Stop selling your stuff on Amazon. eBay is better. If you're too large to sell on eBay, then get out of retail right now, are you crazy? Selling products other people make used to have bigger margins because it was a lot of work (opening and running a store). If your only work is buying stuff wholesale and boxing it up and sending it to Amazon then you, frankly, don't deserve much profit for a few hours of monkey level work.
My brother has an Amazon store. He pulled in about $400,000 in sales last year and saw a profit of close to $200,000 doing exactly what you stated (buying wholesale, boxing it up and sending it to Amazon). Huge margins, I know. However he doesn't work a few hours a day, its more like 9 hours a day driving around to different auctions to buy wholesale. Its a lot of work.
Where are you getting those wholesale prices from? Do you mean the price you can buy an unbranded generic version? Because that's not wholesale, you can't buy it and sell against a listing that's branded.
In general the products that sell well will have a very competitive wholesale market and you'll be lucky to squeeze out 20% margin. It's certainly possible to get large margins in closeouts if you buy items that aren't popular, but it's difficult to scale that. And that's arguably liquidation anyway.
I'm getting those wholesale prices from hengdadice.com, the same wholesaler those two merchants both use. Factory prices, we can only assume, are much lower.
I don't know what you mean by "unbranded generic version". For reselling purposes, you can order a little card with a design of your choice on it (1 design total, 1 card per set of dice) from hengdadice.com, and both merchants I mentioned do that. That increases the wholesale price by a few cents.
In the United States, you can resell any product you legally acquired from any source, you do not need the permission of the original producer/brand owner.
We're talking about selling on an Amazon listing which has the trademark on it, which isn't allowed. That's what I originally pointed out - that the wholesale price wasn't relevant because it's not for the trademarked product.
Nothing's stopping you from registering your own trademark and selling whatever you happen to have on hand under that mark. Ownership of a trademark is free.
Buying generic from China is not wholesale. Wholesale in this context means buying branded goods, either directly from the brand or from a distributor further along the chain.
You also can't scale up the cheap UPU subsidized China Post + USPS shipping. It's for small quantities only. Order ~10+ and they ship via much more expensive means. Try and order a bunch one at a time and customs will catch on and seize them.
The UPU shipped items haven't paid customs fees / duties (or typically have WAY understated the value)..it's an exception for samples/gifts/etc. If they know you're shipping quantities, they want their money.
This is why some items on AliExpress either won't let you order more than quantity 1, or switch to FedEx only shipping if you increase the quantity.
Maybe his profit quote was vague or excluding Amazon fees. That's not that far off without having to do liquidation. Which is also a viable way to make money selling on Amazon.
Amazon fees using FBA typically run around 30% depending on average price. More if you do private label and have to pay advertising.
Talking about gross profit without including fees is effectively meaningless.
My rule of thumb for a successful wholesale business is 50% cogs, 30% Amazon fees, 20% margin. There are companies that do a lot worse, and I'm sure some that do better but it's extremely difficult to beat 30% margins at any kind of scale without doing liquidation, getting some lucrative exclusives, or otherwise find a very uncompetitive niche.
Source: have done several million in sales across hundreds of thousands of units on Amazon in the last few years.
You were higher volume than I, and my Amazon fees across the board ran about 35%, so I completely agree with your assessment. However I was buying liquidation and my cogs tended to be lower, although my processing time/expense likely higher to compensate.
Not only is that a lot of work, as you mentioned, but it is very volatile and a constant hustle to find the right products at the right price.
And as soon as you find a good product to sell at good margins, you have to be moving to the next product because a wave of sellers, both legit and counterfeit will soon move in and start to encroach on your margins.
Even the sources of auctions are a constant whack a mole. Any consistent auction source soon gets overrun with a constant supply of newbie buyers that overpay for anything and everything just to try and make their trip worth it.
I used to frequent postal auctions for products to resell. Then the droves of bloggers and wantrepreneurs started moving in.
I stopped going when people started bidding up the price of MacBooks of unknown provenance to higher than retail.
You keep thinking, well these guys are going to lose their shirts and never come back. They don't come back. But 4 more will take their place the next month.
9 hours a day of driving pays every other job about 1/5th what your brother makes. Not advocating a race to the bottom, but expecting to clear 200k a year by driving around to auctions all day is still insane relative to what other people make doing similar work.
Are you serious? He's not being paid to drive around. He's being paid to go to auctions, analyze the price of things being sold in large quantities, and decide if there is a business opportunity to sell products in a different market. He then ends up with a large inventory that he must sell, otherwise he is stuck with unsold inventory (risk). He also has no guarantee that the aunction will be selling the same products the week after, so it seems like there is a scarcity risk as well (not having a homerun product to sell constantly)
Yeah, this whole thread is based on a false assumption, that the work he does is "easy and equivalent to driving around." It's not easy or trivial to start a business, plus he assumed risk up front.
That's like saying "Property owners just sit around and collect rents, so they shouldn't make any money." It totally misses the point of using capital to invest in and maintain real estate, which is not "sitting around" at all - it only becomes easy after you've done a significant amount of work to make it so.
Real estate is a very poor example considering countless cases of landlords neglecting repairs and maintenance. In some states in the US, there's little or no accountability for this.
I've watched some YouTube videos about various arbitrage schemes, including refurbishing. It rarely makes sense at a small scale, but if you can get enough product, you can eliminate the waste by scaling up.
I can watch videos/read blogs about how to duplicate a specific win, but by that point so has everyone else and margins drop.
A few people who find the deal early can make a ton, and they get paid well for knowing what to look for in a good deal. Even then, I'm sure pretty much everyone who does well with this has plenty of stories where they lost big, and they only win on average. It's the same as stock picking; investors don't get paid well to watch their investments tick up, they get paid well for finding the bargains, and sometimes an investment opportunity is too good to be true.
I find it interesting to see this similar kind of behavior in video game economies like with Path of Exile. There are people who spend all day looking for good deals or opportunities, and essentially buying and reselling, maybe with some minor tweaks. These people tend to be the wealthiest in the game, with far more in-game currency than people actually playing the game.
I think a big part of that is because most people don’t care at all about economics in a video game. When you’re mostly competing with children and people who just want to game and don’t care about being rich, putting any sort of organized effort toward getting rich becomes substantially easier. EVE is like this too. These people are also often derided as “not actually playing” the game.
Exactly, he gets the risk premium. One of the most straightforward ways of making money in markets is being compensated for bearing risk. This is a systemic factor and will exist no matter how many people are doing it. That’s not to say it will always be so lucrative, but in general he will always get compensated more than someone who is merely dropshipping.
Yeah, but his brother has also taken up a lot of risk. There's a much greater chance he could be out of business with absolutely nothing, or worse, he may buy batch of items that gets destroyed, and worst, doesnt sell. The additional income is to compensate for the risk.
This is why Amazon handles the logistics for so many third-party sellers rather than simply buying their merchandise and reselling it. They get the little guy to assume all of the risk. Unsold products? Your problem. Some kind of defect? Your problem. All Amazon is on the hook for is shipping (and warehousing, although the cost there is a bit more abstract).
And when they are handling the logistics, they also get the benefit of just giving a full refund for whatever reason they like. It's nothing out of their pocket, and it makes them look good to the consumer. So, why not?
They also get to look at all that sweet data and if any one product or group of products starts to look too good for those small 3rd party sellers, they aren't afraid to just drop right in on top of everyone and push their own product to the buy box everytime.
After which they will drive away most of the 3rd party sellers before starting to creep the price upward.
It shouldn't be surprising it's more profitable though because it's not just transport that their brother is doing it's transport in service of the real business which is essentially retail supply.
For all the people concerned about Amazon's business ethics here, stop buying your stuff on Amazon too. It used to be that Amazon had solid products and eBay was just a bunch of random sellers selling random things of unknown quality. Now Amazon is more like the latter than eBay is.
I love using eBay; it puts a bit of excitement back into e-commerce when you get packages from overseas -- the stamps, the names, the exotic goods. This year I ordered from 4 different countries things that weren't available in the US. But most products on eBay are shipped domestically, and they won't slow-roll your shipping for a week because you didn't pay for Prime.
eBay is too high barrier for me. For Amazon- the fact that shipping is fast and cheap/free and returns are easy outweighs any other seller for me.
My ebay thought process, which makes searching a chore..
- Returns will probably be a hassle so I really better want it.
- Is it buy it now or do I have to bid?
- Exorbitant shipping price or it's "freight" with no price
- Shipping may require signature and I have to be at home
- Checking seller reputation
- Checking seller location
Agreed - though recently I've had several packages from Amazon delivered FedEx with Sig Req'd. Can't seem to find a way to refuse this kind of shipping - FedEx regularly misses deliveries (just two weeks ago I had a signature required package where the driver left a note on my door...despite the front door being open, with me VISIBLE in the kitchen through the open door. I had my back to the door and was cooking lunch, waiting for the package, and the driver just noped out).
Exactly! On Amazon I know I can get (most) anything I buy delivered very quickly and I can return anything without a hassle. eBay, on the other hand, presents an entirely different and multivariable risk model to the consumer.
I returned to ebay after years of absence when I wanted a replacement wallet just like one I had 10 years ago. I found it for cheap, it shipped, it was brand new in its packaging. I couldn't have been happier.
Since then I've really re-awoken to ebay and tried to get in the habit of looking there and not just on Amazon. So I would second the parent's comment. I could even see there being an ebay revival.
> If your only work is buying stuff wholesale and boxing it up and sending it to Amazon then you, frankly, don't deserve much profit for a few hours of monkey level work.
This line needs to stop - it's flat wrong.
It's not monkey level work - and it's exactly how the entire manufacturer-distributor-wholesaler-retailer relationship has always existed, and it brings obvious significant value to the entire chain, all the way down to you, the customer.
The only difference is the end customer is now more aware, or thinks they're aware, of the chain. Nothing has changed - and it's not going to change. There's too many things and doodads out there in the world that people want to buy for any single company to procure and manage them all.
Same products, pricing, conditions, number of listings - similar effort per platform.
Amazon outperformed eBay by more than two orders of magnitude, so after 12 months she discontinued eBay sales, because daily Amazon sales started exceeding annual eBay sales.
These days people don't even wan to box it up. They contact the manufacturer and ask them to ship the item direct to Amazon, on their behalf. And they complain when they don't get a big enough discount…
But it gets even worse. They will send you a spreadsheet and ask you to fill it out… with all the information Amazon needs so that it's easier for them to upload into Seller Central.
And in the event of damage or customer service? They tell the customer to reach out to the manufacturer.
90% of Amazon sellers are just leeches. You can pretty easily make money doing it though. A lot of manufacturers still aren't savvy to the game. I had a company that literally had "Arbitrage" in their name reach out to me the other day.
For many manufacturers, a great deal of their sales come from distributors (the great majority of retail is still brick and mortar).
They can't compete with their customers. Many manufacturers have started selling direct as well, but they usually sell at a bit of a premium to avoid undercutting their own customers.
It's just bad form to do that. And large retailers like Walmart will usually stipulate that you can't sell it cheaper direct.
I think the main reason is that Amazon won’t buy their items at a reasonable price due to what I can only call “price corruption”.
Basically, third party sellers find a way to get a wholesale discount and then sell it through Amazon for a bit more. So the price on Amazon is artificially low. Say you have a $10 item. Maybe your wholesale price is $5. The third party seller puts it on Amazon for $7. Amazon sees this. Now Amazon only agrees to pay you $4, because to them the $10 price is irrelevant. $4 is too low, so you don’t accept and Amazon doesn’t buy from you.
Now, you can sell yourself on Amazon, but then existing retail partners get mad because suddenly you are selling the item for $5 to compete with the arbitragers. I’ve even found some relatively large retailers selling on Amazon under dummy companies to hide their name, but still be able to profit off their high wholesale discount.
Things are changing. But it can be a slow and painful process for small manufacturers.
That amazon FBA "side hustle" stuff you see on youtube isn't as lucrative as it used to be. More people are doing it and the prices drop quicker on the hot items.
...for what? It's a miserable place to look for stuff, miserable to pay for, miserable to remediate conflict. If you're lucky you'll get what you pay for with no hassle. I can't imagine ever buying a commodity on ebay that I could get from another online retailer.
I can't imagine being out here expecting large internet stores to give a shit about my problems. That ship sailed a long time ago--buy local or accept the shittiness.
The other question is: better for whom? Ebay is less curated than amazon so sellers have more freedom. Sometimes this freedom results in a worse buyer experience.
