Amazon Reselling - The Beginnings of the Beast

Signing up for Amazon was one of those "red flag" moments for me. The second it asked for the EIN of my business or my social security number, it was time for me to rethink my approach. This wasn't eBay or Craigslist or [insert name of local selling app here]. This was serious.

Luckily for me, I didn't just jump in the deep end. No sir, I've been down that road before. I tip-toed in and rightfully so by spending an entire two weeks watching YouTube videos of pros to get a solid foundation. I find that most people are jumping in and not doing their due diligence, only to wind up drowning. Amazon is not a game and out of the gate, you find out quickly that it is strictly business. But if you read the rule book, the good news is you can become immensely successful.

The Basic Three Selling Methods

Naturally most people who jump into Amazon who haven't owned a business before will find themselves in one of three categories: Retail Arbitrage, Online Arbitrage, or Book Selling. There are other advanced methods including Wholesale and Private Label but those are for another time. Arbitrage defined by Google is the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset. In simpler terms, you are buying your items from a brick-and-mortar store or online in hopes of selling it on Amazon for a profit.

For retail and online arbitrage (RA and OA respectively), one of the shocks of a new seller's journey is how many items are "gated", meaning you cannot sell them. Taking a stroll down an aisle in Walmart, you may find that 95% of the items you scan cannot be sold by you on Amazon. These items are either completely restricted or restricted until you meet certain criteria. Some of the criteria out there for a person just getting started is very demotivating. For example, there are companies out there that will charge you an ungodly fee (tens of thousands of dollars) per year to sell their product. Of course if the numbers work out for you and you can afford it it may make sense but I digress. This is a big let down for that aspiring entrepreneur that just found a hot Lego Ninjago set that is marked down 80%. But in book selling, this is not the case.

Book Selling

It is very rare that a book will come up restricted. Honestly I only really have seen it in new release books. Even so when you find out it is restricted, a lot of times you can turn around and sell it on eBay just as quick as you would have on Amazon. Books generally speaking have the highest ROI of the three methods. It's very uncommon to be able to buy an ungated toy for $0.50 and sell it for $14.99 (or much much higher).

So why don't we see more book sellers? The main reason is that it is GRUELING work. Imagine this in an RA scenario. I have a product at Walmart that I can buy for $2.00 per unit and sell it on Amazon for $11.99. I can buy ten of these and voila... I've potentially turned my Jackson into a Benjamin (not counting fees of course, just bear with me). If I sell out of these, I can go back to Walmart and buy ten more to repeat the process.

In books though its way different. Everything is one-off. Let's look at this example. I go to a library sale and find a profitable book. I spend $0.50 on that book and discover that I will be able to sell it for $24.99 (this is a very good find as far as books are concerned). As soon as I sell that book, I cannot replenish it. Likewise, if I found five of these books they would each have to be separated into their own SKU because each book's condition is different from one another. This means that an RA/OA seller could list their ten items at once with the option to replenish them on the same SKU whereas I have to list each and every book individually without either benefit. Finding and listing is a BOATLOAD of work.

Another area to consider is that general knowledge is spread freely between resellers except for products. If I reveal to you a hot item I am selling, why wouldn't you head down and buy the same item and sell it too? This is not the case in books in that as I have said previously everything is one off. If I tell you I got X book at Y place for Z potential profit, you couldn't go there and get the same deal.

Conclusion

In whatever method you chose, Amazon is all about establishing relationships through networking. It is absolutely necessary that you network with other sellers to learn about the business especially if you are trying to get ungated. It is also critical to learn the basic rules before jumping in. Entering into entrepreneurship as a whole is a hell of a journey and requires a lot of work. Amazon and reselling in general is certainly no exception. If you do take the leap, you will hear repeated over and over that the secret to winning on Amazon is all about "feeding the beast". Six months into my journey I can attest that these are the truest words anyone will tell you. If you want to be successful, you cannot stop.