Wholesale VS Agency business model?

This question is directly related to @Trent_Dyrsmid business model (hope Trent or anyone that has a good answer can reply to this).

When pitching my company business model to other entrepreneurs, specifically referring to the wholesale model that focus on closing special agreements with brands to have exclusive distribution on Amazon, I always get asked whether what I provide is a service or not.

I initially thought it was not but then I realized that working on the same offer but providing it as a service might be convenient under certain aspects.

In the “traditional” wholesale model, my company would first close an agreement for the exclusivity to be the only seller of those products on Amazon, then I would periodically buy the products from the brand and do as much as I can to improve sales because it will benefit me (improve pics, listing and invest in ppc)

On the other hand, if I would give the same kind of offer to the brand, but offering it as a service, I would manage their Amazon account (still being the only seller as I would represent the brand itself) but this time I won’t need to purchase any stock in advance (as the brand would provide them), and I will not need to invest in any optimization as it’s their account so I can offer that to them as a service. In terms of payment then I would just get a commission out of sales but without advancing any stock.

I see in the service case (so essentially providing Amazon account management) similar upsides to the “traditional” model (eg. exclusivity) but less downsize (eg. no need to purchase stock in advance)

What are your thoughts about this? Am I missing anything?

My other biggest concern in the “traditional” model is: how do you make sure that the brand won’t end the exclusivity agreement after you have built BSR for their products and invested in PPC and listing optimization?
Or what can you do to minimize that risk?

Thanks in advance


Yes you can absolutely go about it as an account management service.

The biggest upside, as you noted, is you don’t have to use a lot of up front capital.

The biggest downside is that the brand now sees you as very accountable to provide those services.

We’ve found that the accounts where we are sending them checks (buying inventory) are much less headache than when they’re sending us checks (service model).

We do ask brands to sign a contract for 6 mo (which auto renews), but the best way to make sure they won’t end the exclusivity agreement is to do great work for them. We also try not to expend any more capital (subcontractor, labor, etc) towards growing the account than the profit we make from the account. We’re pretty transparent with the brand about this.


Thank you for your answer!

Adding to that, with your model then, do you only look for big brands with strong presence on Amazon? What about those other small-medium brands that might have weak or no presence on Amazon but might be good brands offline? Do you even consider those as your targets?

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@gianmeliShanghai Obviously the big brands are the ones that typically make you profitable but we also look to source small brands as well. You have to be VERY transparent with them about what you will do for them though. We typically promise them less and on a more elongated timeline.

You can tell them, we will do X for you after we have reached Y in gross profit. Y may take 3 months to accumulate but then you’ll have some cash to undertake the first piece of an optimization. Let them know what you did, monitor sales, and set your next profit benchmark and optimization/advertising activity.

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