Why sell on Amazon
Firstly its a huge marketplace with around 183 million vistors to Amazon.com every month there are plenty of willing customers looking for the products that you list. Also there are many ways that you can sell on Amazon. The main three ways that I am going to be talking about are:
- Retail Arbitrage
- Online Arbitrage
- Private Labelling
Each has its own advantages but all three can make you a healthy profit each month providing that you are willing to put in the work to startup and get selling.
Buy low sell high is the simple philosophy that employs many people to sell retail products on the Amazon FBA program.
My personal experience is retail abitrage. I had only read online about this and decided to take the jump after watching this course on udemy.
Amazon FBA Canada: Your complete canadian guide
I am canadian so that was the right course for me however the process is the same no matter which Amazon website you use .com .ca or .co.uk.
After watching this course, I downloaded the amazon seller app onto my phone which in my mind is all you need to get selling. I then went out to check out the stores, in Canada we have Winners which sells brand name retail gear at lower prices and I also checked out walmart. I have found that in order to make a profit you need to target items that are deeply discounted in stores or are on clearance from stores. You also need to make sure that you are going to see a profit of somewhere between 15 and more dollars because the shipping (atleast in Canada) will eat into your profit margins. On the app you scan an item and it will show up with all the details you need to know whether it is profitable. I have some of the products I chose here so I will post some example images below:
I found this product on sale at a camping store that was going out of business. I would be able to sell this product as new because its in new quality, its still in the original packaging and hasn’t been used.
After you scan the item it comes up on here telling you what a new one is listing for on amazon.
After clicking on the item it shows you the prices for Seller fulfilled versus Amazon fulfilled. I live in canada and shipping is very expensive so its best for canadians to use Amazon fulfilled. The profit calculation that is listed of $31.08 is after all other costs have been deducted. So this is your before tax profit.
This part of the app tells you what quality you can sell the product as on amazon. Because its in the new packaging and hasn’t been used before I chose new. I scanned another product and that was listed only as used or refurbished even though it was brand new but those were the restrictions that Amazon had placed on this other product that I had bought.
After I get home from the store. I use the app to add the products into my FBA inventory on the Amazon Seller Website. And then from there you can ship them to Amazon’s distribution warehouse. When you add each listing it will tell you that it is out of stock. You have to send/replenish your inventory and this will send you to the shipping page. Amazon has a great rate / discount with UPS for canadians that are wanting to ship to the Canadian FBA warehouse’s. For around $9 I sent a load of stuff off from Western Canada to Mississauga. With Canadpost it would easily of cost me $40+.
After you send in your items Amazon handles the selling and customer service. And if you are selling items you will get income from them every two weeks deposited into your bank account.
On a scale of 1 to 10 on how much work this is I would rate Retail Arbitrage as a 10. A lot of work, can be quite profitable, hard to scale up as you will only have so much time and money to find deals and list products.
Works essentially the same as retail arbitrage except you can’t scan the barcode into the app. You essentially need to either type it into the app or use something like camelcamelcamel.com to see what the product is selling for currently and in the past. If you find a product and you can get it shipped cheaply to you then you can list the products on your amazon storefront and ship the products back out to the amazon warehouse often in the same box that the products were shipped to you in.
A word of warning regarding retail and online arbitrage. Manufacturers of the products could be already selling the same items on Amazon and may send you cease and desist letters, or report you to amazon, it is best to comply with these so that you do not get your account banned.
On a scale of 1 to 10 on how much work this is I would rate it as an 8, a bit easier because you don’t have to leave your couch to do it but still a lot of work to find deals, receive and inspect products and then ship it out to Amazon.
Private Labelling is a different kettle of fish altogether. I have not delved into private labelling yet as I am building up some cash in the RA and OA methods first. Basically you need to find a product niche that isn’t overly saturated and then find a cheap wholesaled product to list on amazon. Lets go through a few steps.
- Decided on your business niche
- Create a business plan, this should include things such as:
- How much it will cost to manufacture the product
- How much it will cost to ship the product from Asia to the Amazon FBA warehouses
- How much it will cost to store the product
- If you need to make a mould factor that in
- How much time will you need to prepare the product for sale
- How much time you will need to provide for customer service
- How much time and money you will spend on returns
- Then you need to find a good manufacturer to create a sample and ship that sample to you, you may want to do this several times.
- Get all your legal matters sorted, register a company, register as an importer, pay duties etc
- Pay for a minimum order quantity and ship that to yourself initially and then later to the FBA warehouse
- Create a eye catching listing that will outrank your competitors.
This is a lot of work, the legal and financial outset of getting into the manufacturing business can be initially costly, although one friend of mine managed to do it with less than $5000 a month. That being said there are people making thousands a month as the difference between the manufacturing costs and the sale cost can be huge. For example here is one product I was thinking of selling on Amazon Canada that doesn’t have too much competition:
So this is a private labelled diffuser. The private label is VicTsing. Private labelling means you take generic manufactured goods and you put your own label on them essentially making them your own products.
And here is the exact same product by one of the many manfacturers in China making exactly the same product. So if the above seller was using this place and were paying $11.50 USD or $14.95 CAD and then shipping them from China to Amazon Canada – after fees they are probably making $10 CAD on each one.
On a scale of 1 to 10 I would say this is about a 7, it has high startup costs and hard work to get it up and running but day to day its not too bad. My friends that do private labelling mostly concentrate on running ad campaigns and other ways to build content to their products, ie building their own websites to direct traffic to their products. If you for example sold diffusers you could create a website about essential oil and the benefits of using them.