Starting An Amazon Business: Arbitrage, Affiliate, Or Private Label?

By | December 10, 2015

 

Amazon.com is the largest online e-commerce retailers and for this reason alone has made it an incredible opportunity for regular individuals to start an online business. There are three different ways you can go about doing this and my suggestion is to choose one and stick with that plan. Each one of these methods is completely different from one another, but when done right, they can all generate you a steady and growing monthly income.

3 Different Methods Used To Make Money On Amazon!

1st Method: What Is Retail Arbitrage?

Retail arbitrage consists of you searching and buying items that are cheaper in local stores than they are being sold for on Amazon. Meaning that you are buying items and selling them at a markup price on Amazon.Start an amazon business - Retail arbitrage

Retail arbitrage is definitely one of the easiest and fastest methods of making a quick buck on Amazon, but isn’t necessarily the most effective or profitable strategy.

While Amazon provides some great tools to help ease the shipping process and so-forth, you are constantly required to go out and buy products only to resell them.

In addition, it’s more difficult to scale this method and you tend to find that you are always on the move. The advantage here however, is that the more products you sell, the more “reputation” you gain within the Amazon seller network and the more likely you’re listings will get seen. It’s also hugely advantageous if you have plenty of products at home you’re simply looking to get rid of or no longer need.

Retail arbitrage is the most popularly used method on Amazon. From college students selling their used textbooks to individuals who intentionally go out on the hunt searching for cheaper products to sell on Amazon, it can be a great way to make some extra cash. If you’re looking to start a full-time business as an Amazon seller, I’d recommend using methods 2 and 3. However, if you there’s a local store in town which is constantly selling products for cheaper than being sold on Amazon, you might just make yourself a nice profit margin.

Recap:

  • Time-consuming
  • Medium overhead
  • Instant way to make money

2nd Method: What Is An Amazon Affiliate?

An Amazon affiliate is essentially a third-party retailer who doesn’t need any product or inventory to make money. They make money by simply
referring new customers over to Amazon. It’s a simple and highly effective method that’s being used by hundreds of thousands of online Start an amazon business - Affiliate marketingmarketers today.

When people click on your Amazon affiliate link for example, then make a purchase, you make a 4% to 10% commission on any and all items being sold. The difficult part with method #2 is obtaining traffic and it usually re
quires you to create a website and getting it listed within Google.

The biggest benefit with method #2 is the fact that it can constantly be scaled and for this reason alone, individuals are making an upwards of $100,000 a year just by doing this. Once you get the basics setup, it isn’t very hard and honestly, is probably one of the best methods of making money online out there.

Recap:

  • Low overhead.
  • Requires a website.
  • Can be scaled; highly profitable.

3rd Method: Private Label Rights Product Strategy

Now this method is one of the most attractive options out there as it allows for a passive, scaled, and growing residual income. The disadvantage here is that using and creating a Private Label Rights product always involves some sort of risk, whether it be your time or money, it’s an investment into your own branded business. But this is one option I am looking forward to trying out next.Start an amazon business - Private label rights product

The private labels product strategy does not require you to invent your own product, but to find a product that is already out there, brand it as your own, and sell it on Amazon at a nice mark-up. In order to do this however, you need to not only find a product that will sell, but an international manufacturer.

One place I’ve heard is highly recommended is using alibaba to find your manufacturer. In order to start your Private Label Rights, you’ll need to invest into a large sum of products for your inventory, but the nice thing about this is you can use FBA or Fulfillment By Amazon to take care of all your shipping, customer service, and even returns.

Essentially, you are building your own business, while allowing Amazon to take care of everything else for you. What a lot of individuals now do is simply find a good selling product on Amazon, look for a reliable manufacturer, slapping a logo on the product, and then allowing Amazon to take care of the rest. The biggest disadvantage when using a Private Label Rights strategy is being able to get your product seen. As a new seller, it will take some time for your new product to move up the ranks, but once you’ve made that first sale things get a lot easier down the road.

Recap:

  • Easily scaled.
  • Higher overhead cost.
  • Need to find a reliable manufacturer.
  • FBA takes care of shipping, inventory, and service for a small fee.

Amazon Business Overview: Arbitrage, Affiliate, Or Private Label?

These are three different methods you can start using today to start your own full-time business on Amazon. But which one should you start out with? I would say that it all depends on your situation or circumstance. That’s not to say you can’t start with all three.

Let’s say you know of a local retailer that sells all sorts of cheap products that can’t be found anywhere else, well get going with method #1 and open your amazon seller account. Let’s say you don’t exactly have the overhead or investment costs needed to start with method #3, in that case get going with your own website.

Find a niche, and start promoting those items there, and if you don’t know how, get going with this great training. If you have the investment for method #3, then by all means, start researching some products on Amazon, find a reliable manufacturer using Alibaba, and after having negotiated a price and quality of the item, order your first small batch. After having done that, head on over to Fiverr to create your logo, and you should be all set. List your item on Amazon, be patient, and wait for that first sale to come.

The most difficult part is getting started and while method #1 might be an effective way, it might not be the most reliable. Methods #2 and #3 are what I recommend most. Even though they might sound a bit more complex, it isn’t something you can’t handle. While method #2 is the more popular method of the two, method #3 is also a fantastic opportunity to start an online business, but also the most riskiest.

I unhesitatingly recommend either one of these for those looking to start a fairly relaxing and simple, yet high profitable business!

 

 

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