Amazon has become one of the largest retailers in the world. Today, many people go to Amazon to do much of their retail shopping as it offers quick and convenient service and has a reputation for having great pricing. Due to this, there are a lot of opportunities if you want to sell your products on Amazon. For Amazon sellers, there are three common types of sellers on Amazon, and understanding the difference between each one is important as it will help you determine which type you should try to be.
There are several key takeaways that you will receive from this overview, which are as follows:
- You will learn about the differences between the three most popular Amazon selling strategies, which are private labeling, wholesaling, and arbitrage selling.
- You will learn what it takes to get started with each strategy.
- You will understand the advantages and disadvantages of each strategy to determine which strategy is right for you.
Private Label Seller
One common type of seller on Amazon is a private label seller. A private label seller is characterized as one that will purchase a product directly from a manufacturer or wholesaler. They will then rebrand, and possibly repackage, the same product using their own logo and branding. Private label sellers can sell practically any consumer good but will need to have the approval of the manufacturer and distributor to rebrand and resell these items.
How to Get Started as a Private Label Seller
To get started selling with a private label, you will first need to find a product that you want to sell. This should be a product that you are familiar with and will have continued demand for buyers. You can then use online tools to find products that sell quickly and for a fair price. You then will need to find suppliers to sell the product and distributors that are willing to rebrand these items. The use of private label selling products provided by SmartScout can help.
Benefits of Selling as a Private Labeler
There are various benefits that come with selling under a private label. One of the main benefits is that it will provide you with more control and the ability to create your own small business under a new brand. The business and brand can then grow as you develop a quality reputation. Eventually, you could even continue to expand the brand outside of Amazon through your own website and other retailers.
Disadvantages of Selling as a Private Label
While there are benefits that come with selling on Amazon as a private label, there are disadvantages as well. One of the disadvantages is that it can cost more money to get your business up and running. If you want a successful private label, you will need to advertise and market your products through a variety of targeted ad programs. Further, you will likely need to start with larger orders than other selling options, which can increase your upfront costs. There can also be supply chain and vendor negotiation challenges along the way.
Wholesale Seller
Wholesaling has been a popular strategy in retail for a very long time. With this strategy, you will purchase a certain item in a large bulk order and then sell them on a per-unit basis through a traditional or online retailer. An Amazon wholesale seller will follow this strategy but typically only sell through Amazon. With wholesale, you will sell the product using the manufacturer’s name and brand.
How to Get Started as a Wholesale Seller
To become a wholesale seller, you will first need to find a product to buy. You should aim for a product that you are familiar with, has good margins, and has consistent demand from buyers. Using online sources, you can get information about typical sales prices for a product as well as what it will cost to obtain from a manufacturer or distributor. You then will need to enter into a contract with the manufacturer to ensure you are able to purchase products at a price that will result in profitability.
Benefits of Becoming a Wholesaler
There are various advantages that come with becoming a wholesaler. One of the advantages is that you will use the seller’s brand, which means you can avoid much of the marketing costs that come with private label selling. Another advantage is that you can start with just one bulk purchase order to test the market and process. You may also be able to return any unsold items, which can help to reduce your risk.
Disadvantages of Becoming a Wholesaler
One of the disadvantages of being a wholesaler is that it can be quite competitive to find products to buy. High margin and high-volume products tend to have a lot of demand from possible wholesalers. This could make them more costly to purchase from vendors, which could tighten your margins.
Arbitrage Selling
The third common retail selling strategy on Amazon is to follow an arbitrage selling strategy. With this strategy, you will purchase a product through either an online retailer or a brick-and-mortar store and then try to resell it on Amazon for a profit. This model typically differs from wholesaling because the items are not necessarily purchased in bulk or from a distributor. Arbitrage can be done on a per-unit basis and your inventory can come from various providers.
How to Get Started with Arbitrage Selling
As online arbitrage selling can be done on a very small scale, it is often easy to get started. You can start by finding a product that you are familiar with and know a good deal when you spot it. You could even find a specific product on Amazon and see what it sells for through Walmart and other online retailers. You can also go to discount retailers and price-check prices on Amazon to see if there is an arbitrage opportunity.
Advantages of Arbitrage Selling
One of the advantages of this process is that it is easy to get started. You will not have to find a professional distributor or purchase items in bulk. Due to this, other than the time you put into it, there is limited risk and downside. You also have the opportunity to make higher margins on each sale, particularly if you find your products through a traditional retail discount store.
Disadvantages of Arbitrage Selling
One of the disadvantages of arbitrage retail selling is that it can be harder to scale. As product inventory is not always available in bulk, making a lot of money at once can be hard. Further, it can take more work and time, particularly if you source your products through brick-and-mortar stores.
Using SmartScout, you can be any type of seller
Overall, selling products on Amazon can be a great way to earn a living, build a business, or simply start a small side hustle. If you are going to try selling on Amazon, it is important to understand the three types of sellers on Amazon, how to get started with each strategy, and what the advantages and disadvantages are with each option. Using SmartScout, you can learn more about these different strategies to determine which is right for you and your situation. SmartScout is the best tool for private label sellers, wholesale sellers, and arbitrage selling.
