Newbie Help – Summary Of A Few Business Models
It is easier than ever before to generate a full-time income by reselling online. With Amazon’s Fulfillment By Amazon (FBA) service you can ship your products to Amazon and have them pick, pack, and ship the items when they sell. The most common method of obtaining products for resale is through arbitrage. In this context arbitrage is the buying of an item in one marketplace and the reselling of that same item for a higher price at another marketplace. The difference between the purchase price and the sold price is the profit.
For Amazon FBA, products bought through arbitrage (in retail store or online), thrift stores, estate sales, or even garage sales are shipped directly to Amazon to have them handle all aspects of the sales, shipping, and support. With Amazon FBA when your item sells they pick, pack, ship the item, and handle all communication with the customer. All you have to do is list the products and ship them to Amazon. They handle the rest.
Buying products from wholesale sources can be another method to obtain products to resale on Amazon, eBay, or other marketplaces. Wholesale purchases may have some hindrances for new businessperson, as tax permits and business licenses may be required to even purchase the items in the first place. Wholesale companies may also have minimum order requirements that put purchasing from them out of the price range of a new businessperson.
Another method to earn money online is to dropship on eBay (or Amazon, though Amazon can be less favorable for this business model). Dropshipping is when you sell a product and then buy it from another retailer or wholesaler to ship to your customer. This is the opposite of Amazon FBA where you buy the product and then sell it to your customer for a higher price. The price you sell the dropshipped product for is much higher than the price you pay to have that product dropshipped to your customer. The nice thing about dropshipping is that you do not need to purchase any inventory in advance. You only purchase inventory after you already sold the product.
Both Amazon FBA and dropshipping are forms of arbitrage where you find something at a lower price in one market and resell it for a higher price in another market. “Buy low, sell high” is the basic idea behind all retail sales, except they purchase directly from the manufacturer or a wholesaler.
Another business model that applies to Amazon, eBay, and any online or offline sales channel is private labelling. This is where you have products manufactured for you under your own brand name and sell them exclusively or sell them to others to resell. The largest drawback to this model is the expense to get an initial product designed, produced, and marketed, but the rewards can be dramatic.
