Selling on Amazon and eBay Basics

Welcome to Ecommerce Camp, where today’s topic is Selling on Amazon and eBay: Basics for Beginners.

I want to tell you about Amazon and how to start your journey on Amazon.

For the beginning, a few words about myself: I’m a professional Amazon seller. Right now, I’m among the Top 500 Amazon Sellers in the world.

I started in 2016, and it was much easier those days. For you, it won’t be that easy.

I have a solid experience with Amazon, and all my businesses are related to Amazon.

I’ve sold four brands on Amazon in the US. I’m also co-founder of Solver, one of the biggest Amazon law firms in Europe. We help Amazon sellers solve their issues with Amazon because there are a lot of issues with Amazon nowadays.

Selling on Amazon

Today we will talk about how to start your journey on Amazon.

We will talk about Amazon’s work models, the corporate structure, and legal entities. We will focus on how to start selling on Amazon. I will show you the main mistakes that new sellers make when they start selling on Amazon. And finally, we will have some Q&A sessions.

[I made the small presentation only because I want to show most of the information on my screen and I believe it will be much better for you to understand everything.]

I will start with the presentation, and then I will switch to the browser and share some information with you from the browser.

First of all, I want to tell you about the main business models at Amazon.

You will understand the different approaches that you can use to make money by selling something on Amazon.

1. Selling on Amazon: Private Label

First of all the main model right now on Amazon is called Private Label. What does it mean?

It means that you own the brand, you own the trademark and you can produce this brand by yourself or you can hire some

kind of factory in China or whatever and they will make the product for you but under your brand.

An important aspect is that you retain all the profit and intellectual property rights but concurrently assume all liabilities, risks, and responsibilities. This includes being accountable for any mistakes or errors.

This is the private label and it’s common for most of the companies. I’m also a private label seller and when I said that I sold four brands on Amazon it meant that I sold four private label brands.

Currently, many companies are purchasing businesses on Amazon, particularly those focusing on acquiring private label brands.

This stands as the primary strategy for private label sellers: rapidly expanding their brand and seeking strategic buyers. This cyclical process involves growing the brand extensively, finding potential strategic buyers, and repeating the process. This represents the initial model.

It’s challenging to differentiate between a brand like Johnson & Johnson and a private label brand.

The primary distinction, I believe, lies in the company’s size and sales structure. Typically, identifying a product solely distributed through a single sales channel, such as Amazon, indicates a private label seller.

Understanding this is crucial when dealing with private-label brands.

2. Selling On Amazon: Online Arbitrage / Wholesale

The second popular work model on Amazon is called Online Arbitrage or Wholesale.

What does it mean?

It means that you take someone else’s products and just sell them under their name. For example, you can write an email to Johnson & Johnson and say, “Hey guys, I want to sell your products. What are the terms? Can we sign some kind of contract?” and blah blah blah…

When you sign the contract with them, they will give you the product with a discount, and you will be ready to sell it on Amazon.

I want to show you how I understand that you are working with the Wholesaler on Amazon.

Let’s consider a prominent American brand, Oxa, known for their products. Let’s choose Garlic press.

If we navigate to the product page, you’ll notice the ‘New’ and ‘Used’ options at the top right corner. Clicking on this reveals multiple offers—around 17 for this specific product.

Understanding this marketplace scenario is crucial, particularly when engaging in online arbitrage or wholesale models.

The difference between them is only the size and the quantity of the products that you’re selling.

Most of the time when you hear someone saying “I’m working on an online Arbitrage model”, you will understand that he’s selling around 5-10 different SKUs or 20, or something like that, but not that much.

When you speak with the people who are working in the Wholesale model, they will tell you about thousands or hundreds of SKUs. You’ll understand that’s number of SKUs is the only difference, while everything else is mostly the same.

I don’t like this model and we don’t work on that model because you have only a few options for what you do to sell more. Because every seller is selling on the same page you can change only the price and the delivery date.

You can see there’s not much room for you to improve something.

Because wholesale listings are often unchangeable for a particular seller (with some exceptions), it’s crucial to grasp that competing in this arena means contending with sellers who constantly adjust prices by a few cents at frequent intervals using automated repricers or similar tools.

To make substantial profits in this model, one must sell thousands of different SKUs.

Due to this necessity for a high volume of sales, I’m not particularly fond of this model. Moreover, succeeding in wholesale requires a significant upfront investment, making it imperative to have substantial capital.Now, let’s pivot to another model we’ll discuss shortly, such as dropshipping and flipping.

3. Selling On Amazon: dropshipping / Flipping

I’m sure many of you have heard about the Dropshipping model through various videos on platforms like YouTube and TikTok.

Many of these videos portray Drop Shipping as some kind of ‘Holy Grail,’ showcasing stories from zero to hundreds of thousands of dollars in no time.

However, I’d like to shed light on dropshipping from Amazon’s perspective.

Dropshipping

From Amazon’s viewpoint, they are not fond of dropshippers.

This is because, most of the time, dropshippers increase prices without providing any advantages to buyers. Amazon strives to maintain the lowest prices to compete with discount sellers like Walmart and other platforms.

Consequently, Amazon has stringent rules to identify and suspend dropshippers.

Over the years, as a lawyer representing Amazon sellers, we’ve handled hundreds of cases related to dropshippers, with many being permanently suspended due to this model.

Therefore, if you’re considering starting on Amazon, I highly advise against the drop-shipping model.

Flipping

Now, let’s discuss the ‘flipping’ model. This is essentially similar to dropshipping but with a different approach.

In drop shipping, you find a product, let’s say, on eBay, and list it on Amazon. Upon receiving an order on Amazon, you reorder the product from eBay and have it shipped directly to the Amazon buyer.

Conversely, in flipping, you search for a product already available on Amazon, perhaps priced at two dollars. Then, you create a new listing on Amazon for that product at a higher price, say twelve dollars. When someone orders a product at a higher price on Amazon, you purchase it at a lower price from Amazon and have it shipped to the buyer.

However, Amazon can easily detect this practice due to the use of the same addresses and details.

While some individuals have made significant profits with the flipping model, in recent years, many have faced account suspensions.

The major issue with Amazon nowadays is that when they suspend your account, they often withhold the funds from your account balance. Consequently, the current risk associated with these models, both drop-shipping and flipping, is extraordinarily high.

Therefore, my strongest advice is to steer clear of these risky methods for now.

NOTE:

This is a script of our in-depth webinar with Evgeniy Nekoz, delving into the fundamental strategies and crucial insights essential for excelling in selling on Amazon. Gain valuable insights and strategies to kickstart and optimize your presence in the world of Amazon sales.

To further assist you, we’ve made accessing this valuable resource simple. You can easily view the full video recording:

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Selling on Amazon and eBay