Making $1M on Amazon without Affiliate Links

To earn money online you’ve got to perform an exchange — something perceived to be valuable in return for financial reward. Online businesses and creators (such as Youtubers and Bloggers) often turn to Google Adsense, brand deals, and referral links to provide an income. Amazon offer one of the most popular referral programs today, however, it’s far from their most lucrative method of earning money. By taking advantage of Amazon’s “Fulfilled by Amazon” service individuals have created million-dollar businesses without ever handling physical goods.

Amazon’s Affiliate program (also known as Amazon Associates) is one of the largest affiliate marketing programs in the world. It allows individuals to earn a commission of up 12% on any Amazon purchase performed through their custom link. Whilst Amazon Affiliate links are commonly found in Youtube descriptions, countless websites have sprung -up that are centred on earning commissions through the program. A common type is niche-specific review sites. For example, a cat toy comparison website listing the pros and cons of each option, including a link to each of the discussed products on Amazon. However, owing to competition and recent changes by Amazon it is deemed by many to be less fruitful than it was a few years ago.

One of the oldest ways of making money online takes the form of drop shopping. At a high level, the process involves posing as a store, whilst ordering the product yourself from another merchant and having them dispatch it directly to your customer — taking a cut in the process. Drop shipping was one of the methods outlined by Tim Ferris in the widely revered 4-Hour Work Week, and a quick internet search will reveal thousands of success stories. Whilst countless online retailers are happy to sell products to drop shippers, to make sales you need an audience to sell to. Although many choose to list items on their own website, it is hard to bring traffic to your domain. Another common method is to sell on eBay, however, a combination of fees and competition means this isn’t feasible at scale.

Enter Amazon. Since 2006 Amazon’s Fulfilment by Amazon (FBA) service has allowed anyone to set up a shop, and have the day-to-day processes carried out by Amazon. This encompasses product storage, order processing, dispatch, delivery, and returns. They’ll even dispatch your item on Prime. Better still, the service is pay-per-use and there are no minimum inventory requirements. Considered alongside the exposure of being listed on Amazon, Amazon Fulfilment is a drop-shippers dream. Other than arranging having your product delivered to an Amazon warehouse and instructing Amazon with pricing information, etc. you can sit back and wait for profits to roll-in to your bank account.

Sure, Amazon Affiliate sounds promising, but what can you sell and where can you source it at a good price? The answer to part one is anything (well, pretty much). Popular items to sell include posters, mugs, and phone cases. However, providing you stick within Amazon’s restrictions, their global customer base means that you’re likely to be successful with any product providing the price is right and available in the popular territories. For the second part of the question: enter Alibaba. Although similar retailers exist, Alibaba is by far the most popular. Alibaba acts as a digital market place, allowing manufacturers to sell their goods to resellers all over the globe. Because of the types of transaction that Alibaba is designed for, it only caters to bulk buyers. Depending on the item that can be anywhere from a minimum order quantity of 5 units, all the way up to 5000. However, as a side effect of this, the price of products can be extremely cheap — allowing you to make a good markup on resale. Unlike Amazon and eBay potential orders are discussed with the merchant prior to purchase, and bartering is common (also make sure to consider the cost of shipping and import taxes, as these can make a big difference to your bottom line). Providing the proper arrangements are made with Amazon, the inventory can be sent directly to Amazon who will label and individually package the items.

Although Amazon Fulfilment has the potential to bring in a considerable income, there are risks attached. To begin with, the fees that Amazon charge are complicated and vary depending on a number of factors. For example, storage prices work on total volume rather than the number of items being stored. Aside from Amazon factors, stock requires a large initial investment. For example, if you’re purchasing 2000 mugs from Alibaba, that’s an initial outlay of around $2000. Whilst you’re likely to sell the mugs eventually, you’ve got to consider it might not happen overnight. You’ll also be paying for storage at Amazon all of the time you own the stock. Amazon Affiliate selling is also increasingly popular, meaning that there is ever more competition. This can result in pricing battles, squeezing your bottom line.

A good example of someone who is using the Amazon Fulfilment service is Patrick Shyu (aka TechLead on Youtube). Shyu designed his own coffee maker, had the items shipped in directly to Amazon, and uses their fulfilment service to handle the rest of the process. He’s clearly done well out of the process, as he’s also released his own custom wallet. Youtube star Kevin David has also found success, reporting over $1M of income in 2020.

Whilst Amazon’s Fulfilment service is definitely not the only way to make money online, if you’re willing to accept some financial risk it can be a great way of earning good, consistent income. As with any venture, before you begin make sure to do your own research and weigh up the risks and rewards. Best of luck!

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