How to Create a Winning Business on Amazon?
Written by Bashar Katou on February 21, 2018
Does the endless range of product choices on Amazon appear mind-boggling to you at times? Well, it is fantastic to have so many products to choose from for your business, but the opportunity also conceals the challenge of finding your perfect sweet spot for a consistent, profitable, growing business on Amazon.

Whenever someone asks us “Which business model is the best on Amazon,” we say that the answer is not so simple as black or white, but lies somewhere between the myriad shades of grey. What may be a salient way to sell for one individual may fall flat on its face for another.

You need to consider a variety of factors, including your unique financial situation, risk capacity, business experience – and simply personal choice.

We have chosen the private label business model for ourselves because we enjoy it and we are adept at it, but that may not be the model for all.

Through this post, our goal is to help you navigate through your options by explaining the mainstream selling formats and describing the strengths and limitations of each. We believe that this discussion will give you a more objective assessment of what business model fits you the best and where and how you can launch it.



Popular Options to Start Your Own Business on Amazon


Retail Arbitrage:

Retail arbitrage occurs when you buy a product from a retail outlet at a particular price and then sell it on Amazon at a higher price to make a profit. In simple terms, retail arbitrage is all about ‘flipping’ retail merchandise and profiting from the inherent inefficiencies or imperfections of the marketplace.

We typically achieve retail arbitrage by identifying attractive clearance sale items from local retail outlets and then sell them close to their normal retail price on Amazon.

In a few instances, we seek products that are marked at their regular or normal price, which we can potentially sell for at least three times the price on Amazon. This kind of retail market aberration most often occurs in the fourth quarter. That is a special (or abnormal) season when buying gets frenzied and there are desperate customers looking for that “one doll” for which they are willing to pay any price at that moment.

A simple example of retail arbitrage is when you happen to find a wrist watch or a camera at Wal-Mart on clearance for $20 that sells for $45 on Amazon. You might end up making a profit of about $10 after deducting the charges of Amazon.


Strengths

Safe and low-cost way to launch your Amazon business
No inventory investments involved
Straightforward, easy-to-understand business model
Ideal for beginner level
 

Limitations

Involves significant time commitment because you are physically required to location and re-stock your inventories round the clock
It is not a passive income-producing model
Requires plenty of driving around and moving from store to store
 

How to Launch?

If the retail arbitrage business model on Amazon appeals to you, you have arrived at the right place. We have a compelling email course that is designed to hand-hold you through your new business as a retail arbitrage Amazon seller.

 

Online Arbitrage

As the name suggests, online arbitrage is the digital counterpart of retail arbitrage. The difference here is that you are visiting Walmart.com instead of physically visiting your local Walmart outlet to look for attractive clearance sale deals online on their website just the way you would in a brick and mortar store.

In this model, you can perform price comparisons instantly online with the Amazon site to determine whether you are going to make a profit. (In retail arbitrage, you would have to scan your targeted products with a scanning app.) Online sourcing can be made more efficient if you use some of the popular tools available on the Internet.

For online arbitrage, there is no dearth of websites from where you can source your products. You can continue to discover profitable opportunities from famous chain stores to the more obscure ones which you never knew about.

Digital sourcing gives you one special advantage over retail arbitrage. Here you have an opportunity to purchase from outlets that may not be locally present in your area, but are offering deals that can be flipped on Amazon for a sweet profit.

In online arbitrage, you simply prepare your products once they are delivered to your premises, and send them right away to your Amazon Fulfillment Center.

 
Strengths

An absolute work-at-home business
Massive opportunities for sourcing as you are visiting stores virtually and not driving down to them physically
You don’t have to transport the products in your automobile because it is shipped to your doorstep, and you can typically re-use the same packaging to ship them forward to Amazon
Work your sourcing at your convenient time, without any restriction of store hours
Synergize this model with the retail arbitrage model to boost your product range at Amazon
 

Limitations

Learning curve is longer because the choices online are too many and you might initially end up spending time looking at the wrong places
Quantities available online are typically bigger than what you can buy at a physical store, which increases the risk of ending up buying too much
The risk of making buying errors is higher because it may sometimes be confusing whether the online product on your sourcing site correctly matches with the listing on Amazon
 

How to Launch

Same as with the retail arbitrage Amazon model, we have a thoroughly designed email course to help you master online arbitrage.

 

Wholesale

The time-tested wholesale model typically involves buying directly from a manufacturer or (an authorized middleman) in bigger volumes to squeeze a lower price from the manufacturer to put you in a strong selling position.

We would recommend that you consider the wholesale business model only after you have acquired some experience as an Amazon seller. Factors such as the sales track record and current sales ranking of a product become extremely vital and sensitive to succeed with this model.

With online arbitrage and retail arbitrage, we would often recommend you to go wide instead of deep (which means, purchase only very few pieces of a particular product and test out multiple products before you go deeper into one product). However, when it comes to wholesale, going wide is not a strategy for you. This is a world that requires you to go deep. Be prepared to invest at least several hundred dollars in one product to make the wholesale Amazon business model work.

Clearly, the stakes increase with the wholesale model, and that is why experience matters a lot more here. You definitely do not want to land with 500 pieces of a single product in your dead inventory.

You need more in-depth knowledge of that one product where you plan to go deep, and you need to cautiously evaluate all angles, including timing, season, price, quality, and your finances.

 
Strengths

Lower costs and higher volumes means bigger profits.
Once you gain success with one product, you continue to reorder repeatedly to multiply your profits with a winner.
With a stronger buying price than your competitors, you can potentially go lower on your selling price if required and see your sales zoom.
Bulk buying enables your business model to become more passive. You will spend less overheads and less time to sell 1000 units of the same product than sell 10 units of a hundred different products.
Scaling your business faster becomes a real possibility.
 

Limitations

Bigger initial capital investment required
Higher risks compared to retail and online arbitrage models
External market conditions are not in your control, and you could get stuck with major inventory even if your product and buying price were right
 


Private Label

Branding makes a product more believable. The private label business model requires you to buy a product and create your own branding for it. Amazon sellers who use this model typically source their items from Chinese, Taiwanese or other Asian manufacturers at low prices and add their own unique brand name, logo, packaging and marketing to it.

The private label Amazon business model provides you the thrill of owning your own brand! With this model, you get are free from the worries of listing wrong or banned products, and you practically eliminate competition in the listing because you have branded your item and created your own listing.

Nobody can undercut your prices now because you are unique!

To succeed with this model on Amazon, you need to acquire the art of brand marketing, apart from becoming an expert at creating listings. While a lot of research, creativity and planning is involved in launching a new product in your own brand, but many Amazon sellers believe the effort is worth it because it reduces competition and improves the longevity of your business. If your brand resonates with consumers, the sky is the limit.

However, the inherent risk with this business model is that you will not have the advantage of a product sales rankings or a sales history to go by when making a buying decision. You will have to pursue your product research differently and make more sophisticated decisions than what you would with wholesale or retail and online arbitrage.

You will continually have to evaluate how the other listings are performing, and use that data to make your own buying decisions.


Strengths

Competition is virtually non-existed as you are a unique brand
You have a better command over pricing
The perennial worry of an item becoming restricted is gone
You are investing in the future of a brand, not just living for today
Your brand can gradually extend to multiple product lines as you continue to discover winners
 

Limitations

Risks are higher because you do not have straightforward data of sales history and rankings to bank upon
Marketing skills become vital to your survival
Buying in bigger quantities becomes essential
 


Drop-shipping

Drop-shipping occurs when you buy from a wholesaler or retailer and then deliver the order to a customer. Some Amazon sellers prefer this model because it keeps them free from the hassle of handling the product. Time and money savings are possible with this business because you do not have to prep the product yourself or hire someone to do the prepping and shipping.

If you like to be more hands-on with your business, this is not the model for you. With drop-shipping, you will not have the opportunity to inspect the fitness of the product prior to shipping to the end user, and you cannot apply your own standards of packing and shipping.

Another challenge with this model is that if the customer places an order and you find that the product is suddenly out of stock (from wherever you were going to purchase it), you earn a disgruntled customer. If you fail to fulfill several orders like this, you run the risk of getting suspended by Amazon. Customers also sometimes don’t appreciate it when they realize that they had ordered at Amazon, but received the delivery directly from another supplier (whether it is Walmart or an obscure one).


Strengths

Absence of any upfront costs
You do not handle the merchandise
 

Limitations

Absence of quality checks from your end
Packing and shipping is not in your control
The risk of failure to fulfill orders is high
 

At the end of the day, remember that there are not right or wrong answers in any business. Combine our professional guidance and expertise with your own instinct and experience, and you will be all set to launch your new Amazon business or take your existing business into a higher growth trajectory.

Bashar J Katou

Bashar is a 7-figure Amazon FBA seller who also has a passion to helping other start successful Amazon businesses. Bashar has spent the past year educating thousands around the world of this missed opportunity and has in the process create many 5, 6 & 7 figure Amazon sellers from scratch! If you want to learn more about how Bashar can help you, reach out and schedule a call with his team today!
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How to Create a Winning Business on Amazon?
Written by Bashar Katou on February 21, 2018
Does the endless range of product choices on Amazon appear mind-boggling to you at times? Well, it is fantastic to have so many products to choose from for your business, but the opportunity also conceals the challenge of finding your perfect sweet spot for a consistent, profitable, growing business on Amazon.

Whenever someone asks us “Which business model is the best on Amazon,” we say that the answer is not so simple as black or white, but lies somewhere between the myriad shades of grey. What may be a salient way to sell for one individual may fall flat on its face for another.

You need to consider a variety of factors, including your unique financial situation, risk capacity, business experience – and simply personal choice.

We have chosen the private label business model for ourselves because we enjoy it and we are adept at it, but that may not be the model for all.

Through this post, our goal is to help you navigate through your options by explaining the mainstream selling formats and describing the strengths and limitations of each. We believe that this discussion will give you a more objective assessment of what business model fits you the best and where and how you can launch it.



Popular Options to Start Your Own Business on Amazon


Retail Arbitrage:

Retail arbitrage occurs when you buy a product from a retail outlet at a particular price and then sell it on Amazon at a higher price to make a profit. In simple terms, retail arbitrage is all about ‘flipping’ retail merchandise and profiting from the inherent inefficiencies or imperfections of the marketplace.

We typically achieve retail arbitrage by identifying attractive clearance sale items from local retail outlets and then sell them close to their normal retail price on Amazon.

In a few instances, we seek products that are marked at their regular or normal price, which we can potentially sell for at least three times the price on Amazon. This kind of retail market aberration most often occurs in the fourth quarter. That is a special (or abnormal) season when buying gets frenzied and there are desperate customers looking for that “one doll” for which they are willing to pay any price at that moment.

A simple example of retail arbitrage is when you happen to find a wrist watch or a camera at Wal-Mart on clearance for $20 that sells for $45 on Amazon. You might end up making a profit of about $10 after deducting the charges of Amazon.


Strengths

Safe and low-cost way to launch your Amazon business
No inventory investments involved
Straightforward, easy-to-understand business model
Ideal for beginner level
 

Limitations

Involves significant time commitment because you are physically required to location and re-stock your inventories round the clock
It is not a passive income-producing model
Requires plenty of driving around and moving from store to store
 

How to Launch?

If the retail arbitrage business model on Amazon appeals to you, you have arrived at the right place. We have a compelling email course that is designed to hand-hold you through your new business as a retail arbitrage Amazon seller.

 

Online Arbitrage

As the name suggests, online arbitrage is the digital counterpart of retail arbitrage. The difference here is that you are visiting Walmart.com instead of physically visiting your local Walmart outlet to look for attractive clearance sale deals online on their website just the way you would in a brick and mortar store.

In this model, you can perform price comparisons instantly online with the Amazon site to determine whether you are going to make a profit. (In retail arbitrage, you would have to scan your targeted products with a scanning app.) Online sourcing can be made more efficient if you use some of the popular tools available on the Internet.

For online arbitrage, there is no dearth of websites from where you can source your products. You can continue to discover profitable opportunities from famous chain stores to the more obscure ones which you never knew about.

Digital sourcing gives you one special advantage over retail arbitrage. Here you have an opportunity to purchase from outlets that may not be locally present in your area, but are offering deals that can be flipped on Amazon for a sweet profit.

In online arbitrage, you simply prepare your products once they are delivered to your premises, and send them right away to your Amazon Fulfillment Center.

 
Strengths

An absolute work-at-home business
Massive opportunities for sourcing as you are visiting stores virtually and not driving down to them physically
You don’t have to transport the products in your automobile because it is shipped to your doorstep, and you can typically re-use the same packaging to ship them forward to Amazon
Work your sourcing at your convenient time, without any restriction of store hours
Synergize this model with the retail arbitrage model to boost your product range at Amazon
 

Limitations

Learning curve is longer because the choices online are too many and you might initially end up spending time looking at the wrong places
Quantities available online are typically bigger than what you can buy at a physical store, which increases the risk of ending up buying too much
The risk of making buying errors is higher because it may sometimes be confusing whether the online product on your sourcing site correctly matches with the listing on Amazon
 

How to Launch

Same as with the retail arbitrage Amazon model, we have a thoroughly designed email course to help you master online arbitrage.

 

Wholesale

The time-tested wholesale model typically involves buying directly from a manufacturer or (an authorized middleman) in bigger volumes to squeeze a lower price from the manufacturer to put you in a strong selling position.

We would recommend that you consider the wholesale business model only after you have acquired some experience as an Amazon seller. Factors such as the sales track record and current sales ranking of a product become extremely vital and sensitive to succeed with this model.

With online arbitrage and retail arbitrage, we would often recommend you to go wide instead of deep (which means, purchase only very few pieces of a particular product and test out multiple products before you go deeper into one product). However, when it comes to wholesale, going wide is not a strategy for you. This is a world that requires you to go deep. Be prepared to invest at least several hundred dollars in one product to make the wholesale Amazon business model work.

Clearly, the stakes increase with the wholesale model, and that is why experience matters a lot more here. You definitely do not want to land with 500 pieces of a single product in your dead inventory.

You need more in-depth knowledge of that one product where you plan to go deep, and you need to cautiously evaluate all angles, including timing, season, price, quality, and your finances.

 
Strengths

Lower costs and higher volumes means bigger profits.
Once you gain success with one product, you continue to reorder repeatedly to multiply your profits with a winner.
With a stronger buying price than your competitors, you can potentially go lower on your selling price if required and see your sales zoom.
Bulk buying enables your business model to become more passive. You will spend less overheads and less time to sell 1000 units of the same product than sell 10 units of a hundred different products.
Scaling your business faster becomes a real possibility.
 

Limitations

Bigger initial capital investment required
Higher risks compared to retail and online arbitrage models
External market conditions are not in your control, and you could get stuck with major inventory even if your product and buying price were right
 


Private Label

Branding makes a product more believable. The private label business model requires you to buy a product and create your own branding for it. Amazon sellers who use this model typically source their items from Chinese, Taiwanese or other Asian manufacturers at low prices and add their own unique brand name, logo, packaging and marketing to it.

The private label Amazon business model provides you the thrill of owning your own brand! With this model, you get are free from the worries of listing wrong or banned products, and you practically eliminate competition in the listing because you have branded your item and created your own listing.

Nobody can undercut your prices now because you are unique!

To succeed with this model on Amazon, you need to acquire the art of brand marketing, apart from becoming an expert at creating listings. While a lot of research, creativity and planning is involved in launching a new product in your own brand, but many Amazon sellers believe the effort is worth it because it reduces competition and improves the longevity of your business. If your brand resonates with consumers, the sky is the limit.

However, the inherent risk with this business model is that you will not have the advantage of a product sales rankings or a sales history to go by when making a buying decision. You will have to pursue your product research differently and make more sophisticated decisions than what you would with wholesale or retail and online arbitrage.

You will continually have to evaluate how the other listings are performing, and use that data to make your own buying decisions.


Strengths

Competition is virtually non-existed as you are a unique brand
You have a better command over pricing
The perennial worry of an item becoming restricted is gone
You are investing in the future of a brand, not just living for today
Your brand can gradually extend to multiple product lines as you continue to discover winners
 

Limitations

Risks are higher because you do not have straightforward data of sales history and rankings to bank upon
Marketing skills become vital to your survival
Buying in bigger quantities becomes essential
 


Drop-shipping

Drop-shipping occurs when you buy from a wholesaler or retailer and then deliver the order to a customer. Some Amazon sellers prefer this model because it keeps them free from the hassle of handling the product. Time and money savings are possible with this business because you do not have to prep the product yourself or hire someone to do the prepping and shipping.

If you like to be more hands-on with your business, this is not the model for you. With drop-shipping, you will not have the opportunity to inspect the fitness of the product prior to shipping to the end user, and you cannot apply your own standards of packing and shipping.

Another challenge with this model is that if the customer places an order and you find that the product is suddenly out of stock (from wherever you were going to purchase it), you earn a disgruntled customer. If you fail to fulfill several orders like this, you run the risk of getting suspended by Amazon. Customers also sometimes don’t appreciate it when they realize that they had ordered at Amazon, but received the delivery directly from another supplier (whether it is Walmart or an obscure one).


Strengths

Absence of any upfront costs
You do not handle the merchandise
 

Limitations

Absence of quality checks from your end
Packing and shipping is not in your control
The risk of failure to fulfill orders is high
 

At the end of the day, remember that there are not right or wrong answers in any business. Combine our professional guidance and expertise with your own instinct and experience, and you will be all set to launch your new Amazon business or take your existing business into a higher growth trajectory.

Bashar J Katou

Bashar is a 7-figure Amazon FBA seller who also has a passion to helping other start successful Amazon businesses. Bashar has spent the past year educating thousands around the world of this missed opportunity and has in the process create many 5, 6 & 7 figure Amazon sellers from scratch! If you want to learn more about how Bashar can help you, reach out and schedule a call with his team today!
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