How to Make Money on Amazon

Amazon needs no introduction, with over 150 million active prime members as of 2019, you are probably one of them. Amazon now accounts for over half of the online retail space. (see chart below)

If you are like most people, when you want to buy something, you go to amazon. However there is whole other side to amazon, the supply side.

The Basics:

Amazon itself doesn’t sell or even own the vast majority of products listed on their platform. Anyone can open an amazon seller account, create a listing, and have access to amazon’s marketplace. Amazon does sell their own lines of products, you might be familiar with “Amazon Basics” and “Amazon fire stick”. These are brands owned and operated by amazon. This functionality is open to everyone and is how amazon became the E-commerce giant it is today.

How to sell on Amazon:

There are two primary ways to sell on Amazon,

1: FBA

FBA stands for “Fulfilled By Amazon” This method consist of you sending your inventory directly to an Amazon fulfillment center. Once the products are received by Amazon your product becomes “in stock” and when orders come in, amazon automatically picks, packs, and ships the orders out with prime shipping.

2: FBM

FBM stands for “Fulfilled By Merchant” here instead of shipping your inventory directly to amazon to fulfill the orders, you hold the inventory and ship it directly to your customers.

Above is a screenshot of an active seller central dashboard. Here you can see your sales summery, orders, and payments at a glance.

Seller central is where you will operate your business from. Aside from the dashboard, you can easily manage your inventory levels, listings, advertising campaigns, and reports.

What to sell?

This is a topic that is constantly asked but has no direct answer. No one can tell you what product will make money or predict future trends. I can share with you a few resources and strategies that I use.

1: My first piece of guidance is about mindset and the big picture.

If you sell on amazon you are starting a business and your new job title is entrepreneur. If this is your first business venture, it is important to know what an entrepreneur does.

An entrepreneur is a problem solver, they make an impact on the world measured by value created. This can be solving a small issue for a lot of people or solving a massive hurdle for a specific niche. Steve Jobs for example, did both, he created massive value enhancing peoples lives on a mass scale. Thus as a result, he became a very influential and wealthy man.

Luckily you don’t need to be the next Steve Jobs to sell on amazon, but the formula is the same. Offer a product that is unique and solves real problems people have and in turn you will find success.

2: Improve

Inventing something brand new that offers value previously unaddressed by the market would be the best way to go. Inventing new products sets you apart from the competition, gives first mover advantage, unique value proposition along with a host of other competitive advantages.

In reality, inventing new products is hard and this difficulty is what separates average from extraordinary. A solid middle ground is taking an already existing product and improving it. This can be done by looking at existing reviews from competitors and anecdotal research from personal experiences.

3: Reddit

Reddit is a very powerful resource that has helped me numerous times throughout my journey. My favorite subreddits related to selling on amazon are:

• r/AmazonSeller
• r/FulfillmentByAmazon

These subreddits are full of other entrepreneurs running businesses selling on amazon, a great place to learn and ask questions.

How to get inventory?

There are many ways to get inventory depending on your situation.

Retail arbitrage: This is simply buying goods at existing retailers such as Walmart and selling them for more elsewhere. This strategy works for testing the waters but if you want to make a custom product you will need to go to the supplier.

Alibaba: This is the go-to supplier resource currently for amazon FBA. Alibaba compiles listings from thousands of suppliers across all sectors mainly located in China. Here you can easily contact many suppliers, create prototypes, and get competitive wholesale prices.

Advantages of selling on Amazon

Selling on amazon has many pros and cons, here are a few:

Pros

• Access to the amazon marketplace
• Easy to setup and start
• Orders are fulfilled by amazon

Cons

• High competition (low barriers to entry)
• Fully reliant on amazon
• Subject to policy changes

Closing thoughts

Amazon is a powerful and world leading E-commerce destination used by millions of people. If looking to start a side hustle, going from the consumer side of amazon to the supply side is an excellent move.

Remember to always ask, “what problem is this solving” and “does the market need this” when researching products.

It is wise to begin small. You may be excited to start selling on amazon and start making money, however begin small and validate ideas as you go. Good luck!