What are main business models for selling on Amazon?

There are a few business models that are suitable for selling on Amazon – Private Label, Wholesale, Online Arbitrage, Retail Arbitrage & Amazon to Amazon. To start with lets explain those in a bit more detail:

  • Online arbitrage Amazon selling involves sourcing products from online retailers at a lower price and then reselling them on Amazon for a profit. It is a business model where sellers leverage price discrepancies between different online marketplaces to make a profit. Online arbitrage does not require large investment and is a relatively safe business model for Amazon selling. You would for example find a product in Argos clearance section marked down to £10.00 that is selling on Amazon for £30.00. As you are sourcing from a trusted retailer, you also have the option for returning the item if for whatever reason you need to.
  • Retail arbitrage Amazon selling involves going to physical shops and finding profitable deals instore. It is a great way to start your Amazon journey as you might find items reduced to rock bottom prices and they may only be reduced in your store, meaning that competition will be very low. We always recommend new sellers to head out there, scan products using Amazon Selling App and to learn to analyse deals. Same as with Online arbitrage you have the ability to return items if needed.
  • Amazon to Amazon sourcing. This method of sourcing is only a few years old but it has taken reselling community by storm! You buy items that Amazon either mispriced or price match other retailers, get them sent to you, repackage and send them back to Amazon FBA. At Resell Concierge we have a variety of different Amazon bots that find all of these deals so that you wouldn’t need to sit there aimlessly looking for deals manually. Do they drop their prices often? Often enough! We have seen insane bargains like £5.99 Fire Tablet bundles, SSD’s reduced from £600 to £40 and so much more.
  • Private Label refers to a business model where a company sources products from a manufacturer or supplier and then sells them under its own brand name. In the context of selling on Amazon, private label typically involves finding a generic or existing product, customizing it with unique branding, packaging, or features, and then selling it as a proprietary product. Due to the nature of the business model you would need a fairly substantial investment to start a private label, there is certain risks involved and you would need to have a fairly good knowledge of selling on Amazon.
  • Wholesale sourcing for Amazon selling involves purchasing products directly from wholesale suppliers or distributors at discounted prices and then reselling them on Amazon for a profit. This business model involves buying products in bulk at wholesale prices, leveraging economies of scale, and taking advantage of established brands and products. Same as the private label, wholesale sourcing requires large capital as wholesales will give best prices to those buying in bulk, there is lack of buyer protection and return on investment and margins are generally a lot smaller than other business models.
  • What we always recommend to new sellers is to avoid trying to launch ‘Private Labels’ or start sourcing their leads from Wholesalers. Why? As per above those business models are risky, new sellers should stick to Online Arbitrage, Retail Arbitrage and Amazon to Amazon, these provide better margins and generally are low risk.

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