EA 23 Private Label vs Arbitrage vs Amazon Wholesale

EA 23 Private Label vs Arbitrage vs Amazon Wholesale

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While coronavirus wrecks havoc, the world still turns. On this episode of Entrepreneur Adventure, we’re breaking down what 2020 means for new Amazon sellers. Can you still go private label? Are Chinese sellers disrupting the marketplace? We’re answering all of these questions and more.

Private Label

Although many swear by it, private label is a tough gig – and even more so now. What is private label? Simply put, it’s the process of choosing a category (i.e. dog products) and creating products within that category to sell on Amazon. Essentially, you must create your own brand from the ground up, a venture many are unprepared to tackle. Especially given the flux of Chinese sellers entering the marketplace with unbeatable prices and knockoff products popping up left and right.

Nevertheless, if you’re sold on private label, check out Scott Voelker for some top-notch advice.

Bottom Line? Despite the success stories, private label remains the toughest avenue on Amazon to pursue.

Retail Arbitrage

Arbitrage is a great place to learn the ropes. What is arbitrage? Retail or online arbitrage involves buying products from local stores like Goodwill and Walmart (or online) and reselling them on Amazon. While it’s a simple process, if you’re caught in a liability rut, Amazon won’t accept a receipt from Target as bail. While a great place to learn, Arbitrage is hard to scale and therefore tough to sustain.

Bottom Line? Arbitrage is a great place to start out, but don’t stay for too long.

Wholesale

Out of the three entrances to Amazon, wholesale has the most opportunity. As private label and retail arbitrage get harder, wholesale stands above the rest. What is wholesale? In short, wholesale means buying established products from suppliers to resell on Amazon. Luckily you can find ways to predict a product’s profitability. Not to mention, Amazon will always take receipts from brands and distributors if your account is ever flagged.

Selling wholesale requires a smaller investment and because you’re typically buying products from your own country or the country you’re selling in, you can get products in just two weeks.

Bottom Line? While not an “easy” path by any means, wholesale presents the least risk with a high return on investment.

Overall

Hopefully this helped to clear up your options in a time of uncertainty. If you commit to wholesale, Entrepreneur Adventure is a great place to learn. As always, happy selling.

Resources From This Episode

Outline of This Episode

[00:19] Todd’s introduction to this episode

[01:17] How hard is private label?

[05:11| All about retail arbitrage

[07:33] Why wholesale trumps them both

[11:12] Todd’s closing thoughts on wholesale

Transcript

Todd Welch (00:00):
Chinese sellers coming into the marketplace. Knock offs, Amazon shutting down accounts, selling on Amazon is getting harder and harder, but there’s one way that stands above all the rest in 2020 stay tuned.

Todd Welch (00:19):
What’s up everybody? Todd Welch here from entrepreneur adventure and today I’m going to dive into the one way of selling on Amazon that I think stands above all of the rest in 2020 and it is definitely still flying under the radar. It is not nearly as possible as the other two main ways of selling on Amazon, so stay tuned. We’re going to dive into the three big ways that people are currently selling on Amazon, why two of them are getting harder and one stands above all the rest. Before we dive into that, make sure you click that subscribe button down below, clicked the little bell to get notified of more videos like this one. Let’s go ahead and dive in. All right. Number one, the gorilla in the room. Amazon private label. Sometimes people refer to it is Amazon FBA, but really Amazon FBA can be used for any type of selling, but private label is the gorilla in the room.

Todd Welch (01:22):
The one that everyone tries to sell you on tells you that you need to do it and you can make millions of dollars super easily. Well, unfortunately that’s not really the case anymore. It’s never been the case, but it’s a lot harder nowadays. So private label I would really put towards the bottom. Anyone getting started, it’s definitely not something that you don’t want to do, but let me dive into the reasons why it’s a lot harder. So in the past you could take a product, make it a little bit better, throw it up on Amazon, sell it, and start getting a lot of sales pretty easily. Now those days are long gone. If you’re going to do private label, which basically means creating your own products, you really need to create your own brand nowadays so you’re not just creating random products, throwing them up on Amazon, doing a launch and hoping that they sell.

Todd Welch (02:23):
Instead, you need to be developing, creating a business. Around a group of products, so let’s say you’re in the dog market. You’re going to create maybe a dog treat, a dog toy, maybe a collar and a leash, and then you can start building your business or before you even create it, you can build say a website, a blog about dogs and have hundreds of articles driving traffic from Google and create products around that and sell the products to that market. That combined with the Amazon marketplace that’s already there to buy, you can still build a good business out of that, but it’s going to take a lot more work. I’m actually doing it myself for my own private label brand because I like building stuff, so I am still doing that, but it’s not even close to the main way that I’m making money nowadays in 2020 if you’re interested in doing that kind of stuff.

Todd Welch (03:28):
The private label building a brand area, I recommend checking out Scott Voelker. He is really good and focused on that market, but it’s a long term play. Everything is really a long term play. You have to treat these all like a real business. There’s no such thing as a get rich quick on Amazon. It definitely doesn’t exist now. It never really existed before, so if anybody’s trying to sell you that, they’re probably just trying to take you for a ride, but private label is getting a lot harder because Chinese sellers are coming in more and more to the Amazon marketplace. They can undercut us on price and get a lot of products into the marketplace for cheap and flooded. There’s still a lot of opportunity, like I said, for building those brands, but it’s getting harder and then also the knockoffs or the hijackers taking over your listings.

Todd Welch (04:25):
There’s a lot of unscrupulous sellers out there that take advantage, throwing junk on your listing and trying to sell it and get a quick buck making you look bad, giving you bad reviews and really hurting your products on Amazon so it’s getting harder and harder in that area. Definitely not impossible if you want to do it, go into it, but don’t expect immediate results. You’re looking a year, two years down the road after building out your brand. Now the second way of selling on Amazon is arbitrage. Either retail arbitrage or online arbitrage, and that is basically where you buy products from one market and sell them on Amazon. So it is could be going to a physical store like your local Walmart, your local Goodwill or thrift store or target finding clearance products, buying them and selling them on Amazon. And this is still a way that I recommend to get started on Amazon and just to learn the ropes, learn how Amazon works, send some products in, figure all that out before you move into one of the other ways to sell on Amazon.

Todd Welch (05:47):
It’s really good way to learn the system. The problem though is that Amazon is getting more and more strict on people doing this and and more often people are getting takedown notices, they’re getting IP complaints and Amazon is shutting down accounts and with retail arbitrage or online arbitrage, you have really no recourse because Amazon is not going to accept the receipts from those stores most likely to prove that the products you bought were legitimate products. The other bad thing about retail arbitrage is it’s the hardest of all of them to scale because to scale to grow a retail arbitrage business, it just takes man hours, more shopping, more looking, more finding products to sell and it’s a never ending struggle and never ending loop of having to find new different products because even if you find a successful one, that one will probably not be available in a month or a week even at the same stores, so you’re not going to be able to sell the same product over and over again.

Todd Welch (06:56):
Though it’s a really good way to get started and learn the game. It’s how I got started before I went into private label. It had a few failures. Now I have an okay private label that’s going, I’m trying to grow it, but it’s not something that I would recommend doing longterm unless you want to be constantly grinding, physically getting out there and working your tail off to grow that business. And now the third one, and this is the one that flies under the radar, not a lot of people talk about, but is the biggest opportunity on Amazon right now, and that is wholesale, Amazon wholesale as we call it. And basically what that is is we are buying other people’s products to sell them on Amazon and we have ways to find products that are already selling good on Amazon, have an established sales history.

Todd Welch (07:54):
We know the historical price, we know the historical sales rank. We can go out and either contact the brand directly or go through distributors, which distributors usually carry lots of different brands, buy from them, send in the Amazon and sell it. So it’s really the lowest risk way to sell on Amazon right now because we’re looking at established products, we know they sell well. We know what the historical price is, we know we need to buy them for to be able to see a profit. We go out there, talk to the brand, talk to the distributor, buy those products, open those accounts, send them in and sell them. Rinse and repeat. We can keep replenishing those products. While we’re also looking for additional products to add. So in my opinion, this is the safest way to get started on Amazon. Now it is very simple.

Todd Welch (08:52):
I don’t want to make you think that it’s easy. It’s very hard, a lot of work. You have to still treat this like a real business, but it’s the lowest risk and most accessible way to start selling on Amazon. You need very little money. You could start with a thousand or $5,000 unlike private label, you need a lot more than that. Very often to get started and keep growing. And with wholesale we’re buying products from, usually within whatever country you live in, a lot of times or wherever you’re trying to sell it. In the U.S market, we’re buying products from the U.S we can get them within two weeks. We don’t have that 30, 60, 90 days like you have to wait for private label. So we only have to carry maybe 30 days worth of stock or in the very beginning you can do a couple of weeks or 20 days worth of stock so that you can more quickly grow your money.

Todd Welch (09:51):
Now things that you need to watch out for in wholesale. Definitely just like anything else, just like retail arbitrage, we can get those IP complaints, counterfeit product complaints, but we have invoices from legitimate distributors and or the brand directly. We can send those in Amazon and 9 times out of 10 that just goes away and we are good to keep on selling. So the hardest part in Amazon wholesale is that you’re often competing with other people for the buy box. So you have to share the buy box and get a percentage of that. So occasionally you’ll find a good product that sells really well in the beginning. Then maybe more people come in and you start losing interest. So you have to find other products. So you’re still in that constantly trying to find new products, but you have very much lower risk versus private label and retail arbitrage.

Todd Welch (10:50):
The hustle is less, it’s more easy to pass a lot of the work that you don’t want to do off to a virtual assistant or something like that. So wholesale, I think is where it’s at. You’re definitely gonna want to check out some of my other videos. If you’re interested in learning wholesale, if you don’t decide to go into it, that’s fine, but I think you should at least know all of your options. So I will put some videos on the screen here for you to definitely check out and make sure you subscribe. Click that little bell to get notified of more videos, just like this one as well. So with that, this is Todd Welch with the entrepreneur adventure, signing off. Happy selling everybody

Speaker 2 (11:40):
[inaudible].

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