What's The Best Business Model For Starting An Amazon Business?
Updated: Sep 17
There are so many different business models to choose from when starting to sell on Amazon. Each model requires a different amount of capital and expertise.
Bob Schneck, ALGO Online Retail's lead instructor, has tried every model, such as retail arbitrage, private label, white-label, dropshipping, etc.
Bob has been selling in the e-commerce industry for over 25+ years and believes ALGO Online Retail's wholesale retail business model is the best.
It is simple.
Source name brand products from U.S. based suppliers.
Buy low in bulk at discounted prices.
Sell high at marked-up prices on the Amazon marketplace.
It is a time tested proven business model that large successful retailers use.
Bob said this model is by far the most profitable and successful model in all of his experiences.
Why is it better than all of the other models?
Retail arbitrage is basically going to the dollar store or Walmart and purchasing items that are on clearance and reselling them on a platform like Amazon. It is possible to make small profit margins doing arbitrage, but it is not sustainable.
The first problem with retail arbitrage is Amazon may ask the seller to provide proof of authorization to sell the items. The receipt from the store is not going to cut it.
If the seller can get by Amazon's radar, then it is very difficult to scale an arbitrage business because there is no consistent supply of products.
The seller needs to run around searching local stores with clearances to find potential products.
It is essentially trading time for money, which is not utilizing the true power of Amazon's marketplace. The ability to make money while you sleep.
The problem with dropshipping is the lack of inventory control. Dropshippers rely very heavily on their supplier to fulfill and ship orders to the customers.
Order can be placed on Amazon and the supplier can tell the dropshipper there is no more product. Now the dropshipper has to cancel the order, which makes Amazon very mad.
Also, the dropshipper will not qualify for Amazon Prime shipping or the buy box.
Private labeling and white labeling are popular right now but can be very difficult and expensive.
It is the idea of finding a successful selling widget and putting your new personally created brand name on the product.
The problem is customers are looking for an already established brand name.
Private labeling takes a great deal of time, money, and advertising to gain brand recognition.
The Wholesale retail business model has proven to be successful for a very long time and is now being used on Amazon.
The online retail and Amazon marketplace boomed in the past 5 years and will continue to grow. Take advantage of the time and start applying the wholesale retail model to an Amazon business.
Sell brands that people are already going to Amazon to purchase, such as Nike, Nintendo, Hasbro, Keurig, Mattel, and the list goes on.
All of those other strategies are new approaches to the retail industry.
There is no need to reinvent the wheel.
Successful retailers like Target, Costco, and Best Buy use the wholesale retail business model of buy low, sell high, and sell name brand products.
The wholesale retail business model that ALGO Online Retail teaches is the best way to start an Amazon business.
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