Amazon is the world’s largest online retailer and research suggests that by 2021, 50% of all online shopping done in America will be fulfilled by Amazon. That is a truly incredible figure, but whilst it is one of the easiest ways to do your shopping, many budding entrepreneurs are also finding that there are great ways to make money on Amazon too.
If you have ever dreamt of making money online, then building an e-commerce business using the Amazon platform could be a great way to make extra money; however, it will require a lot of dedication and hard work.
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How do you get started?
Before you can begin to make money on Amazon, you need to understand how selling on the platform works as well as needing to be aware of your overall budget, resources, and goal.
You will also need to decide on what it is that you plan to be selling – if you have the skills and talent, this could be something you make yourself or more than likely it will be a product you source from elsewhere.
There are a number of different strategies that you can implement to start making money, and each one has its pros and cons. The three most common options are Retail Arbitrage, Wholesale and Private Label, but what do these mean though?
#1. Retail Arbitrage
This is most commonly how new Amazon sellers begin to make money from the platform as it is a relatively simple way to do things and does not require huge sums of the initial investment.
The basis of Retail Arbitrage is to find items being sold on other platforms, such as eBay, at a low price and then purchasing and reselling them on Amazon at an increased price. If you search hard enough, you can often find products selling at less than half the cost that they do on Amazon; meaning you will be able to quickly make significant profit percentages on each item you sell, even with the Amazon fees added.
This is a popular way to start as it helps you to manage your inventory very easily and does not require much in the way of start-up capital as you can simply purchase as much or as little of the items that you plan to sell. That means you can start your career selling on Amazon slowly and around your current job.
There are negatives though, primarily the time it will take to scour the internet to find the very best initial price for the product you are planning to sell. This can be a very time-consuming process and will require hours of work to complete it properly, that is time that could perhaps be used more effectively elsewhere. The profit on these products is typically low too – whilst you will have a high-profit percentage on the price you sold it for against the price you purchased it for, the actual amount in dollars is very low and not enough to quit the day-to-day grind.
Retail Arbitrage is a great way to get yourself started on Amazon, but it is almost impossible to scale up into a full-time career and you will be limited to the profit that you can make.
If you have more money to invest initially or you have been able to make enough money from Retail Arbitrage that you are ready to take the next step, then purchasing products from a wholesale supplier or directly from a manufacturer is a great solution.
By beginning to work with a wholesaler or manufacturer, you will be given the option to purchase the products at a much lower rate than you would normally – however this typically involves needing to purchase product in significant bulk.
So whilst you will be able to enjoy much better profit margins compared to the Retail Arbitrage method, you will need a large sum of money in place in order to meet the minimum order requirements. Quite often, the best prices are reserved for the bigger orders so it is worth doing your research and waiting until you can afford to purchase at the best price. Before you do that however you need to be certain that these products will sell (particularly if they have a use-by date) otherwise you could end up actually losing money.
Despite the higher risks, by purchasing products at a wholesale price and selling at a retail price you will be able to make significantly more money. Depending on what you purchase, you could be selling a respected brand already which means you will not have to be selling from scratch.
Compared to Retail Arbitrage, the Wholesale method can help you to make significantly more money on Amazon but it does open you up to more risk. If you find that the products you purchased are not selling then try to unload them at cost and move on to another product.
#3. Private Label
One of the most popular ways to make money on Amazon, one that the serious sellers utilize, is what is known as Private Label. This is where you create your own branded products to sell, either by using an existing product you have rebranded or a product you have developed and put your own spin on.
This is the most profitable way of selling on Amazon as you are able to maintain complete control over your product, inventory, and most importantly price. If you conduct your market research thoroughly enough you will know what competition you face and can adapt accordingly. This also lets you create your brand and style, helping you to set yourself apart and control your marketing.
Running Private Label products does require more investment and time than the other two methods, and you do have to accept more risk. With the right research though you can help to mitigate that risk to ensure you are still making money on Amazon.
Other ways to make money on Amazon
If you are not looking to sell products on Amazon, then there are still ways you can make money from the platform. One of the easiest ways is to become an Amazon Affiliate using its dedicated Associate’s program. This means that you do not need to worry about sourcing, storing or selling any products, instead you direct potential customers to sellers and for every product purchased using your affiliate link, you will receive a small commission fee between 4-10% per item.
The Amazon Associates platform is completely free to join, meaning that there is no upfront costs for you to face, so you can start whenever you like. Once you have been approved and have your affiliate links, you can then start to promote those links however you like – most commonly via your own website and social media.
There is no limit on the amount of commission you can receive, so the more people who click your links to purchase products, the more money you can make.
Whilst this does not require any investment other than your time, it is a great option to start earning real money from Amazon but it is important to remember you will need a lot of people clicking those links to make real money. That means you will need to be dedicated and put in the hours, building up your website and increasing your visitors.
Amazon is constantly changing and bringing in new ways to make money too, from using Merch by Amazon to design your own clothing to sell to self-publishing a book on Amazon Kindle. So no matter what your skillset might be, there is a very high chance you will be able to supplement your monthly income with extra money from the platform.
Is it worth the effort?
There are many ways to make money on Amazon and supplement your income, but it is not a get rich quick scheme and will require you to be dedicated and passionate about what you are doing. If you are able to dedicate a few hours each and every day to grow your business, whichever money-making option you choose, you will be able to soon start seeing the profit you make increase.
Each option provides a valid opportunity to make money, but before you decide which option to do make sure you complete your market research and work out which method suits your lifestyle the most.
Make sure you understand exactly what each method requires and the time it will take you to successfully grow; by finding out as much as you can, you will be prepared for any eventuality and you might soon be able to turn this money-making gig into your full-time career.
How I Make My Money Online
Personally, I found the Affiliate Marketing route was the most profitable to me and I was able to branch away from just promoting products on Amazon too. There are a lot out there but I have found that the Wealthy Affiliate platform is the most useful and has been helping my online business.
For me, the best part of the site was that it gave me all the tools that I needed to succeed; from tips and tricks to being able to interact and chat with fellow members to share ideas. Not only that, but Wealthy Affiliate also has a whole bank of lessons to help you to succeed, including how to successfully market yourself via social media and improve your SEO ranking.
Thanks to Wealthy Affiliate, I’ve been able to become financially independent and get away from the 9-5!