Selling 101 says that the bigger your markup, the more profits you take home. So, if you can source products for cheap and resell them high, what’s stopping you? That’s the idea behind the Amazon reseller model, where regular eCommerce sellers are buying up goods wherever they’re least expensive and then reselling those same goods with higher markups on Amazon.
There’s a lot of confusion and misconceptions about reselling on Amazon, so we wanted to clear things up. In this guide, we explain what you need to know about Amazon resellers and how you too can take advantage of this lucrative opportunity.
What Does an Amazon Reseller Do?
Basically, an Amazon reseller is any merchant who buys products from suppliers and resells them on Amazon.
Amazon resellers are distinct from distributors because distributors tend to work together with manufacturers and suppliers in terms of marketing and branding. Resellers are more or less another customer, albeit one who buys in bulk and frequently at that.
In light of rising inflation and price gouging by some opportunistic resellers, Amazon has recently launched the Invite Only Experience for High Demand Products. Under this new program, you must request an invitation to purchase selected high demand, low supply products sold by Amazon.
That’s just a broad explanation, though — in reality, there are a few different and specific methods of acquiring and reselling goods.
Retail Arbitrage
In general, retail arbitrage is when a retailer buys products at a discount from another retailer and then resells them at a higher cost. For example, buying items during a two-for-one sale and then reselling them at full price.
Amazon arbitrage is quite effective, considering how you can cut costs compared to competitors who are paying higher acquisition fees to traditional suppliers.
Wholesalers
Sourcing products from wholesalers is more in line with conventional Amazon selling. Sellers buy products in bulk with price breaks from wholesale suppliers or directly from manufacturers and then resell those products on Amazon.
While the markups and profits are usually smaller than retail arbitrage, there are more opportunities and wider product ranges available.
Secondhand and Used Goods
Perhaps what comes to mind when you hear “reselling” is selling secondhand or used goods. Essentially, sellers offer preowned goods at a discount. Product sourcing consists of scouring secondhand stores, flea markets, and yard sales, or simply selling your own household items.
While savvy negotiators will be able to turn a profit on found items, you’ll need to spend extra time looking for new products to sell. Just be sure to list the product condition correctly and follow all guidelines for restricted products on Amazon.
Private and White Label
Private and white label goods are products manufactured by a third-party manufacturer and sold under your own brand name.
A good example of this practice is the generic store brands you see that are similar to (but priced lower than) the more popular brands. The store buys these products from a private or white label supplier and then rebrands them as their own.
Note that private labeling is different from white labeling. Private labeling is when a supplier or manufacturer produces products that are packaged and sold exclusively by a third party. Conversely, white-label products can be sold by any reseller.
Is Reselling on Amazon Allowed?
Many sellers assume reselling on Amazon is not allowed, but that’s not actually true. Reselling on Amazon is perfectly acceptable. In fact, reselling on Amazon is protected by the first sales doctrine, as long as the product is unchanged from when it was first acquired (so you can’t buy a product, open the box, and then resell it as new).
However, certain types of reselling are restricted on Amazon. While drop shipping and online arbitrage generally are acceptable practices, you must be careful to follow Amazon's selling policies.
Drop shipping is when a seller passes a sales invoice to the manufacturer or supplier and they ship the product to the customer directly from their storage.
Online arbitrage is when a seller sources products from other online marketplaces and then lists them for sale on Amazon.
You can very quickly get into trouble if you're missing documentation that states you're the seller and not someone else.
How to Resell Items on Amazon
Reselling on Amazon works in mostly the same way as all other selling — the only difference is how you acquire your products. You still need to set up a seller account and manage your marketing and advertising as usual, plus handle customer support.
Your first step is finding a market opening. This could be a product that isn’t yet available on Amazon, an improved version of an existing product, or a product that's currently priced too high but has a lot of demand.
If you want to be a reseller, finding a market opening is only half the battle — you also need to find that product from a supplier at a workable price. Bargain hunting skills are essential for product sourcing with a reselling model, whether finding deals from other retailers, used-good sellers, or wholesale suppliers. Oftentimes you’ll find that market openings are left open for a reason.
Part of Amazon reselling involves keeping your eyes open for deals. If you’re out shopping, watch out for sales and discounts on goods you could potentially resell. If you’re looking for a specific type of product, reach out to the manufacturer or supplier directly and see if you can cut a deal. Ask your seller friends or the seller community in general where you can find new wholesalers or suppliers that match what you’re looking for.
We’re Here to Help
Whether you’re a new Amazon seller looking to break into the space or an experienced seller wanting to expand their business, eComEngine's seller software can give you an advantage in the largest and most competitive retail market on the planet.
FeedbackFive is our highly renowned feedback and review software that proactively improves your product and seller reputation by sending out requests on your behalf.
RestockPro is our FBA inventory management solution that keeps you in stock and intelligently organizes your supplier info. You can easily manage hundreds of SKUs to maintain your profitability and IPI score.
But for reselling, you might be most interested in MarketScout. This Amazon market research tool consolidates product pricing and other data into one easily accessible dashboard so you can review the performance of different products to find the best ones to sell.
Simply enter a product’s ASIN and MarketScout will tell you who’s selling it and at what price, including the seller’s sales rank. You’ll be able to make informed decisions faster about what to sell.
If you have any questions about our tools or selling on Amazon in general, don't hesitate to ask!