A 24-year-old made over $300,000 in revenue selling on Amazon in 2022. He explains how he got started by arbitraging products from stores like Walmart and Target to sell online, and shares his top 4 tips for beginners.

  • Kade Peterson began selling on Amazon by buying discounted products from retail stores.
  • Buying a few items at a time allowed him to learn the process without taking a big risk.
  • Once he understood how to use the seller’s page, he began buying from manufacturers.

Kade Peterson, 24, wanted to be an Amazon seller after witnessing his older brother become successful at it. 

“Growing up, Trevin has just been my role model. I’ve always wanted to do the things he did, the sports he played, the clothes he wore, and the music he listened to,” Peterson said. 

His brother, 26, had been purchasing products from suppliers on Alibaba and shipping them to an Amazon warehouse. But Peterson wanted to start small. So he turned to retail arbitrage, purchasing products on sale from discount stores or even major retailers such as Target and Walmart, and reselling them on Amazon. 

He was also able to do this as a side hustle while attending Utah Valley University. 

The price per unit often cost more than if it were purchased from a supplier. However, it allowed him to buy fewer products to test out. He was also able to sell well-known brand names as opposed to creating a brand from scratch and hoping people will buy it, he said. 

The first time he tried to arbitrage a product was in 2018. He had $500, which he said had been saved up over the years. Together with his brother, he went to an overstocked goods store with the Amazon Seller app in hand. They then began scanning products to see what each one was selling for on Amazon. 

In the makeup section, Peterson scanned a bronzer that was selling for $2 in the store. Sellers on Amazon had it priced between $21 to $24. He decided to purchase 10 of them to try his luck. Once uploaded on Amazon, they sold within a week and he made a profit of $140, he said. So Peterson continued to go back and buy more, gradually increasing the number of units as he built confidence and profit. He told Insider he bought and sold a total of 606 units of bronzer over a span of a few months. 

He gradually began doing this with different products he’d find on sale, from toys to sporting goods. Anything that had a profit margin of at least 50% was a winner. 

But what he eventually realized was that just because an item sold for more didn’t mean it would find buyers. Peterson made numerous mistakes by buying things that weren’t in demand. He spent months breaking even between products that sold and ones that didn’t. He also wasn’t tracking the time he was spending at stores to determine whether it was all worth his time. 

“It’d take me 20 minutes, 10 minutes to get to the store, and then an hour or two of scanning, and then an hour or two of preparing the products and sending them to Amazon. Only to make, let’s say $20,” Peterson said. 

Another mistake he made a few times was buying products he didn’t have permission to sell on Amazon. New sellers can’t sell many of the big-name brands like Nike or Barbie, he noted. In these instances, he would either lose money completely or try to sell them on eBay. 

In June of 2021, he made over $3,000 in profits, according to a screenshot of his Shopkeeper dash viewed by Insider, which was his most profitable month for arbitraging. 

Today, he sells products he buys from manufacturers off of Alibaba, following his brother’s process. The products are then shipped directly to Amazon’s warehouse from the manufacturer. He began doing this because he wanted to scale without trading more time for money. 

“The struggle with retail arbitrage is yes, it’s low risk, but it also requires more work because as soon as you sell out, it’s done,” Peterson said. 

Sometimes Peterson will still arbitrage products if he’s at a store and sees a great bargain, he said. Year-to-date, his Amazon revenue is over $309,000, according to a screenshot of his Amazon account. Most of the products were shipped from a manufacturer. 

Arbitraging was a great way to start because he was able to make mistakes and learn about Amazon’s seller app in the process. By the time he was shipping large wholesale orders, he had a good understanding of what worked and what didn’t. 

“Amazon Seller Central can be a little confusing and overwhelming for a new seller when they first create their account, and they see how many features they offer their sellers, and it can be kind of confusing,” Peterson said. 

Tips from lessons learned  

After noticing that some products sold immediately and others never sold, he realized that he could use an Amazon metric known as an Amazon Best Sellers Rank (BSR). This helps determine the product’s popularity based on how well it sells. The lower the rank, the better the product sells, he said. For example, in the category of toys, a product that has a sales rank below 100,000 will probably sell quickly, he noted. 

He also uses an additional tool called Keepa, which allows him to see the historical data of a product’s sales rank. This is important because some products are seasonal, he noted. For example, during Christmas, the sales rank of a winter product could be very good, but in the summer it could be very bad, he said. 

He determines whether he has permission to sell a product before he purchases it. Peterson will scan the product while he’s in the store to determine whether there are restrictions on selling it. 

New sellers can’t sell as many types of products as experienced sellers, he said. But there are some brands that don’t allow anyone to sell their products, no matter how long you’ve been an Amazon seller, he noted. However, there are ways to qualify for certain brands, he said. 

“There are two ways of doing it,” Peterson said. “You can either get a written note from the brand saying that they give you permission to sell the product, which is the harder way. The easier way is to buy products from a distributor and then get an invoice from them and send that invoice to Amazon showing that, ‘hey look, I have official products’.”

Once you have permission to sell a certain brand, you can also go to any retailer and purchase the brand, he said. However, you have to be careful that they are authentic and in good condition. If a customer complains about a faulty product, Amazon will shut you down, he said. 

When it comes to profit margins, he never purchases a product that has less than a 50% return on investment. In the event another competitor drops their price, you would also need to drop yours to remain competitive, he noted. Sometimes, you can find yourself in a bidding war, he added. A good profit margin gives you space to adjust your price. 

There are also shipping costs you need to account for, which you pay out of pocket when you ship the products to an Amazon warehouse. Additionally, there are Amazon fulfilment fees and storage fees. The rates vary based on the product’s weight, size, and category channel the product is being sold on. On average, Peterson says his fees are about 35% of the product’s price. He uses Amazon’s FBA calculator where he scans the product’s bar code and it determines the breakdown of fees and calculates his profits. 

You May Also Like

답글 남기기

이메일 주소는 공개되지 않습니다. 필수 필드는 *로 표시됩니다