The 2 Models
- Selling existing products on Amazon
- Launching a brand-new product to Amazon
Selling Existing products on Amazon
Selling existing products on Amazon is what I feel like is the lower barrier to entry business model and what I would recommend most Amazon sellers start with. Some of the most common models you will hear people talk about are
- Selling of Used Books and Media
- Online Arbitrage
- Retail Arbitrage
- Wholesale
What all these models have in common is the items you sell will already be listed on Amazon and will already have a built-in audience on Amazon looking for the product. You then just need to find a place to source these products at a price cheaper than what the item is selling for on Amazon and you can reap a profit of each sale. All you need to do succeed with this business model is utilize the right tools to find the profitable products, purchase them and sell the product on Amazon. We will discuss in other blog postings how to achieve this; you will see as we discuss the reverse business model that this method is much easier, and you can usually see success with this model faster than you can with launching a new product. The downside this model is that because the item is readily available to many people you will be competing with many other sellers and in some instances, you will be competing with Amazon directly on many items if they also carry a stock of the items. When launching a new product, especially if the product you are launching is something you manufacture and own the brand too, you could potentially never compete with anyone because you would be the only seller that carries the product on Amazon.
Launching a brand-new product to Amazon
You might be thinking; well, it seems much easier to just launch a new product that does not exist on Amazon so I do not need to compete with others, why would I say it is harder? We will cover that in a minute but first let me lay out the different business models that fall under launching a new product.
- Private Label Products
- Creating and manufacture you own unique products
- Launch another product that does not exist on Amazon, but you can purchase from a supplier.
If you have not caught onto it the main factor in this business model is that the product does not exists in the Amazon catalog, and you will be introducing the product to Amazon. So, what makes this so hard? If you remember we discussed in the previous business model that the products already have a built-in audience on Amazon. When launching a new product on that audience does not exist and it is a much longer and more expensive process to start getting eyeballs on that product. Amazon’s product catalog is a search engine and works in the same way as any search engine works. If you post something to their site and it has never sold before Amazon is not going to show it to anyone. And this is where the true challenge arises with this model. You need to show Amazon that this product is something people want. You accomplish by running ads and using social media to drive people to the Amazon listing to start getting sales. Once sales start flowing in, Amazon’s systems will see that and will begin showing your products to other customers. This process can be more costly to get going as well as it can take months before you see the organic customers buying your product that would be buying your product from day one if you were selling a product that already existed on Amazon. It is important to remember that will greater risk is greater reward and if you are able to grow one of these products to even 10 sales a day (Many people have produced products that sell hundreds a day) if you own that product and no one else can sell it unless they go through you, a single product could produce thousands in revenue.
What model is right for me?
I think the most important thing you should take from these business models is that whichever model you choose they are very different. Model 1 is going to be all about looking through products lists and finding as many products as possible to sell. Launching your product on Amazon you can release as many products as you want but you will need to spend a lot of additional cost and time in marketing that item to get it to perform on Amazon. And one of the biggest downsides to the second model is that the success you have will not be nearly as fast and so many people get frustrated with something when they do not see quick success.
I do favor business model 1, as I am not a marketer, but I would recommend to everyone to start with Business Model 1, start making money and get comfortable with the Amazon platform. Once you have success in this model if you still desire to launch a product then I would jump into that space. The only time I suggest someone to jump straight to model 2 is if they have an extensive background with the marketing of products and are comfortable with running ads and driving traffic to something, then you are probably safe to jump straight to Model 2. My concern if you do not have the marketing experience, there is a lot to learn with the Amazon Platform alone and to try and tackle Amazon and the marketing side of things is a lot for one person to take on. That said a person who is comfortable with marketing would more than likely tell you the exact opposite of what I just told you. So, for you to make the correct decision you will need to reflect on what model best matches your skill set.