I’m currently sourcing products directly from manufacturers in China and Thailand for the US Amazon marketplace.
One thing I’ve noticed repeatedly is that manufacturers often start with what appears to be a very high quotation. When I explain that the price isn’t commercially viable, their immediate response is often:
“What’s your target price?”
I find this approach a little strange. As the manufacturer, they presumably know their production costs much better than I do.
I’m particularly interested in how experienced Amazon private-label sellers handle this.
A few questions:
Cost-to-retail ratio: Do you use a general rule of thumb for maximum landed cost versus Amazon selling price? For example, 20%, 25%, or 30% of retail?
Factory negotiations: Do you disclose your target buying price, or do you expect manufacturers to provide their most competitive quotation first?
Initial quotations: In your experience, how much negotiation room is typically built into the first factory quotation?
Small initial orders: For test orders of around 100–300 units per SKU, how much higher should we realistically expect factory prices to be compared with larger orders?
Supplier selection: How do you distinguish between a genuinely expensive manufacturer, an inflated opening quotation, and a product that simply cannot be sourced profitably?
I’m mainly looking at mechanical and electrical replacement parts rather than generic low-cost consumer products.
I understand that every product category is different and that Amazon fees, PPC, returns, shipping and import duties all affect profitability.
I’d be particularly interested in hearing from experienced sellers about the actual pricing rules, sourcing benchmarks and negotiation strategies they use before committing to inventory.
Thanks in advance for sharing your experience.