For my Amazon business, I source products 3 ways (well, more than 3, but the major methods are):
- Retail/online arbitrage
- Private Label
- Keeping track of all the different products and quantities.
- Removing price labels
- Getting warnings/cease and desist notices from Amazon or the brand owner (yikes!) of a few products
- Getting said products forceably removed from Amazon
- The risk of the Amazon price plummeting as other sellers buy the same product
- Insurmountable brand restrictions imposed by the manufacturer
- Generally having to handle the inventory yourself (you're the receiver, prepper and shipper)
- Inability to efficiently deal with supply and demand. Example A: A big influx of resellers can bloat the supply at Amazon, and leave you with aging inventory and/or plummeting prices. Example B: You may have a "hit" product but it's generally very difficult for you to replenish your stock consistently via retail/online arbitrage
- Competitors copying and/or hijacking your listing
- Manufacturing and import delays (if you're dealing with a foreign manufacturer)
- Generally higher up-front costs for overseasl manufacturing (typically $3000 to $5000)
- Having to build an Amazon listing from 'scratch'
- Having to build up customer reviews (honestly and within Amazon's rules) via discounts, giveaways, etc.
- Having a competitor (unethically) file a copyright/trademark infringment notice with Amazon and thus getting your listing pulled down. This actually happened to me. The legal remedy ($3,000) cost far more than the monthly potential revenue for this product).
- Amazon red tape (silly Hazmat restrictions for battery-powered products are but one example)
- Dealing with one-star product reviews
- No price labels to remove
- You can deal with one (or a few) SKUs and larger quantities of each SKU
- You (the Amazon seller) are working direclty with the brand owner/manufacturer, so you are already granted permission to sell.
- The product is (generally) already in the Amazon catalog, so it already has a history of sales and reviews on Amazon
- If a competitor starts unethically filing trademark/copyright infringment notices against the product, that's handled by the brand owner/manufacturer (not you.)
- The brand owner/manufacturer can easily restrict Joe-Schmoe sellers from piggy backing the listing, undercutting the MAP (minimum advertised price), etc.
- Many brand owners permit initial small orders from resellers (e.g., $500 to $1500)
- With a uniform product you're ordering wholesale, you can have a trusted pre-fulfillment center receive, prep and ship the products to Amazon for you, at a reasonable cost. This way, you don't have to 'touch' the product.
So, does wholesale sound appealing? Great. I can tell you, it works!
You're probably asking "where can I start?"
- Skip McGrath's Wholesale Buying System ($47) is an excellent resource, I've endorsed it for several years now
- Proven Wholesale Sourcing ($297) is an easy to follow system from my trusted partner Jim Cockrum. You get it free when you buy the entire Proven Amazon Course ($399)
And if you have any horror stories with retail arbitrage or private label (or even wholesale), sound off below.