isaiah Fritz OSP would be good. You can also you know, check out our website, you know, I’m definitely you know, wood, you can always DM me, I’m always there to try to provide value. And I’m always looking, you know, we’re looking for brands, that are already established brands that are doing millions of dollars in revenue that are non Amazon focused, that’s really our target customer, non Amazon focus brands where we can go in and buy wholesale from them and be their exclusive partner. So we have a really good referral program where we pay at minimum $10,000, to signed contract all the way up to $100,000. So you know, any, you know, we’re always looking for that if you want to reach out, but if anyway, I can help anyone out there, I want to do it. I had a lot of people helped me get to the point where I’m at. And so I always feel like I’m giving back to help someone else. So obviously, you know, I’m not like a super famous Dude, where I get like billions of DMs every day or something. So I still have, I still can, you know, I mean, don’t try to take up hours and hours of my time. But you know, like I’ve said, DM me, and I’d love to help you definitely.
Ben Donovan 42:57
And you have some events as well what type of recording you’ve got one just coming up very soon, it comes up as it comes out, the event will have gone but your are, you’ve got others planned in the future. And I looked at the event and it’s got a killer lineup of speakers. So those are legit things man, so
Isaiah Fritz 43:14
It is what it is. It’s ecomsummit.com. And so it’s it’s not just me, but I am one of the owners of the event, one of the founders of the events, in deserts kind of a long story how good I got into but I am not a majority owner of the event. And but I’m definitely help promote ecomsummit right now. It’s in Chicago, August 1 and 2nd, like you said, it’s going to be over by the time we release this, but we’d love you guys to keep an eye out and get on our email list for more events in the future. So we’re thinking about having multiple events a year, not just like one event a year and maybe different locales in the United States beside Chicago. It’s an event company. So that’s that’s what it is. It’s an event company for the Amazon niche, and E-commerce niche show. Definitely follow us and we’d love you know, our only goal is to provide value and to help each other and help each other be more profitable. So that’s our goal.
Ben Donovan 44:13
Amazing, good stuff. Well, thank you so much for taking time out to be on the show. I know you’re very busy. It’s been a value packed episode. Appreciate you coming on.
Isaiah Fritz 44:21
Thanks, Ben. You’re a great guy.
Ben Donovan 44:24
Thanks, man. And I hope you guys have enjoyed it listening as well and got loads out of that. If you do want to connect with as I make sure you do that. We’ll put the links in the show notes in the description below. Explore this potential revenue stream exciting opportunities out there for sure. And if we can help with anything, please do get in touch. And we’ll see you in the next episode. Same time next week. Take care