The Four Business Models for Amazon Sellers
The models for Amazon sellers are fairly simple. Yet complicated. In this post we will brush on the models what they are and the pros and cons of each.
Most people think they will just buy products and list them. Not so, this can come later if you choose, but in reality the best to sell are those already listed.
Let's take a closer look at each of these models and how they work:
Retail Arbitrage (RA) 
RA is the practice of purchasing products from retail stores and reselling them on Amazon for a profit. The idea is to find products that are on sale or clearance at a brick-and-mortar store and then sell them for a higher price on Amazon. For example, if you found a popular toy on clearance at Walmart for $10, you could sell it on Amazon for $30 and make a $10 profit, or less depending on Amazon charges.
Keep in mind that almost 100% of new buyers go to Walmart,Costco etc to buy the same products you are looking at. This can and does lead to tanking on the listings.
Meaning that you buy for $10 liat it for $30 and the price tanks to $7. Don't laugh, this happens a lot, so you lose not only $3 bucks on the cost, but the Amazon charges too, this could cost you another $10 or whatever the cost is!
Just remember these are great stores to help you get started, but think out of the box for your next move!
This is the recommended way for beginners to start and learn the ropes.
Online Arbitrage (OA)
Online Arbitrage is similar to RA, but instead of buying products in physical stores, you find deals online. You can use price comparison websites, Amazon's own price tracking tools, and other online resources to find products that are being sold for less than their market value. Then you buy those products and resell them on Amazon for a higher price.
Again you may run into the same problems with tanking.
But the one advantage is, cash backs and points are usually better, meaning you can use your credit card,the same as with RA, receiving your 1-3% cash back, but the online stores usually offer discounts as well.
And you can use Rakuten, coupons etc. for great rewards and cash backs as well!
This can be used as a beginner but you must really pay attention to what you buy and the products you are matching.
Wholesale (WS)
Wholesale is a bit different from the first two models. In this case, you purchase products in bulk directly from manufacturers or distributors at a discounted price. You then sell these products on their platform, taking a cut of the profits.
This model allows you to offer a wide variety of products at competitively lower prices, therefore knocking sellers that buy the products via RA,OA or the WS sellers that aren't getting the same discounts off the listings and lessening competition, which leads to a more stable price and sharing of the buy box...usually.
The downside is you will only get cash back or points on your purchases depending on which cards you use.
Private Label (PL)
Private Label is the practice of creating your own brand of products and selling them on Amazon. Amazon provides the platform, but you're responsible for sourcing, branding, and marketing your own products. This model allows you to create a unique brand that customers can buy only from your brand.
This is not recommended for new sellers. Unless you have experience in the field, which I'm assuming you don't, because you're reading this!
This is a process that can take up to 1 month, or more just to pick a product, I know your saying huh? That's right most sellers are looking for products already for sale on Amazon, maybe changing them somehow, putting thier own TM on the product and then selling it.
But be very careful with this method. As I say wait on this a long while, learn the ropes first. Amazon is a very tough go and takes time to figure out all the crap that will come your way, it's not just about buying and selling s**t.
Each of these models has its own advantages and challenges, but they all contribute to Amazon's success. By diversifying you will be able to offer a wide variety of products at competitive prices, while also generating significant revenue.
The mix I recommend and use after you have gotten a bit of experience under you is OA,RA,WS.
Amazon seller business models - Retail Arbitrage, Online Arbitrage, Wholesale, and Private Label - As a seller , it's important to understand these models to get the most out of Amazon's platform.
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