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Today, we're going to look at a different Amazon program: Fulfillment by Amazon, often called FBA. In November and December 2015, I earned more than $9,000 reselling items on FBA, usually making a 25 to 50 percent profit on each item.
Selling through FBA is a great way to put some extra cash in my pocket, and it's one more way for you to earn extra money as well.
How Fulfillment by Amazon Works
You probably already know that many items on Amazon are sold through third-party sellers. This is why you sometimes order a product from Amazon but it doesn't arrive in Amazon's traditional brown packaging; the third-party seller has handled the fulfillment and shipping part of the sale.
Fulfillment by Amazon lets third-party sellers like me turn the fulfillment and shipping part over to Amazon. We send our items to Amazon, and the company stores our items until they sell. When someone buys one of our items, Amazon ships it to them. Here's a short video that Amazon created to explain the FBA program.
How I Made Money With FBA
I started getting into the toy resale business as a way to earn extra money in college, and in 2012 I used that knowledge to resell toys on FBA. I focus exclusively on toys, and I only sell them during the holiday season, when the most people are looking for these items.
My toy reselling strategy is to search online for retailers selling toys at huge discounts, buy the toys and sell them at a profit. This is called retail arbitrage.
Sometimes I get lucky and find a big discount on a popular toy. These toys generally resell very quickly, especially if they're becoming scarce in regular stores. In my experience, it's been pretty easy to resell nearly all of my stock with FBA; the majority of my items have sold within a week of listing them, and some have sold within hours.
If you want to resell toys with FBA, start shopping for those big toy discounts. Keep in mind that Amazon FBA accepts both new and used items, which is great if you can find a mint-condition Teddy Ruxpin or another one of those valuable '80s or '90s toys. Otherwise, look for popular or perennial toys that are likely to be hot sellers.
However, one thing to be aware of is that Amazon offers a 100 percent guarantee on products. If something is damaged in shipping or the user simply doesn't like it, you're responsible for the return. I haven't had too many returns, but you should be aware of the possibility of getting a few before jumping into selling through FBA.
Also, toys aren't the only item you can resell through FBA — I just happen to know a lot about them, but you can definitely pick a different type of item. Some FBA products require approval before you can sell them, so check Amazon FBA's Categories and Products Requiring Approval to see if your product is on that list.
Make Extra Money While Buying Your Inventory
Here's a way to take this even further: How are you going to buy the items you plan to sell on FBA? Why not use rewards cards and gift cards that earn money for you?
Before I buy items to sell on FBA, I figure out which gift cards I need to buy those items. If I was going to buy toys from Toys ‘R' Us, for example, I'd want to buy those toys with a Toys ‘R' Us gift card.
I'd use a rewards credit card to buy the Toys ‘R' Us gift card from a discount gift card site like Gift Card Rescue or Gift Card Zen. Then, when I made the purchase using the gift card, I'd use my Ebates account to get even more rewards. I'd also search coupon sites like RetailMeNot to save on the Toys ‘R' Us purchase and make that discounted gift card go even further.
To recap: I earn rewards on my credit card, I earn rewards through Ebates, I increase the value of my gift card by buying it at a discount and combining it with online coupons, and then, after I make my purchase, I sell the purchased items through FBA at a profit. When you explain it like that, it sounds easy enough, doesn't it?
Don't forget that your rewards card is a credit card, though; if you don't pay it back in full every month, you are likely to get hit with interest that cancels out all of your hard-earned rewards.