Before you start your business on Amazon, you have to consider what type of products you are going to sell and where you are going to get those products. The amount of money you need to start an Amazon business depends on where you’re sourcing your products from. Finding good opportunities depends on a lot more than imitating the success of a popular product or competing against products with mediocre Amazon product pages. There are three primary ways you can about procuring the inventory for your business:
- Retail Stores/Outlets
This is, by far, the most popular way to do business on Amazon. You buy items at local/online retail stores at a discounted price, and resell them on Amazon. This is known as retail/online arbitrage. Retail is generally a great starting point for an Amazon newbie. What’s great about this technique is you can get your feet wet selling on Amazon without a huge investment up front. Online arbitrage is the same idea, only that sellers buy discounted products online to then resell them on Amazon.
- Private Label Manufacturers
Private label is perhaps the most scalable model for selling on Amazon. You will design, modify, customize, and develop your own branded products, and get it manufactured. With private label, you find a generic product and a manufacturer who can make the product in bulk at a cheap price. Then you tweak the product, adding your logo and business information, and sell it under your own brand. You will be responsible for its branding, quality testing, and all other operational aspects before the items hit the market. All the profits you make here will be yours and the manufacturer has no rights over the brand. This method is also referred to as Private Label and is among the most preferred option by sellers.
- Wholesale Suppliers/ Manufacturers
Some of the resellers on Amazon prefer this type of product sourcing especially to those who have enough investment. You get in touch with the main company itself, buy the products at a wholesale price and then resell it on Amazon for a profit. This option may require a bit of investment since companies are usually interested in doing business with those parties who can handle large volumes. You can also get in touch with their suppliers to buy inventory. The difference between this and private label is that with wholesale, you’re buying products directly from an already established brand and then selling them under their brand name with their approval.