No CommentsAmazon is one of the world’s biggest marketplaces and one of the best places to grow an ecommerce business. The beauty of selling on Amazon is that you can follow many different business models and be successful — you can launch your own brand products through private label or resell other brands’ products with the wholesale and retail arbitrage models.
READ MORE | How to Sell on Amazon
If you want to make some extra money or start a new business, reselling on Amazon can be a great way to do it.
In this article, we’ll go over how to resell products on Amazon and the various methods of doing so.
- Is it legal to resell products on Amazon?
- How reselling items on Amazon works
- Amazon reselling statistics
- How to find items to resell on Amazon
Is it legal to resell products on Amazon?
Before we go any further, let’s answer the question many new sellers ask: is reselling products legal?
Yes; reselling products on Amazon or any other marketplace, such as eBay or Facebook Marketplace, is legal.
According to the first-sale doctrine, once you purchase a product legally, you have the right to resell it as long as it is sold in an unchanged condition. Meaning if you buy and sell it as new, the product must be sold in new condition.
Now while it is legal to resell other brands’ products on Amazon, Amazon does put limitations on which brands sellers can sell – and may need to get approval before selling a particular brand.
Think big brands such as Nike, Disney, LEGO, etc. If a new seller tries to list one of these brands on Amazon, they will not be able to without prior approval from Amazon.
How reselling items on Amazon works
The idea of reselling products online is very simple. You purchase products at a low price, then resell them for a higher price, and you keep the difference as your profit.
Of course, with selling on Amazon, you have to calculate all the fees involved before purchasing products to resell to ensure you will actually turn a profit. Many new resellers don’t fully understand their numbers, causing them to undercut other resellers and lose money on each sale.
READ MORE | How to Reduce Amazon FBA Fees: 13 Tips for 2024
You also need to decide how you will fulfill your orders on Amazon. You have two options: FBA or FBM.
With Fulfillment by Amazon (FBA), you must also account for the additional FBA fees. And if you fulfill yourself with Fulfillment by Merchant (FBM), you must account for your shipping costs.
An easy way to understand all the costs and fees associated with reselling a product is to use Amazon’s revenue calculator before deciding what to purchase.
You can also use the Amazon Seller app to calculate fees by searching for or scanning the barcode of a product.
Amazon reselling statistics
You may be wondering, how many sellers resell on Amazon, and are they profitable? Well, luckily for you, we surveyed over 2,600 Amazon sellers in our 2023 State of the Seller Report to find this exact information.
- 26% of Amazon sellers use the wholesale business model. They buy products in bulk directly from a brand or distributor to resell on Amazon.
- 25% of Amazon sellers use the retail arbitrage business model. They purchase discounted products from retailers and resell them on Amazon for a higher price.
- 24% of Amazon sellers use the online arbitrage business model. They purchase discounted products from online retailers and resell them on Amazon for a higher price.
Are Amazon resellers profitable?
It really all comes down to what your product’s costs are, what your expenses are, and what you sell them for on Amazon. This applies to all business models on Amazon, not just resellers.
If you don’t know your numbers or understand how Amazon’s fees work, you may have difficulty earning a profit.
With that being said, according to our State of the Seller Report:
- 55% of wholesale resellers told us that they started to turn a profit in under six months.
- 12% of arbitrage resellers were able to launch Amazon businesses with less than $500.
- 55% of sellers have profit margins above 15% after all costs and fees.
What categories are best for reselling items on Amazon?
As long as you’re profitable, you can resell products from nearly any category on Amazon.
Popular categories of resellers are Toys & Games, Home & Kitchen, Electronics, Video Games, Clothing & Shoes, Grocery, and Sports & Outdoors.
Though just because these categories are popular for other resellers doesn’t mean you only need to focus on the same categories. Think outside the box.
We suggest searching for products in all categories, but when you are first starting out, start in one category and work your way into others.
Also, think of products that do well during the holiday season or during different times of the year. For example, in late September or early October, consumers purchase Halloween decorations, Thanksgiving supplies, and are starting to think about gifts for the holidays.
How to find items to resell on Amazon
As mentioned at the beginning of the article, there are two ways to resell products on Amazon: Wholesale and arbitrage.
Wholesale
Wholesale reselling consists of purchasing products in bulk directly from the brand or a distributor and reselling them at the retail price.
The benefit of doing wholesale versus retail arbitrage is that you’ll have a steady source of inventory as you will purchase directly from the brand and usually at a consistent price point.
Purchasing directly from the manufacturer or brand also offers more security as you will receive invoices from the brand proving that your products are legitimate – in case you receive any inauthentic product claims from a customer.
Receiving invoices from the brand also allows you to get brand approval much faster on Amazon, as Amazon will typically ask sellers for an invoice with at least 10 units purchased to get approved for a restricted brand or product.
To purchase directly from a brand, you will need to open a wholesale account in order to purchase products in bulk at a discounted price.
To learn more about the wholesale business model on Amazon and how to get started, check out our in-depth guide: How to Sell Wholesale on Amazon in 2024
Don’t forget that Jungle Scout is also on YouTube! Check out these great wholesale videos on our channel:
Arbitrage
Arbitrage is the practice of taking advantage of a price difference between two retailers for your own benefit. You purchase a product at a discounted price from an in-store or online retailer and resell that product for a higher price on Amazon or any other marketplace.
There are two ways to do arbitrage: Retail arbitrage and online arbitrage. As you can probably figure out, retail is buying and reselling from in-store retailers, and online is buying and reselling from online retailers.
An easy way to find profitable products to resell from retailers is to visit your local stores, such as Walmart, Target, or grocery stores, and start scanning products using the Amazon Seller app.
In the app, you can plug in your buy cost, and the app will tell you what your product will be based on the selling price and after fees.
A good place to start in-store is by going to the clearance sections and scanning everything until you can find something profitable. It is a tedious process but will pay off if you are patient.
If you want to learn more about retail and online arbitrage and how to find profitable products to resell, check out our in-depth guides on both topics:
We also have some awesome YouTube around arbitrage as well!
Do you resell items on Amazon?
Reselling other brands’ products on Amazon can be a very lucrative business venture if you do it right. We hope this article gave you some insights into what reselling on Amazon is and how to get started.
Make sure to check out our in-depth articles on wholesale and arbitrage to learn more about how to find profitable, in-demand products to resell on Amazon for a profit.
Do you have any more questions about reselling on Amazon? Let us know in the comments.
