In my previous article, Starting in FBA, I talked about doing Retail Arbitrage and getting the Buy Box on Amazon.
I also mentioned in the article that while Retail Arbitrage is a popular way to make money on Amazon, there is also another way that is very popular. I promised that I would tell you about that other way in my next article, so here we are.
Basically, what you would be doing is going to Alibaba or some other Chinese company and buying container loads of merchandise. Most often people use private labeling to do this. If you don’t really know what private labeling is, that means that you make your own brand. What you would do, for example, is search on Alibaba for companies that manufacturer shampoo (or whatever product you want to sell). You would start a company, let’s call it “Bill’s Personal Care” and you would design a logo. Then you would provide the labeling with your logo to the company in China, and order a ton of shampoo (not literally ordering by the ton, rather I mean you would order thousands of bottles), Bill’s Personal Care brand of Shampoo.
Now, remember, you will have to pay the manufacturer up front for the shampoo, and it is not cheap to ship a container load from China to the USA. Don’t forget that you will pay Customs fees, storage fees at the warehouses and such. It all adds up. But, a few months later, Amazon will be selling Bill’s Personal Care shampoo. Maybe you want to also offer a Conditioner, Lotion, Shaving Cream, Cologne or whatever else you can think of. Don’t worry, there are manufacturers in China to make anything you can imagine, as long as you have the money to pay.
Again, like Retail Arbitrage, this method is also something that just does not work like it used to.
No Buy Box Worries
In my previous article, I told you about the Buy Box on Amazon and how you would have to compete against a lot of other sellers selling the same thing, and only one or two of those guys will get the sales when people buy.
Thing is if you are selling “Bills” Brand and you ARE Bill… there won’t be any competition. You are the only person who has the right to use the name if you register it properly, so you won’t have any competition for the buy box. Every sale will be handled by you.
That is great that you will get every sale… but only if there are sales! Let’s face it, nobody has heard of Bill’s Personal Care products before. Are you going to advertise? That is expensive. You will need to do something to produce sales… you just don’t want that to be too expensive or it is a losing proposition.
Competition can spoil your plans
You see, 5 years ago, this might have been a great business. You were selling Bill’s shampoo against the big boys, and you could sell it cheaper because you were getting it from China. These days, though, even the big boys are buying from China. And the real clincher is that there are thousands of people trying to sell private label shampoo, lotion, shaving cream and any other product that you can think of on Amazon. They are all getting it from Alibaba too. So, there might be 40 different people selling the exact same shampoo with a different label and brand name on each. What are the chances you are going to sell that container load of 400,000 bottles of Bill’s shampoo when you are competing with Susie, Fred, Cathy, and Harold as well? And, you have the buy box for Bill’s but you can bet that Fred and Cathy and the others are cutting prices so that they can undercut you. If you just spend $50,000 for a container load of shampoo, even if you have to sell it at a loss at least you will get some of your money back.
It is hard to make money under those conditions.
There must be a better way!
There must be a better way to sell and make money on Amazon FBA, right? Well, there is! I know there is because I found a better way, and I am sure that thousands of others have also found that better way.
Tune in again next time, and I will share my method with you. No buy box worries. No big outlay of money. No competition in my case! You can do it too if you want.
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