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Amazon FBA Product Sourcing Methods


– A quick editor’s note. I did not mean to look like Gary V. and Mr. Rogers’ lovechild in this video, so please try to ignore that, and enjoy. (uplifting music) Today, I wanna go over
all of the different ways that you can find products
to sell on Amazon. Not all of the ways are created equally. Some are better than others, but I wanna go through every option that you have, and kinda discuss each one of ’em just a little bit. So you ready? Let’s go. First, I’m gonna start at the bottom, and we’re gonna work our way up to the top, to the things that, the sourcing methods that are more ideal. So first, at the very bottom,
is selling your own stuff. Do you have a bunch of stuff lying around your house, mostly books? As a new seller, there’s nothing wrong with getting started by
selling your own stuff. Obviously that’s only gonna take you so far, but if you start by selling your own stuff, it’s gonna change the way that you look at Amazon FBA, because I think a lot of people
should never have gotten as deep into Amazon as they did. A lot of people are
just not cut out for it, and by selling your own stuff and getting into the practice of doing it, you can get a better idea of if you can visualize yourself
doing it in the future. So start by selling your own stuff. That’s what I did. The first thing I ever sold was a copy of The 4-Hour Workweek,
and it sold immediately. My merchant fulfilled it and
the rest is kinda history. Next, you can go thrifting
and garage sale shopping. This is much better for places like eBay, because on Amazon, they’re very, very particular about the
quality of the product. So if you’re gonna go thrifting or garage saling, you’re gonna want to make sure that you list
the products properly. You need to list them as used, and make sure that you
read the descriptions on Amazon for how they want you to list and grade all of the products, because if you don’t do it properly, then you’re gonna get in trouble, you’re gonna get your account kicked off. Especially at the beginning, if you send in off-quality stuff, you can end up getting suspended really quickly, and if your brand-new, they aren’t very cool about letting you back on. If you get suspended
later on down the road, you have a better chance of getting back ’cause you have built up
a little bit of history. But if you get suspended
right away, it’s not good. So thrifting and garage
saling is an option. Next, you have liquidation sourcing. I also don’t really love
liquidation sourcing. Some people do it really well,
and they do it the right way. There is a right way to do it, but for the most part,
liquidation sourcing, and there’s an article
down in the description that I wrote about this, and a lot of people think that
liquidation sourcing is awesome, and for some people, it is. Don’t get me wrong. I think that it does have its place, but you have to be very careful because a lot of liquidation
product can be off-quality. It can be things that were
maybe opened or dropped. You might not get exactly
what you’re planning on. A lot of people end up
buy just pallets of stuff. That is such a terrible, terrible approach when you’re selling on Amazon, because you end up spending this money on stuff, and you’re gonna be more likely to send in junk, to kind
of recoup your money. It’s not a good model. Do not get into liquidation unless you’re okay with maybe taking a loss from time to time, and knowing that, okay, this product is not fit for Amazon. I need to sell it on eBay, or I need to list it as used, good. Make sure that you follow the procedures, like I said with everything,
but especially with liquidation because liquidation
products can be problematic. They could also be, you
don’t know what came back in. They could be returns. Somebody could have taken a product, put a fake one in there, returned it, got their money back, kept the real one, and then that ends up
in a liquidation pile. You get it, you ship it into Amazon, next thing you know, you’re
hit with an inauthentic claim. I know that’s a wild
example, but I’ve seen all of these things
happen, where people send in products and they have no idea how this could’ve been inauthentic. It must be a fake claim or competitor. It’s like, no, you’re
sourcing liquidation. That’s a risk you’re gonna get. You’re gonna have that
happen every once in awhile. So liquidation is not great, but it is viable if you’re safe. Next, retail arbitrage. This was my favorite when I started. It is not as scalable, even though I know people have made seven-figure businesses doing retail arbitrage. It’s just labor-intensive, so you have to be out there, scanning and flipping. You can definitely, absolutely 100% make six figures doing retail arbitrage, but your business is gonna be a little bit more difficult to sell. Scratch that. Your business is gonna be
very difficult to sell. It’s hard to sell a
retail arbitrage business because it’s like selling a freelancer. It’s like selling your ability to paint. You can’t really do that. You still have to be able to go out and source the products, and when you stop doing that, the
business kinda stops. Some of the sellers that
I know that do this, they hire people to go out for them. We used to do that. I don’t do retail arbitrage anymore, but we would hire people. We’d pay them a certain
amount per hour or per piece. There’s different ways you can do it. Or you can do it yourself, and go out there, with your scan fob. Just scan all the products
and see what makes money. Eventually, you’ll get a good feel for it. It’s not my favorite method because you do have to do a lot of, I like to do my work right here, so that brings me to my next one, which
is online arbitrage. Online arbitrage is the
same as retail arbitrage, except for you’re finding
products from the internet. So you’ve got more
products to source from, and you can do it from
the comfort of your home. Tools like Tactical
Arbitrage, and oaxray make it so that you can source products and have them shipped directly, either to you, or directly
to an Amazon prep center. So they can send ’em to a prep center, the prep center can then
send them on to Amazon. There’s obviously gonna
be some restrictions. Some prep centers can’t do that. Some stores don’t allow that. They blacklist certain prep
centers from getting products. So there’s a lot to go
into that, so make sure that you do your research
before you get too deep. But online arbitrage, retail arbitrage, you can definitely, definitely
grow a good business, and build a bunch of capital,
to invest into bigger things. And that’s kinda where I’m getting, guys. If you see, there’s kind of a upward climb of different sourcing methods, and as you go, the goal is to be able to spend as much of your money as possible in inventory
that maximizes gains. You always wanna be
turning your inventory. No matter what model you’re doing, you wanna be able to buy product, sell it, and keep it moving. So next, after online arbitrage,
is going to be wholesale. Wholesale is buying
products from wholesalers who have deals with the brands, and they’re gonna get a
certain price for ’em. They’re gonna sell ’em
to you at a low price, and then you’re gonna sell
’em on Amazon at your markup. The margins in wholesale are
gonna be a little bit lower, but you have that direct stream of products that you know are
gonna sell a certain amount. You capitalize on economies of scale. Wholesale’s a very, very good option. It’s much easier to get
deals with wholesalers than directly with
brands, so wholesale is a very, very good option. A lot of people use that to scale up into the seven figures and beyond. Next, you have private label. This is different because private label is one of the steps that your
business can actually skip. I know a lot of businesses
that skip over wholesale. And a lot of businesses
just start at private label. It’s hard, and the thing
about private label is, I don’t recommend people go right into it, right away, as
their starting point. Like I said, I think you
should start selling a couple of your own books, and then
doing a little retail arbitrage, but some people jump
right into private label, and the problem is, is that
there is a lot of up-front cost. So you’re gonna need to spend
money to get your samples. There’s a lot of freight. That stuff’s gonna be
coming over from China. It’s very expensive to do that. So you can theoretically put yourself in a quick five-figure hole. You could be down 10 grand if you find out that your products aren’t selling, and there’s a lot to
go into private label. There’s a lot of things to know that some people can really excel with, and then they take their
private label products, and they put ’em on their own websites, and they start learning
about pay per click, and they start learning how to really create a brand that’s resellable. Like I said, with retail arbitrage and the other arbitrage methods, you can’t sell that as easily. It’s just not gonna be
nearly worth as much. Also, I read an article down below, you can click on the link, about how much your Amazon FBA business is worth. I kinda cover private label businesses, and wholesale, stuff like that, and you can see what you could actually sell your Amazon business for. So that’s private label. You’re basically creating
your own product. You’re having someone
manufacture it overseas. It can be very simple. The goal is usually to get something as simple as possible, something with as few components as possible, but it’s very saturated, so you have to be creative, because if
you create a good product, there’s a lot of tools like JungleScout and Viral-Launch so that people can really see what’s going on. So it is difficult to
create a honeypot product, basically, where you’re
making money non-stop from it, without a competitor coming in, probably charging less, maybe
hustling you out of reviews. It’s definitely an exciting model, and I know a lot of people who absolutely crush with private label, but it’s not the best method. It’s just another method. Some people, it’s gonna
be the best option. For other people, it’s not. If you’re not the type
of person that’s willing to take a big risk up-front, and then also stick with it when it’s frustrating at first, I wouldn’t
recommend private label. Private label isn’t inventing things, necessarily, even though
you technically can, but it is kind of just
more about filling needs that are on Amazon, finding
what people are looking for, and then bringing that to them. So that’s private label. It’s definitely a valid option. A lot of people make their
entire business private label. I skipped over one. I skipped over dropshipping. Dropshipping is not permitted on Amazon, but I’m gonna touch on it for a second. Dropshipping is basically the process of listing a product on Amazon, and then buying it from a third party only after someone has paid for it. So it’s a no-risk financial business, ’cause you’re actually not,
you can have no inventory. This could be my dropshipping
business right here. There’s no inventory around me. It could be my entire business, and I could only buy the products after I’ve had a customer purchase ’em. So I’m basically not putting
up any of my own money. And the problem with dropshipping, from Amazon’s standpoint,
is you’re listing items that you don’t have at prices
that you can’t guarantee. So let’s say that you said
you sell this camera for $100. Somebody buys it for
$100, and your source, that used to be at $60,
and you’d have a little bit of margin there, is now back to $100. So you cancel the order, ’cause you don’t wanna lose money on it. Amazon doesn’t like that. Or let’s say that you sell that camera, and you do have the margin still, and you tell ’em it’s gonna be there in three to five days, and
then it goes out of stock. It goes out of stock
’cause of the third party. There’s a lot of things
that are gonna happen that end up putting the third party store in control, and Amazon needs you to be in control, and making sure that you are the only
one that’s accountable for the success and
quality of your business, not some third party that’s dropshipping. So that’s dropshipping. Next, the ultimate method, the one that is most difficult, but you should always be striving to get up
to, is direct from brands. So if you can get
connections with companies like Beats By Dre, anything that you can get that is gonna be directly from the brand, but still give you some margin, that’s amazing. That stuff, you’ve got millions and millions of dollars
into to advertising that’s selling these products. It’s very easy to get
in on these listings, and just get a, if you have a little bit of margin, and you have capital to invest, you can grow your business very rapidly, and really,
really expand things with direct brand deals. So those are all of the methods, you guys. If you think I missed anything,
let me know in the comments. Other than that, good luck to you. If you’re brand-new to Amazon, go check out our group, FBA Today. Like I said, if you’re brand-new, start selling your own
stuff, see how it goes. It’s not for everybody. I don’t think that, it’s definitely not the same back when
I started, back in 2013. There’s a lot of brand
gatings, and things like that, so make sure that you’re ready to commit to that before you go too deep. I still think there’s tons, and tons, and tons of opportunity in Amazon FBA. So that is it, guys. Thank you, and be sure to subscribe. I’m giving away gift cards. If you’re the first person to watch this video, check the comments. There are four gift card codes for four different countries, and all you gotta do is copy the code, and paste it, and see
if it’s still active, and if it is, it’s yours. If it’s not, somebody already claimed it. Be sure to subscribe and hit the bells so you can get the next one. All right, guys, take it easy.

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