371: Little Known Ways To Make Money On Amazon With Steve Chou

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You’re listening to the My Wife Could Her Job podcast, the place where I bring on successful bootstrap business owners and dig deep into what strategies they use to grow their businesses. Now today, I’m doing a solo episode to try to convince you to start your own side hustle if you haven’t already. And the topic of this show is ways to make money from Amazon that you probably did not know about. Now, most of you who’ve followed me for a long time know that I’m not the biggest fan of Amazon for control reasons, but depending on the business model, Amazon is a great place to make money online.

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especially if you have no money to invest. So enjoy these nine little known ways to make money on Amazon. But before we begin, I want to thank Klaviyo for sponsoring this episode. Always excited to talk about Klaviyo because they’re the email marketing platform that I personally use for my e-commerce store and it depends on them for over 30 % of my revenue. Now you’re probably wondering why Klaviyo and not another provider. Well Klaviyo is the only email platform out there that is specifically built for e-commerce stores. Here’s why it’s so powerful. Klaviyo can track every single customer who has shopped in your store and exactly what they bought.

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So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week. Easy. Let’s say I want to set up a special autoresponder sequence to my customer depending on what they bought, piece of cake, and there’s full revenue tracking on every single email sent. Klaviyo is the most powerful email platform that I’ve ever used, and you can try them for free over at klaviyo.com slash my wife. That’s K-L-A-V-I-Y-O dot com slash my wife. I also want to thank Post Group for sponsoring this episode.

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If you run an e-commerce business of any kind, you know how important it is to own your own customer contact list. And this is why I focus a significant amount of my efforts on SMS marketing. SMS or text message marketing is already a top five revenue source for my e-commerce store. And I couldn’t have done it without Postscript.io, which is my text message provider. Why Postscript? It’s because they specialize in e-commerce and e-commerce is their only focus. Not only is it easy to use, but you can quickly segment your audience based on your exact sales data.

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and implement automated flows like an abandoned cart at the push of a button. Not only that, but it’s price well too and SMS is the perfect way to engage with your customers. So head on over to postscript.io slash Steve and try it for free. That’s P O S T S T R I P T dot IO slash Steve. And then finally, I want to mention a new podcast that I recently released from my partner, Tony. And unlike this podcast where I interviewed successful entrepreneurs, the profitable audience podcast covers all things related to content creation and building an audience.

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No topic is off the table and we tell it like how it is in a raw and entertaining way. So be sure to check out the profitable audience podcast on your favorite podcast app. Now onto the show.

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Welcome to the My Wife, Quitter, Job podcast. In this episode, I’m gonna teach you nine different ways on how to make money on Amazon. And when most people think about Amazon, they usually only consider selling physical products online, but there’s actually many different ways to leverage Amazon as a side hustle with very little upfront investment. So if you’ve been on the fence about starting any side hustle, this episode will give you ideas. You’ll learn about the upfront costs and the revenue potential for each business model to determine if it’s even worth your time.

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Now, most people think of Amazon strictly as a place to shop. But in addition to buying products online, you can also make money selling on Amazon. And in 2020, Amazon made almost $81 billion from sales from third-party sellers. And because the Amazon marketplace is so large, there’s actually a huge opportunity for anyone looking to start a small side hustle or launch a full-blown e-commerce business. So these nine business models that I’m going to be talking about will be evaluated based on the following criteria.

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and all ratings are gonna be based on a scale of one to 10. Difficulty to start, how easy is it to get started? Revenue potential, how much money can you possibly make? And then startup costs, how much does it cost to get started? Now because there’s such a wide range of opportunity from affiliate marketing to selling private label products, these nine ways to make money on Amazon described in this episode will be listed in the order of lowest to highest in terms of money making potential.

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All right, so business idea number one is Amazon Mechanical Turk. Now Amazon Mechanical Turk is a crowd sourcing marketplace for small virtual tasks. And you can think of Mechanical Turk like a Postmates or a TaskRabbit for small online jobs. Now what’s nice is that most virtual tasks from Amazon Turk can be performed from the comfort of your living room while watching TV or online at the grocery store. So for example, a typical Amazon Mechanical Turk job might be to fill out a survey or to visit a website.

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or to leave a review. More involved tasks might include transcribing a short audio clip. Here’s some examples of Amazon Mechanical Turk postings that you’ll find on the platform. You can give your opinion on a website. You can perform a Google search. You can take a survey. You can enter data from a receipt into a spreadsheet. You can comment on a blog post, write a title or description for an image, write a short review or provide your opinion. Now most tasks on Amazon Turk will just take a couple of minutes of your time and do not require your full attention.

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The downside though, is that Amazon Mechanical Turk jobs do not pay much. If you’re diligent about taking on as many jobs as you can, you can make roughly eight to nine dollars an hour. Now, this might not seem like much money, but remember, most jobs can be done while relaxing and watching television on the couch. So how do I rate Amazon Mechanical Turk from one to 10? Well, in terms of difficulty to start, I give it a 10 out of 10. After a short signup process, you can start taking on jobs right away. Revenue velocity, I give it a one.

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you will never make more than some spending cash at eight to $9 an hour. In terms of startup costs, I give it a 10 out of 10 because it costs nothing to start. The next Amazon business model up the ladder is the Amazon Associates affiliate program. Now Amazon actually runs one of the largest affiliate programs in the world and it’s called Amazon Associates. By joining the Associates program, you can earn a cut of every sale that you refer to Amazon. Here’s how it works. Once you sign up, Amazon provides you with special links for every product you want to promote.

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If anyone clicks on your link and makes it purchase on Amazon, you will earn a small percentage of the entire sale. You don’t have to carry inventory. The only thing you have to do is send people to Amazon. Now, while the payouts for Amazon associates are low, you can earn a commission for every single product that a customer buys within 24 hours of clicking on your affiliate link. But overall, you’re going to need a lot of traffic to make life changing money with this money making method. So in terms of rating the Amazon associates affiliate program, the difficulty to start, I give it a 10 out of 10.

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After a short sign-in process, you can start promoting products right away. Revenue velocity, I give it a 2 out of 10. Because your commission rate is around 4%, it will be difficult to make a lot of money unless you can drive mass amounts of traffic. For startup costs, I give it a 10 out of 10. It costs nothing to start. The next business model is Merch by Amazon. Now Merch by Amazon is a place where you can sell branded products designed by you, which are produced, sold, and shipped by Amazon. Now if you’re a designer or a creative person,

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You can generate a solid income selling t-shirts, hoodies, and other merchandise through this program. Merch by Amazon is essentially a print on demand company or pod, which is a form of drop shipping. Basically you design it and Amazon ships it. You don’t have to carry any inventory or worry about shipping and you get to keep the difference between your selling price and Amazon’s wholesale price for your product. So for example, my kids started an entrepreneurship t-shirt business using a pod company similar to Amazon Merch.

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If my 11 year old kid can start a print on demand business, then so can you. Now the best part about Amazon Merch is that your designs will be listed in the Amazon Marketplace, which attracts billions of eyeballs every year. So in terms of ratings, I give Amazon Merch a difficulty to start rating of eight out of 10. After you are approved for the program, you can start uploading your designs right away. You will likely need to understand how to manipulate images, so there’s going to be a small learning curve. In terms of revenue velocity, I give it a three out of 10.

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Brent on demand margins are typically pretty low depending on how much you can charge. So for example, my kids make roughly an $8 profit per t-shirt sold. For startup costs, I give it a 10 out of 10, and Amazon Merch business costs nothing to start. All right, moving right along. Let’s talk about Amazon Kindle Direct Publishing. Amazon Kindle Direct Publishing, or KDP for short, is a program that allows you to publish and sell your own digital books on Amazon. Now most people have the misconception

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that books you saw on Amazon must be of a certain length or professionally edited. But you can literally publish short targeted books for specific topics and make a living doing so without an agent or a publisher. Basically, there’s only a couple requirements to sell using Amazon KDP. You need to format your book properly using tools provided from Amazon and you need a book cover and you need to write the book itself, obviously. But that’s it. Once you hit publish, your book will be listed in the Amazon marketplace.

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So in terms of ratings, I give it a difficulty to start rating of seven out of 10. After you’ve written your book, there’s a short learning curve to format and list your book on Amazon, but it is pretty straightforward. In terms of revenue velocity, I give it a four out of 10. Now, depending on pricing, you get to keep up to 70 % of the royalties you make from your book. And most successful authors on KDP publish many books over time, which can add up to significant money. But writing great books does take a lot of time. For startup costs, I give it a nine out of 10.

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An Amazon KDP business costs nothing to start if you do everything yourself, but you might need to hire an editor or a graphic designer for your book cover.

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If you sell on Amazon or run any online business for that matter, the most important aspect of your long-term success will be your brand. And this is why I work with Steven Weigler and his team from Emerge Council to protect my brand over at Bumblebee Linens. Now what’s unique about Emerge Council is that Steve focuses his legal practice on e-commerce and provides strategic and legal representation to entrepreneurs to protect their IP. So for example, if you’ve ever been ripped off or knocked off on Amazon, then Steve can help you fight back and protect yourself.

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Now, first and foremost, protecting your IP starts with a solid trademark and Emerge Council provides attorney-advised strategic trademark prosecution, both in the United States and abroad for a very low price. And furthermore, the students in my course have used Steve for copywriting their designs, policing against counterfeits and knockoffs, agreements with co-founders and employees, website and social media policies, privacy policies, vendor agreements, brand registry, you name it. So if you need IP protection services, go to EmergeCouncil.com and get a free consult.

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And if you tell Steve that I sent you, you’ll get a hundred dollar discount. That’s E-M-E-R-G-E-C-O-U-N-S-E-L dot com. Now back to the show. The next business model is drop shipping on Amazon. Now Amazon drop shipping is an e-commerce business model where you sell physical products on Amazon and your supplier ships your orders to the end customer. You don’t have to deal with inventory, shipping or handling or customer service. Here’s how it works. You create a merchant fulfilled product listing.

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on Amazon and you make a sale. You then notify your supplier and they ship your products directly to the Amazon customer on your behalf. And then you pocket the difference between the selling price and your wholesale price. Now be careful with this business model because Amazon imposes several rules that you must follow or you risk getting banned. And first off, I had to mention this. AliExpress drop shipping and eBay drop shipping on Amazon is expressly prohibited. Amazon only allows drop shipping from real wholesale distributors.

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Purchasing products from another online retailer like AliExpress or eBay and having the retailer ship directly to customers is actually against terms of service. So with that in mind, dropshipping on Amazon can be a low cost method of selling on Amazon because you don’t have to worry about inventory. However, dropshipping traditionally carries low margins, around 10 to 30%. So you have to make a lot of sales to make significant money with this business model. So in terms of ratings, I give it a seven out of 10 in terms of difficulty.

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Finding reliable dropship wholesalers is the hardest part, but once you find a great supplier, the rest is straightforward. In terms of revenue velocity, I give it a four out of 10. Because dropship margins are so low, 10 to 30%, it can be extremely difficult to make a decent profit once Amazon takes their 15 % cut of the sales. In terms of startup costs, I give it a nine out of 10. An Amazon dropshipping business costs very little money to start because there’s no cost of inventory. All right, now we’re getting to the bigger money makers.

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Amazon retail arbitrage and online arbitrage. Retail arbitrage is the act of buying inexpensive or clearance products from retail or online store and then flipping them for a higher price on Amazon. Here’s how it works. You purchase products from retail or online store from the clearance section at low prices. You then list the item on Amazon at a significant markup. And then when your product sells, you keep the profit. Now, when I was in college, I actually used retail arbitrage to make some quick spending cash by buying clearance computer equipment from Craigslist.

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Remember Craigslist? And then selling them on eBay and Amazon. And what’s great about retail arbitrage is that it requires very little upfront cost to begin, and it’s a low risk way to sell physical products online. And your main upfront cost is the price of your goods. Now I’ve actually interviewed several successful entrepreneurs who make money with retail arbitrage, but the revenue potential I would say tops out at six figures because of the labor involved in shopping for goods. The only way that you can scale this business model is to hire a team of shoppers to buy your merchandise.

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So in terms of ratings, a difficulty to start, I give it a seven out of 10. Finding great deals to sell on Amazon is the hardest part. But if you have the right products, getting set up on Amazon is pretty straightforward. In terms of revenue velocity, I give it a four out of 10. Because you must physically go shopping to find products to sell, your revenue velocity is limited by your shopping time. In terms of startup costs, I give it an eight out of 10. Retail arbitrage costs as much as you are willing to spend on inventory. The next way is Amazon Handmade.

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Now Amazon Handmade was created by Amazon to directly compete with Etsy. Now with Amazon Handmade, you can sell clothing, jewelry, soap, home goods, basically anything you create yourself. And similar to Etsy, Amazon will provide you with a storefront with your own custom URL to sell your goods. Furthermore, handmade sellers don’t have to pay the $4 a month monthly fee that Amazon normally charges for professional sellers. So overall, if you’re already selling on Etsy, then Amazon provides another outlet to market your handmade goods.

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Now in terms of ratings, I give it difficulty to start of 7 out of 10. You’re likely considering this option if you already have handmade items to sell, and creating great products is the hardest part. Setting up and creating an Amazon listing is pretty straightforward. In terms of revenue velocity, I give it a 4 out of 10. Because you must physically hand make your products for sale, your revenue potential will be capped by how quickly you can make your goods. In terms of startup costs, your startup costs are entirely based on your cost of goods, and selling on Amazon is free.

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but overall I give it an eight out of 10. All right, we’re getting to the last two business models now. The second to last one is selling wholesale on Amazon. Selling wholesale on Amazon involves purchasing bulk quantities of products made by other companies for sale using Amazon FBA. So for example, if I want to sell Legos on Amazon, I would reach out to Legos distributors and ask to purchase Legos in bulk at wholesale prices, and then I would list these products on Amazon to sell at a profit. Now overall, selling wholesale products on Amazon is extremely difficult

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because it’s so competitive. Because you’re selling other people’s products, your only differentiation is price, which can quickly spiral to the bottom. Successful wholesale Amazon sellers typically negotiate exclusive rights with their wholesale suppliers to sell on Amazon. Now, according to Jungle Scout, 61 % of wholesale sellers on Amazon make at least $5,000 a month, which is pretty good if you can pull it off. So in terms of rating this business model, I give it a difficulty to start a five out of 10.

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And finding great wholesale suppliers to work with is the hardest part of this business model. In terms of revenue velocity, I give it a six out of 10. The more you’re willing to spend on inventory, the lower your prices and the higher your revenue velocity. However, due to the competitive nature of selling other people’s products on Amazon, your margins will eventually erode as more sellers sell the exact same products as you do. In terms of startup costs, I give it a five out of 10. You must purchase inventory in bulk in order to make the numbers work out in terms of profitability.

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And finally, there’s number nine, selling private label products on Amazon. Now selling private label products is by far the best way to make money on Amazon, but it also carries the highest upfront cost. Now what is private label? Private label is a product sourcing model where you place your own brand or label on a product that you sell online. And typically you’ll work with the factory to fabricate your product, including the packaging and the labeling with your brand collateral. And because you’re selling your own brand and products, you have full control over every aspect of your business.

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You can set pricing and define your product’s features however you want, and no one else can sell the exact same product on Amazon. So as a result, your margins for private label are typically above 66%, which allows you to pocket the majority of the revenue you generate online. And the bulk of my students in my Create a Profitable Online Store course make their money selling their own branded products. Meanwhile, my seven-figure e-commerce store over at Bumblebee Linen sells private label handkerchiefs on Amazon, which command up to 90 % margins.

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The only downside to private label is that it costs more to begin. And depending on exactly what you sell, the cost to sell private label on Amazon will run you between two or $3,000 to start. So to rate this business model, I give it a four out of 10 in terms of difficulty. Finding factories to work with and creating your first product can take several months. In addition, you may have to import your goods from China to get the best pricing possible. So overall, expect the process to take at least three months before you start selling online.

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In terms of revenue velocity, I give it a 10 out of 10. Because your margins are so high and you own your own brand, selling private label is easily the fastest way to make money on Amazon. In terms of startup costs, I give it a three out of 10. Because you’re working with factories, your minimum order quantity will be higher. So expect to spend at least two to three K to launch your first product. So now that I told you the nine methods, which method should you choose? Now, if you have the money to invest,

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selling private label products on Amazon will easily be the fastest way to make life-changing money online. And choosing from the remaining business models will depend on your budget, your talent, and the amount of time you’re willing to devote to your side hustle. So for example, if you’re a writer, then selling your books on Amazon KDP is a no-brainer. If you’re a designer, then selling with Merch by Amazon might make more sense. If you don’t have the time or the money to spend on a side hustle at the moment, it might make sense to sign up for Amazon Mechanical Turk to make a couple extra bucks here and there while watching TV.

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But regardless of what you choose, the general rule of thumb is that the more money and time you are willing to invest on your side hustle, the more money you will make. And at the lower end of the revenue scale, Amazon Mechanical Turk will net you around two to 300 bucks a month on average, whereas a private label business can easily net you seven figures or more. So figure out what your priorities are and your tolerance for risk and pick the business model that makes the most sense based on your personality.

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Hope you enjoy that episode. And here are the common excuses I get when trying to make money online. Steve, I don’t have the money and it’s too hard to generate traffic. Well, with these nine business models, there are ways to make money that do not cost any money. And you can leverage Amazon’s large built-in audience to generate your sales. For more information about this episode, go to mywifecluderjob.com slash episode 371. And once again, I want to thank Postscript, which is my SMS marketing platform of choice for e-commerce.

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With a few clicks of a button, you can easily segment and send targeted text messages to your client base. SMS is the next big own marketing platform, and you can sign up for free over at postscript.io slash div. That’s P-O-S-T-S-H-R-I-P-T dot I-O slash div. I also want to thank Clivio, which is my email marketing platform of choice for eCommerce merchants. You can easily put together automated flows, like an abandon card sequence, a post purchase flow, a win back campaign, basically all these sequences that will make you money on autopilot.

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So head on over to mywifequitterjob.com slash KLAVIO. Once again, that’s mywifequitterjob.com slash KLAVIO. Now I talk about how I use these tools on my blog. And if you are interested in starting your own eCommerce store, head on over to mywifequitterjob.com and sign up for my free 16 mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.