Three Ways To Make Money On Amazon

RETAIL ARBITRAGE

Purchasing discounted products at local retail stores and selling for a profit on Amazon.

Minimum Start-Up Cost: $50

Time commitment: 1-10 hours per week

Pros:

  • Great for beginner Amazon sellers. A lot of Amazon sellers start with Retail Arbitrage.
  • Low initial investment.

Cons:

  • Not easy to scale, typically you’ll only be able to purchase items one by one instead of in bulk.
  • You’ll need to physically drive to each store to find and purchase inventory, and sometimes the story may not have anything for you to source.

Perfect for:

The busy individual who only has a few hours to spare and/or doesn’t want much financial risk. If you’re great with coupons and finding good deals at stores you will do very well with Retail Arbitrage.

How it works:

  1. You visit local retailers in your area such as (Walmart, Target, Macy’s, etc.) to find local deals on products that you can sell for more on Amazon.
  2. You use an Amazon Product Scanner Mobile App (ex: Profit Bandit) that lets you scan products to determine their feasibility.
  3. You purchase products based on the results from the scanner.
  4. You send your purchased products to an Amazon Fulfillment Warehouse and Amazon ships your products when a buyer purchases.

Bottom Line:

Retail Arbitrage is great way to make money online. You can start with little to no money and keep flipping until you’ve got a nice sum of money in the bank and cashflow. I believe that RA is a great model  for building up capital to invest in models that require less time to run such as Private Label or Wholesaling. When beginning, retail arbitrage can be a great way to learn the ins and outs of Amazon while earning. The risk is up to you, spend as little as $10 at a local dollar store  or as much as $1,000 worth of Playstation 4’s. It’s really up to you, how hard you go.


WHOLESALING/DISTRIBUTORSHIP

Purchasing products in bulk from established retail brands and selling for profit on Amazon.

Minimum Start-Up Cost: $200

Time Commitment: 8-10 Hours Per Week

Pros: Begin generating sales quickly, since the brand is already established.

Cons: Lower profit margins, since you’ll be buying from a middleman and not manufacturing yourself.

Perfect for: The working professional who doesn’t like the idea of driving around to multiple stores in search of discounted products. If you’ve got $300-$500 to invest and can allocate 6-8 hours or more per week to your business. Wholesaling can be a great way to get results quickly since you’re selling products that are already established and making money on Amazon.

How it Works:

  1. Find branded products that are already selling well on Amazon, using product research software such as Jungle Scout.
  2. Contact the manufacturer directly and request to purchase the product in bulk.
  3. Purchase the product in bulk and send to an Amazon Warehouse to be sold to your customers.
  4. When a customer purchases the product, Amazon will ship your product to your customer.

Bottom Line:

Wholesaling is a great way to generate immediate revenue from Amazon. Since the brands you will be purchasing in bulk are already established – they already have loyal customers, you’re simply supplying the product for the customer who is already looking for that brand on Amazon. The profit margins aren’t the best, but the name of the game in wholesaling is selling hundreds of products. Wholesaling is also nice because unlike retail arbitrage you’re selling inventory that can be replenished, meaning you can consistently go back to the manufacturer and purchase the product.


 

 

 

 

PRIVATE LABEL

Private labeling is my favorite. You modify or add value to already existing products and brand them as your own. Adding value can be changing the color, material or by including multiple units of the same item in a bundle deal of an already proven product. Private labeling offers opportunity larger than Amazon. You can trademark your brand and sell your branded product to stores, set-up distributorship arrangements or set up your own website and sell on your own domain. So many Pros to private label.

Initial Start-Up Cost: $1,500-$5,000

Time Commitment: 3-4 hours per week

Pros:

  • You’re business will be able to survive off Amazon.
  • You will own intellectual property such as trademarks, patents etc.
  • You can create lifelong loyal customers.
  • You can sell your brand to an even larger corporation later if you like.
  • Is the most location independent of them all.

Cons:

  • High minimum orders due to dealing directly with China for the manufacturing of your products.
  • Riskier due to the fact your brand isn’t proven. (There are ways to lower risk).

Perfect for: The working professional who has a few thousand to invest and want’s a business that doesn’t require much time to run once running.

How it Works: (Real Life Example)

  1. You find a baseball glove that is selling well and notice that there is no one selling a baseball glove and baseball kit.
  2. You find  a manufacturer on Alibaba.com who can either make your requested baseball glove kit or two manufacturers who can supply each separately.
  3. You purchase your first order of baseball gloves and balls from your manufacturers in China with your own branding logos and design.
  4. You bundle the two products together if they haven’t already been bundled.
  5. You Ship your Baseball Kits to Amazon’s Warehouse to be fulfilled.
  6. When a customer purchases your baseball glove kit, Amazon will ship your kit to your customer on your behalf.

Bottom Line:

Private Labeling is the most scalable and lucrative out of all three ways of making money on Amazon. You’re able to build a brand from scratch and own that brand on and off Amazon. Building a brand also allows you to have a market to release new products too. You’ll be able to build a reputation and loyal brand following overtime which makes your business extremely valuable to outside investors or potential acquirers.

I hope this provided some insight on a few ways to make money on Amazon. If you have any questions, don’t hesitate to contact me via email at james@jsmithmoore.com and I will try my best to answer within 24 hours.I do offer personal coaching and consulting services. Please contact me if interested.

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