In this post, I will teach you 9 different ways how to make money on Amazon. You’ll learn about the upfront costs and the revenue potential for each business model to determine if it’s worth your time.
Most people think of Amazon strictly as a place to shop online. But in addition to buying products online, you can also make money selling on Amazon as well.
In 2020, Amazon made almost 81 billion dollars in revenue(55%) from sales from 3rd party sellers.
Because the Amazon marketplace is so large, there’s a huge opportunity for anyone looking to start a small side hustle or launch a full blown ecommerce business.
The following 9 business models will be evaluated based on the following criteria. All ratings will be based on a scale of 1-10.
- Difficulty To Start – How easy is it to get started?
- Revenue Potential – How much money can you make?
- Startup Costs – How much does it cost to get started?
Because there is a wide range of opportunity from affiliate marketing to selling private label products, the 9 ways to make money on Amazon described in this post will be listed in order of lowest to highest in terms of money making potential.
Are you interested in creating a strong, defensible brand for your products? If so, I put together a comprehensive package of resources that will help you launch your own online store from complete scratch. Be sure to grab it before you leave!
Amazon Mechanical Turk
Amazon Mechanical Turk is a crowdsourcing marketplace for small virtual tasks and you can think of Mechanical Turk like a Postmates or a TaskRabbit for small online jobs.
What’s nice is that most virtual tasks from Amazon Turk can be performed from the comforts of your living room while watching television or in line at the grocery store.
For example, a typical Amazon Mechanical Turk job might be to fill out a survey or to visit a website. More involved tasks might include transcribing a short audio clip.
Here are examples of Amazon Mechanical Turk postings that you’ll find on the platform.
- Give your opinion on a website.
- Perform a Google search and provide the result.
- Take a survey.
- Enter data from receipts into a spreadsheet.
- Comment on a blog post.
- Write a title or description for an image.
- Write a short review.
- Provide your opinion.
Most tasks on Amazon Turk will take a few minutes of your time and do not require your full attention.
The downside is that Amazon Mechanical Turk jobs don’t pay much. If you are diligent about taking on as many jobs as you can, you can make roughly $8-9/hour.
This might not seem like much money but remember, most jobs can be done while relaxing and watching television on the couch.
Amazon Mechanical Turk Rating from 1-10(Best)
- Difficulty To Start (Rating 10/10) – After a short signup process, you can start taking on jobs right away.
- Revenue Velocity (Rating 1/10) – You’ll never make more than some spending cash at $8-9 per hour.
- Startup Costs (Rating 10/10) – It costs nothing to start.
Amazon Associates Affiliate Program
Amazon runs one of the largest affiliate programs in the world called Amazon Associates. By joining the Amazon 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 that you want to promote. If anyone clicks on your link and makes a purchase on Amazon, you will earn a small percentage of the entire sale!
You do not have to carry inventory. You do not have to manage customer support. The only thing you have to do is send people to Amazon.
Here’s a table of the payout you can earn as a percentage of sales. Please note that your commission percentage depends on the category of the product you refer.
Amazon Associates Commission Rate Table
|Product Category||Fixed Standard Program Fee Rates|
|Luxury Beauty, Amazon Coins||10.00%|
|Digital Music, Physical Music, Handmade, Digital Videos||5.00%|
|Physical Books, Kitchen, Automotive||4.50%|
|Amazon Fire Tablet Devices, Amazon Kindle Devices, Amazon Fashion Women’s, Men’s & Kids Private Label, Apparel, Amazon Cloud Cam Devices, Fire TV Edition Smart TVs, Amazon Fire TV Devices, Amazon Echo Devices, Ring Devices, Watches, Jewelry, Luggage, Shoes, and Handbags & Accessories||4.00%|
|Toys, Furniture, Home, Home Improvement, Lawn & Garden, Pets Products, Pantry, Headphones, Beauty, Musical Instruments, Business & Industrial Supplies, Outdoors, Tools, Sports, Baby Products||3.00%|
|PC, PC Components, DVD & Blu-Ray||2.50%|
|Televisions, Digital Video Games||2.00%|
|Amazon Fresh, Physical Video Games & Video Game Consoles, Grocery, Health & Personal Care||1.00%|
|Gift Cards; Wireless Service Plans; Alcoholic Beverages; Digital Kindle Products purchased as a subscription; Food prepared and delivered from a restaurant; Amazon Appstore, Prime Now, Amazon Pay Places, or Prime Wardrobe Purchases||0.00%|
|All Other Categories||4.00%|
While the payouts for the Amazon Associates program are low, you earn a commission for every single product that a customer buys within 24 hours of clicking on your affiliate link.
But overall, you need a lot of traffic to make life changing money with this money making method.
Amazon Associates Affiliate Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 10/10) – After a short signup process, you can start promoting products right away.
- Revenue Velocity (Rating 2/10) – Because your commission rate is ~4%, it will be difficult to make a lot of money unless you can drive mass amounts of traffic.
- Startup Costs (Rating 10/10) – It costs nothing to start.
Merch By Amazon
Merch By Amazon is a place where you can sell branded products designed by you which are produced, sold and shipped by Amazon.
If you are a designer or a creative person, you can generate a solid income selling t-shirts, hoodies and other merchandise through this program.
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.
For example, my kids started an entrepreneurship t-shirt business using a POD company similar to Amazon Merch.
If my 11 year old kid can start a print on demand business, then so can you:)
Here’s a podcast interview I recorded with Derek Pankew who sells tshirts for a living.
The best part about Amazon Merch is that your designs will be listed in the Amazon marketplace which attracts billions of eyeballs every year.
Amazon Merch Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 8/10) – 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 a small learning curve.
- Revenue Velocity (Rating 3/10) – Print on demand margins are typically pretty low depending on how much you can charge. For example, my kids make roughly an $8 profit per t-shirt sold.
- Startup Costs (Rating 10/10) – An Amazon Merch business costs nothing to start.
Amazon Kindle Direct Publishing Or KDP
Amazon Kindle Direct Publishing(KDP) is a program that allows you to publish and sell your own digital books on Amazon.
Most people have the misconception that books you sell 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!
On my podcast, I’ve interviewed many authors who make 6 and even 7 figures online selling their books WITHOUT a traditional publisher.
Here are a few examples.
Basically, there are only a few requirements to sell using Amazon KDP. You need to format your book properly using tools provided by Amazon, you need a book cover and you need to write the book itself. That’s it!
Once you hit publish, your book will be listed in the Amazon marketplace.
Amazon KDP Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 7/10) – After you’ve written your book, there’s a short learning curve to format and list your book on Amazon, but it’s pretty straightforward.
- Revenue Velocity (Rating 4/10) – Depending on pricing, you get to keep up to 70 percent of the royalties you make from your book. Most successful authors on KDP publish many books over time which can add up to significant money. But writing great books does take time.
- Startup Costs (Rating 9/10) – An Amazon KDP business costs nothing to start if you do everything yourself. But you may need to hire an editor or a graphic designer for your book cover.
Dropshipping On Amazon
Amazon dropshipping is an ecommerce business model where you sell physical products on Amazon and your supplier ships your orders to the end customer.
You do not have to deal with inventory, shipping and handling or customer service.
Here’s how it works.
- You create a merchant fulfilled product listing on Amazon and make a sale.
- You notify your supplier and they ship your products directly to the Amazon customer on your behalf.
- You pocket the difference between the selling price and the wholesale price.
Be careful with this business model because Amazon imposes several rules that you must follow or you risk getting banned.
Purchasing products from another online retailer (Aliexpress or Ebay) and having the retailer ship directly to customers is illegal.
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 (~10-30%) so you have to make a lot of sales to make significant money with this business model.
Amazon Dropshipping Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 7/10) – Finding reliable dropship wholesalers is the hard part. But once you find a great supplier, the rest is straightforward.
- Revenue Velocity (Rating 4/10) – Because dropship margins are so low (10-30%), it can be extremely difficult to make a decent profit once Amazon takes their 15% cut of the sale.
- Startup Costs (Rating 9/10) – An Amazon dropshipping business costs very little money to start because there’s no cost of inventory.
Amazon Retail Arbitrage & Online Arbitrage
Retail arbitrage is the act of buying inexpensive or clearance products from a retail or online store and then selling them for a higher price on Amazon.
Here’s how retail arbitrage works.
- You purchase products from a retail or online store from the clearance section or at low prices.
- You list the item on Amazon FBA at a significant markup.
- When your product sells, you keep the profit.
When I was in college, I used retail arbitrage to make some quick spending cash by buying clearance computer equipment from Craigslist (remember Craigslist?) and selling them on Ebay and Amazon.
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. Your main upfront cost is the price of your goods.
I’ve interviewed several successful entrepreneurs who make money with retail arbitrage but the revenue potential tops out at 6 figures because of the labor involved in shopping for goods.
The only way you can scale this business model is to hire a team of shoppers to buy your merchandise.
Here are some podcast episodes to check out.
Amazon Retail Arbritage Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 7/10) – Finding great deals to sell on Amazon is the hard part. But if you have the right products, getting setup on Amazon is pretty straightforward.
- Revenue Velocity (Rating 4/10) – Because you must physically go shopping to find products to sell, your revenue velocity is limited by your shopping time.
- Startup Costs (Rating 8/10) – Retail arbitrage costs as much as you are willing to spend on inventory.
Amazon Handmade was created by Amazon to directly compete with Etsy. With Amazon Handmade, you can sell clothing, jewelry, soap, home goods, basically anything you create yourself.
Similar to an Etsy store, 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 $39.99/month monthly fee that Amazon normally charges for professional sellers.
Overall, if you are already selling on Etsy, then Amazon provides another outlet to market your handmade goods.
Here’s an interview with a student in my Create A Profitable Online Store course that makes 6 figures per year selling his own handmade pottery online.
Amazon Handmade Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 7/10) – You are likely considering this option if you already have handmade items to sell. Creating great products is the hard part. Setting up and creating an Amazon listing is straightforward.
- Revenue Velocity (Rating 4/10) – Because you must physically hand make your products for sale, your revenue potential will be capped by how quickly you can make your goods.
- Startup Costs (Rating 8/10) – Your startup costs are entirely based on your cost of goods. Selling on Amazon is free.
Selling Wholesale On Amazon
Selling wholesale on Amazon involves purchasing bulk quantities of products made by other companies for sale using Amazon FBA.
For example, if I want to sell Legos on Amazon, I would reach out to Lego’s distributors and ask to purchase Legos in bulk at wholesale prices. Then, I would list these products on Amazon to sell at a profit.
Overall, selling wholesale products on Amazon is EXTREMELY difficult because it’s so competitive. Because you are selling other people’s products, your only differentiation is price which can quickly spiral to the bottom.
Listen to my interview with Trent Dyrsmid for a more in depth explanation of how Amazon wholesale works.
According to Jungle Scout, 61% of wholesale sellers on Amazon make at least $5000/month which is pretty good if you can pull it off.
Amazon Wholesale Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 5/10) – Finding great wholesale suppliers to work with is the hardest part of this business model.
- Revenue Velocity (Rating 6/10) – The more you are 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.
- Startup Costs (Rating 5/10) – You must purchase inventory in bulk in order to make the numbers work out in terms of profitability.
Selling Private Label Products On Amazon
Selling private label products on Amazon is by far the best way to make money on Amazon but it also carries the highest upfront cost.
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.
Typically, you’ll work with a factory to fabricate your product including the packaging and labeling with your brand collateral.
Because you are selling your own branded products, you have full control over every aspect of your business.
You can set pricing and define your product features however you want and no one else can sell the exact same product on Amazon.
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.
In general, the bulk of the students in my Create A Profitable Online Store course make their money selling their own branded products.
Here are some podcast interviews with successful students selling private label.
Meanwhile, my 7 figure ecommerce business over at Bumblebee Linens sells private label handkerchiefs on Amazon which command up to 90% margins.
The only downside to private label is that it costs more to begin. Depending on exactly what you sell, the cost to sell private label on Amazon will run you around $2000-3000.
Amazon Private Label Business Model Rating from 1-10(Best)
- Difficulty To Start (Rating 4/10) – 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. Overall, expect the process to take at least 3 months before you start selling online.
- Revenue Velocity (Rating 10/10) – 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.
- Startup Costs (Rating 3/10) – Because you are working with factories, your minimum order quantity will be higher. Expect to spend at least $2000-3000 to launch your first product.
How To Make Money On Amazon – Which Method Should I Choose?
If you have the money to invest, selling private label products on Amazon will easily be the fastest way to make life changing money online.
Choosing from the remaining business models will depend on your budget, your talents and the amount of time you are willing to devote to your side hustle.
For example, if you are a writer, then selling your books on Amazon KDP is a no brainer.
If you are 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 of extra bucks while watching tv.
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.
At the lower end of the revenue scale, Amazon Mechanical Turk will net you around $200-300/month on average whereas a private label business can easily net you 7 figures or more.
Figure out what your priorities are and your tolerance for risk and pick the business that makes the most sense based on your personality. Good luck!
Related Posts In Amazon Business Models
- Private Label Products – How To Start A Brand & What To Sell
- How To Make Money On Amazon – 9 Ways Rated And Explained
- Online Arbitrage On Amazon – How It Works And How To Make Money
- What Is Retail Arbitrage On Amazon And Why It’s A Waste Of Time
- Selling On Amazon Vs Ebay – Which Will Make You More Money?
Steve Chou is a highly recognized influencer in the ecommerce space and has taught thousands of students how to effectively sell physical products online over at ProfitableOnlineStore.com.
His blog, MyWifeQuitHerJob.com, has been featured in Forbes, Inc, The New York Times, Entrepreneur and MSNBC.
He's also a contributing author for BigCommerce, Klaviyo, ManyChat, Printful, Privy, CXL, Ecommerce Fuel, GlockApps, Privy, Social Media Examiner, Web Designer Depot, Sumo and other leading business publications.
In addition, he runs a popular ecommerce podcast, My Wife Quit Her Job, which is a top 25 marketing show on all of Apple Podcasts.
To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store, BumblebeeLinens.com, with his wife and puts on an annual ecommerce conference called The Sellers Summit.
Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses.