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

Podcast: Download (Duration: 20:13 — 23.4MB)

There are nine distinct ways to make money on Amazon, and they range from Mechanical Turk paying $8 to $9 an hour with zero startup cost, to private label products with 66%+ margins requiring $2,000 to $3,000 upfront. Private label is the fastest route to life-changing money, and the right choice depends on your budget, your skills, and how much time you can commit.

In this solo episode I walk through all nine, rating each one on difficulty to start, revenue potential, and startup cost on a scale of one to ten.

Below is every model in order from lowest to highest earning potential, with what each one actually pays and what it takes to begin.

Key takeaways

• Amazon paid third-party sellers nearly $81 billion in 2020. The marketplace is large enough for any of these.
• Four models cost nothing to start: Mechanical Turk, Associates, Merch, and KDP.
• Private label margins exceed 66%. Bumblebee Linens handkerchiefs run up to 90%.
• Dropshipping from AliExpress or eBay is banned. Only real wholesale distributors are permitted.
• Retail arbitrage tops out around six figures because it is capped by shopping time.
• 61% of Amazon wholesale sellers make $5,000+ monthly, per Jungle Scout.
• Private label takes about three months before you sell anything.
• Match the model to your skills. Writers pick KDP, designers pick Merch.

How the 9 Amazon business models compare

Higher numbers are better in every column. A 10 for difficulty means easy to start, and a 10 for startup cost means it costs nothing.

1. Amazon Mechanical Turk

Mechanical Turk is a crowdsourcing marketplace for small virtual tasks, functioning like TaskRabbit for online work.

Typical jobs: filling out surveys, visiting websites, transcribing short audio clips, entering receipt data into spreadsheets, writing image titles or descriptions, and giving opinions on websites.

Most tasks take a couple of minutes and require little attention, which means they can be done while watching television.

The pay is the limitation. Working diligently gets you roughly $8 to $9 an hour, or about $200 to $300 a month on average.

Ratings: Difficulty 10/10, since a short signup gets you working immediately. Revenue 1/10. Startup cost 10/10.

2. Amazon Associates affiliate program

Amazon Associates pays you a percentage of every sale you refer, through special links Amazon provides for any product.

The mechanic that makes it better than it looks: you earn commission on everything the customer buys within 24 hours of clicking your link, not only the product you promoted.

The constraint is the rate. Commissions run around 4%, so meaningful income requires substantial traffic.

Ratings: Difficulty 10/10. Revenue 2/10, since low commissions demand mass traffic. Startup cost 10/10.

3. Merch by Amazon

Merch by Amazon is print on demand for branded apparel, where you upload designs and Amazon produces, sells, and ships everything.

You keep the difference between your selling price and Amazon’s wholesale cost, with no inventory and no shipping to manage.

The advantage over standalone print-on-demand is placement. Your designs appear in the Amazon marketplace rather than on a site nobody visits.

My kids run an entrepreneurship t-shirt business on a comparable platform and make roughly $8 profit per shirt. If an 11-year-old can do it, the barrier is not the technology.

Ratings: Difficulty 8/10, with a small learning curve around image manipulation. Revenue 3/10, since print-on-demand margins are thin. Startup cost 10/10.

4. Kindle Direct Publishing

KDP lets you publish and sell digital books on Amazon with no agent and no publisher, and you keep up to 70% of royalties.

The common misconception is that books need a certain length or professional editing. Short, tightly targeted books on specific topics sell.

The requirements are minimal: write the book, format it using Amazon’s tools, and produce a cover.

Successful KDP authors publish many books over time rather than banking on one, which is what adds up to real income.

Ratings: Difficulty 7/10, with a short learning curve on formatting. Revenue 4/10, limited mainly by how long good books take to write. Startup cost 9/10, since you may need an editor or cover designer.

5. Dropshipping on Amazon

Amazon dropshipping means listing merchant-fulfilled products and having your wholesale supplier ship directly to the customer.

The rule that gets people banned: dropshipping from AliExpress or eBay is expressly prohibited. Buying from another online retailer and having them ship to your customer violates terms of service. Only genuine wholesale distributors are permitted.

Margins are the other constraint, running roughly 10% to 30% before Amazon takes its 15% cut, which leaves very little.

Ratings: Difficulty 7/10, with finding reliable dropship wholesalers being the hard part. Revenue 4/10. Startup cost 9/10, since you carry no inventory.

6. Retail and online arbitrage

Retail arbitrage means buying clearance products from retail or online stores and reselling them on Amazon at a markup.

I did this in college, buying discounted computer equipment off Craigslist and reselling it on eBay and Amazon for spending money.

The appeal is low risk and low upfront cost, since your only real expense is the goods themselves.

The ceiling is labor. Revenue tops out around six figures because you have to physically shop for inventory, and the only way to scale is hiring a team of shoppers.

Ratings: Difficulty 7/10, with finding genuine deals being the hard part. Revenue 4/10, capped by shopping time. Startup cost 8/10, scaling with what you spend on inventory.

7. Amazon Handmade

Amazon Handmade is Amazon’s answer to Etsy, for clothing, jewelry, soap, home goods, and anything else you make yourself.

You get a storefront with a custom URL, and Handmade sellers are exempt from the monthly professional seller fee.

For anyone already selling on Etsy, this is an additional channel for the same inventory rather than a new business.

The ceiling is production speed. Your revenue is capped by how fast you can physically make things.

Ratings: Difficulty 7/10, since making good products is harder than listing them. Revenue 4/10. Startup cost 8/10, determined entirely by your cost of goods.

8. Selling wholesale on Amazon

Wholesale means buying other companies’ products in bulk at wholesale prices and reselling them through Amazon FBA.

The example: to sell Lego on Amazon, you contact Lego distributors, buy in bulk, and list at a profit.

The structural problem is differentiation. Selling someone else’s product means price is your only lever, which spirals downward as more sellers pile onto the same listing.

Successful wholesale sellers negotiate exclusive rights to sell a given product on Amazon, which is what prevents the race to the bottom.

The numbers are respectable when it works. Jungle Scout data shows 61% of Amazon wholesale sellers make at least $5,000 a month.

Ratings: Difficulty 5/10, with supplier relationships being the hard part. Revenue 6/10, with margins eroding as competitors arrive. Startup cost 5/10, since bulk purchasing is required.

9. Selling private label products on Amazon

Private label means putting your own brand on products you have manufactured, which is the highest-earning model and the most expensive to start.

You work with a factory to produce the product, packaging, and labeling under your brand, which gives you control over pricing and features and means nobody else can sell your exact product.

The margin difference is the whole argument. Private label typically exceeds 66%, and Bumblebee Linens sells private label handkerchiefs on Amazon at up to 90% margins.

Most students in my Create A Profitable Online Store course make their money this way.

The costs are real. Expect $2,000 to $3,000 to launch a first product, factory minimum order quantities, and roughly three months before you sell anything, including importing from China for the best pricing.

Ratings: Difficulty 4/10, since sourcing and first production take months. Revenue 10/10. Startup cost 3/10.

How to choose which Amazon model to start

Match the model to your budget, your existing skills, and the time you can commit, since the more of each you invest the more you make.

If you have capital, private label is the fastest path to significant money and nothing else is close.

If you have a skill, use it. Writers should go to KDP, designers should go to Merch by Amazon, and makers should go to Handmade.

If you have neither time nor money right now, Mechanical Turk earns a couple hundred dollars a month for attention you were not using anyway.

The spread across these models is enormous. Mechanical Turk nets $200 to $300 monthly, and a private label business can reach seven figures.

Frequently asked questions

What are the ways to make money on Amazon?

Nine models: Mechanical Turk, the Associates affiliate program, Merch by Amazon, Kindle Direct Publishing, dropshipping, retail arbitrage, Amazon Handmade, wholesale, and private label. They range from zero startup cost with minimal income to $2,000+ upfront with the highest earning potential.

Which Amazon business model makes the most money?

Private label, because margins typically exceed 66% and you own the brand so nobody else can sell your exact product. It requires $2,000 to $3,000 upfront and about three months before your first sale.

How much does Amazon Mechanical Turk pay?

Roughly $8 to $9 an hour if you work diligently, or about $200 to $300 monthly. Most tasks take a couple of minutes and require little attention, so they can be done while doing something else.

What commission does Amazon Associates pay?

Around 4%, which means meaningful income requires substantial traffic. The offsetting benefit is that you earn commission on everything the customer buys within 24 hours of clicking your link, not just the product you promoted.

Can you dropship on Amazon from AliExpress?

No. Dropshipping from AliExpress or eBay violates Amazon’s terms of service and risks a ban. Amazon permits dropshipping only from genuine wholesale distributors, and margins of 10% to 30% leave little after Amazon’s 15% cut.

Is retail arbitrage worth it on Amazon?

It works as a low-risk entry with minimal upfront cost, and revenue tops out around six figures because you must physically shop for inventory. Scaling past that requires hiring a team of shoppers.

How much does it cost to start private label on Amazon?

Between $2,000 and $3,000 for a first product, driven by factory minimum order quantities. Budget about three months from starting supplier conversations to having product available to sell, including import time from China.