How to Make Money on Amazon

Posted by Madison

I think I have found my next ridiculous money maker. Not only does it cover the spending requirements on my latest application spree, it actually is generating a profit by itself.

I recently launched a new (and totally unplanned) business as an Amazon FBA Seller making money online. Here’s how it happened.

Background

I randomly stumbled on the book Selling On Amazon Simplified: Learn How I Make $2,700 Every Month. It’s free on Prime, and I had some time to kill one evening.

I never had any intention of selling things on Amazon, I was literally just reading it because it was free, the kids were in bed, and none of my fall shows had started on TV yet. However, as I read, I realized this arbitrage strategy is right up my alley!

Long time readers know I have a huge obsession with finding deals. Combine that with my love of making money off of arbitrage situations, and a need to hit spending requirements on my latest app spree and the next thing you know, I have a new business up and running!

How it Works

Essentially, you buy retail items at dirt cheap prices. Think Target clearance, Kohl’s 30% deals, and any other deals you find on Slickdeals or Fatwallet. Then you box it up and ship it off to Amazon. The strategy has earned the name Retail Arbitrage. (There’s even a book with the same name: Retail Arbitrage, but I haven’t read it yet, since it’s too expensive for my taste!)

Here’s the fun part, where the Amazon FBA (or Fulfilled by Amazon) program takes over…

When I used to sell my old textbooks on half.com or eBay back in college, having to ship each item as soon as it sells was a very tedious, time consuming process. Not to mention dealing with customers. The Amazon FBA program actually eliminates all that junk. After getting the merchandise, you box it all up together and ship it off to Amazon. They store it in their warehouse, they ship it out, and provide all of the customer service. In addition, because Amazon is fulfilling the orders, the merchandise qualifies for Prime and free super saver shipping.

Profitability

For my very first test run, I bought 6 items and sent them in. Within 4 hours, the first 5 items sold! The sixth item sold a few days later. I spent $294 on the items, which sold for $472 on Amazon. After the Amazon fees, shipping, and sales tax I made $137 profit.

Once I realized how simple this actually was, I’ve gotten better with each box. Now I aim for items that will net me 100% on the profit margin on costs (profit / cost).

Add in all the extra things we know about deal hunting, like cash back on the purchases, coupons, credit card cash back, and meeting the spending requirements for sign up bonuses… and I’m starting to feel like I’ve found a legitimate way to print money.

Tools I’m Using

Here are the tools I’m using to run the show:

There are some more additional tools that help sellers, but since I’m just starting out, I’m doing it on the cheap.

Other Thoughts

There have been a few additional side benefits. I hired my kids to box up the stuff to send off to Amazon. I pay them a quarter per box, which is a great way for them to earn money, and quite possibly a good way for them to fund their Roth IRAs at tax time.

In addition, I now have a huge stash of stuff that I can shop myself, which was great for my second son’s birthday this month!

I don’t know if I will continue after all the spending requirements on the credit cards are met (but I could, it’s very addictive… I just sent off another box of 37 items and purchased another 87!)

Stay tuned, as I’m working on an article of tips and tricks to save money when we buy on Amazon from all the information I’ve learned during this process!

Do you sell stuff on Amazon? If so, I’d love to hear about it!

Update: Here are specific Examples of Profits from Selling on Amazon for my first few items and How I Made $10,000 Selling on Amazon.

More on Amazon






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Comments to How to Make Money on Amazon

  1. So what kind of stuff are you buying that you are able to sell? Just looking for an example or two. I am unsure how easy it is to find deals that would make you profit without spending all day shopping. Also, does the cost of all the boxes add up quite a bit or is there a cheaper way for that?

    Joe

    • Hi Joe,

      I started to reply, but it turned into a very, very long detailed response. Stay tuned, and I’ll run an article tomorrow with detailed examples of what I’m selling and other factors.

      Madison

  2. +1 to Joe’s question above.

    Also, wanted to know what kind of stuff would give you a higher profit margin than others? That can help do this with less number of items to purchase and send. What happens to the stuff that you send but does not get sold? How have you come to know what kind of stuff to sell? From the book you read?

    Bhavin

    bhavin

    • Hi Bhavin,
      I put together some examples for the article tomorrow showing some lower priced items and higher priced items. Hopefully, the article will answer all of your questions!

      Madison

  3. This just sounds too good to be true. Even if it were true, I would expect the free market to eventually eliminate the arbitrage opportunities over time.

    I would like to see some solid examples of how this works. For example, which items are you selling? Where did you buy the items? Etc.

    The devil is in the details.

    Tommy Z

    • Tommy,
      I thought the same thing as you… too good to be true, which I why I just had to try it out.

      Like I said to Joe and Bhavin, stay tuned and hopefully tomorrow’s article (with examples and details) will answer your questions.

      Madison

  4. I know that this works as I have seen a client of mine do this, but it took a while to develop a niche to make it work well. Ultimately, you will probably benefit by finding a distributor to buy from, rather than purchasing sale items from a retail store.

    You must also factor in your time, as well as other costs to get at how much you are really making. For example, if it takes you 10 hours and you made a $100 profit, then you would probably be able to find a job making more money. Additionally, you have to factor in other costs, such as shipping to Amazon, including boxes, labels, etc (not sure if that was including above or just shipping out), automobile expenses, monthly Amazon fees, etc. And perhaps higher administrative costs such as sales tax filings and a more complex tax return.

    Joseph

    • Joseph,

      Thanks for chiming in about your client. Always great to hear from someone who has seen it done!

      I agree, if anyone was interested in this for real, they’d have to account for their time. Since I don’t have any interest in finding a real job, and only pursuing hobbies, I just do it as a time killer for an hour in between dropping off kids and picking them up from preschool.

      Good catch on the other costs. I’ll add all the overhead costs into my article for tomorrow with the details.

      Madison

  5. I too wonder what type of things you are buying/selling. With my luck I would get stuck with a bunch of inventory that no one wanted. Where is the arbitrage part, putting it on the credit card in hopes of selling it all befor the end of the billing cycle? And what do you mean maybe not continuing after the spending requirements are met?

    Sadie

    • Here’s the follow up article with examples of some things I’ve sold: Examples of Profits from Selling on Amazon.

      The arbitrage part is taking advantage of the price difference between what you can buy it for locally and the price it sells for on Amazon.

      And I see below, you figured out the spending requirements.

      Madison

  6. How timely.
    Im looking forward to your next post as Im considering a 30 day trial period on this idea and maybe even get a bigger course.
    I do know that some focus on books cd’s etc and there was an interview with a guy here in southern california who turned it into a huge business for himself. The key was he hired his family members to go out and buy things. He said you will remain small if you try to do it all yourself.
    The number one key is for me – what the heck to buy… I suppose the scanning tells you and you can guess at about how long it takes to sell base on some data.
    I guess if you work at home and your driving your spouse nuts, might be a good way to get out for awhile. :) ~

    Susan

    • Susan,
      I could see how he said you can grow it by hiring others, I’ve found much more than I could handle in my few hours a week I planned for it.

      Definitively a fun way to get out of the house… although, I might be driving my spouse even more nuts with the huge stash of inventory now in our dining room!

      Keep us posted if you decide to try it, I’d love to hear how it goes!

      Madison

  7. Looking forward to your article tomorrow now!

    Jane

  8. Very interesting article. Looking forward to more details.

    Rebecca

  9. Oh I see now you are refering to meeting the spending limits for the new cc bonuses.

    Sadie

  10. This article got me interested. I went to Amazon and bought the book mentioned in this article (I don’t have Prime) and read it. I decided to try buying & reselling some books.

    Per the book’s instructions, I went to the website they recommended to find book sales. Surprisingly, there was a big sale located just 1 town over. I showed up with my iPad ready to scan in some books.

    Unfortunately, my 3G service on the iPad would not work inside the store…perhaps because of the thick ceiling and walls…I almost never have this problem. Nevertheless, I bought some 6 books for $10 based on my gut feeling.

    I checked the original MSRP price on the book, compared it to the price the book store usually charges (all books were on sale because the book store owner is going out of business), and then looked at the copyright dates to try and get some newer books.

    When I left the store and got Internet service again, I looked up the values. They were all going on Amazon for $0.01. What a waste!

    I guess the entire inventory was cherry picked. I’ll have to keep experimenting.

    Tommy Z

  11. Tommy,
    Oh no!! Although I bet your $10 investment was worth every penny… you won’t ever “guess” on something again.

    Sometimes, I feel like some of the best business expenses are making mistakes since we learn so much from them.

    And just so you know, I made a mistake too on one of my first items and had to send it back. I was out the cost of shipping, but learned a great lesson.

    Let me know if you decide to try it again!

    Madison

  12. I sell on Amazon and you can really cash in if you know where to source your inventory. I once bought a used book (in good condition of course) on equine opthamology for the low low price of $3. It sold for $59 before fees.

    What is key is using apps on your smart phone like fba scout that will tell you whether the item you scan in the store is worth buying.

    Toni Sherman

  13. Amazon is still one of the best online store in the world, almost all products we need are available in there.
    If you find yourself sitting around wishing you could find ways to earn some extra cash, this is definitely one avenue to try out.
    Success Madison!!

    Site honesto


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