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Iāve talked about Selling Wholesale on Amazon FBA a lot of this channel. Iāve also talked about doing online arbitrage and shipping it into Amazon FBA a lot tooā¦.but lately in the discord chat Iāve been getting a lot of questions on my experience starting a few different private label products a few years agoā¦.and whether or not I think itās still a viable business model that people should try to get intoā¦.or if they shouldnāt waste their time and selling online arbitrage products or wholesale products is more worth it.
So in this video, we'll be discussing three different business models and comparing the benefits and drawbacks of eachā¦.to give you a clear cut winner!
First letās discuss Selling Wholesale on Amazon FBA Selling wholesale with Amazon FBA is a business model where you buy products in bulk from a manufacturer or distributor and then sell those products on Amazon. One of the key benefits of this model is that you can buy products at a lower price due to the bulk purchasing power you have with these companiesā¦.not to mention the fact that as you build up a good relationship with them, you can slowly get even cheaper prices which increases your profit margins significantly if youāre buying a lot of inventory.
Another key benefit of this is you donāt actually need to run any ads to your products to generate salesā¦.or even build the brand at allā¦.simply b/c youāre sourcing products that already have demand on amazon and typically already have a recognizable brand name. Thereās a TON of scalability here. Itās not abnormal at all for normal people to hop into this and a few years later their sales are in the millions. I see it happen ALL THE TIME.
One of the main drawbacks of thisā¦.is that you'll be competing with other sellers who are also selling the same products. Also, some manufacturers may require a minimum order quantity, which means you may have to invest a large amount of money upfrontā¦.depending on the product and the specific distributor. But perhaps the most worrisome part of this for newer sellers is the fact that youāre more invested into a product listing (b/c youāre often buying more inventory for each listing)ā¦.which means if you miscalculated your competion or the opportunity on this listing, it can be a more costly error than if you did that on say an online arbitrage listing.
Which brings me to Selling Online Arbitrage on Amazon FBA This is the very first way I got started on selling on Amazon. I still think itās great for beginners trying to get into ecommerce and learn the ropes of how to make profitable buys, learn amazon through actually doing (which is the best way), and mitigate their risk heavily in the process.
With this business model where you buy products from online retailers and then resell those products on Amazon. One of the benefits of this model is that you can find products at a lower price than you would if you were buying them from a manufacturer or distributor. This is because you're often taking advantage of sales, clearance items, and other discounts. Another major benefit for beginners is that youāre not āmarriedā to a listing a lot of times since you typically donāt source that many units for each listing. That gives you more flexibilityā¦.and a lot more room to make errorsā¦.And they wonāt be as costly if you do mess up a buy. You can chalk it up to a learning experience and it most likely wonāt be a big deal.
However, there are also some drawbacks to selling online arbitrage products. One of the main drawbacks is that you'll need to do a lot of research to find profitable productsā¦mainly b/c itās a lower barrier to entry businessā¦.so youāll be competing with a lot of other sellers (that wouldnāt otherwise be on wholesale listings - for example). You'll also need to be careful about the condition of the products you're buying, as Amazon has strict rules about selling used or damaged items. Finally, you'll need to be able to move quickly to take advantage of sales and other opportunitiesā¦.and make sure your products get into FBA in a timely fashion. Because A LOT can change quickly on an Amazon listing that is selling elsewhere for cheaper.
All in all, this business model is a GREAT way to get started selling on amazonā¦..and learn the ropes quickly while making some money. But it is tough to scale it to a significant amount without spending astronomical amounts of time.
