GIG BUSTING: Selling On Amazon FBA – Part 1

Emergency Fund
Build That Emergency Fund Like A (Gig) Boss!
February 10, 2021
FBA Selling on Amazon
GIG BUSTING: Selling On Amazon FBA – Part 2
February 22, 2021
Show all

GIG BUSTING: Selling On Amazon FBA – Part 1

FBA Selling on Amazon

“Gig Busting” is an ongoing series about the potential to level up a particular gig to full-time self-employment. This is the first in the series because it’s one I have extensive first-hand experience with, as I did it part-time from 2013 to 2020. It was a wild ride…buckle up!

Here’s the quick guide for how easy/difficult it is to get this gig going:

GETTING STARTED: Pretty easy to open an Amazon seller account
MONEY NEEDED: Credit card with some back-up cash, about 50% of what you spend on product
QUALIFICATIONS: Just some guts and a little entrepreneurial spirit; mental math skills a plus
EQUIPMENT: Spare space, laser printer, computer (duh), packing tape, sharpie, Goo-Be-Gone
RATE OF RETURN: Depends on your profit margin. At 12%, I grossed $30-35/hr.
OTHER: If you live in an apartment or a strict HOA, this may not be the gig for you.

How & Why I Got Started In Amazon FBA

In 2013, I discovered the online communities that showed you how to work credit cards for travel miles and points. I wasn’t a big fan of the idea of extensive credit card churning, but they made it sound easy to buy stuff at Kohl’s and Staples for lots of points with the right credit card through the right shopping portals and resell it on Amazon for a small profit, lather rinse repeat. And in 2013, that was definitely the case. Shopping portals were exceptionally generous with those stores, it was easy to find and purchase just a couple of products without any pressure to get into it too deeply, things went great for a few years, it was awesome.

I racked up a ton of points reselling like 18-24 Nutribullets a month and flew first class for the first time in my life – to St Petersburg (Russia, not Florida!) and from Beijing at either end of my epic Trans-Siberian train trip, and then round trip to Amsterdam later in the year for both me and my mother. Half the miles used were from credit card sign-ups, half were from my earnings from FBA reselling. It was so worth hefting awkward 25-lb boxes up and down the elevator to my 14th floor Manhattan apartment every few weeks.

What is Online Arbitrage and Amazon FBA

A few definitions here…online arbitrage is simply when you buy something at an online retailer for a lot less than it’s selling for on Amazon. How much less depends on your own personal guidelines for risk, rate of returns, “worth it” factor for doing the work, etc. Then you list it with Amazon and ship it into their warehouse for them to ship to the customer. This makes you a third-party seller, and there are a ton of them. So while Amazon is a retail behemoth, it is also a platform for small businesses.

Another way to buy things is Retail Arbitrage, where you physically go into a store and wheel out multiple carts full of the same few clearanced items. This sounds absolutely miserable to me, so I’ve never done it, but it’s pretty popular. Stores do a lot to crack down on this behavior though, so it’s kind of had its day.

TIP: I advise against buying lists, and probably against software that creates a list for the same reason. I tried it once despite most claims of disappointment in various online communites. Everything seemed to be based on weird price glitches on Amazon that wouldn’t be sustained long enough for you to get product in, and it didn’t take into account whether or not the product was “gated”. Example: Hurry and go buy ABC windshield wiper fluid at AutoZone at $4 because it’s $23 on Amazon (with 4 reviews @ 2 stars, blech). I tracked that one out of curiosity. A week later it was $5.99, and it turns out it’s classified as a hazardous material that you can’t send in without a ton of documentation. No, I didn’t fall for this – common sense said no one was going to pay $23. I did get suckered into a toy though, broke even on it. So basically I was out $22 for buying the stupid list with about 40 lame items on it.

I Never Got Blacklisted As A Buyer

I bought products as a regular consumer. The big problem that plagues online buyers (as well as in-store ones) is that stores really don’t like resellers, and once they identify you, will close your account and ban you from shopping there. I never had that happen because I never placed three $1000 orders of 20 Presto griddles and 20 princess castles. I placed a $350 order for 4 griddles, 4 castles, 2 sets of dishes, 3 waffle irons, and a set of dish towels (a filler item to hit a new reward level, lol). Wait a few hours. Place a $300 order for 2 sets of dishes, 4 griddles, 2 castles, 2 vacuums, etc… in other words, a few orders, all different, spaced out, different totals, etc didn’t send up the red flag for seven years. Clearly I did something right.

However, this tells you that there is a roadblock to scaling this buying model to a sustainable and reliable sole income. So let’s move on from online and retail arbitrage.

Other Ways To Source Goods To Sell

There are two other routes you can go for sourcing goods, but I never wanted to take this full-time and therefore never even considered them: Wholesale and Private Label.

Wholesale involves a relationship with distributors, and receiving and shipping pallets of products by the full or partial truckload. Some people do this out of their garage, but if you live in an HOA, close-packed neighborhood or have some other kind of PitA neighborhood situation, that’s not an option. So you’re going to be working out of a storage unit in all weather, and you’ll need employees/giggers…lots of ramifications there.

The other option is Private Label products. Ever notice on Amazon how you’ll see multiple listings for the same item with different unknown brand names, often with the same display pics? Yeah, there are whole businesses in China set up for this – you pick a shirt or water bottle or whatever, they put your label on it, have professional product pics ready, etc. The same item if available for anyone to put their label on it and do the same thing with. You take delivery, send to Amazon, maybe do some paid advertising and hope they sell like hotcakes.

I have no problem with either of these business models. I just nixed them because they didn’t align at all with my goal to earn mega miles and points. Plus, over the years I became very distrustful of Amazon as a business ‘partner’, but you’ll have to wait for the next post to find out why. It’s worth the wait though, because I also give out some financial details… Stay tuned!

4 Comments

  1. HI Katie, very interesting article. I have a friend who was selling on Amazon for a while (not sure if she still is, but I am going to ask, lol) and I think this might have been what she was doing. I can’t wait to read the second part and see how you became distrustful of Amazon. Thanks for sharing your gig busting tips.

  2. I always wondered how someone partnered up with Amazon to sell some of those things–griddle irons, vacuums, toys, etc. You described everything so clearly. Thank you.

    Can’t wait for the second part to read more. It’s like a cliff-hanger ending of one of my favorite shows on Netflix! LOL

  3. Thanks for your insight into the Amazon reselling business. I did that fr a short time but, didn’t get into that much. My husband sells vinyl and cds on amazon. Looking forward to your part 2.

  4. […] seen a lot of people be successful with Amazon FBA selling which you can read more on here in this article by […]

Leave a Reply to Melissa Brown, MD Cancel reply

Your email address will not be published. Required fields are marked *