Unlike with – with this business model you don’t have to create your own products, instead, you can sell already popular copyrighted trademarked products. And as I’ll show you, you can take the money you earn and scale this business up and up so that one day you might even cross the million-dollar mark yourself
So here is the deal. Did you know that most products even very popular products like this dog toy aren’t sold by Amazon themselves? Nope.
They’re actually sold by third-party sellers like me or you. So you might be thinking that every month over 2,000 people are buying this toy on Amazon and speeding over $30,000. But how can I buy this toy at a discounted price to resell on Amazon for a profit and take a slice of the sales for myself? Well, one of the easiest cheapest and most beginner-friendly ways to do this is with something called Retail Arbitrage.
With Retail Arbitrage (and high ticket dropshipping, by extension) you basically Source Products like this dog toy from other retail stores. Yours so here is how it works. What you do is you walk on into a local retail store like Walmart or Target or your local supermarket. You go to stores like that and you look at the items that are selling especially the products on sale and you compare their on sale prices to the going price on Amazon. And if you find an item that is priced higher on Amazon, then you’ve got a hit. So what you do is you buy as many of this winning product as you can and then package it up and then ship it into one of Amazon’s FBA fulfilment warehouses.
Amazon will store your products for you and you can set your price then when a customer comes and order to your product from you on Amazon, Amazon warehouse staff will find your items do it there that will package the item up and ship it out directly to the customer and it will arrive in one of Amazon’s classic boxes. This service is called Amazon FBA otherwise fulfilled by Amazon its a done-for-you service that handles all of the storing packaging and shipping of the products while of course, you get to keep the difference as profit.
This is a great first business for a lot of people because it makes a lot of logical sense you go into a retail store you purchase an item that’s on sale for cheaper than what it is on Amazon and then you go and you relist it on Amazon for its full price. Not all customers in the world have access to your local retail stores with your local retail stores on sale prices. They only have access to Amazon and you get to take advantage of this plus Amazon actually makes this business even easier for you, because of something called “the buy box”.
For example the dog toy from the previous example. This is a very popular dog toy as I showed earlier using the Amazon sale estimator tool jungle Scout (one of the best ).
We can see that it estimates that more than 2,000 of these medium-sized toys were sold within the past month, which is over 30 thousand dollars in sales. Now when you come to buy it from Amazon, you might think that by clicking the Buy Button you’re buying it from Amazon, but you’re not you’re actually buying it from a third party seller and this case here. However, if we check out the Amazon list of sellers will see that there are seven of them selling this exact same toy:
So why did Amazon choose to list unbeatable say link as the person we buy it from when we click the buy now button. Now, this is a little simplified. But essentially this is what the algorithm does. Does it look at who are storing and shipping their products from Amazon? If there are 7 sellers selling at a similar price, Amazon algorithm will give each seller a roughly equal amount of time to dominate the “Buy box” that a customer clicks when wanting to purchase an item
That means in our case that roughly, Amazon will give each of these sellers enough by box time to get about $5,000 each. That’s how this business starts off when you’re beginning you give a small amount of money by a small number of products on sale you send them into Amazon you sell them for a higher price you flip them. Repeat.
I know that Gary Vaynerchuk recommends flipping as a great first business for people because of course, it makes a lot of logical sense – you buy somewhere cheap and then you resell for a profit elsewhere and this is just a Different Twist on their business model. However, once you’ve got some capital that you’ve built up from doing this you can then take it a step further. I have a good friend Dan and he wasn’t Amazon salad doing Retail Arbitrage who had the smart idea of going wait a minute, you know, what instead of going into retail stores each and every day to look for products like the dog toy. Let’s just go straight to the manufacturer buy them in bulk at discounted wholesale prices and ships them into Amazon.
Buying direct from manufacturers at discounted wholesale prices and then reselling for the retail price is very Punchy tried true strategy. However, the moment that you do this the business that’s no longer cheap because now you got to buy products in bulk. However, while it may no longer be cheap it kind of makes up for it in the fact that it becomes extremely passive – once you’ve negotiated your wholesale agreements, all you’ve got to do is make sure that your inventory delivers on Amazon, don’t get low when you see that they’re getting low. You just call up your wholesaler and order more products to sell and ship them into Amazon who will then take care of the rest for you.
And so I asked him what his favourite part of the business was and he agreed that yes, The Upfront money, in the beginning, made that he definitely had to make some sacrifices, however, now that he’s got a passive business. He does not have any regrets.
Here’s an example of just two of his current wholesale accounts over the past 12 months.
To quote him: “Keep in mind that they have more than 40 active wholesale accounts. I meet with my payment three employees about once a week and that’s it. And I’m going, to be honest with you. It was really hard in the beginning. But if I had it to do all over again, I would do it every time”
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Founder Dinis Guarda
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