One of the most crucial decisions that every Amazon seller has to make is choosing the right business model under which they are going to operate on Amazon. That’s because the entire success of Amazon businesses directly depends on choosing the right business model. If you do not want to go wrong with your Amazon business model, you should be aware of all types of Amazon’s business models and understand the main differences between them. It will help you create a profitable and reputable business without facing any issues.
Before jumping into our main topic, it is wise to mention that Amazon provides its sellers with lots of opportunities for building a profitable business on its platform. It is the exact reason why Amazon provides newcomers with the widest chain of business models, so you can easily choose the one which suits you more.
Here is the list of business models that Amazon provides its sellers:
- Private Label
- Retail Arbitrage
- Online Arbitrage
Today, Private Label is considered to be one of the most popular business models among Amazon’s sellers. Even Amazon itself sells private label products through its platform. The main idea of this business model is to source unlabeled products from your suppliers and put the name of your brand on them. Try to make sure that the suppliers with whom you are going to work, are reliable and will provide you with high-quality products.
Wholesale is considered to be one of the safest business models on Amazon, because it allows its users to not only to build a prosperous business on Amazon, but also reduce the possibility of getting suspended by the platform, especially when you are doing wholesale FBA.
Retail Arbitrage is one of the easiest and dangerous business models, since the only way of sourcing goods is through brick-and-mortar stores. Everything is pretty simple: you buy low-cost products and sell them through your Amazon account at higher prices. This may have your Amazon account suspended if you are not careful, however.
The same goes for Online Arbitrage. The only difference is that you source products from online stores and the difference between prices will be your revenue. However, when it comes to these two business models, you have to be extra careful, since they are magnets for receiving Amazon suspension emails from Seller Performance.
Nowadays, Drop shipping is leading the pack by remaining one of the most popular business models on Amazon. That’s because it does not require much money on your part for your startup. It is wise to also mention that this type of business model is one of the most common ones when it comes to suspensions. The main reason is that most drop shippers do not pay due attention to Amazon’s policies concerning drop shipping, and make some big mistakes during their operation.
If some of your relatives or yourself create interesting and unique products which are going to fly on Amazon; then, the Handmade business model is what you really need. In this case, your product will differ from the masses and you will be able to make good profit from your handmade business.
When it comes to choosing a business model under which you are going to run your Amazon business, you have to devote a considerable amount of time in order to choose the best one. Otherwise, you risk going down the rabbit hole and face difficult issues within your operation and find your Amazon account suspended by the Seller Performance team. In this case, you have to do your best in order to solve this issue as soon as possible. However, in most cases, it is too hard to handle these issues by yourself and most sellers prefer to work with professional reinstatement companies who have more experience in this sphere.
Good luck with your Amazon selling experience!