Just the tip
We all know what Amazon is, but you may not know about selling on Amazon. According to PYMNTS, 60% of Amazon.com’s e-commerce revenue is generated by 3rd party sellers like me. If you’re counting, that approximately $308 BILLION in sales in 2022. Thats a big number. Selling on Amazon can be easy but its not like all of those scammy influencers tell you. So lets talk about how you can get in on this action.
Quick thoughts:
Cost to get started: [1-2]This is a $,000 to $$,000 business to get started. You have to have money but there are some options in getting started and different business strategies. Don’t listen to the nonsense influencers peddling online courses.
Ease of business: [1] – Amazon FBA can be done by anyone. Its not complicated to figure out. You dont need any specialized degree or knowledge. You can learn everything you need online for FREE over on my free Amazon seller education site. (Shameless plug?)
How big can this grow: [3] Vacation money to a full hundreds of millions in revenue. This is a classic business of “the harder you work the more you can make”. If you’re lazy and give up easily…this isnt for you. Heck, entrepreneurship probably isnt for you if thats the case.
Resource level: [1] Anyone can do this business. You can do this 100% solo. You don’t need much for resources to get started.
Can I pull it off: [5] For sure. Anyone can do this.
Why This and Where is It Going?
So I won’t lie..this is the first post on the website analyzing a business and this is easy for me to plow through this and give some legit feelings. Amazon’s biggest advantage is distribution. Before we got into the business, my wife and I thought about other businesses but knew that distribution is usually one of the biggest issues that people run into. We learned this from our previous insurance business. Lessons learned the hard way. I think the fact Amazon has hundreds of millions of buyers is its strongest advantage for any new e-commerce seller. Distribution is basically taken care of. You’re piggy backing off a super successful business.
Why else is it a good idea? Distribution…I know we talked about distribution regarding finding customers…but this time I’m talking about moving products. Amazon runs the Prime network. You’re probably a member so you know the advantages. The advantages as a seller is using Amazon’s giant warehouse network, their employees to pick and pack products and their employees for customer service. While there are some disadvantages, if you ask me…FBA is a no brainer.
So where is the industry going? E-commerce has been growing exponentially. If you sold online during covid and didn’t grow by a huge margin, something went wrong. E-commerce exploded and our own Amazon business few by 500%. Covid led to more online shoppers. Old people were almost forced into using online shopping that previously never wanted to. While Covid did end and people returned to stores, e-commerce is flourishing. E-commerce is expected to grow by 50% in the next 5 years. A rising tide lifts all ships.
Lets Talk Financials
There are few ways to sell on Amazon. A quick rundown of each one and what you can expect.
- Wholesale – selling like Walmart or the local grocery store. You buy products from brands and distributors and resell it. 15-20% Gross margin should be the goal
- Retail Arbitrage – buying products at local retail stores and reselling it online. 30-50% Gross margin
- Online Arbitrage – buying products at online retailers and reselling it online. 20-30% Gross margin
- Private label – this is building your own brand of products. This one is hard to say. 20-60%margin
Each of these has their advantage. Just remember, these are GROSS margins meaning profits you made from selling on Amazon but DON’T include stuff like employee labor, warehouse, internet, etc. The more money you have, the more you can make. We have an entire free video course over at AMZFusion.com if you’re interested.
How to Get Started
Learn the business. You don’t need a fancy education, you can learn everything you need to know online for free. You don’t need to pay for a course. Again, check out AMZFusion.com and you can learn everythign you need for free. You’ll need to understand the advantages and disadvantages of each business type to figure out whats best for you. We personally sell wholesale on Amazon and move a few million dollars per year on Amazon.
Final Thoughts
If you haven’t been an entrepreneur before, I think Amazon is a great business to get started in. You don’t need a lot of money to get started though it helps and you will grow faster. You’re main starting capital will be to purchase goods to sell and you have some liquidity in that. You can always liquidate inventory at 0% profit and get most of your money back out of the business. Not many businesses like this.
You don’t need a college education to be successful in this business. This can be a small side gig for a little extra money or it can become big with 100 employees and a warehouse. It’s all up to you. Leveraging Amazon is a quick way to scale a business and easier than doing for businesses that depend on you 100%. Using Amazon as a partner undoubtedly makes growth way easier.
