It started with a post on Facebook – where else?!!
In August 2017, my son William saw a post on his Facebook feed from a bloke called Oliver Denyer who claimed to have built a £1m business selling on Amazon. And how he was now teaching people how to set up their own Amazon businesses. How often have we all seen or heard people on Facebook claiming to be gurus for whatever?
Anyway, Will watched the free webinar and got really quite excited by it all and sent me a link for the replay saying “This would be right to your street Dad – you could still travel with Mum and have a great business too!”
I duly watched said webinar and did indeed get a little excited…so much so that I paid a tidy sum for some excellent video training on how to get started using what we call “Retail Arbitrage” . At this stage, I was on my own and started the Qualitopia business by doing retail arbitrage.
What on earth is Retail Arbitrage you may be asking?
Put simply, it is buying up products from local shops at a discounted price and sending them into Amazon to re-sell on Amazon for a profit. Now for those of you who think this sounds bonkers and simply wouldn’t work – think of your local Sainsbury, Tesco, Asda, Morrisons, Toy Store etc as your own wholesalers. They buy huge quantities of stuff in bulk and if it doesn’t sell quick enough, they discount it heavily to get rid of it.
But surely, the price on Amazon is lower you may be thinking? Where’s the profit? This is where you need to take a bit of a leap of faith and start to understand buyer behaviours.
Why would someone pay say £30 for a toy on Amazon when the same toy is on sale in Tesco for say £15?
The answer is quite simple. How many people use Tesco for their shopping? Let’s say ten million people. How many of those ten million will go there actively looking for toys? Let’s say a quarter. So two and half million. The UK population in 2017 consisted of twenty seven million households. That’s nearly twenty five million households who don’t shop for toys at Tesco…and don’t know that the price of a toy is cheaper in Tesco.
Online is convenient and easy
Online shopping, particularly with Amazon is easy, painless, and risk free. If you don’t like something, or something is not right, you send it back and get your money back – simples. All from the comfort of your sofa at any time of day – even the middle of the night when you are on shift and bored!
It’s a trust thing. Amazon has built a reputation with its customers for great service, great products, a massive range of products, free next day delivery if you’re a Prime member and hassle free returns.
Now compare that experience with going shopping to your newest Tesco. Dragging your kids into the car, driving to the nearest Tesco superstore, parking up in the rain after getting stuck in traffic, wheeling around a shopping cart, surrounded by other people’s screaming, out of control kids, and then queuing at the checkout. Only to get home and find its broken. Which, means another trip to the bloody supermarket to exchange it or get your money back after queuing at customer services for 30 minutes.
It’s no wonder people shop online to be honest. But that said, if you were in Tesco and you needed a nice pressie, you would probably go and have a look at the same time as doing your weekly shop.
Are you starting to see how you can make money by just selling other people’s stuff on Amazon yet?
Anyway, the good news was that I sold over £12,000 worth of toys on Amazon in my first three months and made a nice profit of around £3000 for my efforts. Not bad for just selling some toys and building some capital to take the business to the next level.
Dragging myself around supermarkets looking for toys on sale isn’t really my idea of a long term business though, we hear you say!
You’re right – 100% right.
But, for a partner at home looking after children or elderly parents, it’s an unbelievable opportunity to make some money. Imagine making a profit of say £400 a month. That’s a game changer for many families who are struggling. It’s also a great way to learn about a new business, make your mistakes when the stakes are low, and start to understand what sells and what doesn’t.
Retail Arbitrage (RA) is a great way of starting an Amazon business.
There’s a bit more to it than what I’ve outlined in terms of apps to use to test prices, and what you can and can’t sell. But there’s a whole world out there to be explored using RA – and do you know what? It becomes a bit addictive! You’re in a supermarket and you think “I’ll just pop over to the toy isle and scan a few products to see if there’s any good ones there”.
Two minutes later, you’ve found a little goldmine – a dozen toys at half price with a profit margin of around £7 each on Amazon. That’s £84 profit from a ten minute trip to the shops. Can you see how this might become a bit addictive and fun? The excitement of finding ‘treasure’ on the shelves of a supermarket never stops. It’s like they’re giving you money!
So what happens next? How do you develop the business?
For many people though, having made some money through RA and built up some capital, the next step is what we call “Private Labelling”. In other words, finding a manufacturer who can make a product for you and brand it your name, so you can sell it on Amazon. That means no more going around supermarkets!
Now we’re talking about negotiating with suppliers (probably in China), designing packaging, making a product that’s a bit different and better than the competitions and selling it under your brand name.
That’s what we’re doing now and I’ll talk a bit more about Private Labelling next time out. I’ll also cover how Dan and me got together and how we share a common goal – to build a successful family business that makes and sells sustainable products, packaged in recyclable materials and which makes a living for both families.
So until next time – thanks for reading this if you got this far!
Feedback and a thank you
We’d love to hear what you think and get any feedback. Tell us what you want us to talk about next perhaps, or tell us about your own experiences with Amazon if you’ve started out too.
P.S. A very big public thank you to Oliver who introduced Tim to Amazon and has been a mentor and guide to Tim in the first months. He is the real deal by the way and if you fancy just having a look at what he offers the best way is to go to his website at sign up for one of his frequent free webinars.
You’ll then be invited to join his public Facebook Group Ecommerce Freedom Warriors. You don’t have to pay anything at this stage. Just listen and learn.