Amazon FBA in 2020: How It Works (Benefits + Disadvantages)

Here is the Truth about Amazon FBA in 2020, including how Amazon FBA works, the pros and cons and some secrets no one will tell you!

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3 Main Amazon Business Models

Retail Arbitrage
In this model, you go to retail stores like Walmart or Sams Club and find products that are on a deep discount or clearance. You take and ship the product into Amazon. The problem with this is it’s not a sustainable business model because you constantly need to go out to retail stores and look for products. It’s a good side hustle though for low-income companies or students.

Wholesale
In this model, you go to companies or manufacturers and you buy their product at a wholesale price and flip it on Amazon. While you can make money with wholesale on Amazon, there are three problems with this model. First, it’s getting too saturated. Second, there are established sellers that are just so far ahead. Third, a lot of the manufacturers are just going directly to Amazon.

Private Label
This is the most common one that new sellers are doing. It used to be extremely easy and it used to work really well. Basically, you find a product on Amazon that has high sales and low reviews. You can create your own private label version of this product. You slap your own brand on it. You go to Amazon and create a better listing and get more reviews. This is great in theory but there are four main problems why the private label is dead. First, it’s too saturated. There are so many people joining Amazon FBA every day, trying to private label the same junk products. Second, there are sellers that are way ahead of others. The third reason is China. China is going directly to Amazon. There are many times they are cutting out the middlemen because they are seeing the power of the Amazon platform. The last reason is Amazon Basics. Even if you find a really good private label product, Amazon will just copy it and create their own version of it.

My solution to this is creating my own private label product bundle that is completely unique!


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