How to Resell on Amazon 101
Reselling on Amazon is one of the ways a lot of people get started in ecommerce. In this article, we’ll be talking about various ways to resell on Amazon that AREN’T the private label method we typically discuss.
Common methods for reselling include:
- Retail arbitrage
- Online arbitrage
Since we usually talk about private label, let’s dive into these alternative (and successful!) methods of reselling on Amazon.
Retail arbitrage: buy products in-store and resell them online
Retail arbitrage is probably one of the easiest ‘gateway’ methods into becoming a serious full-time seller on Amazon and eventually establishing an ecommerce business. Many Amazon sellers began with this route.
Retail arbitrage (or RA) involves purchasing products in person from physical stores, then taking those products and reselling them at a higher price.
How is it possible to make a profit if you purchase your inventory at retail value?
The trick is to hunt for products at a discount. The most common way is to go to big box retailers.
Think large consumer goods stores like:
- Bed, Bath, and Beyond
- T.J. Maxx
- Big Lots
- Department stores
- Chain office/hardware supply stores like Staples, Lowe’s, and Home Depot
- Chain pharmacies like Walgreens, Rite Aid, CVS
- Chain pet stores like Petsmart and Petco
These large retailers often rotate large amounts of merchandise at a steep discount, sometimes as high as 80% or 90% when on clearance.
Part of the fun is the “hunt.” Those who make it a full-time business simply drive from store to store and load up their car with their finds.
To make price comparisons even easier, there are apps you can use to scan the barcodes of items in-store. The app will take you to the Amazon page of that item (if one exists) so you can quickly see the product’s price, other sellers, ranking, and other essential data.
- Low financial barrier to entry
- Great place to start if you want to get familiar with Amazon/ecommerce
- You can stick to a free “Individual” Amazon account (if you sell under 40 items/month)
- Fun for those that like to bargain hunt in-store
- You can choose virtually any product space
- Physically traveling from store to store
- You can’t predict what items you may find day to day
- Potential for competition – resulting in fighting over the Buy Box
- You don’t “own” or control your brand or listings
Setting up your Amazon Seller Central account
If you’re just starting out with Amazon and are going to go the retail arbitrage (or online arbitrage) route, start with an Individual account (like we mentioned above).
You can sell up to 40 units per month, with a $0.99 fee-per-item on top of the “referral” (commission) fee that Amazon takes out depending on the product category of the item you’re selling.
Go here to see how to sign up for Amazon Seller Central.
Online arbitrage: buy products online and resell them online
Want to make money shopping online?
Online arbitrage is similar to retail arbitrage. The main difference is that you bargain hunt and purchase your inventory online instead of in-store.
Arguably the descendent of retail arbitrage, online arbitrage has the appeal of being able to do everything retail arbitrage does – but from the comfort of your home.
Fellow Helium 10 content writer Chuck wrote on several tools that online arbitrage sellers will find useful, from product sourcing to discount-finders, and perhaps most important for arbitrage sellers: price-comparison tools.
Wholesaling: buy products in bulk directly from an existing manufacturer or brand
Being a wholesaler through e-commerce is, in many respects, very similar to classic wholesaling at a brick and mortar shop.
You find a supplier – typically an established manufacturer or brand. Then you purchase product in bulk from them – usually at a steep discount.
This has the benefit of a better profit margin for you (vs. purchasing at retail value), as well as the assurance that you’re purchasing authentic product directly from the brand.
People arrive at the wholesaling model from a variety of backgrounds. Some are business people already familiar with how wholesaling works traditionally, and are looking to bring their model online.
Others are retail or online arbitrage sellers who eventually hit a ceiling in terms of being able to scale their business up – after all, there are only so many hours in the day that you can spend cruising from store to store.
Wholesaling requires a more business-savvy approach. Arbitrage is arguably easier with a faster inventory turnover; you find gaps in marketplace offerings and make money quick, but your income potential plateaus at some point.
In some ways, wholesaling is just a larger version of online arbitrage!
Laws vary from state to state, so for US sellers, you’ll need to find what laws apply to small businesses and wholesalers. Amazon will also ask for proof that you’re licensed to sell a certain brand, if you’re reselling products from an established brand.
Dropshipping: like wholesale, except you never physically handle the product
Important: Amazon has some rules about dropshipping that differ from traditional dropshipping, which we’ll mention in a moment.
Traditional dropshipping is when you form a relationship with a manufacturer, and that manufacturer handles the shipping for you.
For example, you set up your ecommerce store, and people come to your site to purchase a product. Once they do, you send the shipping info to your manufacturer, who directly ships the product from their warehouse to the customer.
Basically, you never handle the product yourself. You’re the frontend of the store, while your supplier is the backend.
Now with Amazon, there is a slight difference.
Amazon does not allow you to dropship in this manner IF any information on or in the packaging identifies a company or seller other than you.
This basically means in most cases you can’t dropship directly, since any packages sent directly from the dropshipper would include their shipping address and contact info on the labels at the very least, if not in packing slips, invoices, etc.
If you can find a way to dropship directly while ensuring no third-party information appears on or in the packaging, you might be okay.
Another way around this is to use the FBA model and have your dropshipper send inventory directly to Amazon.
You still wouldn’t have to handle the product yourself, and you’d have to pay FBA fees, so it’s up to you to decide if this is worth it.
Read Amazon’s fine print to make sure you’re complying with their drop shipping policies!
Want to know more?
Now that you’re aware of the different ways to sell on Amazon that don’t involve private label products, are you ready to explore your options?
Take a look at Chuck’s in-depth article on how to use Helium 10’s Black Box, Profitability Calculator, and Xray tools to research and narrow down potential product spaces and specific items for arbitrage or wholesale purposes.
And if you haven’t already, also see some Chrome extensions he found that can be helpful to online arbitrage sellers.
Want to talk more about non-private label selling methods? Let us know in the comments, or start a discussion in the Helium 10 sellers Facebook group.