Can You Make Money on Amazon? The Best 6 OpportunitiesUpdated: November 13, 2020
Amazon is the e-commerce platform where thousands of people all over the world are making money on a regular basis.
The internet is full of successful sellers who managed to develop solid businesses by selling items on Amazon.
The question is – Can you make money on Amazon or is it just an overpraised technique to getting rich?
The answer is simple – Amazon is, indeed, an oasis full of money-making opportunities.
I'll go through the best opportunities to earn money on Amazon with or without directly selling products. But first, let's take a look at why Amazon is the best platform to start an e-commerce business on.
Why is Amazon the best money-making opportunity?
Selling solely through a website is getting tougher for retailers as the competition to rank high on search engines for vital keywords is becoming wilder as days go by.
Amazon gives sellers the opportunity to expose their merchandise in front of a more extended audience than a search engine can provide. Not to mention, this audience is wandering through the platform with the intent to buy.
How big is the audience, you may ask? Well, in 2017 Amazon achieved a significant growth in sales, becoming the number one e-commerce U.S retailer, followed by Apple Inc and Wal-Mart Stores Inc. “Amazon took the number-one spot with $94.7 billion in online sales. The company experienced online sales growth of 19.4 percent compared to the prior year's period.”
Based on statistics from 2016, there were 310 million customer accounts with 44% of them starting product searches on Amazon. This customers' behavior presents retailers with a great opportunity as most customers don't even get to search for products on search engines.
To become a third-party seller on Amazon is not free of charge. Amazon takes a commission from every sale made through the platform, but it's a small price to pay for an Amazon money-making opportunity.
There are more ways to making money on Amazon. It can be either by selling stuff online or by leveraging their affiliate program or merch by Amazon. Which of them could turn out to be more profitable depends on your goals, situation, and how much effort you're willing to put into it.
1. Retail Arbitrage
Retail arbitrage is the easiest way to make money with Amazon. You find retail stores nearby, buy products at a great discount then resell them on Amazon for a higher price.
Stores like Target, Walmart or Big Lots are a couple examples of places where you can find great deals.
You can go hunt down a couple of products, less than 40, open a free account on Amazon and start selling them. What is awesome about this technique is that you can test the waters without having to invest a lot in the beginning. You don't have to buy a high amount of items from foreign manufacturers and pay the shipping fees. All you have to do is drive to the store, buy the products, then ship them to your customers or to the Amazon warehouse.
Although this business model has an easy process to follow, it's also a risky business.
The basics of retail arbitrage
- You need to provide the proof of purchasing – In order to sell retail arbitrage, you need to prove that you purchased the product from the distributor (a retail receipt is not approved). Amazon will let you list the products without having proof of purchasing, but you may encounter problems with some manufacturers. While some manufacturers don't care who sell their products, some do mind because they want to keep their own sellers in the loop.
- List the products as “used” – Because you can't provide the invoice for the items you sell, you need to list the products as used otherwise you'll get banned.
- Avoid big brands – Established brands like Apple, Nike, Samsung, etc. are a definitive no.
- Stay away from restricted categories – Some categories are restricted, so you need to watch carefully what you are allowed to sell before you decide on anything.
- Consider sourcing books – The safest and easiest category to get into with retail arbitrage is in the books category. Even though the books market is very competitive, it seems that sourcing books work pretty well for most sellers. You can find really cheap books at garage sales, thrift stores and such. The key is to find books that people want to buy.
- It might not get you a huge profit – The money you can earn from retail arbitrage is not that high compared to other Amazon business models as the profit margin is lower. If you buy a product for, let's say, $8 and you double its price at $16, you'll be left with around $3-4 after paying Amazon's fees and shipping costs (or FBA fees). So, if you're wondering how to make money on Amazon easy and just to supplement your income a bit, retail can be the right approach.
- Competition might be stiff – Even if you buy the products at a discount, you can buy them cheaper directly from the manufacturer, which is what some of your competitors do. Because your competitors invest less, there's no problem for them to lower their prices so you can't take over their sales.
- It's not a sustainable business model – It's a hard business model to sustain in the long run. You won't be having a sustainable supplier so you have to source different products regularly. Even though there are sellers who make money through Amazon retail and are pretty successful, most of the retail sellers had turned to wholesale or private labeling products.
- Consider where you're selling from – If you sell from outside the US or UK, this method might not be worth it as the shipping costs would be extremely high for such a small profit margin, leaving you with no profit at all.
Takeaway: With all these in mind, be careful with retail arbitrage. While selling RA can be a great idea to make money online with Amazon, it's also risky and it's not a sustainable business model. Most of the sellers doing RA have turned to wholesale because it's way more profitable and safe.
2. Online Arbitrage
Online arbitrage, like retail arbitrage, means being an Amazon reseller who sources deals from online stores and resells them on Amazon at a higher price.
The difference between retail arbitrage and online arbitrage is that in retail you source products from physical stores while with online arbitrage you hunt the products online.
You would think that online arbitrage should not work so well because the customers can find the products themselves on online stores at the lowest price, but the thing is that people are comfortable. Most of the time they would rather just buy from Amazon than having to search the entire web for better prices.
The basics of online arbitrage
- What applies to retail arbitrage, also applies to online arbitrage.
- Keep an eye on the prices – You have to track what's going on with the prices on Amazon. In order to make a profit with online arbitrage, you have to find products you can buy at a lower price than they are sold on Amazon. Given the fact that Amazon is a competitive market where prices constantly change, you need to keep your eagle eyes on.
- Find cheap products to make a decent profit – You need to find products you can buy for at least half the price for which they are sold on Amazon so you can keep a decent profit margin after adding Amazon's fees and shipping costs.
- Stay away from big brands and gated brands – Some categories may not be gated, but this doesn't mean certain brands under those categories are not gated.
- It won't get you rich – While you can certainly make money off Amazon through online arbitrage, it's not the kind of business to get you rich. It's more of a make a couple of extra bucks kind of deal.
Takeaway: Online arbitrage, like retail, is a great way to start selling on Amazon with the minimum of investment and get some profit to invest furthermore. While this is an easy business model you can follow, I do not recommend focusing your business on OA in the long run.
3. Wholesale Products
Selling wholesale means buying products directly from manufacturers and reselling them on Amazon for a profit.
You are purchasing the items from already established brands and resell them exactly as they are. You won't need to create your own brand, unlike product labeling which implies having the manufacturer brand the products and having them sold under your own brand.
The basics of wholesale products
- You'll need a wholesale license – In order to be allowed to sell wholesale products, you have to provide proof of a license so you need to familiarize yourself with the requirements in your country.
- Strengthen relationships with manufacturers – In wholesale, a lot of energy is invested into creating great relationships with manufacturers. A strong relationship ensures that you have a steady supplier you can rely on, you get the best deals for the items, and you may come to an agreement that the supplier will also label your products with UPC or FNSKU labels.
- You have to source products from the brand manufacturer – For example, if you try to sell Nike shoes but you don't buy them directly from Nike, you'll be selling counterfeit products which is not ok.
- Some manufacturers sell their products directly on Amazon – Manufacturers from China started selling products on Amazon themselves so you need to find the ones who aren't already Amazon sellers.
- You won't need to create a listing for the products – Because you're not adding new customized products on the market, the items are probably already listed on Amazon. This means you won't need to create a listing yourself, to buy a UPC barcode, or to provide high-quality images.
- Stay away from products that Amazon is selling – Competing with Amazon is a dead end. Products sold by Amazon will always get higher ranking in search and a better exposure, it's their platform after all.
- You can build a profitable business – The profit margins for wholesale products are way higher compared to retail or online arbitrage, which means higher profit for you. Wholesale is one of the most beneficial ways to make money with Amazon while building a strong business.
Takeaway: Selling wholesale can be a viable Amazon business model if you do it right and you're willing to learn your way to the top. The first steps into wholesale are getting your wholesale license and finding reliable manufacturers to source products from.
In order to expand to a fruitful business and make good money on Amazon with wholesale, it's crucial to learn how to find profitable wholesale products.
4. Private Label Products
The best way to make money on Amazon is through selling private label products. What does this mean?
You find a profitable generic product, source a manufacturer who can fabricate the product at a cheap price and have him place your brand on the items. It can be as simple as this, or you can choose to manufacture a new, improved product to put on the market.
How can you sell private label products:
- Have the manufacturer fabricate the products with your brand on them
- Improve the quality of best selling products
- Design your unique products
It's better to actually come up with improvements to the products rather than just throwing your brand on a product sold by other hundreds of sellers. Even though you'll be having a different listing for the branded products, there will still be tons of similar products sold on Amazon with the only difference being the brand name. Why would the customers choose your product over the other similar offerings?
The basics of private labeling
- The cost of the items is low – You can source products from manufacturers in China at very low prices which will let you with a high-profit margin, and there's where the money comes from.
- You'll be developing your own brand – Rather than just being a reseller, you'll be having your own, unique products to sell under your own brand. Developing a brand and establishing your name is extremely powerful for a successful business.
- You'll be getting your own listings for the products – hence no thorough competition for the Buy Box.
- You can improve products' quality – By selling private label products you can find products that already sell well and improve their quality to make them even better given you a significant advantage on a competitive market full of similar products.
- You'll have unique products to sell – If you design your own products, your offers will stand up from the rest of the sellers resulting in increased engagement and sales.
You can learn more about private labeling from our guide.
5. Amazon Affiliates
One way to make money through Amazon is by registering for the Amazon associates program. If you want to make money on Amazon without having to sell items yourself, using the affiliate program is the best way to go.
Also, Amazon affiliate can be a great asset if you already have a niche website and you're looking on how to make some money with it.
How does Amazon affiliate program work?
By becoming an affiliate you choose what items you want to sell and you'll be provided with a special link, containing a unique tracking ID. You then share this link on your website or social media. Every time a sale is made through your unique link, you'll be receiving a commission from the sale.
Amazon affiliate commissions can be up to 10%. After Amazon changed their commission structure, now the commission you receive is based on the category the product is in.
The basics of Amazon affiliates
- Find a profitable niche – The crucial part to make money using Amazon affiliate program is choosing the right niche to promote. You'll be having to build a website or social media profiles revolving around a certain topic. Some niches are more profitable than others, and you also need to consider how much you like to talk about the said topic. The ideal scenario is to find a niche that's both profitable and you're passionate about because you'll have to write about the products a lot in order to promote them.
- Optimize your website – Once you figured out the right niche for yourself, you have to rank your website high in Google search so people will find it. For this, you need to find the right keywords that can turn searchers into customers. The best keywords are the ones that people use when they are already thinking about making a purchase, rather than generic search queries. For example, “blue wireless headphones under $100” would be a better pick than “wireless headphones” as the user has already set up his budget and he gives more details about what he's looking for purchasing.
6. Merch by Amazon
Another way to earn money from Amazon without having to deal with selling products yourself is through the Merch by Amazon program. You upload your designs for T-shirts on the platform with no upfront cost and Amazon will produce and ship the T-shirts every time a customer buys your products.
Once you upload your designs, you set up the colors and the price. How much money you can make through this method depends on the pricing you set for the T-shirts, the royalty is based on this.
In order to become part of the Merch by Amazon program, you have to submit a request for an invitation as it's not open to the public. After revising your application, Amazon will decide if you're fit for the job.
The downside is that once you submit your application you'll be placed on a waiting list until a spot is available, which means you can wait up to a couple of months. The best approach is to submit a request for an invitation as soon as possible and use the time you're waiting for approval to come up with the designs for the T-shirts.
The basics of Merch by Amazon
- Research profitable T-shirts – You might be inclined to choose designs that you like and think that other people will like, too. The thing is, just because you like them, it doesn't mean they will sell. And if you want to make money on Amazon, you have to provide items that sell. Rather than uploading random designs, you want to research and find T-shirts with the best seller rank (BSR) under #100,000 and create similar designs. Inspire yourself from popular designs, don't copy them!
- Leverage design skills – If you have good design skills, this is an opportunity to turn those skills into making extra money on Amazon.
- Source designers – Another approach is to source professional graphic designers on UpWork or 99designs who will design great visuals you can use.
- Thorough keyword research – Besides choosing designs that sell well, another critical step is to target the right keywords. Without SEO, you won't see an increase in sales as customers won't find your listings. Higher ranking in Amazon search means more sales. You need to invest lots of time in keyword research to come up with search queries with a decent volume of searches and with low competition.
So, can you make money on Amazon?
As you can see, there are a couple of opportunities through which you can make money on Amazon either to develop a profitable, long-term business or to earn some extra money to supplement your income.
There are opportunities both for retailers selling products and for website owners who are looking to make some money from their blogs.
How much money you can make on Amazon revolves around how much work you're willing to do, and how ready you're to learn about how Amazon works.
There are lots of free resources online you can learn from all you need to know about selling on Amazon or successfully using the affiliates program. Or, if you want something straightforward without having to search the web, you can invest in a course and a mentor. Both ways can turn up to be successful, it all depends on your eagerness to thrive.
Are you thinking about giving a try to any of these Amazon money-making opportunities? What are your biggest struggles with Amazon? Let us know in the comments, or get in touch with us on Facebook or Twitter.