Starting an Amazon business Things you need to know
But aside from certain technicalities, like understanding the numbers which are important when you are thinking of starting an amazon business and become an Amazon seller, there is another important thing to get out of the way.
And that is doubt.
Now don’t get me wrong, scrutiny, doubt, double checking and second guessing are important before you start selling on amazon.
But once you have weighed all the pros and cons and have made a decision, I would urge you to stick with it as long as you can.
With this article I am going to try and help you make things clear and hope it will assist in your decision process, whether you are going through with it, or not.
When you are thinking about starting an amazon business, you inadvertently ask the question, how to sell on Amazon?
To my knowledge you have 4 ways of selling on Amazon:
- Retail arbitrage
You go to a physical retail store like Walmart, use a scanner app to check profitability and send the purchased item to an Amazon warehouse
- Online arbitrage
The same as retail arbitrage, with the exception that you make your purchases through an online store
- Private label
You build your own brand, from products often manufactured in China
Comparable to both forms of Arbitrage, with the exception that with wholesale you tend to buy a lot of stock of one particular item, over spreading out your purchases over multiple items, as you should do with arbitrage.
All 4 of these have their pros and cons, which you can find here in this article.
What I do want to address though, is that there is a lot of noise on the internet about whether or not selling on Amazon is a dead end.
On one hand you have these gurus, who tell you that the sky is the limit and on the other hand you have these sceptics who tell you that it is all a big scam, or a bubble at the very least.
Unfortunately there are very few people who take a more moderate approach.
The way I see it, both sides have good points and therefore both of them are equally wrong as well as right.
Yes I know it may seem I take the easy middle road, but hear me out.
The thing is that when you contemplate starting an Amazon business, you should really consider it a business and not just sell something on Amazon.
Anyone can become an Amazon seller, but very few can run a business.
And in a way the cynics are definitely right and the easy pickings are over.
With Arbitrage big brands have become gated and you have to search harder and longer for nice products that sell well, with Private Label you really have to research your market niche of choice and you can’t just slap a logo on a coffee mug and expect it to sell anymore.
Another point I agree with the sceptics on, is that there are a lot of bad apples out there, as just about anyone can sell something on Amazon.
With Private label, you have hijackers who steal your listing away from you and copy your product, the reason they can do this, is because you don’t own your listing and Amazon decides who can list on any particular listing or not.
With Online arbitrage you have people who put in claims of inauthenticity, or simply buy your product, treat it poorly and send it back in a state which makes it unsellable.
So yes the sceptics and the cynics have great points and I can say from experience that trying to get your account reinstated because of such claims or dealing with these malicious acts, is the very opposite of fun.
But you know what?
It is part of the process when you start selling on Amazon.
And starting an Amazon business is still the most cost effective way to get started:
- It is a business with a lot of known metrics you can depend on.
- When you do FBA, all of the logistics are handled
- It has a pay per click system that taps directly into the market.
And although I too get annoyed by these gurus sometimes, I do believe that if you become an Amazon seller and treat it like a business it will go well for you, like any other business would.
Now as to answer the question of how to sell on Amazon (i.e. Arbitrage , private label or wholesale), it really depends on how much money and how much time you have.
As a rule of thumb you can say that if you have more time than money, it is good to start with any or the arbitrage models.
If you have precious little time you can spend each day, but have money to spend then Private label is the way to go.
If you have neither then start with arbitrage.
Wholesale I would start doing once you have at least 6 months to a year of experience doing arbitrage, as you will have a solid grasp of the market by then.
There is however not one ideal way of selling on Amazon, but if you would twist my arm, I would say to start with arbitrage, gain experience on Amazon, get ungated for categories and build capital for a private label project down the line.