Decide What to Sell
- Homemade items – anything you made (ex. jewelry).
- Retail items (a.k.a. retail arbitrage) – you buy stuff from a store and then sell it on Amazon.
- Used items – stuff you found at a thrift store or yard sale.
Each type of item has pros and cons.
- Unique – you’re selling something no one else has.
- Control – you control your inventory levels.
- Difficult to list – Listing unique items is a little more work.
- Time – You’re sale’s potential is limited by your time as you have to make and sell the products.
Another thing to consider (which could be a pro or con) with this type of item is the price. Since you have no competition it may seem like you could demand a pretty high price for your item but since there’s no competition there may not be anything to compare the item to… meaning you have to somehow prove the value to the buyer.
- Easy to list.
- Scalable – you can typically buy more of the same product and grow your business if that product is doing well on Amazon.
- Competition – you may find yourself facing stiff competition from other third-party sellers or even Amazon.
- Upfront investment – you have to invest money in physical inventory before you can begin selling on Amazon.
Pro tip: If you’re going to be selling retail items, download an app for your smart phone that’ll allow you to scan the barcode on a product and see how much it is selling for on Amazon, what the best seller’s rank is, what the competition looks like, and more. Having an app like this will help you decide if a product is worth investing in.
- Low upfront investment – you can usually find used items pretty cheaply. In fact, you may have some stuff around your house you could sell right now.
- Good ROI – If you scoop up used items that are a little uncommon (ex. rare books, name brand clothes) you can get a strong return on investment.
- Competition – Unless the item you have is quite rare, you’ll probably still face competition.
- Unreliable – You probably won’t be able to get the same used product again and again meaning it will be difficult to build up a list of go-to products to sell.
A Closer Look at Retail Arbitrage
Let’s pause for a second in learning how to sell on Amazon and take a closer look at retail arbitrage. I think it’s important to examine the concept a little more in-depth for two reasons:
- For a lot of people the idea of retail arbitrage is a bit confusing.
- This is how many people make a lot of money on Amazon.
If you want to make a living selling on Amazon, there’s a strong chance you’ll find yourself at least dabbling in retail arbitrage.
As I said above, retail arbitrage is where you buy stuff from one source (ex. walmart.com) and then sell it on Amazon.
In order to make a strong profit through retail arbitrage, you’ll want to purchase items as cheaply as possible and obviously, resell them for as much as possible. When looking at perspective items, use a scanning app to check current prices on Amazon. Look for items that are a few dollars more (at least) on Amazon.
To get your inventory at the lowest price point possible:
- Adhere to my grocery shopping secrets – these tips can be applied to most all types of shopping.
- Check out the “save while you shop” section of this money making apps article.
- Take advantages of online applications like Ebates and Qmee.
- If buying online, look for free shipping deals.
- Buy from the clearance aisle.
- Buy in bulk.
- Scoop up off season items and save them for next year. For example, right after Christmas, snag deeply discounted lights, ornaments, etc. and hold them until next November and December.
One question I hear a lot is “Why would someone buy a product from Amazon if they can get it a lot cheaper elsewhere?” That’s a great question and to answer it you have to think about people’s shopping habits.
First, Amazon is super convenient. If you’re a busy mom and you can have something delivered to your door for $2 or $3 more versus having to run all over town trying to find it might you just buy it from Amazon? In addition, a lot of people think of Amazon as a one-stop-shop. They don’t do any type of comparison shopping.
Now that you have a better understanding of retail arbitrage let’s get back to how to sell on Amazon!
Pick Your Categories
As you probably know, there are a lot of different categories on Amazon you could be selling items in. However, not all categories are open to everyone. Some, such as beauty products and health and personal care, require approval. Other categories don’t necessarily require approval but specific products might.
To learn more about categories check out Amazon’s category comparison page.
Now, just because a category (or product) requires approval doesn’t mean you should shy away from it. You should just be ready to roll up your sleeves and do a little more work.
While the approval process can be a bit time consuming (or even confusing!), you can get help along the way from Amazon’s customer support. The big benefit of getting into those restricted categories is there is less competition. Others have given up and decided to stick to “open” categories meaning you have more opportunities to make big sales.
Pro tip: Keep in mind that even if you are approved for a category it isn’t necessarily forever. If Amazon receives complaints about you as a seller or your products you can be kicked out of the category. Keep yourself in good standing by always describing your products as accurately as possible, shipping promptly, replying to any customer inquiries in a timely manner, and of course, adhering to Amazon’s guidelines.