It’s typically low risk and can turn a good profit, we’re going to be talking about how to sell other peoples products on Amazon.
The common term for this is “Arbitrage” and like I stated above it’s just simply you (the seller) buying other people’s or company’s products at a discounted price and selling them for a profit online. In this case it’s Amazon.
Amazon is probably one of the best ways to get started doing this, you can utilize their fulfillment centers, gauge product opportunities, and sell all under one program. (Don’t worry we’ll get into this below)
Arbitrage can either be a good source of some cash on the side or like anything if you fully commit you can generate a good amount of money, so if you’re serious about doing this and want to go all in, this is for you.
So why sell other peoples product on Amazon?
Why not e-bay, craigslist, or any other platform? First off it’s no secret that Amazon is leading the industry when it comes to e-commerce, they’re responsible for 30% of online sales in 2015 alone, close to $100 billion to be exact.
Now if that doesn’t show they have a good flow of customers I don’t know what does, Amazon is known to be a conversion machine, converting 74% with Prime members and 13% with new non-prime members.
That’s quadruple other leading e-commerce stores, and with their Prime members coming it at around 60 million, that’s not half bad either.
Long story short, if you want to get something sold, Amazon is your go to store.
Amazon Fulfillment Centers
Amazon has a great program called Fulfillment By Amazon (FBA) that has grown in great popularity with sellers over the years.
This is when Amazon handles the storage, packaging, shipping of your products, returns, and some additional customer service. (For a fee of course)
This allows sellers to run high volume physical products businesses without actually touching the product, this allows you to focus more on the business aspects of your business such as scaling, marketing, and sourcing.
They do offer an alternative selling program called Merchant Fulfilled, but isn’t something I recommend.
This is where instead of Amazon handling your product, you will be responsible for the storing, packaging, shipping, returns, customer service, basically everything.
The only way Amazon is involved is them allowing you to list your product for sale on Amazon. So the only fee here will be Amazon’s standard 15% commission for using their platform.
>>Here’s an article going over more detail on the pros and cons of FBA vs. Merchant Fulfilled if you want to learn more.
Since we’re on fees, lets go over what you can expect with Amazon FBA.
Amazon FBA Fees
Since Amazon isn’t going to do everything for free, their are some fees involved with using their fulfillment centers.
Their are typically 4 fees involved. On top of Amazon’s standard 15% commission.
- Order Handling
- Pick and Pack
- Weight Handling
- Monthly Storage
Most being self explanatory, order handling is their associates handling their orders (they have to get paid), pick and pack (packaging), weight handling (a fee based on how heavy or bulky your item is, lighter and less bulky = smaller fee, heavier and more bulky = bigger fee.), and monthly storage, is well… storage. (which can be as low as 1c a month, so no big deal).
So when doing this it’s important to take the fees into account if you’re looking to turn a profit. So lets get into that…
The Arbitrage Process| Learning the basics
There are two types of Arbitrage, Retail and Online.
The only difference between these two is how you will be sourcing these products, retail being in physical brick and mortar stores and online obviously being online.
Most people can practice both but for those who live in rural areas, online is usually their best route.
Sourcing products| What to look for
When looking for product opportunities (online or retail) you’ll want to shop in clearance or sales sections in stores or online, utilize magazines, e-mail subscriptions, anywhere you can find something marked down.
Typically around 50 – 70% is ideal, but isn’t the case in some situations.
From here once you found something that looks like it could be a good deal, you’re going to want to make sure it’s selling on Amazon. (you can usually just copy and paste the item name into the search bar and it’ll pop up)
From here you’ll want to check if the first result showing for the product is listed for at least double the price you can get it on sale.
You’ll now want to check if the price hasn’t recently been raised and was previously lower, this would mean this wouldn’t be a good buy, since the price isn’t consistent.
The way you do this is by using a price tracking software, I prefer Keepa (Google Chrome Extension) that you can download and install that will give you a chart showing the product’s price history in the product listing.
This is an example of a popular Disney plush toy that was listed for $7.79, as you can see the price is fairly consistent with only one price drop between July 11th – 14th.
If everything checks out and the price shows to be somewhat consistent now we have to gauge sales.
Now there’s a difference between listed and selling, anyone can go and list something for some outstanding price but that doesn’t mean people are going to buy it for that. So how do we know it’s selling?
For this I use a site called Camel Camel Camel, this is a tool that can also track price but is great for gauging sales.
You simply go to the URL of the product and copy the ASIN and paste it into the search bar. The ASIN will be a 10 digit code in the URL starting with BO.
Using the same plush toy and searching the ASIN, you’ll go down to the chart below and click on “Sales Rank” and it will show you roughly how many sales per month (Data range you have selected) this product is getting.
With every spike being around 1-3 sales per month.
Like I said earlier this is a good way to show if a product is selling and in demand and also shows you roughly how many you should buy to have sufficient inventory.
As you see here we would roughly need around 15-20 units. (you typically want to go on the lower end of the investment, having inventory sitting waiting to be sold isn’t ideal as this business model is about turning a quick profit.)
Purchasing and Selling
From here if all lines up you would go forward with purchasing your inventory and have your items shipped to you.
From here, (you’ll need a seller central account with Amazon, preferably professional ($39/month), and you’ll create your product listing and print your shipping labels.
Once the listing is ready and the labels are printed, you will put the labels on your box your using to ship the items to Amazon FBA and they will notify you when your inventory arrives.
Once your inventory is processed your listing will now be active, and congratulations your selling on Amazon!
>>>If you still need some blanks filled in, here’s a couple great programs for Retail and Online Arbitrage, I highly recommend you check out.
Just scroll down to the Arbitrage section and I elaborate further. Although I covered a lot here there is still a lot of behind the scenes work to be done, and I didn’t go over every last detail of getting set up on Amazon.
So if you need something that goes from A to Z, and touches every letter along the way, you should look into the courses above. They are taught by some very successful entrepreneurs in the Arbitrage game.
They show you everything from their sourcing methods, to lucrative websites, stores, software, and even bar code scanning apps to make the process that much easier.
Just choose what direction you want to go in (retail and online) and they’ll show you the rest.
Wrapping things up…
If this opened your eyes a bit, this is just scratching the surface of what’s really out there!
If you have an entrepreneurial spirit and have dreamed of going into business for yourself, you should go check out my friends at Amazing.com.
They’re an amazing community of entrepreneurs with over 100 courses spanning over a variety of entrepreneurial outlets, everything from selling on Amazon, to website development, app creation, social marketing strategies, real estate investments, and so much more.
If this sounds like it’s for you, you can read up more about them in the link provided above or the banner below. If not I hope you found this article helpful and eye opening of what can be done with a little intuition and direction.
Until next time,
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