This week I talk about the three different Amazon business models: Amazon Wholesale FBA, Amazon Arbitrage and Amazon Private Label. I describe each one and touch on the strengths and issues with each model. Additionally, I discuss the importance of self-talk in your business.
Amazon Business Models Episode Show Notes
Here are three types of Amazon business models that people are currently engaged in for you to get a sense of what’s out there:
- Amazon Private Label – this may be the one who would hear time and time again and what this business model essentially boils down to identifying a product that you can sell to Amazon as your own.
An example may be finding a bird house which has a lot of potential but seeing the opportunity of improving a top pole as product reviews state that they fall off after just 6 months. What you do is recognize a spot in the market which has ample demand, have it produced (usually in China) and sell it under your own label. Once you have that patented, no one else can sell that same product on Amazon but you.
- Amazon Arbitrage – can sometimes be called Retail Arbitrage or Online Arbitrage. It refers to something that’s already up for sale in Amazon, thereby you can also sell it.
If you bought a Canon camera, for example, you can get an Amazon account and list it there. This goes whether the item is used or out of the box. In a way, this is like eBay where you can round up stuff in your house and sell them over. This is a bit hard to scale but some people are making good money by rounding up clearance sale items (in physical stores and online) and listing them in Amazon aggressively.
- Amazon Wholesale FBA – this refers to products which a seller buys in bulk but stores them in an Amazon warehouse. Amazon does the marketing, fulfilment and shipping meaning, when a buyer purchases the item, Amazon is the one who ships them over after taking off some percentage from the seller.
Let’s say you buy boxes of rubber bullets in wholesale price, ship it to the Amazon warehouse and it stays there until it gets bought. Once it does, Amazon ships it out on your behalf to the buyer’s address and for the privilege, they will charge you a certain dollar amount. Deduct all your operating expenses and you keep the difference.
Links Mentioned In This Episode
- Necessary Endings by Henry Cloud
- The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results by Gary Keller
- Subscribe in iTunes
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Amazon Business Models — Transcript
It’s been a crazy week since Free the Dream and lots of activity going on. It’s been really exciting. A lot of activity around Cliff’s community; the Free the Dream community is super fired up. If you didn’t hear about Free the Dream, I talked about that last week in Episode 153. I want to encourage you to go listen to that. That was a lot of fun. It was just a really impactful time that I had there with Cliff and his community at Free the Dream Live.