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The Ultimate Guide on How to Sell on Amazon FBA in 2018

by | May 21, 2018 | Business

20 min read

I founded my company and started selling on Amazon in April of 2016. I originally started selling products that I found online and in stores, which was really fun! I realized though, that there wasn’t a great guide of information out there for others who want to choose their own business model before selling on Amazon. So, I wrote The Ultimate Guide to Selling on Amazon FBA in 2018!

Being able to scan a product and see how much money you would make for sending it in was kind of like a treasure hunt!

Speaking of treasure hunting, if you are interested in learning more about Amazon/Digital Products/E-commerce, you should go join one of my favorite Facebook Groups called Treasure Hunting! ran by none other than the amazing Katharyne Shelton!
She is an amazing creator and I love her methods! I always get more than enough ideas to do something when listening to her Youtube videos or participating in her classes.

After some time of finding and selling products, I decided that it would be hard to scale a business where you had to go to different stores and hope that you found products there. It’s possible, it just wasn’t my thing. Also, I get tired of shopping after about an hour and a half, so it wasn’t the best model for me.

Online Arbitrage has a different story, as you can use software to scan websites for you, and simply double check the numbers and purchase! Once it arrives, you can package it up and ship it to Amazon. Overall,  I decided I wanted a more hands-off approach to selling online.

I started in with Wholesale and ended up finding a great number of companies that would work with me. Three of them were actually on Shark Tank! Unfortunately, with volatile pricing, no MAP (minimum advertised price) policies in place, terrible listings, lack of control, and bad Amazon sellers have made the experience of selling on Amazon quite literally hell for some brands.
This has caused a lot of brands to not want to work with Amazon sellers. This is where the hustle of Amazon wholesale comes in, but that’s for another blog post.
If you do start doing the wholesale model, please do your research, and please make sure you are treating your brands with respect, and helping them with their pain points and problems.
It’s all about working together and networking anyway, right?
If you master this, you will be successful in doing this model!

Currently, I’m focusing more on the digital aspect of selling on Amazon. I’ve messed with almost all of the models in this post except for pallets and liquidation, which isn’t something I want to pursue.

Now that you’ve heard a little bit about me, go grab a cuppa, and settle in.

Let’s get on with the show!

This is your Ultimate Guide to Selling on Amazon in 2018!

An Introduction to Amazon Accounts

 

Vendor Express

Vendor Express is a program that has recently been discontinued. The program will be officially over by January 2nd, 2019. Vendor Express is an account that brands themselves used to register with Amazon. Brands could sell direct to Amazon without going through a 3rd party seller.

 

Seller Central

This will be your only option for getting physical products into Amazon’s FBA program as a third party seller. Seller Central does allow you to do all of the normal things you would want such as edit and change listings, create new listings, delete listings, etc. This will be where you do the majority of your Amazon work.

 

Different Business Models to Sell on Amazon

This is Your Ultimate Guide to Selling on Amazon FBA in 2018

There are various types of models that people can choose from when they start selling on Amazon.

  • Retail Arbitrage
  • Online Arbitrage
  • Liquidation/Pallet buying
  • Thrifting
  • Bookselling
  • White Label and Private Label
  • Bundles
  • Wholesale
  • Digital products

Each of these comes with their own pros and cons, and it’s easy to do more than one model at a time. However, I would suggest focusing on one model at a time and master that model before moving onto another.

Let’s break down each of these models one by one.

 

Retail Arbitrage

Seemingly the most common model of selling on Amazon, the idea is that you use the Amazon Seller Central app on your phone to scan products at any store. This could be at Target, Walmart, Sears, Trader Joes, Home Depot, or even local stores in your town. As you scan, you enter the price of the item, and the Amazon app calculates how much profit you will receive for selling that item.

List Price – Amazon Fees – Cost of Item = Gross Proceeds

You can enter the cost of the item, and see the net profit on that item after all fees

Here’s how this model works:

  1. Go to stores, scan products
  2. Purchase products, ignore weird stares from the cashiers for buying 28 bras in all different sizes
  3. Create shipment on Amazon Seller Central
  4. Prep item with your seller ID sticker
  5. Drop the package off at UPS/FedEx
  6. Lather, rinse, repeat

Pros of this model:

You can go to whatever store you want, you can find items at a lot of stores fairly quickly, and it is scalable (although less so than some other models).

  • Some people love to get out there and shop every day
  • Can find clearance that may not be on sale in other cities
  • Can find items that are priced lower than the manufacturer could sell to you at a wholesale rate

Cons of this model:

You have to go to lots of stores to find a product within the right product criteria to sell, only to find that a lot of other sellers have also found that product across the country and sent it to Amazon too. Also, you may have a store that only has three of that item, and so it costs more in labor to find the same amount of items as other models.

  • Competition & pricing is volatile
  • A small amount of product on the shelf
  • Time-heavy
  • At the whim of seasonal retail trends

Online Arbitrage

The other method if you can’t go to stores or don’t have the patience *raises hand* is to search online. You can do this fairly quickly, and even can use software such as Tactical Arbitrage to scan websites for you quickly.

The scalability of this model is fairly easy, as long as you can find an efficient way to prep your items, and find the product. You can utilize virtual assistants to do the scanning and product vetting for you.

How this model works:

  1. Scan for products by using software or other browser extensions
  2. Purchase product and hope it doesn’t get canceled by vendors (such as Target, who doesn’t tolerate resellers and will cancel your orders if they figure you out)
  3. Create shipment on Amazon Seller Central
  4. Prep item or have it drop shipped to a prep center
  5. Lather, rinse, repeat

Pros of this model:

  • Sit at home in your jammies
  • Find discounts online to use on your purchases (such as Ebates Honey, Gift Card Granny, etc)
  • If you live in a smaller city with not as many stores, it doesn’t matter

Cons of this model:

  • Competition & pricing is volatile
  • Some online vendors don’t like resellers
  • Everyone else is probably looking at the same item
  • Can only buy a small amount (although more than retail arbitrage, you might be able to purchase way more than the 3 that were on the shelf in the store)

 

Liquidation & Pallet Buying

Although I think this model is slowly fading out for a lot of sellers, there are still quite a few people who buy liquidated products – and for good reason. Rock bottom clearance prices, and purchasing in bulk!

How this model works:

  1. Find a liquidator store or a store that sells packaged pallets
  2. Scan the manifest and ensure the prices for selling are reasonable
  3. Create your Amazon shipment
  4. Prep items with seller ID sticker
  5. Drop off or have freight forwarder pick up
  6. Lather, rinse, repeat

Pros of this model:

  • If you find a killer deal, you can make a killing (haha)
  • Less competition because you’re buying all of them
  • Discontinued products often sell for higher prices because of dedicated customers

Cons of this model:

The problem with buying liquidated products is that there are a lot of risks! Moreso than the other methods, in my opinion.

  • Items often come broken or used even when not stated by the liquidation company
  • The Manifest (the document that shows what items are in the pallet) often is incorrect when it lists what the product is worth or what the product will sell for
  • You may not get everything that is stated on the manifest
  • A lot of these products are simply returned from big box stores that didn’t want/couldn’t sell the product
  • If you purchase in the electronics category, you really need to be careful on many things such as recalls, or broken or damaged items
  • Once you sell the product out, you may not be able to get it again because it might be discontinued

 

Thrifting

I don’t know about you – but I get the heebiejeebs going into antique stores and thrift stores. I understand that there are gems to be found, but I really can’t take a store seriously if they sell used underwear >.<

So this is not my favorite model by any means, but it is here nonetheless!

You can go to garage sales, neighborhood sales or estate sales to find products, too. In fact, lots of people do very well simply by thrifting at garage sales.

Here is a cool guy (The Sourcers Apprentice) who does thrifting and retail arbitrage on Youtube. His videos make me want to go out and scan all the things!

How this model works:

  1. Use your Amazon Seller app to find products at garage sales. Bring lots of coffee, and maybe some headphones to block out others. Ignore the stares from others! They’re just jelly.
  2. Create your Amazon shipment
  3. Prep items, make sure to clean them very well, too
  4. Box them up and drop them off
  5. Lather, rinse, repeat

Pros of this model:

  • Garage sales are kind of fun
  • Cheap prices = higher profits
  • Can find awesome deals and niches you never knew existed

Cons of this model:

  • If you find a great item, there’s likely only one of them
  • Some product owners want to know why you’re scanning their products or will jack up the price once they know what you’re doing
  • Lots of sifting to find enough products to scale = lots of man-hours

 

Book Selling

I decided to put this in its own category. It could technically belong in the thrifting or RA/OA section, but some people make their living strictly on selling books!

RELATED: The Exact Steps I Use to Hire My Virtual Assistants

How it works:

  1. Find a thrift store, closeout book sale, library sale, garage sale, etc
  2. Scan and search to your heart’s content using the Amazon Seller app
  3. Clean your books, prep the items
  4. Send in
  5. Wait forever for them to sell

Pros of this model:

  • The ROI on a book can be amazing. People have found books that sold for hundreds of dollars, and paid only cents for it!
  • Do this in bulk, and you’ve got yourself a good business!

Cons of this model:

  • Hard to find those diamonds in the rough sometimes
  • Ranks in the book category on Amazon are very different than other categories and must be adjusted accordingly
  • Books take a lot longer to sell, so you may be sitting on them for quite a while before they sell. Some never sell.

 

Product Bundles for Amazon

To create bundles, you can use products that are already selling, and that complement each other to make it easy for the customer to choose your product over others. Bundles are highly customizable and is actually a fairly scalable business model.

You don’t want to include brands that don’t work together. The example I have heard most is don’t combine “Crayola” brand crayons with an off-brand dollar store pack of colored pencils. Your customers will know the difference, and it lowers the value of your products.

How this works:

  1. Find products that work well together that a customer would want to buy. You want to think logically about pairing certain products together. Don’t bundle things that don’t make sense
  2. Get a GTIN exemption to identify your bundle without using the UPCs on the existing products
  3. Prep products by packaging together
  4. Create your shipment and send to Amazon
  5. Lather, rinse repeat

Pros of this model:

  • It’s fun to put products together
  • Bundles do well all year round
  • Easy to find gaps in the market with products that people normally buy and combine them with similar products, that aren’t easily found
  • Can make this scalable by contacting wholesale companies and buying direct rather than finding at the store or online

Cons of this model:

  • Lots of brand owners don’t want their products to be together with others, so you need to be careful that you aren’t representing the items on behalf of the brand, but simply joining products together
  • You may create several bundles that don’t work because it’s not a vetted product idea with sales history. You can only guesstimate

White Labelling and Private Labelling

Now we’re getting into the idea of ‘new’ products and are no longer scavenging in stores or garage sales.

“White labeling,” I think is a term coined by someone else – and is similar to private labeling, but a bit different.

Private Label is more for finding your own products across seas, and working with a manufacturer to get it built. White label is more about finding a local product in the United States, with a manufacturer that will let you put your own label on the product and sell it.

The main difference, in my opinion, is where you source the product. Private labeling can be creating a brand new product itself by working with a manufacturer, or it can be simply finding a manufacturer that already has the product made, and you simply customize it with your brand name to make it your own.

White Label is becoming more popular because you will be creating your own listing, eliminating competition, and using your imagination to intersect ideas and niches together to create something new!

How this model works:

  • Brainstorm & Research
    1. Find a problem or gap in the market, and solve it
    2. Make sure it’s something you’re passionate about, otherwise you may run out of steam to keep it going
  • Analyze current market
    1. Competition research – can you improve upon what is already out there?
    2. Pricing research
    3. Trend research
    4. Please – PLEASE don’t just do the same thing that someone else does. We have a joke about garlic presses in the Amazon community. They’re all the same, and there are millions. Find something different and stand out!
  • Find a product to sell
  • Find a supplier somewhere online. You can use sites such as Alibaba.com (higher quantities, bulk pricing) or AliExpress (lower quantities, higher prices)
  • Complete a test buy
  • Prep product, create Amazon shipment and send in
  • If successful, lather, rinse, repeat

 

Pros of this model:

  • Create something new and unique to your idea and imagination
  • Eliminating or narrow the competition by making it your own
  • Can work from home to do this, or travel to meet with a manufacturer if you’d like
  • Scalability
    • Can make a full-time business by creating a brand around the product(s)
    • Can create an audience and a fan-base around the product niche
    • Can start selling wholesale and even spread to other platforms such as Etsy, Sears, Walmart, etc
    • The sky is the limit!

 

Cons of this model:

  • If you don’t make your product unique, it will swim in the sea of sameness on Amazons pages, and competition may hop on or try to rip off your product
  • If your idea is too unique, you will have an untested market and the risk of losing money is higher
  • Advertising costs are a large part of this process. No eyes on your product = no one knows it exists
  • Shipping from overseas can cause a lot of headaches with customs, language barriers, and pricing agreements

 

Wholesale for Amazon

Finally, we have reached wholesale. This what I believe to be the most lucrative model when it comes to purchasing in volume, at lower prices, with the brands’ approval to sell on Amazon.
Competition is steep, so differentiating yourself is going to be the second most important factor.
The most important thing to do is to make sure you’re delivering value and building a long-term relationship with the brand owner. Honesty is key, and word spreads fast.

 

How this model works:

  1. Work your bum off to find products that you want to sell on Amazon
  2. Contact the brand owner and get approval to sell
  3. Purchase products and have them shipped direct, or to you for prepping, or to a prepping center
  4. Create your shipment, send to Amazon
  5. Lather, rinse, repeat

 

Pros of this model:

  • Scaling is easy if you determine your sell-through rate and master that up front
  • Building lasting relationships with brand owners can take you a long way in your business when it comes to spreading your value by word of mouth. The brand owner may recommend you to their friends if you do an excellent job of helping them.
  • Prepping takes a lot less time because you’re handling the same products over and over. Efficiency is key

 

Cons of this model:

  • Competition is very steep. You NEED to find a way to differentiate yourself, hit the pavement, and work hard for your accounts
  • It takes a lot longer to gain traction and to scale, but if you’re in the model for the long-term, it will be worth it.
  • Again – competition and volatile pricing structures make it difficult to manage products, but certainly not undoable.

 

Digital Products

Read my post on How to Quickly Start an Easy Digital Products Business here!

Merch by Amazon, CreateSpace, and Kindle Direct Publishing are three ways that you can start selling digital products on Amazon today. Each of these models does something a little different.

Merch by Amazon is a program that allows you to create T-shirts and sell them at your own price. You can design whatever you’d like on your shirts, choose a color, size, and price, and you can be up and selling within a day (after your account approval). If your shirt doesn’t sell within 30 days, it is automatically taken down.

CreateSpace is based on creating digital books. You can create e-books, journals, diaries, or notebooks that customers can purchase a physical copy of. You upload the book, Amazon approves your book, and you sit back and gain royalties for it.

Kindle Direct Publishing is very popular for self-publishing authors and indie authors. The idea is to find a niche or book that you want to write, write and proofread it, upload it, and price it accordingly.

Pros of this model:

  • Creative minds thrive on ideas to create or write the written word
  • Digital products allow you to work at home without going anywhere or finding any products
  • No product prepping, no number crunching, no crazy illogical Excel spreadsheets

Cons of this model:

  • Advertising & marketing is usually needed
  • You need to know how to use software such as Photoshop, Illustrator or Canva to create book covers, t-shirts, or to format the inside of your e-book
  • You need to know how to write if you are going to write an e-book, or find a proofreader on Fiverr or Upwork to edit for you. Nowadays, people even hire ghostwriters, which is an upfront cost as well.

How to Choose a Model to Sell on Amazon FBA

Weigh the Pros and Cons

Weighing the pros and cons of each business model, it’s obvious that you can make money doing any one of these models.

In fact, every single one of these models has tons of people who are making a full-time income doing them.

Each one has the good and the bad, so you simply need to decide which problems you are okay dealing with.

Would you like to create your own product or do you not want to deal with the hassle of marketing and advertising? Would you prefer a product already made, and all you have to do is go out and find it (or sit in your jammies at home and find it?)

What Works Best For You?

Are you a more creative-thinker or more logical? Do you prefer looking at numbers and data, or design and packaging?

You’ll get to do those with any of the business models, but each one relies heavier upon certain areas. For example, wholesale is more data-driven and lots of Excel sheets are involved, while white labeling and bundles are more creative and fun to put together for some people.

The best part about selling on Amazon is that anyone can do it! The ideas listed here aren’t profound or difficult in and of themselves, but each model goes down a rabbit hole and you can get lost in research-land without taking any action on them.

Whether you choose to deal with physical or digital products or decide to choose the model that fits your personality or family the best, it’s all about experimentation and learning.

Within each of these is a million and one details that need to be covered before you will become successful – just know that it is possible, and it’s not too competitive to jump in!

Was this article helpful?

 

I wrote The Ultimate Guide to Selling on Amazon FBA in 2018 because there wasn’t an article out there that talked about all of the different business model options, with an honest review and opinion on how difficult it can be. This guide is so that you can choose the best business model for you and your family. Happy selling!

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The Ultimate Guide to Selling on Amazon FBA in 2018  | The Success Mountain
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The Ultimate Guide to Selling on Amazon FBA in 2018  | The Success Mountain
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Exact Steps on How to Sell on Amazon FBA in 2018 | The Success Mountain | Learn the basics of how to choose a business model to sell on Amazon FBA for beginners | #amazon #amazonfba #ecommercebusiness #Startanonlinebusiness #sellingonamazonforbeginners
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Exact Steps on How to Sell on Amazon FBA in 2018 | The Success Mountain | Learn the basics of how to choose a business model to sell on Amazon FBA for beginners | #amazon #amazonfba #ecommercebusiness #Startanonlinebusiness #sellingonamazonforbeginners
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Exact Steps on How to Sell on Amazon FBA in 2018 | The Success Mountain | Learn the basics of how to choose a business model to sell on Amazon FBA for beginners | #amazon #amazonfba #ecommercebusiness #Startanonlinebusiness #sellingonamazonforbeginners
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