Author Topic: Amazon reselling. Good idea?  (Read 1117 times)

2Cent

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Amazon reselling. Good idea?
« on: November 08, 2017, 06:15:46 AM »
https://www.cnbc.com/2017/11/02/28-year-olds-company-makes-millions-selling-walmart-buys-on-amazon.html
So I read the above article. TL;DR; Guy made a big business reselling stuff on Amazon he got in sales in Wallmarkt.
I was wondering, does anyone here have experience with this? I guess there will be more people doing it if it's in the news, but I just wonder if it would be a nice side hustle for whenever I find some nice wholesale offer.

Revelry

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Re: Amazon reselling. Good idea?
« Reply #1 on: November 08, 2017, 06:54:29 AM »
It's been discussed.
https://forum.mrmoneymustache.com/reader-recommendations/your-guide-to-selling-on-amazon-(side-hustle)/
https://forum.mrmoneymustache.com/entrepreneurship/selling-on-amazon-prime-via-fulfillment-(amazon-fba)-anyone-try-this/

From the article "Grant has reduced his salary down to $60,000 a year and now dedicates much of his time to getting that message out. He consults and teaches e-commerce classes through the same blog he has been using to track his performance."

The whole article is an advertisement.  That's why you're reading about it.  If it was a really lucrative deal that didn't also require a ton of work you wouldn't hear about it.

orangepalm

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Re: Amazon reselling. Good idea?
« Reply #2 on: November 08, 2017, 07:09:55 AM »
I haven't done this personally, but I did read up on it a few years ago. There are already a lot of side-hustle sellers on Amazon, I'd say it's only worth it if you're really gonna commit a lot of time to it. Once you ramp up sales you also need to keep in mind things like sales tax withholding (there are services doing that for you as well).

The guy in the article does something called Retail Arbitrage, basically find cheap (clearance) products and resell them with Amazon FBA. The other option is to create your own private label products, with your own branding in a certain niche, produce it in China (find suppliers on Alibaba) and ship it off to Amazon. I felt like this market was getting pretty saturated a few years ago already so I never got into it, but I know you can make it work if you really commit. Check out The Amazing Seller podcast if you want to get into it.

mrigney

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Re: Amazon reselling. Good idea?
« Reply #3 on: November 08, 2017, 07:28:33 AM »
Yeah, I've sold ~$100k (gross revenue) on Amazon over the last 2 years. My college roommate had gross revenues of $900k+ for 2016. He's basically doing it full time. I've more or less quit. Two reasons I've basically quit are 1) I had a 3rd kid, and 2) I've started traveling too much at my day job.

There are a few different models out there for amazon reselling. Four big ones are

1) Retail Arbitrage - go walk in a store, buy some stuff, resell at a profit on amazon
2) Online Arbitrage - go to a website, order some stuff, sell
3) Wholesale - develop relationships directly with brand owners, develop the ability to offer them value propositions in return for discounts, semi-exclusive, or exclusive partnerships--e.g. I can help you improve your amazon listing and walk your company through the brand registry process in return for me being the only person authorized to sell your product on amazon
4) Private label - create your own product and sell under your own brand. A lot of people do this by ordering from alibaba.com (e.g. I could by 1000 instant read thermometers from alibaba.com for about $4.50 each, slap my own branding on it, and then try to sell on amazon for $20. Problem is, a dozen other companies have the same exact thermometer with their own branding on it. Can be very competitive.

I would say in the two years I've been "in the game," the game has gotten exponentially more competitive. When I started, it was almost too easy to find replenishable products. I basically did it by hand (e.g. no software). These days, I think software and various plugins to make sure you are finding the best products, prices, and stackable deals is a necessity.

If you have time and enjoy spending a lot of time online (or want to go the wholesale route and really enjoy the service industry), it might be a good idea, but I find it harder and harder to spend a few hours a week and make a little extra cash on it, which is why I started.

2Cent

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Re: Amazon reselling. Good idea?
« Reply #4 on: November 08, 2017, 07:43:25 AM »
Thanks. I missed those topics.

@mrigney $100k is Amazing for a side hussle. I sometimes run into loads of goods that are being dumped for cheap so that's my angle.

I will start listening to the podcast and read the other threads.

seattlecyclone

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Re: Amazon reselling. Good idea?
« Reply #5 on: November 08, 2017, 08:44:49 AM »
From my experience selling a few odds and ends on Amazon (stuff I didn't want anymore, garage sale finds that were clearly underpriced, etc.), $100k gross revenue doesn't translate into nearly as much as you might hope after Amazon and the post office and the place you bought the stuff from in the first place take their cut.

mrigney

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Re: Amazon reselling. Good idea?
« Reply #6 on: November 08, 2017, 11:25:39 AM »
@seattlecyclone - Right, that's gross revenue. Wasn't trying to give a picture of how much I actually made...was trying to give an accurate picture of how much experience I have selling on Amazon. For some idea of what that translates into in terms of net profit....my general rule of thumb was that I wanted something to sell for about 2x what I bought it for. Obviously this varies based on things like sales rank, type of product, size/weight of product, etc. But general rule of thumb. And you always have some products you think will sell for 2x what you bought that end up tanking for whatever reason.

My rough breakdown
Gross revenue: $100k
Cost of Goods Sold: $60k
FBA Fees: $20-25k
Misc (software, shipping, supplies, etc, etc): $5-7k

Net Profit: $10-13k.

That sounds about right to me. I think you can do better if you're really selective. But I'd say that's a pretty decent profit margin in most businesses ($13k profit on $65k expenses--inventory + Misc--is a 20% profit margin). I know some people whose profit margin is closer to 30-35%, but I've never been able to push mine that high.

So yeah, it can be a decent side hustle. I just lacked the time/energy at this point in my life to spend a lot of time doing it (3 small kids and a day job will do that). But, who knows, I might pick it back up when life slows down.