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A Breakdown of the Five Top Options for Selling on Amazon

By The Selling Family

Does your head sometimes start to spin when you look at all of the different ways you can sell on Amazon? It’s great to have choices, but sometimes they can overwhelm us!

We typically say there is no right or wrong answer to the question about which model is “best.”

There are so many factors to consider, including your own experience, situation, tolerance for risk — and simply preference. We chose retail arbitrage because we like it and are good at it, but that’s not the model for everyone.

Today, we are going to help you sort through the choices by providing a definition of the most popular selling formats, then give you our recommendations for the best training programs and educational materials related to each.

By the time you’re finished reading this article, you should have a good understanding of what model is the best fit for you, as well as where you can go to learn more!

First, a rundown of the five models you’ll see the most. These include: Retail Arbitrage; Online Arbitrage; Wholesale; Private Label; and Drop-shipping.

Retail Arbitrage

Retail arbitrage is when you purchase a product at a retail establishment and then sell it at a higher price on Amazon. It’s essentially “flipping” merchandise, or what is often described as taking advantage of market inefficiencies.

For example, you might find an MP3 player on clearance at Walmart for $15 that it sells on Amazon for $35. After Amazon fees and its cut, you might make a profit of about $10.

Pros:

• This can be a really inexpensive way to get started selling on Amazon
• No minimum investment to start
• Easy model to understand

Cons:

• This can be the most time-consuming of the business models, as you have to physically find and restock inventory constantly
• Related to the above, this is not a passive source of income
• Mileage; you have to drive from location to location

Retail arbitrage is our specialty! It’s where we got started and originally found success — Jessica was able to replace her income in a few months and then bring Cliff home from his job in about a year’s time.

If you’d like to learn more about this model, check out our Amazon Boot Camp, where we take you step-by-step through the process of setting up your account through making your first sale, and teach you what you need to know to grow from there.

The course includes video modules, custom printable and checklists and a bonus section. More than 3,500 people have taken the course!

We also have an accompanying private Facebook seller group where you can ask questions and share your successes with thousands of other members.

Online Arbitrage

In online arbitrage, you do the same thing as with retail arbitrage, except that you do your sourcing online.

Instead of heading to Walmart, you might go to walmart.com. There are hundreds of websites available, from large chain stores whose names you recognize to a bunch you may never have heard of.

Pros:

• A true work-from-home model
• More sourcing opportunities available, as you don’t have to physically drive from one store to another
• Product is shipped to you, so you don’t have to lug it in your car — plus you usually receive boxes and packing materials that you can re-use when you ship your inventory to Amazon
• Source at any time, not just during store hours
• Good way to complement your retail arbitrage and add more product

Cons:

• This is a little more difficult to learn because there is so much product available and you can spend a lot of time looking in the wrong places
• It can be easy to buy too much
• Sometimes more difficult to tell whether the product on the retailer’s website matches the Amazon listing, so you can be more prone to error when purchasing

Over the last few years, we’ve added online sourcing as a major way to find inventory during the first three quarters of the year.

It allows us more flexibility to spend time with our young son, plus it complements the products we find when we do head to the store to do retail arbitrage. We can also buy in larger quantities.

We’ll teach you how to do the same in Online Arbitrage - ABCs of Online Sourcing.

Our video course is set up in four easy-to-follow modules.  Among other topics, we teach you how to find good stores to source from; the key differences between sourcing product online versus at a brick and mortar store; our favorite tools; and ways to determine how much competition you’ll have.

Wholesale

With wholesale, you typically buy direct from the manufacturer - or from a middleman - and buy in larger quantities in order to get a lower price than you would at a retail establishment.

Pros:

• Lower purchase price means higher profit
• When your purchase price is lower than other sellers, you have a better chance at winning the Buy Box because you can go lower on your sales price if needed
• Buying in larger quantities allows your business to be more passive. It takes less effort to sell 100 of the same item than it does to sell one of 100 different items.
• You can scale your business

Cons:

• Larger investment of capital
• Bigger risk than retail arbitrage because you are buying larger quantities. There is always a chance you get stuck with large amounts of a product you can’t sell.

If you’re interested in pursuing this model further, we recommend the Unstoppable Amazon Academy by Robyn Johnson.

Robyn is the author of The Unstoppable Entrepreneur and hosts The Unstoppable Entrepreneur podcast. She has sold more than a million dollars on Amazon.

This course includes basics for beginners, but is designed for sellers looking to grow their business to $50,000 a month or more.

Some of the lessons and modules include: scaling retail arbitrage; Wholesale sourcing at higher margins; Introduction to Amazon SEO; hiring and training virtual assistants; business basics; and an introduction to bundling.

The Unstoppable Amazon Academy, which is a subscription, offers a monthly or annual payment option.

Private Label

Private label refers to the practice of purchasing a product and then putting your own branding onto it. Many times, sellers will purchase product from China and then attach their own brand, logo and marketing to it.

Pros:

• Little to no competition because you are the brand owner
• More control over price

Cons:

• Riskier than retail arbitrage and wholesale because the product typically has no ranking or sales history to draw upon
• You typically must purchase in larger quantities

For training on this model, we suggest Proven Private Label (PPL), a primer on how to start your own Private Label product line. You can buy just a book or go for the mentoring program (which we recommend).

The program teaches you how to find the “golden gaps” on Amazon, which are products people are searching for but can’t find.

It shows you how to find products and market them, and walks you through each step, from brainstorming to having your own Private Label product you can resell on Amazon, eBay, or elsewhere.

The teaching includes 6 mentoring modules, 20 PDF lessons and a private Facebook group.

Topics include how to choose your product; contacting suppliers; creating a listing; brand name, logos and packaging; and advanced strategies.

Drop-shipping

When sellers drop-ship, they purchase from a retailer or wholesaler and then have the order sent to the customer. We recommend against this practice.

Pros:

• Sellers don’t handle the merchandise

Cons:

• Lack of quality control; seller doesn’t have the opportunity to inspect the product, nor to ensure that packing and shipping is handled in a way you would approve of

This is not an area we have used or explored, so we don’t recommend any particular training for it.

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