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Amazon Business Models and How to Start an Amazon Business

When starting out on Amazon seller central, you will need to decide on which business model to use or get some Amazon consulting from a trusted person. There are three

main avenues: private label, retail arbitrage, and wholesale. Each has its own pros and cons but we will walk through each below:


Retail Arbitrage:

Are you someone who likes to sweat while they work and have an achy back at the end of the day but feel satisfied? If yes, then this model is for you! In a nutshell, you will travel to big box stores like Walmart ad Target to find really great clearance deals on items ranging from kid's toys to kitchen Items. Once secured, you will label and ship these into Amazon for reselling to customers on this platform. This is a time-intensive design but one that many people pursue because there is little risk of being overstocked with inventory. It’s also very attractive to someone who doesn’t have the capital to jump right into a design that requires big cash upfront. Cash flow for retail arbitrage is strong but you will find yourself getting tired of this principle pretty quickly if you ask me.

Wholesale:

This is my second favorite model. Unlike retail arbitrage when you are driving all around town trying to snatch up deals, you will be working with various wholesalers who will send in an item to the warehouse to sell. This is attractive for someone who wants to utilize the FBA ecosystem but does not want to reinvest the wheel in terms of product creation. A practical example is phone cases. I’ll use OtterBox for example. Once you develop a relationship with them, you will get bulk quantities of these rugged phone cases which you will purchase and send into the warehouse. You will mark up these prices and retail them for a profit. The struggle here is that like retail arbitrage, you will be competing with pricing, and winning the

buy box will always be a challenge. Wholesale is preferable to retail arbitrage but still comes with a variety of struggles.

Private Label

Amazon private label is the king of these 3 models. When you talk to sellers on this platform, almost everyone single one will be doing some sort of private label business. There is big money in this design but it’s more than that. One of the most common complaints with other molds is the lack of control over the goods s they are selling. Unlike retail arbitrage and wholesale, you are the designer, manufacturer, and seller of the product. You control the intellectual property for this product and all pricing changes. You also will never have to deal with hijackers on your listing or buy box fights.


Why?


Because no one else is allowed to sell your unique, branded product. You control the branding, pictures, and even video production. This is the gold standard for selling on this stage and will continue to explode as the years go on. It’s just such a great combination of business control and time efficiency. You will never need to make a trip to a store, deal with wholesale agents, or touch your shipments ever again. Talk about optimization!


Thanks for letting me walk you through the three main models for selling on the Amazon seller marketplace! I’m obviously biased and will recommend the private label route for pretty much every single person out there, but don’t be scared about getting your feet wet with one of the other two models. All three of them make money, and that’s the important thing. If you need help with any Amazon consultancy services please reach out above.

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