Buying & Reselling on Amazon in 2021: Mad Money or Risky Business?

by Drew Estes

You want to start selling something to make a profit on Amazon, but you don’t want to go through the hassle of creating your own product. Welcome to the world of reselling.

Whether you’re buying wholesale or simply snatching up deals for arbitrage, reselling can be a fantastic way to make money online. You can piggyback the recognition of established brands, and even spare yourself the upfront costs of building your own brand.

However, reselling these days isn’t as simple as it used to be. That doesn’t mean reselling is dead, just that it’s a very different game than it was in the early years of Amazon, and the paths to success are trickier to find. We’ll explain all that here.

This article is a primer for aspiring Amazon resellers. We’ll explain its pros and cons, risks and rewards, and how to do reselling the right way.

While owning a private label technically qualifies as reselling under some definitions, we draw a distinction here: Resellers are those who buy wholesale (or through retail arbitrage) from established brands. Private label sellers are those who develop their own brand and have exclusive selling rights to it.

If you plan on owning your own brand, we suggest you stop here and head over to our post on How to Start a Private Label Product. Aspiring brand owners can also check out our last post, Private Label Sourcing for Dummies where we talk about how private label sellers can find suppliers for products.

Bad News First: Reselling is Harder Than Used to Be

Before we get started, you should hear a few words of warning, because reselling on Amazon can be a risky business to get into.

While yes, selling a product from a recognized brand can lead to some easy sales in theory, there are some very big exceptions.

The biggest things to pay attention to are: finding a product to sell where the supply isn’t meeting the demand (or where the current offerings aren’t satisfying to shoppers), accessing gated categories, getting permission from the brand to sell their products.

Let’s tackle these obstacles, one at a time.

Picking the Right Product to Resell

• Pick an untapped niche with high demand. Don’t just pick some top-selling product and jump on the bandwagon with it. Use a niche finder to find up-and-coming products not yet available on Amazon – the products shoppers want, but can’t find. Don’t use Google for this unless you want to throw your money away on unprofitable products.
• Consider searching for specific brands to resell. Many popular brands have little to no presence on Amazon, for any number of reasons. You won’t have much luck with giant brands like Apple of course, but look at the leaders in your niche. You can use the niche finder mentioned above to look at search data for brand name, even if they’re not listed. Find a brand with high demand, then reach out to them about selling their products for them on Amazon (more on this in a minute).
• Consider high-end alternatives to Amazon’s brands. For the most part, Amazon takes a Walmart-style approach, focusing on having the cheapest offerings. If you’re set on selling a certain product, it’s wise to avoid competing on price. Buy from a brand that focuses on quality rather than a low price point. Unfortunately, if Amazon eventually adds the high-end product to their product line too, it’s going to hurt your sales, so the better your niche (and the more unique your product offering), the better your odds of long-term success.
• Check out Kickstarter. New products are crowdfunded and launched all the time on Kickstarter, and it’s a great way to brainstorm potential products. Find a validated idea by looking at projects with a lot of attention and funding. Small companies like these will be more open to reseller partnerships, so figure out how to help maximize their product sales on Amazon.

Here’s one giant caveat: there’s nothing stopping other resellers from selling the same product as you. If it’s selling well, people will notice, and competition will eventually increase. Thankfully, there’s a solution.

Exclusive Seller Relationships: The Path to Reseller Success

Successful, profitable reselling is about finding a brand to partner with. Your goal here is to figure out what value you can bring to the brand.

Identify areas where the brand isn’t doing so well and you see where you could improve it. Having great sales or marketing skills is a big plus for instance.

You’re looking for brands on Amazon who are already selling well elsewhere, but aren’t on Amazon yet. Or, if they are on Amazon, maybe they only offer some of their products. Sometimes this is a strategic choice on the brand’s part, but other times they just don’t have the right systems in place to make it happen.

This is where you ask yourself some important questions. Why should this brand partner with you? Why should they sell to you specifically, rather than any other reseller?

Maybe they’re running out of stock often and can’t maintain a steady supply chain. Maybe they’re having conflicts with foreign sellers and don’t have the bandwidth to do more.

If their current Amazon listings are just crap, this is a big opportunity for you. Check if they have low quality images, unoptimized text, low review count, bad ratings or whatever else.

Even great brands can have gaps in their organization where they don’t have anybody dedicated to Amazon sales. This is your chance to be the Amazon expert and provide value to them. When they outsource this work to you they save money (because they’re not employing you), but you still have to show them you’re the right person for the job.

And remember, when it comes to business arrangements like this, don’t stop at the first “no.” Rejection or radio silence are common enough. Improve your offering and try again.

What You Need Before You Sell: Permissions and Ungating

Before you just pick a product and add it to your listing, you need to make sure you’re allowed to sell it. There are two main obstacles here: reseller authorizations and gated categories.

Get Permission from the Brand Owner

Reselling rules have gotten stricter. Amazon is cracking down on unauthorized resellers, which means you can’t just pick some brand’s product and start selling it. As we said above, you need permission from the brand to sell their products, and proof of that permission.

If you can’t prove to Amazon that you have permission when they contact you about it, you won’t be allowed to sell the product.

To spare yourself the hassle later, contact your supplier to confirm that they are an authorized distributor for that brand. Or take it a step further and contact the brand owner directly so you can ask who their authorized distributors are.

Don’t forget, when you get permission from the brand to sell their product, make sure you get it in writing (with a letter that specifies your company), including the address and their contact information on their letterhead. Having this will make it much easier to get Amazon’s approval.

Get Through the Gate

You’ll also need to check that your product isn’t in a gated or restricted category. If your category is gated, you need to request approval from Amazon to sell it.

Getting ungated is a different process depending on what you want to sell (so be sure and read the rules specific to your product), but the general idea is the same.

First make a wholesaler account, where your shipping address matches the one on your Amazon account. Then purchase some products — at least 10 to be exact. You’ll need to submit the invoice from your distributor, dated within 180 days prior to your application.

You may also need to submit product photos, following Amazon’s instructions for your category. Gated categories will generally need some documentation as well, such as FDA registration for food products.

For more information about which categories will require approval, read our post about gated and restricted categories on Amazon.

Closing Summary

Reselling on Amazon has fierce competition because the barriers to entry are so much lower than creating your own product, and every merchant knows that selling a recognized brand is a quick way to get sales without as much advertising.

To add to this, when Amazon creates their own brands to sell, it’s almost pointless to compete with their products directly.

Since there’s no limit to how many merchants can sell a given product, your best bet is to form an exclusive relationship with a brand, so nobody else can sell that brand’s product on Amazon except you.

Using brand recognition like this means you don’t have to compete on price like Amazon does.

Exclusive reselling relationships are all about identifying gaps of unmet demand, or gaps where a company’s skillsets haven’t been enough to thrive in that space. If they don’t have all their products listed (or have no presence at all), you’re in luck.

The next step is about pitching the company on why you’re the one to sell for them.

If you’re adding this kind of value to a company, don’t feel limited to Amazon. You might do better if you ditch Amazon altogether and find other markets with substantial sales potential where a brand hasn’t placed their products.

To sell these products in any new space, a brand needs someone they can rely on. The greater your expertise and business skills, the better your odds of success. If they turn you down at first, improve your pitch and try again.