A few years ago you could simply go out and buy brand name products in stores and sell them for three times or more what you paid for them. Easy profits! And the guru's were all promoting it. Even some of the major news networks featured stories about people making hundreds of thousands of dollars reselling on Amazon.
And more and more "new" sellers jumped on the band wagon for their share of the profits.
But then retailers began cracking down and banning resellers from their stores (Target were first, but others followed). And of course, the competition began to get fierce as thousands of new Amazon sellers armed with the free seller app began storming local Walmarts and buying up whatever they could. In Canada, it never reached peak frenzy so we didn't run into quite the competition that the US did. But profits eroded nonetheless, and deals became more and more difficult to find.
The next "gold rush" was sourcing online for products. Known as "online arbitrage". Software tools were developed and sold to the masses that could scour the internet to find "deals" for you. And they reached peak saturation sometime last year.
Then, retailers began limiting the quantity of items you could purchase from them online, or sometimes flat out cancelling orders that were being shipped to "known" prep and ship company addresses.
The competition got crazy. Thousands of people all paying $100 a month for the SAME tools, finding the SAME deals. Guess what happened to prices? Yup. Tanked. A lot of people got salty and decided that "selling on Amazon sucks". The people selling the tools made a fortune though.
The final death blow was when Amazon and brand owners began cracking down on "unauthorized" re-sellers and sending out IP violation notices and threats. It didn't matter if you could prove your case, Amazon sided with brand owners 90% of the time and you'd be banned from selling the item again, or worse, have your account shut down. They went even further, RESTRICTING thousands of brand names making it impossible to even sell those items on Amazon any longer.
Don't get me wrong. I've personally made tens of thousands of dollars doing arbitrage myself and can attest that it was highly lucrative and relatively easy. In fact, I only stopped doing it in 2018 (though it only made up a tiny percentage of my business by then).
In 2020, you can still do arbitrage when you're starting out and likely make some money doing so (especially buying in Canada and selling in the US). But it will take a LOT more work to find products that you're actually able to sell (due to brand restrictions) as a newbie with enough profit after all fees are taken into account. But the caveat is that it's a temporary stop gap measure, not a business plan. It's a good way to lean the ropes and build up some capital. Then move on.
Another business strategy for Amazon sellers that was BOOMING and reached peak frenzy in 2016 is know as Private Label. The method mostly being taught was to buy generic products in China on Alibaba, slap a made up brand name on them (that you dreamed up overnight), create a listing with nice images, offer a promotion/giveaway, get reviews, and sell on Amazon.
I think at one point, there were over 10,000 listings of the same damn garlic press all with different brand names tacked on them (due to an example a guru put out and everyone copied). And people were making a KILLING at the time doing Private Label. Every Guru out there was promoting a course on how to create your own brands on Amazon and promising people easy riches as they posed next to mansions and Lambos. People couldn't sign on fast enough! It was indeed a gold rush and almost anyone could make money doing Private Label back then
But.....you guessed it...the party crashed hard sometime around late 2017. Chinese vendors began selling on Amazon directly, undercutting prices. Along with thousands of other Amazon sellers who took the same courses from the big shot Guru's listing generic crap no one wanted. Hoverboards with cheap batteries from China started exploding and sellers got sued. The guru's didn't mention anything about getting liability insurance and how expensive that is to obtain. guess they forgot about that part?!
I spoke to someone the other day who's stuck with over $10K worth of products that won't sell. They followed some guru's outdated advice and went all in as a brand new seller on Amazon with zero experience and launched their first "Private Label" product. They bet the farm looking to win the lottery and lost it all. Very sad indeed.
Amazon have steadily increased their fees over the years, making it nearly impossible to profit selling low priced items now. This was to cut down on many of the generic crap listings that had flooded the platform. And it has had a decent effect, though there's still a lot of crap out there.
While all of this mania was underway, I stuck to a very boring business plan. Wholesale. Nothing sexy about a warehouse full of boxes is there? But, I focussed on building relationships and adding value to my suppliers. Optimizing listings. Helping them create better photographs, keywords, and running advertising campaigns. Creating unique bundles of complimentary products along with their products. Being creative. And then asking to represent them exclusively once I'd proven my worth. Even managing their accounts for them for a percentage of the profits (no inventory purchasing needed). No product liability insurance needed as that was on the brand owners. Low risk. Steady and reliable sales, and taking advantage of Amazon's explosive sales growth.
In 2020, it's no longer about just scanning a product, or downloading a price list from a wholesaler and listing on Amazon. Sure, you can get started doing this but it's the lazy approach that will be short lived and lead to losses and frustration.
Now, you have to look to this as a REAL business. That doesn't mean full-time, and you can definitely do this while working a 9-5. You need to build a brand for yourself, and become know as the expert. Then you'll be able to show brand owners how you've helped others and share your expertise.
This requires having a solid plan in place, and following it step-by-step. I will share more about this in an upcoming webinar. You can register for that here.
Stay tuned for further updates.