Starting a business online can be called “Laptop Lifestyle” and is very attractive. This business has never been a better time to start. In the e-commerce business, Amazon is the best platform at present. Choosing the right Amazon business model to scale up your e-commerce business is the most important decision.
Entrepreneurs get so many offers from Amazon to begin businesses because the more we succeed, the more Amazon will succeed in the long run. There are five popular Amazon business models that sellers use to sell products on this platform. They are:
- Retail Arbitrage
- Online Arbitrage
- Private Label
Here we describe shortly about these models to go through the thought process of deciding which business model is right for you.
Books: Selling books on Amazon is an excellent decision. Because Amazon controls 64% of sales from printed books online and has the largest share of the e-book market, 67%, Amazon is the perfect place to get started to sell your book whether you want to work as an online seller. Books are always popular and all-time selling products. That’s why Amazon got started e-commerce business with bookselling and how they can scale their business through this profitable niche.
2. Retail Arbitrage: Retail arbitrage is to sell a product at a high price on Amazon after you purchase it from a retail store at a low price. Normally this can be managed by finding clearance items at local retail stores and then selling them on Amazon closer to the regular retail price. You need to find items marked at a regular price that can sell for 3x or more on Amazon. Retail arbitrage is the easiest method to sell the product on Amazon.
3. Online Arbitrage: This business model is very similar to retail arbitrage. It is a method of finding a discount or low-cost product on a website or online marketplace to resell on Amazon. The profit method for online arbitrage is as like as retail arbitrage that is to earn the difference between the price for which they can sell the product on Amazon minus Amazon’s fees and the product’s original cost.
4. Wholesale: You typically buy directly from the manufacturer or middleman and buy larger quantities to get a lower price on this wholesale model. But it’s so important to understand things like sales history and ranks. The risk of wholesale is higher than in online arbitrage or retail arbitrage. Because you’ll often be required to place a minimum order worth hundreds of dollars, you tend to buy in bulk and need to count so experience also.
5. Private Label: Private label is the model of purchasing a product and then making your branding onto it. In this system, a seller comes up with a new design for a common product or sometimes just packaging. Then they source a manufacturer and hire him to make it for him. Amazon’s private label business model has the potential for high and steady profits and is more challenging because it’s difficult to get people to buy your brand rather than the running ones.
Amazon experimented and learned lessons over the time being to become an e-commerce giant from the beginning, and now Amazon is. No need to wait years to see successful results for Amazon. You need to go strategically and choose the right Amazon business model, start, test, and adjust. Also, you need to consider the changes you make, and over time you can see the results.
Click here to learn more about Amazon business models.
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