Back in 2015, my wife and I started a side hustle of selling on Amazon. We thought it would be fun to work together on something, and our intent was to spend a few hours per week on the business and hopefully bring in between $1,000 and $2,000 per month in profit.
Little did we know that our side hustle would generate six figures of profit in our first 12 months.
There are a lot of different approaches to making money with Amazon, and our choice was to sell private label products via FBA (Fulfillment by Amazon).
In this article, we’ll take a quick look at some of the different ways you can make money with Amazon, as well as a more detailed look at how to have success selling through Amazon’s FBA program.
But first, I’d like to share a little bit about our story since I think it can be motivational if you’re looking for a way to make some extra money.
Building a Six-Figure Amazon Side Hustle
In the summer of 2014, I came across a few blog posts and podcast episodes focused on the topic of selling private label products through Amazon’s FBA program. I was aware of the possibility to sell private label products, and I was aware that third-party sellers could offer their products on Amazon, but I had never thought about the power that exists when those two factors are combined.
If you’re not familiar with the term “private label,” all it means is that someone else manufactures the products and then puts your logo and branding on the product.
As for FBA, it’s a service Amazon offers that’s really a game-changer for small businesses and individual sellers. Through the FBA program, you can send your inventory in bulk to an Amazon warehouse. Then, when a customer buys your product, Amazon will pack up the item and ship it on your behalf.
When you sell products via FBA, you don’t need to fulfill individual orders, handle returns, or deal with customer service on issues related to shipping. And you can send in hundreds or thousands of items at once, instead of running to the post office every day to ship your orders.
When you sell private label products, you’re essentially outsourcing all of the manufacturing. And when you sell products via Amazon FBA, you’re essentially outsourcing all of the order fulfillment and shipping (as well as most of the customer service).
What do you get by outsourcing all of these things?
You get the possibility to have a very passive source of income.
This is an attractive idea in principle, but it also actually works very well in practice for many sellers. In fact, more than 50% of sales on Amazon are made by third-party sellers (as opposed to being products sold by Amazon).
As someone who had been working online and blogging for several years, the possibility of making money passively by selling on Amazon was very enticing to me. For a long time, my wife and I had been talking about starting a business together, so I told her about it and she was in!
Over the next couple of months, we learned more about selling on Amazon and tried to come up with an idea for our first product. We had a few, but everything we considered was either too competitive or the startup costs for inventory were too high.
After a while, we gave up.
A few months later, in the spring of 2015, I came across a course (Amazing Selling Machine) that specializes in teaching people how to sell private label products on Amazon. My wife and I watched a webinar together and decided to invest in the course and commit to giving it a shot.
The course was eight weeks long. A few weeks into it, we had decided on our first product and ordered samples from a few manufacturers in China. By the end of the eight weeks, we had chosen a manufacturer and had placed our first inventory order.
Our Product is Live!
In August of 2015, our inventory arrived and our first product was live for sale on Amazon! We figured it would take a while to start making sales, but we actually sold out of our inventory (1,000 units) in about three weeks.
Our second order of 1,000 units also sold out in three weeks. By this time, we had a number of four-star and five-star reviews on our product, and we started looking into possibilities for a second product under the same brand.
In early November we received an order of 5,000 units of our first product, hoping to make a lot of sales from holiday shoppers. We actually sold out of that inventory a few days before Christmas and were out of stock for about a week until our next order came in.
During a 30-day period between Thanksgiving and Christmas, we made more than $50,000 in gross sales from a single product that sold for about $16, and we were doing no advertising at that time. All of those sales were the result of creating a quality product, doing a better job with the photos and listing than our competitors, and benefiting from the massive exposure that Amazon can provide.
Growing the Business
Throughout 2016, we were focused on adding new products. Originally, we had only intended to sell one or two different products. However, we decided to try and grow our product line so that our business wouldn’t come crashing down if a single product stopped selling.
By the end of 2016, we had seven different products under our brand and each of those had two or three color variations. None of our other products matched the success of our first product, but they were all profitable. Two of them sold quite well, even though they weren’t home runs, and the others averaged a few sales per day.
Selling the Business
Although the business had grown nicely and we were making more than $100,000 in profit from a part-time side hustle, we decided to sell the business.
In order to keep growing, we would have needed to invest more money into inventory for other new products, and we decided we’d rather sell the business to someone who could take it to the next level.
So in 2017 we sold the business for a six-figure amount, and our experiment with an Amazon FBA business was complete.
How to Make Money On Amazon: Nine Different Ways
One of the great things about Amazon is that you have several different options for making money. Pick the one that seems like the best fit for you.
Let’s take a look at the options.
#1. Selling Private Label Products
My wife and I chose to sell private label products because we liked the idea of having one (or a few) consistent product(s) that we could sell over and over again.
With some of the other options that we’ll look at in a minute, you’ll need to constantly be on the hunt for products to sell.
One of the nice perks of selling private label products is that if you’re successful you won’t need to keep looking for products — you just need to make sure you have inventory of your products that really sell.
I won’t go into too much detail here, because later in the article I’ll cover how you can have success selling private label products on Amazon.
Pros of selling private label products:
- Possibility of passive income.
- Potential for high profit margin.
- No need to constantly look for items to sell.
- Can build a brand that’s a long-term asset (and can be sold).
Cons of selling private label products:
- The fewer products you have, the more vulnerable you are if sales drop for one of your products.
- Developing new products can take a while.
- Higher inventory costs than the other approaches.
- Most products have lots of competition.
- Standing out from the competition can be hard when your products are similar.
#2. Sell a Custom Product
With a private label product, manufacturers use one of their own stock products and slap your brand name on. But creating a private label brand isn’t the only option if you want to sell your own product.
Another option is to design and create your own custom product by having a manufacturer produce an item according to your specs. Many of the manufacturers you’ll find on Alibaba (and elsewhere) are ready and able to do this.
Most Amazon sellers choose to go with one of the manufacturer’s stock products and opt for the private label route because it’s fast, easy and inexpensive. However, if you’re using a stock product, it’s usually very easy for other sellers to copy it.
By creating your own unique product, you may be able to get a patent (if there’s something patent-worthy about your product), which will protect you from others who may want to copy your success. And if you can’t get a patent, you may be able to get an agreement from the manufacturer to not use your design for anyone other than yourself.
Creating and selling a custom product will definitely take more work upfront, but it will give you a better chance to sustain long-term success.
Pros of selling a custom product:
- You may be able to get a patent for your product and protect yourself from other sellers who want to copy it.
- Easier to differentiate yourself from your competitors (compared to private labeling).
- Most manufacturers are willing to work with you to create your own unique product.
Cons of selling a custom product:
- Requires more work and effort to get your product created and ready to sell (compared to private labeling).
- Requires more cost (compared to private labeling).
- Not all products can be patented. If yours can’t be, competitors may still be able to copy your successful products.
#3. Retail Arbitrage
Retail arbitrage involves buying a product and then reselling it for a profit. With this approach, you won’t be creating a brand or your own products. You’ll be buying and selling products from a variety of different brands.
There are basically two keys to making money with retail arbitrage:
- You need to find great deals on products that people want to buy.
- You need to be able to figure out how much you can sell it for on Amazon (and how much you’ll keep after Amazon’s fees).
The most common way to source products is by finding sales and closeouts in local retail stores and online.
Retail arbitrage can be quite profitable, but you’ll need to be on a constant quest to find the best deals.
If you want to learn more about how to have success with retail arbitrage, I recommend the course Amazon Bootcamp, where you’ll learn from a very successful seller.
Although plenty of people are still making a great income with retail arbitrage, Amazon keeps making it harder. Over the years, Amazon has significantly increased the restrictions and limitations that are placed on sellers.
For example, sellers need to get approval to sell products in certain categories, in an effort to ensure that all sellers are legit businesses. In some cases, getting approval is very difficult, if not impossible, for a small-time seller. If you can’t get approval, you can’t sell those products.
And even if you can sell a product today, Amazon could change its policies tomorrow and you might be shut out of the marketplace. This is one of the main reasons why retail arbitrage is not my favorite approach.
Pros of retail arbitrage:
- You can get started quickly.
- No need to build a brand of your own.
- You don’t need to worry about things like product reviews.
Cons of retail arbitrage:
- You need to constantly look for products that you can buy and resell.
- Some of the policy changes Amazon has made in recent years make retail arbitrage more difficult than it used to be.
#4. Selling Products From Wholesalers
Another option is to buy products from wholesale distributors and sell them on Amazon. This approach is somewhat of a cross between private label and retail arbitrage.
Like with the retail arbitrage approach, you won’t be creating your own brand or your own products. Instead, you’ll be selling existing products.
But as with the private label approach, if you find a few successful products, you may be able to sell them over and over again for a long period of time.
The key is to find the products that you can buy at the right price to sell on Amazon for a profit.
You can learn more about wholesaling, and hear a success story, on this episode of The Side Hustle Show.
Selling items purchased at wholesale can also present some of the same challenges as retail arbitrage. In order to sell a product, you need to get approval from Amazon to sell in that product category. Getting approval can be difficult sometimes.
Pros of selling wholesale on Amazon:
- Make money from products that other sellers are overlooking.
- No need to build your own brand.
- You’re not dependent on the success of any individual product.
- Possibility to scale and grow the business.
Cons of selling wholesale on Amazon:
- Low profit margins and (sometimes) high minimum order quantities.
- Many manufacturers are already selling on Amazon themselves.
- Finding the right products can be tricky.
- You’ll need Amazon’s approval to sell products in restricted categories.
#5. Selling Used Items (Including Books)
Another option is to sell used items. One of the most common approaches is to sell used books, but there are other types of used items you can sell. See this list of the best items to flip for a profit.
For example, used cameras and lenses can maintain good value if they’re in decent condition, and there’s a large market for used photography gear.
Amazon does have some restrictions on the used items that can be sold (mostly for the safety of Amazon’s customers), so you will want to be sure that you can sell a product before moving forward.
Pros of selling used items:
- Potentially less competition than the other approaches listed above.
- Possibility for good profit margins if you can buy at the right price.
Cons of Selling Used Items:
- Constant need to find more items to sell.
- If you’re selling low-cost items (like books), you’ll make a small dollar amount on each sale.
- Restrictions from Amazon on certain types of products.
#6. Writing E-Books
The next three options are quite a bit different from the options we’ve looked at so far. None of them involve physical inventory.
Amazon is a great marketplace for selling books, including e-books through the Kindle Direct Publishing (KDP) program. There are millions of customers looking for e-books on Amazon, so there’s plenty of opportunity.
A successful e-book can continue to generate passive income for months or years to come. Some people write one or two e-books and make a small, passive income every month. Others choose to grow their business by constantly writing more e-books.
Pros of writing and selling e-books on Amazon:
- No need for inventory.
- Potential for passive income if your e-book continues to sell.
- Option to scale the business by writing more e-books.
Cons of writing and selling e-books on Amazon:
- Most ebooks on Amazon sell for low prices.
- Most ebooks experience a significant drop in sales after the first few weeks.
- Most people that make significant money with this approach are constantly producing new e-books.
#7. Amazon Associates
The Amazon affiliate program is called “Amazon Associates.”
As an affiliate, you can use your website or blog to promote products sold on Amazon, earning a commission for each sale that you generate.
Amazon’s affiliate marketing program is extremely popular for a few reasons:
- Even small websites and blogs can get accepted into the program.
- No matter what topic your website or blog covers, Amazon has products that you can promote.
- Your conversion rates will be high because most people already trust Amazon, and millions of people are Amazon Prime members.
- If someone clicks on your affiliate link, you can earn money even if they buy a different product.
Many internet marketers create niche websites that cover a specific topic and then monetize the site by linking to products through the Associates program.
For example, you could create a website or blog about camping and link to tents, sleeping bags, and camping accessories being sold on Amazon. One of the great things about this niche website approach is the possibility for it to become a source of passive income.
Once you have the website set up and you’re getting traffic from Google searches, there’s not a lot that you need to do to keep the site running. You’ll probably want to continue to add more new content, but that can be outsourced very easily.
For a more detailed look at this approach please see my complete guide to building a profitable niche website.
Pros of Amazon Associates:
- Countless products that you can promote.
- Potential for a passive source of income.
- Create a niche website and build an asset that you can sell.
- Possible for newish websites to get approved into the program.
Cons of Amazon Associates:
- Relatively low commission per sale.
- You’ll only get paid if the visitor makes a purchase within 24 hours of clicking your affiliate link.
#8. Merch By Amazon
Merch by Amazon is another way to make money on the site without paying for or dealing with inventory. This print-on-demand program for apparel allows you to make money by designing t-shirts, hoodies and other items. You’ll upload the design and when someone purchases it, Amazon will print and ship the item.
You’ll need to get an invite in order to sell through Merch by Amazon (which can be requested from the company). Since the items are printed as they’re sold, you’ll have no need for inventory.
If you’re a designer, Merch by Amazon could be a great fit. But even if you’re not a designer, you could outsource the design work and still maintain the ownership and rights to the designs.
Possibly the most appealing thing about this opportunity is the potential for passive income. When you have a number of successful designs in your store, they’ll be generating income for you with almost no effort on your part.
To learn a lot more, please read this Merch by Amazon review.
Pros of Merch by Amazon:
- Potential for passive income.
- No need to deal with inventory.
- Low startup costs.
Cons of Merch by Amazon:
- You’ll need to get an invitation in order to sell.
- Many successful designs will be copied by competitors.
- If you’re not a designer, you’ll probably need to outsource the design work.
#9. Amazon Handmade
The last option that we’ll look at is called Amazon Handmade, which is a competitor of Etsy. Through this program, you can sell your own crafty products and reach Amazon’s massive audience.
You’ll need to apply and get approval in order to sell your handmade products. The approval process is in place to ensure that only genuine handmade products are sold on the platform.
You’ll have the freedom to price your products any way that you choose, and Amazon will deduct a 15% referral fee from any sales that you make. You also have the option to sell through the FBA program, or you can fulfill orders on your own.
Pros of Amazon Handmade:
- Great for individuals and businesses who are already selling on Etsy or other similar platforms.
- Reach a huge audience with your own unique products.
Cons of Amazon Handmade:
- Requires a lot of time to create the products that you’ll be selling.
- If you’re not crafty, this is probably not a good option for you.
How to Make Money With Amazon FBA
Now that we’ve taken a quick look at some of the different ways you can make money with Amazon, let’s take a deep look specifically at how to sell private label products through Amazon’s FBA program.
Step #1. Decide On a Product
The first thing you need to do is choose a product that you want to sell. There are basically two different approaches you can take:
The Standard Approach
Most articles and courses related to selling private label products on Amazon will advise you to use criteria that will help you avoid some headaches and expenses.
With the standard approach, here are some attributes that you want to find in an ideal product:
- Priced between $15 and $50 on Amazon. After the Amazon fees for FBA, it’s hard to make much of a profit with products that sell for less than $15. Purchases under $50 tend to be impulse buys, so the sweet spot is between $15 and $50.
- Small in size. Typically, you’d want to sell a product that could fit inside a shoebox. The storage fees that you’ll pay to keep your products in Amazon’s warehouse are higher if you’re selling oversized products. Higher fees obviously cut into your profit.
- Lightweight. If you’re sourcing products from China, your cost will be influenced by the weight of the product. My wife and I had our inventory shipped by air express with DHL, UPS or FedEx. That’s the most expensive shipping option, but our products were very lightweight so it still worked out.
- Nothing with electronics or batteries. These types of products have a greater defect rate, and will probably require more customer service. Batteries can also be an issue when coming through customs.
- Simple products that people already know how to use. Ideally, you don’t want to have to train customers on how to use your product. Simple products require much less customer service.
There are obviously many legitimate and convincing reasons to follow these criteria, and this is the approach my wife and I took when choosing our products.
The Opposite Approach
If there are convincing reasons to follow the standard approach, why would you want to take a different route?
The vast majority of private label sellers are following the same criteria and looking for the same types of products. This leads to heavy competition.
If you go against the common logic, you may be able to find a product that you can sell with far less competition.
To take this approach you’ll need to be willing to jump through a few hoops, or potentially to invest more money. But the end result might be worth it.
If I were starting a new Amazon FBA business today, I would probably look for an unconventional product that most private label sellers don’t want to deal with.
If you choose an oversized product or a heavy product, you may need to have it shipped by sea (you can hire a freight forwarder to help). It’s inconvenient and intimidating to most new sellers, and you can avoid a lot of competition if you’re willing to do what other people won’t.
Similarly, if you choose a product that sells for $100 instead of $15 to $50, you’ll need to invest more money into startup inventory. But since most sellers aren’t willing to do this, you’ll probably have less competition.
When you’re deciding on the first product that you want to create (or have manufactured) and sell, you’re basically looking for an opportunity.
There are a few possibilities:
#1. Low Competition
Most sellers look for an existing product that’s selling well on Amazon but doesn’t have a lot of direct competition. Then you’ll create your own version of this product.
This is how my wife and I decided on our first product that turned out to be very profitable. Although, I have to be honest: it’s not that easy to find a product like this. There’s a lot of competition on Amazon, and we looked at many different products before finding one that we thought was a good opportunity.
You can use Amazon’s best sellers list to find products that are moving well. From that page, you can click through to specific categories and subcategories to see the top sellers in each. Or you can use a free tool like Unicorn Smasher to give you an estimate as to how many units of a product are being sold each month.
To check out the competition, search on Amazon for the main keywords that people would use to find this product. If there’s not much competition, you may have found a good opportunity.
#2. Flawed Products
Maybe a product you’re considering has a lot of competition, but the competing products all suck. If all of the competitors have bad overall ratings and reviews, there may be some opportunity for you to jump in.
Read through the negative reviews of the competing products and see what people don’t like. This could be things related to the product’s design, quality of materials, size, colors, smell, or anything else.
Take note of what seem to be the major issues. If you can find a manufacturer who will make a product that addresses these issues, you could have a product that’s better than all of your competitors.
Use your listing to point out how your product is well-designed and made from quality materials, and you may be able to sell a lot.
#3. Poor Listings From Competitors
The quality and price of a product aren’t necessarily what determines how well it sells. Some products on Amazon are presented very well, and others are not.
If you find a product where all of the competitors have bad listings, you may be able to come in and outsell them all with a good listing.
A bad listing will usually have poor quality photos, not enough photos, and/or a lack of information in the bullet points and product description. On top of all that, it may not be optimized for the right keywords.
Step #2. Find a Manufacturer
Once you’ve found a product that you think may be a good opportunity, the next step is to find a manufacturer.
The easiest approach is to use Alibaba and search for a manufacturer that creates the product you want to sell (or something similar). Keep in mind, most private label sellers use this approach.
With that in mind, it’s important that you customize the product in some way. Otherwise, it’s too easy for someone else to sell exactly the same product as you.
Most manufacturers are willing and able to change or customize products. Some will even create a completely custom product just for you.
The reason most private label sellers use Alibaba is that it’s easy. However, some sellers actually travel to China and go to the Canton Fair, where supposedly (I haven’t been there) you can find much more than you can find on Alibaba.
When you’ve identified a few potential manufacturers, you can contact them through Alibaba to get pricing on the product. Be sure to tell them that you’ll be selling the product on Amazon and that you plan to place repeat orders (they want repeat business, so they will be more eager to work with you).
If you’re a new Amazon seller, it’s helpful to work with a manufacturer that has experience with other Amazon sellers (which is increasingly common). So don’t be afraid to ask them if they’re familiar with Amazon’s rules and if they can prep the products for FBA, which includes a barcode on the packaging.
The price and minimum order quantity that you get from the manufacturer is negotiable. Some of them will also make a one-time concession to give you a small minimum for your first order. If you need a small quantity, ask if they would be willing to do a “test order” so that you can be sure that the product will sell before committing to a larger quantity.
Keep in mind that the smaller quantity you order, the higher price you’ll pay per unit. As your business grows, one of the best ways to increase your profit margin is to order larger quantities and decrease the cost of each unit.
Be sure to get a sample sent to you before placing an inventory order. I recommend getting samples from several manufacturers so you can compare them. I also like to buy competing products that are selling on Amazon so I can compare them to the samples.
Quality Is Critical
When you’re deciding on a manufacturer, don’t simply go with the lowest price. In order to have long-term success selling private label products on Amazon, you will need to prioritize quality.
Product reviews are extremely important for selling on Amazon. If your product is low-quality, you’ll get bad reviews and your sales will dry up. But if you have positive reviews, the product can continue to make money for a long time.
Manufacturers will often default to using cheap materials so they can give you the lowest price possible. But in most cases, they’re able to use higher-quality materials if you ask — and a lot of times, the price difference will be relatively small.
Step #3. Create the Product Listing
After you decide on a manufacturer and place your order, you will probably have at least a few weeks — and possibly a couple of months — until the product is in Amazon’s warehouse and ready to sell.
During this time you should be working on your listing.
Listing Key #1: Use Good Photos
Your listing’s photos are one of the most critical factors in its success or failure. You might be surprised by how many Amazon customers buy based on the photos alone, without even reading the product description.
If you have bad photos, you will have a hard time making sales. And if you have good photos, your product will stand out.
You don’t need to be a professional photographer to get good photos. One of the keys is to take the photos in natural light, avoiding harsh sun and shadows.
I took all of our own photos, and I did most of them outside on overcast days. I’d put the product on a piece of cardboard or something with a solid background.
Afterward, I’d find someone on Fiverr to change the background to solid white (I paid $5 for background removal on 10 photos).
Be sure that you take photos of all angles and all sides. Amazon gives you space to add a lot of photos to your listing, so use them all.
You can also take lifestyle photos that show the product in use. Amazon stipulates that your main photo needs to be on a white background, but other photos can be lifestyle.
If you’re not comfortable taking the photos yourself, you can hire an expert to do it for you. My recommendation is to find a photographer that specializes in product photos for e-commerce.
Listing Key #2: Use Keywords In the Product Title
Your product title is extremely important for Amazon SEO. You want the most important keywords to be in your title so that potential customers can find you.
Browse through your competitor’s listings and jot down all of the keywords you find. You can use a tool like Merchant Words to see which keywords get the most search volume.
It’s also important that you use keywords that accurately describe your product. Don’t just choose keywords because you think people will search for them. Amazon will use your conversion rate as a major factor in determining where you rank in searches, and if you’re ranking for irrelevant keywords your conversion rate will be low.
Listing Key #3: Use Benefit-Driven Bullet Points
Aside from the photos and the title, the bullet points are the next most important part of the listing. Make sure that your bullet points focus on the benefits of the product and how it will help customers.
Focus on what makes your product unique and better than the competition. The bullet points are the best place to sell your product.
Use all of the bullet points that Amazon gives you.
Listing Key #4: Fill Out as Much Info as Possible
When you’re creating a product listing in Amazon Seller Central, there are a ton of different fields. Fill out as many of them as possible. This will give the customer the most information, and it will also give you the best chance to rank in searches.
Step #4. Make Sales
Once your product is live, the next step is to make sales. If you were able to choose a product with low competition you may be able to start making sales within a few days, just by visitors finding your listing through a search on Amazon.
Getting traction and making the first few sales can be one of the hardest parts of the process. At first, you won’t have any customer reviews, which makes it harder to sell if your competitors have a lot of reviews.
Once you’ve proven to Amazon that you can make sales, they’ll rank you higher in the search results. So at first, you just need to focus on getting the ball rolling.
Here are a few things you can do.
Strategy #1: Pay for Amazon Ads
When you do a search on Amazon, you probably notice that the first few listings on the page say “sponsored.” If you’re willing to pay, you can get exposure even for a new product.
You can bid a maximum amount that you’re willing to pay per click, and you can set a max daily budget.
Amazon will give you reports to show your average cost per sale, so if you know your profit margin, you can work to keep your bids at a level that allows you to break even.
Even if you’re not making any profit from your ads, the conversions can help you to rank higher in searches and the result will be more organic (free) sales.
Strategy #2: Run Ads on Other Sites
A lot of sellers pay to run ads on other sites (like Facebook). Depending on your profit margin and the cost that you have to pay per click, this can be a good way to start making some sales.
Some sellers will use discount codes or special offers to generate more sales from these ads.
Strategy #3: Use Your Email List
If you have an existing email list, you can use it to help launch your new products or to promote limited-time offers.
Most new sellers won’t have an existing email list, but this is something that you can work to build over a period of time. A quality email list will make it much easier for you to launch new products and get reviews for those products.
Strategy #4: Use Discount Sites
There are a number of websites where Amazon sellers can offer discounts on their products in order to make more sales. You may not make much of a profit (or you may lose money), but the conversions can help your product to rank better.
The hardest part is getting those initial sales. Once you get some sales momentum and some reviews, things can pick up.
Step #5. Scale Up
Once you’re making some sales with your first product, you may want to consider adding a second product. Scaling up and adding more products is the best way to grow your overall revenue and profit.
There are a few different approaches that you can take for scaling up. The first approach is to build a brand in a particular niche where all of your products will be related.
For example, if you want to build a brand in the camping niche, your first product might be a tent. Options for future products would include things like other styles of tents, sleeping bags, hammocks, hammock straps, backpacks, or any other type of camping gear.
The other approach is to sell a wide variety of products based simply on whichever products give you the best opportunity to make money. Those that take this approach usually go with a very generic business name like Best Quality Products that will allow them to sell just about anything.
In this case, your first product might be a tent and your next product might be a baking mat. There is really no correlation between the products, so you’re not building a recognizable brand.
Although both approaches can work, my preference is to try to build a brand in a particular niche where all of your products are at least somewhat related. This will give you the best chance to sell multiple products to your customers and it will give you the best options for branding your business over the long run.
As you add more products, not all of your products will need to be a home run. My wife and I had several products that averaged around 5 to 10 sales per day. None of those products made us a significant amount of money individually, but the cumulative result was a successful business that didn’t rely too heavily on any one product.
Products that make a few sales per day can also fly under the radar of some of your competitors, whereas top-selling products tend to inspire a lot of copycats.
Probably the biggest challenge that you’ll face related to scaling up involves cash flow. As you add new products, you’ll need to invest money into the initial inventory for each product, and it can be a while before you start to recoup that investment. This can limit how fast you’re able to grow your business.
Some Words of Caution for Amazon Sellers
Although selling on Amazon presents some great opportunities, there are also some details that I want to point out for anyone who is considering this. I don’t do this to discourage you from trying it, but I want you to be informed of some of the downsides instead of learning them the hard way.
Sales Tax Laws are Changing Quickly
As a third-party seller on Amazon, you will have some responsibility regarding sales tax (at least for now). The laws vary by state and are changing quickly as states seek to ensure they’re not missing out on tax revenue that should be collected.
Amazon has fulfillment centers all over the U.S., and if you’re selling your products via FBA, that means that you could have inventory in any state. In general, having inventory in a state creates a nexus, which means that you’ll be responsible for collecting, filing and paying sales tax for sales made to residents of that state.
Some states have passed laws that require sales tax to be collected and paid regardless of where your inventory is stored.
Staying on top of sales tax and the changing laws can be a challenge. And then actually filing the appropriate sales tax reports is another challenge.
I’m not a sales tax expert, so I recommend that you speak with a CPA or e-commerce sales tax professional that can advise you for your own specific situation. Some states are passing laws that place more of a burden on Amazon than on third-party sellers, so if that trend continues, sales tax for third-party sellers could get a whole lot easier.
It’s highly recommended that sellers get a liability insurance policy that will protect them in case of a lawsuit related to one of their products. Amazon’s terms require you to have liability insurance when you reach a certain threshold in sales, but I would recommend that you get insurance right away if you’re looking to make this a legit business. In most cases, the cost of the insurance premiums is not that high.
Don’t Rely on Amazon
When you sell on Amazon’s platform, you’re at Amazon’s mercy. They can take down your listings, restrict your seller account, or permanently close your seller account — and there’s not much you can do about it.
Amazon is a great platform for sellers, but you need to keep in mind that your control is limited. If you plan to make this a long-term business, I would highly recommend that you also work to build up your business on other platforms, most specifically your own e-commerce website.
You can use Shopify or another e-commerce platform to start selling on your own website. It will take time and effort to build up your business, but you’ll have more control and you won’t need to split revenue with another party.
Conclusion: How to Make Money on Amazon
Amazon is not only a great place to buy products, it also provides plenty of opportunities to work from home and make money. In this article, we looked at six options and took a deep dive into selling private label products.
I’ve personally found Amazon to be a great money-making opportunity, so I encourage you to look at the options and find the one that is the best fit for you.