Are you looking to become an Amazon seller? Have you ever heard of family and friends selling on Amazon and making great money but confused on how it all works?
If those are some of your questions then you have come to the right place.
In this article we’re going to break down:
- What are 3rd party Amazon sellers
- The 4 types of Amazon sellers
- How you make money in each process
- How do you get started? (most important part)
Here’s a hint, everyone usually begins selling on Amazon in the same way.
What are 3rd party Amazon sellers?
As a seller myself I pretty much have my Amazon elevator pitch down now and really it’s more of a “family party” Amazon pitch.
I had to perfect it over the years because no one could grasp what the heck I was talking about when I told them I sold products on Amazon.
It usually goes a little something like this:
Family Member: Hey, I heard you sell on Amazon? What’s all that about? How does that work?
Me: I do actually. OK so let me ask you this….what is your favorite band right now?
Family Member: Ummm…I don’t know…I like Michael Buble right now.
Me: Ok, so let’s say you go on Amazon and you want to buy a Michael Buble CD. Your an Amazon Prime customer, you find one, it’s $13.99 and you like the price so you buy it and it’s at your house in 2-3 days. Sound about right?
Family Member: Yep, sounds right.
Me: Ok, so what you don’t realize is that CD was actually bought at a garage sale in Tallahassee, FL by an Amazon seller and then he sent in to an Amazon warehouse and he sold it to you through Amazon for a profit that him and Amazon split. It’s called Retail Arbitrage or Thrifting.
Family Member: Really? Holy crap, that’s interesting. But like, how did he do it? How did he know what to sell? Is there money in this?
Me: Oh yeah, there is money in this for sure. Lots of it. He used a 3rd party Amazon listing software to list it and then just sent it in.
And this is typically where I lose them at these parties.
Once you start talking about the mechanics of the process it becomes “information overload” and most people check out.
There checking out because they want a simple path to money and it’s already getting complicated to them. But it really isn’t.
Hopefully this is an article you feel comfortable sharing with family and friends to help them get their head around how to become an Amazon seller.
The 4 types of Amazon sellers
There are typically four main ways you can sell and make money on Amazon which is pretty amazing actually.
The first one we sorta covered in my “family party” conversation example just now
1. Retail Arbitrage
Retail Arbitrage is the process of buying low and selling high. But more specifically, it’s doing it at local retail stores.
You can walk into any Walmart in America with the right scouting app on your phone and find and purchase items for $xx.xx and then turn around and sell them on Amazon.com for a higher amount.
“But why would people pay more on Amazon for an item they can buy for cheaper at Walmart?”
There are a number of reasons for this, but let me quickly list a few just to give you some context.
- They don’t like shopping at Walmart
- They are an Amazon Prime customer and they can get the item delivered to their house in 2 days
- They are busy
- They don’t have time to price comparison shop for just a few items
This is hands down the easiest and quickest way to start selling on Amazon and make great money part time.
2. Online Arbitrage
Online Arbitrage is just like Retail Arbitrage but it’s all happening online instead of physically going to the stores to make your purchases.
Here is a perfect example:
You visit the Dollar Tree website and buy a product in bulk (usually case packed) and then turn around and list the product onto your Amazon account in order to sell it for a higher price and make a profit.
Buying online is very easy. You probably already do it twice a week now as a regular consumer. But because it’s so easy, it can be really dangerous as well.
We typically don’t recommend online arbitrage as a selling process to new Amazon sellers. You really need to understand the Amazon ecosystem, its fees, Seller Central and the entire FBA process before you migrate to this type of selling.
3. Wholesale Selling
We’re moving up the food chain here with respect to complexity and time and resources needed.
Wholesale is the process of buying items or products in a huge or bulk amounts and then sending them all in on Amazon to sell them for a higher amount.
But were not talking about a case or two from the Dollar Tree website, but rather pallets full of products that may require a small office or warehouse and employees.
Selling wholesale on Amazon requires a decent amount of start up money, some relationships and great processes in place to make great money.
4. Private Label
Not until you have a couple of years under your belt or maybe even more, should you ever try to do private label on Amazon.
This is not for the faint of heart and it requires skill, shrewdness and incredible business acumen.
Private Label is typically described as:
- Researching a product that sells (like a back scratcher)
- Contacting a Chinese manufacturer in China
- Building a relationship with them (even a visit to China)
- Sending them specs to build you a copy or better version of the product you want to sell
- Buying a short test run of the product to test for quality
- Then committing to a very large purchase of the product
- Sending it into Amazon to be sold to millions of customers
Sounds pretty easy right? There are lots of courses out there that would make you believe so, but it isn’t.
Easiest way to start selling on Amazon
Now that we’ve covered the four types of ways to sell on Amazon and their pro and cons, let’s cover the easiest way and product to sell on Amazon.
Did you know that Amazon was started in a garage by Jeff Bezos in 1995 (I graduated high school this year) and all it sold was books?
That’s right. It started with the easiest to understand product and a symbol for knowledge…the book.
This is actually where every new Amazon seller starts on their quest on how to become an Amazon seller.
Here are just a few reasons why books are the best place to start selling on Amazon:
- They are everywhere and there is no shortage of them
- They are still in very high demand despite ipads and kindles
- They are an everlasting symbol of knowledge
- They are an easy product to ship
- They are an easy product to understand
- They hold up well over time
You could literally be up and running in a day or so if you start with selling books on Amazon. (highly recommend this course)
Here is what you need to start selling books on Amazon
- A professional Amazon seller account
- A subscription to AccelerList
- A subscription to ScoutIQ
- Some supplies
The startup costs
Yes, there are some start up costs but they are very low .
You’ll pay $40 a month for the professional Amazon seller account but that is taken right off the top of your profits so it doesn’t ever feel like its a real out-of-pocket expense.
You’ll want a subscription to AccelerList so you can quickly list all of the books you want to sell on Amazon. The subscription cost is $34/mo currently.
The ScoutIQ app is meant to be downloaded on your phone (Android/iOS) and is the best app for finding books that are profitable where ever you go. The subscription cost is $44/mo but well covered by your monthly profits.
And finally you will need some some misc supplies which will cost around $250 or under.
So there is a mix of some small start up costs and some recurring costs but most of our sellers on Amazon are netting (profit – minus fees and costs) of around $750+ a month.
What could you do with an extra $750 a month?