If you haven’t lived under a rock for the past 5 years, you’ve probably heard about the wide variety of business opportunities that Amazon offers to pretty much any type of business. From solo entrepreneurs to big companies: At least, in theory, there is opportunity for everyone!
In today’s article, I want to shed light on three major business models that you can implement using Amazon as a platform as well as their gigantic, already existing customer base. We will look at two business models that you can literally start making money with TODAY, as well as a third one which is rather mid- to long-term focused.
Let’s get rolling…
How To Make Money By Selling On Amazon
Have you ever wondered why so many businesses sell their products on Amazon? I’m not only talking about “small” solopreneurs like you and me but even large companies that have already successfully built and established a big online presence with their own online store? Why do even they care about selling on Amazon?
The answer is simple: Amazon has a GIGANTIC customer base. Pretty much every single person in the western world knows the name Amazon, and millions of people shop there each and every day. Amazon Prime alone, Amazon’s premium subscription model, has over 100 million users.
Imagine how hard it can be to attract people to visit your own, tiny webshop, then earn their trust to finally convert them into paying customers. Amazon takes the heavy lifting out of that equation as the customers are already there. And they do already trust Amazon’s excellent service and high standards! That work has already been done. It’s a low hanging fruit, ripe, waiting for you to be harvested.
That is why everyone wants to be on Amazon and sell their products there. But how can you get started and make money selling on Amazon?
Beginner Level: Selling Used Stuff
If you have never sold anything online and want to get your feet wet, selling used stuff you can find on your attic on Amazon can be an excellent opportunity to get some first hands-on experience with Amazon as your future business partner.
I know many will argue that selling used stuff from your attic or garage isn’t “real business”. That may be true, but I’d argue that it is a great first step and will teach you a lot! Let me give you a few examples:
- You’ll get first hands-on experience in building an online business out of thin air.
- You’ll learn what selling physical products online feels like.
- You can get a feeling for the type of work an online seller does (writing listings, communicating with customers, dealing with Amazon, handling returns, etc.) and if that work involved is something that makes you happy.
- You’ll learn what having a big corporation like Amazon as your business partner feels like.
- You’ll earn your first cash relatively quickly. That’s exciting and the moment that can spark a motivational “fire” for years to come.
- If you don’t have invoices or debt that you need to pay right away, you can put that earned money aside and reinvest it into one of the two business models I am going to describe below: Retail Arbitrage and Private Label Business
The great thing about selling used stuff on Amazon is that you can get started RIGHT NOW and potentially earn your first buck TODAY! In just three simple steps you can take RIGHT NOW:
Step 1: Search Your Attic Or Garage
It’s time to get rolling: Head to your attic or garage and look through ALL your old stuff. Make three piles:
- Stuff to KEEP,
- stuff to SELL, and
- stuff to THROW AWAY.
Everything you haven’t used in the past 12 to 24 months goes either on the “stuff to sell” or “stuff to throw away” pile! That’s important: Do not hold on to old stuff that you haven’t used in ages just because you may want to use it sometime in the future. Be consistent and stick to the plan!
Step 2: Create an Amazon Seller Account
Now head over to Amazon and create a Seller Account. Visit https://sell.amazon.com/ and create your account.
Step 3a: Find The Product On Amazon And Add Your Offer…
Now, look for the product you are trying to sell. If it is an “off the shelf” product you will typically find it on Amazon. One example of such a product would be a videogame, tools, or maybe even a watch.
Once you have found the product scroll down a bit until you find the small section with a button where it says “Have one to sell? Sell on Amazon”.
Now, login to your seller account and create your offer. If you can afford it, try to sell your used product a few dollars cheaper than what the other sellers sell it for. That way, your product will appear on the top of the list of the available offers. That’s it!
… Or Step 3b: Create a New Listing On Amazon For Your Offer
If the product is less of an “off the shelf” product (like your grandmother’s old cuckoo clock, for example) then you will have to create your own listing. It’s a bit more complicated, as you will have to come up with your own title and text for the product listing as well as take some photos.
However, bear in mind that this is your first step into the world of selling products online. Writing good product listings is something you will have to learn anyways, so why not start now?
Once you are done, save your listing and it will go live on Amazon. Make sure to share it with your friends via social media. Maybe someone knows someone who is looking for the exact product you are selling!
Alternatives To Amazon
Obviously, Amazon is only one of many platforms that offer you to sell your used stuff. eBay and Craigslist are well-known and respected alternatives. Give them a try and see which one works best for you. The truth is that there are many small business owners out there that have found that selling used stuff (be it their own or stuff that they have bought from others to flip online) is their destiny and the kind of business that makes them happy! Maybe you are one of them!?
Intermediate Level: Retail Arbitrage
Retail Arbitrage is an “intermediate” level approach to selling on Amazon, but one that is somewhat closer to the idea of running a real business. The idea here is that you go to a local shop like Walmart, Target or so and start searching for products that have a higher price when sold online than they have in your local retail store.
Give it a shot and you’ll be surprised how much money people are willing to spend when shopping from home, assuming that Amazon has the best price anyway and therefore stop comparing prices with their local retailers!
Here’s your gameplan:
Step 1: Do Your Research
First, go ahead and download Amazon’s app to your smartphone of choice. Now, visit your local Walmart or Target and browse for products that appeal to you. Take your smartphone and open the Amazon app. Inside the app, you’ll find a product scanner, that you can use to scan the barcode that you find printed on the products – Be careful with the scanning process, though, as some retailers don’t like seeing customers excessively comparing prices online.
Now, compare the prices you’ll find on Amazon with the prices in your local store. When you happen to find a product that your local retailer sells for LESS MONEY than Amazon sells it, you have a potential winner (I didn’t say if; and that’s for a good reason 🙂 ).
Let’s say you find a board game that retails for $20.- at Target while on Amazon it would cost you $40.-. Winner!
Now it’s time to dig deeper! You can do this on-site or take notes and do this step from home or, better yet, from the parking lot. Three more steps to complete your research:
- Do an online search and try to figure out how much shipping this product across the states would cost you. A car tire for example is much more expensive to ship than a bottle of barbecue sauce. Let’s say you could ship the board game for $4.-
- Amazon takes a share of roughly 10%. If you plan to sell the board game for $39,- that would set you back another $3.90!
- Now calculate your potential profit: $39.- – $20.- (purchase the product) – $4.- (shipping) – $3.90 (Amazon fees) = $11.10! That’s a nice profit margin that even gives you some wiggle room to take other factors into consideration, like gas (for driving to the store and the post office), and taxes, etc.
Alternatively, you can even do a light version of this entire process from home! After your weekly shopping, scan the products you’ve just purchased and do as described above. Then compare the prices you’ll find on Amazon with the ones that you paid and find nicely printed out on your receipt.
Step 2: Buy Products
Now buy the products. Start small! Buy 5 to 10. That would net you a profit of $50 to $100. And if something goes wrong, you’ve not invested your entire savings. The cashier may give you a weird look when you suddenly buy 10 times the same board game. But hey, who is he to judge!?
Step 3: Sell On Amazon
Now return home and list the products you have to sell on Amazon. The steps are the same as described above in the “Beginner Level” section. Wait for orders and fulfill them! Done, you’re first online business is now up and running!
Some may say that retail arbitrage is a bit dishonest. I can see where these people coming from, but I would still disagree. After all, you are providing a service, i.e. make a product available online that you otherwise would probably have to go to your local retailer to shop for. Also, the market itself regulates the price, as there are competing sellers on the same platform (in this case Amazon), which makes flipping retail arbitrage inherently different than dropshipping, which I personally don’t feel good about in terms of business ethics. Simply put, dropshipping is a totally different cup of tea!
Advanced Stuff: Private Label Business and Fulfillment By Amazon
If you have a bit more “pocket money” to spend and you are certain that you want to sell physical products, then a so-called private label business is what you should look into closer.
The basic idea of that business model is that you research products that
- do already perform well on Amazon,
- offer some wiggle room for additional, new competitors and
- have some minor flaws that you could fix with some improvements (be it a change in the product’s design, its packing, or just some added value by providing a free ebook, for example).
Compared to the other two methods I have described above, this one is a real business. While the other two are something you may want to consider to get started and get your feet wet, maybe make some initial cash to reinvest, this one can earn you money for years to come, and that pretty much on autopilot if you are doing it right!
I have written an entire article about this business model and you can learn more about the private label and Amazon FBA business model here!
Can I Use Amazon To Build A Dropshipping Business
I have written a whole article about the idea of dropshipping, how it works and if I consider it a good business model. You read my full breakdown on dropshipping itself right here!
The question is if you could use Amazon to sell products and then dropship them from a third party right to your customer’s doorstep. The answer in short: Yes… but also no!
As I described above you can certainly sell products through Amazon and then manually fulfill them and ship them to your customer. In theory, it doesn’t really matter if YOU fulfill the orders personally or forward the order to some overseas manufacturer to fulfill it for you. In fact, nowadays there are many Chinese sellers on Amazon themselves who whip their products directly from China to your doorstep. Nothing wrong with that!
BUT: Amazon sets very high standards for their sellers and holds them accountable! In other words: Assume you take an order, forward it to your Chinese supplier to fulfill the order for you and he messes up; then YOU are the one Amazon will hold accountable. If that happens more than once Amazon may permanently ban you from selling on their platform. That happens regularly and the internet is full of stories from people who have been banned from selling on Amazon.
Don’t become one of them!
Selling products on Amazon is an excellent business opportunity. One that anyone who is willing to deal with the competition on the website should seriously consider.
Personally, I have been running an Amazon Private Label business since 2015, and it still makes up for a big portion of my monthly income. I am not invested in it as much as I was in the early stages of getting the business up and running, as I simply didn’t enjoy the business model as much as I expected to. But it is worthwhile pointing out that it works and it makes me money up to this very day and years to come, even now that I’ve put it on the back burner.
My Suggestion For Beginners
Before you jump the gun, though, make sure to educate yourself about the many different online business opportunities out there so that you can man an educated decision. I’d argue that there is a much better business model out there than selling physical products on Amazon. Especially if you are in the early stages of your journey as an online entrepreneur.
If you liked this article or have anything to add, please share your thoughts in the comment section below, and let’s have a discussion. Also, please share this article with your friends and family, if you think it is worth a read. As always: Sharing is caring!
All the best,