How Does Amazon Continue to Make Money

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Amazon is a cash machine, and there are ways to sell products that don't require a significant time or financial investment to get started.

"My best friends and I started a Kindle publishing company with $200 nine years ago," says Steve Cicalese, an ecommerce entrepreneur and C.E.O. of Amz Advisers, a company that helps brands grow on Amazon. "We published eighty Kindle books on Amazon. We outsourced the writing, editing, and cover creation. [Each book] would then make us $200 a month in recurring revenue [from Kindle stores]. We got enough cash in royalties to quit our jobs."

In 2021, 50% of Amazon's $469.8 billion in net sales came from third-party merchants, according to the company's recent press release. Between Fulfillment By Amazon (FBA), book publishing, private labeling products, and the Amazon associates program, there are many different ways to tap into Amazon's loyal customer base and create a new stream of income.

Here's what you need to know about how to make money on Amazon – along with advice from experts who are doing it.

4 Ways to Make Money on Amazon

2.45 billion people access Amazon each month, according to research published by Statista, a data analytics company. In addition to the methods listed below, you could use Amazon as a marketing platform to sell low-cost products, introduce customers to your company, and later sell professional services or other larger offers.

Here are four viable ways to make money with your own Amazon page if you're getting started today.

Pro Tip

Get clarity on which money-earning model on Amazon makes sense for you, research initial costs, and plan accordingly.

No. 1: Publish Physical or Digital Books

50% of Americans believe they have a good idea for a book, according to a poll of 2,000 people led by OnePoll in partnership with ThriftBooks, a book reseller. If you want to write and publish a book quickly, Amazon is a great place to self-publish and start selling your masterpiece.

"Anytime I'm looking for a book, I go to Amazon first," says Tae Lee, an Amazon-published author and founder of The Money Maximizer, a company that helps consumers build generational wealth. "We sell books that you read and books that you work through (workbooks), and we spend two hours a week marketing the books on social media and to our email list."

Lee notes that sales of her books lead to sales of her consulting services, and that a book on Amazon can be a marketing channel to sell other products and services. Other entrepreneurs agree that this strategy is viable.

"I make money by selling my books on Amazon," says Sha' Cannon, an Amazon published author and founder of The Fractional C.O.O., a company that helps business owners with financial growth strategy. "I have a course, fractional chief operating services, and use my book [as a promotional tool] to help with selling products and services."

Cannon says she mainly uses books as a credibility play to later promote and sell consulting services or digital products. Her Amazon book sales lead to an average of $7,900 per month in consulting clients and $500 per month in digital product sales on the backend.

Millions of authors use Amazon as a marketplace to sell their books, but the way customers like to consume books varies. Consider listing your book in paperback, Kindle, and Audible formats to reach different types of consumers on the platform with the same information.

No. 2: Use Fulfillment By Amazon (FBA)

Fulfillment By Amazon is a fulfillment network that leverages advanced technology and warehouses of various shapes and sizes to support the processing of orders. One way to make money on Amazon is to sell a product on the site, then have an Amazon fulfillment center handle the delivery of the product via its FBA services.

The way the process works is:

• Sign up for a Fulfillment By Amazon account.
• Create a listing for the product you will sell.
• Ship your inventory to an Amazon fulfillment center near you.
• Promote your products, then watch Amazon fulfill them to your customers whenever you make sales.

You can sell products and know that Amazon is taking care of what could be the most time-consuming part of the process.

FBA is not the same as dropshipping, a form of ecommerce in which you never actually hold your own inventory. You will have to supply the product in order for Amazon to fulfill it; you can source these products either by shopping locally and then selling on Amazon, or finding a supplier like Alibaba that can send your inventory to an Amazon warehouse on your behalf.

Retail Arbitrage

The end goal of any Amazon ecommerce strategy is to buy or develop a product at one price, then sell it at a higher price on Amazon. When you purchase an already-existing product, then mark it up to turn a profit, this is known as retail arbitrage.

In times of duress, retail arbitrage can be controversial, such as when hand sanitizer resale prices spiked dramatically at the start of the pandemic. However, retail arbitrage is fairly common, as some entrepreneurs make time and effort to locate sources willing to sell wholesale goods, then mark up prices later.

Amazon Handmade

Want to only sell the items that you yourself have made? Amazon Handmade is a platform specifically for artisans who want to spend their time creating goods and let Amazon handle the rest. Amazon Handmade was founded in 2015 and has handmade sellers in over 80 countries.

Remember that Amazon's area of expertise is shipping. If you have a great product, and just need to dial in the fulfillment piece, using Amazon might be a great fit for you.

No. 3: Private Label Products

Another way to make money on Amazon is through selling private label products and services. There are a few ways to use private labeling on Amazon.

1. Find a product with good sales but low reviews. There are some great products that can't get enough reviews, so their sales are affected. You see what the sales of those products are and either negotiate a deal with the manufacturer or source a similar product, then label the product as your own.
2. Offer a product or service to another established brand to sell for you as if it's their own. Since they have an established audience, they do the selling for a percentage.
3. Offer a product or service to sell under your brand. You may be the seller with the audience–you can sell other products and services under your brand as if they're your own.
4. Sell different versions of a product or service. You may have higher and lower- priced versions of your product or service. You can sell one under your brand name and private label the other to differentiate what you offer. This allows you to appeal to different customer bases. Walmart's Great Value brand and Costco's Kirkland Signature brand are two examples of this.

Many companies and brands private label offers because it makes more sense financially. There might be a product or service you can private label and sell on Amazon.

No. 4: Sell a Subscription Box

Subscription boxes like Dollar Shave Club, Hello Fresh, and Birchbox have taken their industries by storm in recent years. If you have a great idea for a product that people want monthly, Amazon has an invite-only program that lets sellers list, sell, and manage subscription box products directly from the platform without having to figure out their own delivery service.

To receive an invitation from Amazon, you must be able to offer a fully-assembled curated subscription box with the ability to support free shipping directly to customers in all 50 states, Guam and Puerto Rico. Amazon says that sellers must also have an active Professional seller account to start selling, although it is not required to apply for the program. Applicants get notified via email of their application status in seven to ten business days.

"I had a spa subscription box that scaled quickly," says Patty Callwood, the founder and owner of True Serenity Tea, a tea subscription box service. "Inside that box, I had loose leaf tea. I knew that getting my tea subscription box onto Amazon could help with product awareness."

Callwood says a subscription box is an untapped way to make money on Amazon and can lead to other opportunities.

"Before putting it on Amazon, my box had been featured in media publications, the Oscars Gala, gift guides, and many other places," says Callwood. "I used the media attention to negotiate a good deal with Amazon to list my tea subscription box. Because of Amazon, I've also been able to get my tea box on DoorDash, UberEats, Postmates, and GrubHub."

Subscribers to a subscription box make regular payments to get a box filled with items of a particular category. The seller packages up the month's selections and sends them to customers at set intervals.

Do I Need to Sell Something to Make Money on Amazon?

Not necessarily! There are ways to make money on Amazon that don't require you to supply your own product at all.

One way to make money without selling a product or service is by joining Amazon's associate program. This affiliate program lets you create affiliate links for your favorite products and earn an affiliate commission whenever someone purchases from your link.

Here's how the Amazon affiliate program works:

1. Sign up as an Amazon associate.
2. Get your affiliate link center set up.
3. Find the products on Amazon you want to promote, then generate affiliate links for those specific products.
4. Promote your affiliate links wherever you like, but make sure you disclose that they are indeed affiliate links, per FTC guidelines.
5. Whenever people purchase items through your affiliate link, you'll earn a small commission for every sale.

Being an Amazon associate is a way to earn passive income without having to set up your own Amazon business. You can have hundreds of affiliate links for products you like. You can share those links in various places online and make as much money as you want without having to manage any one physical product on Amazon.

Is Selling on Amazon Worth It?

With billions of dollars being spent by consumers, selling on Amazon is worth it for those looking for a way to make money without taking up too much time. You can add some extra dollars to your bank account or even build a business.

"I think that having anything on Amazon automatically puts you in front of more people you may not have access to," says Maleeka Hollaway, an entrepreneur and speaker who has three books published on Amazon.

"My website is down as I redo how it looks, so I send people to Amazon. If they Google my name, three of my books come up and they can see I'm a legitimate person." Maleeka says that being on Amazon adds credibility to herself and her business.

The great part of selling on Amazon is an established customer base. One of the more challenging parts of selling anything is creating trust with customers who may not know you. Amazon customers trust the brand, which is good news for you.

"Last month, we did $71,160 in sales on Amazon with a medical device company we work with," says Jayden Scott, an ecommerce entrepreneur who helps Amazon sellers build businesses that could eventually be acquired someday. "Amazon is an important platform on the internet, and anyone can make money with it."

Does It Cost Money to Sell on Amazon?

Choosing the right way (for you) to make money on Amazon is essential. Certain forms of making money may cost you money to start. If you were to choose private labeling products or FBA, there is an initial investment to buy inventory.

If you want to write and publish books, you may incur the cost of an editor and formatter, but you could publish and sell books on Amazon with no initial costs if you choose to do all the work yourself.

The potential costs will be dependent on the model you choose. Get clarity on which model makes sense for your goals, research possible initial costs, and plan accordingly.

Start Making Money on Amazon Today

Amazon is worth it because you're selling to a customer base that already trusts the marketplace. You have various ways to earn passive income, and you can make money in your spare time. Selling on Amazon can be a side hustle that grows into something more – and you might be able to start making money on the platform sooner than you think.

Do your research, focus on action, and eventually you'll have a new income source that can become significant as time goes on.

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Source: https://time.com/nextadvisor/financial-independence/how-to-make-money-on-amazon/

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