If the positives outweigh the negatives, your next question is where to get items to sell on Amazon.
Here are four popular options.
Retail arbitrage. Retail arbitrage is finding discounted items in retail stores and then selling them for a profit. If you like to shop, this can be a fun way to sell on Amazon. Your margins probably won’t be as high as other selling options, but arbitrage can be an easy way to get started.
Drop shipping. Drop shipping is another low-investment way to start an online business. With the drop shipping business model, you list products for sale, but you don’t purchase a product from the manufacturer until your customer buys it. The manufacturer ships orders directly to your customers. Amazon allows drop shipping. Make sure you check out the pros and cons of drop shipping before choosing this method of selling on Amazon.
White label products. If you want to build a brand, you can purchase items from manufacturers and have them labeled with your branding. You’ll have a better chance of making a profit with this strategy, but it requires more upfront investment.
Sell your own brand. If you’re already producing products, you can sell them on Amazon. Just be sure you understand the risks of knockoffs and counterfeit products for sellers in the Marketplace.
Of course, you can also buy products wholesale from other brands and retail them on Amazon.
Should Amazon sellers use Fulfillment by Amazon (FBA)?
Like every aspect of doing business with Amazon, FBA comes with benefits and drawbacks.
Benefits of Amazon FBA
- You get access to Amazon’s logistics services, which are some of the best in the world.
- Amazon will get your products to your customers quickly.
- You can offer Prime shipping, which increases sales.
- Amazon manages your order fulfillment, so you don’t have to.
- FBA can ship orders from other sales channels, not just Amazon.
Drawbacks of Amazon fulfillment
- When warehouse space is limited, Amazon limits how much you can ship to FBA. This can make it hard to meet your sales potential.
- Amazon has strict rules for inbound shipments. If you don’t pack and label your products to their specifications, your shipment may be sent back.
- Receiving can be slow. That may delay your sales, especially if an item is out of stock.
- Orders ship in Amazon boxes, not your branded packaging.
- While its warehouse and pick and pack services are excellent, you should consider the pitfalls of Amazon FBA before you trust Amazon with your order fulfillment.
Alternatives to selling on Amazon and Amazon FBA
When you sell on Amazon, you are a number. The company views you only as a unit of profit. Here are some Amazon alternatives every eCommerce entrepreneur should consider:
Sell on a marketplace that specializes in the types of goods you sell. For example, you could sell handmade or craft items on Etsy or electronics on Newegg.