7 ms·

My brother has an Amazon store. He pulled in about $400,000 in sales last year and saw a profit of close to $200,000 doing exactly what you stated (buying whole

by adossi 7y ago

My brother has an Amazon store. He pulled in about $400,000 in sales last year and saw a profit of close to $200,000 doing exactly what you stated (buying wholesale, boxing it up and sending it to Amazon). Huge margins, I know. However he doesn't work a few hours a day, its more like 9 hours a day driving around to different auctions to buy wholesale. Its a lot of work.

acollins1331 7y ago
9 hours a day of driving pays every other job about 1/5th what your brother makes. Not advocating a race to the bottom, but expecting to clear 200k a year by driving around to auctions all day is still insane relative to what other people make doing similar work.
- jeromegv 7y ago
  Are you serious? He's not being paid to drive around. He's being paid to go to auctions, analyze the price of things being sold in large quantities, and decide if there is a business opportunity to sell products in a different market. He then ends up with a large inventory that he must sell, otherwise he is stuck with unsold inventory (risk). He also has no guarantee that the aunction will be selling the same products the week after, so it seems like there is a scarcity risk as well (not having a homerun product to sell constantly) This is what the retail business is. He's not just "driving around".
  - ccvannorman 7y ago
    Yeah, this whole thread is based on a false assumption, that the work he does is "easy and equivalent to driving around." It's not easy or trivial to start a business, plus he assumed risk up front. That's like saying "Property owners just sit around and collect rents, so they shouldn't make any money." It totally misses the point of using capital to invest in and maintain real estate, which is not "sitting around" at all - it only becomes easy after you've done a significant amount of work to make it so.
    - mAEStro-paNDa 7y ago
      Real estate is a very poor example considering countless cases of landlords neglecting repairs and maintenance. In some states in the US, there's little or no accountability for this.
      - bdcravens 7y ago
        Sounds like confirmation bias.
    - beatgammit 7y ago
      I've watched some YouTube videos about various arbitrage schemes, including refurbishing. It rarely makes sense at a small scale, but if you can get enough product, you can eliminate the waste by scaling up. I can watch videos/read blogs about how to duplicate a specific win, but by that point so has everyone else and margins drop. A few people who find the deal early can make a ton, and they get paid well for knowing what to look for in a good deal. Even then, I'm sure pretty much everyone who does well with this has plenty of stories where they lost big, and they only win on average. It's the same as stock picking; investors don't get paid well to watch their investments tick up, they get paid well for finding the bargains, and sometimes an investment opportunity is too good to be true.
  - sreque 7y ago
    I find it interesting to see this similar kind of behavior in video game economies like with Path of Exile. There are people who spend all day looking for good deals or opportunities, and essentially buying and reselling, maybe with some minor tweaks. These people tend to be the wealthiest in the game, with far more in-game currency than people actually playing the game.
    - wincy 7y ago
      I think a big part of that is because most people don’t care at all about economics in a video game. When you’re mostly competing with children and people who just want to game and don’t care about being rich, putting any sort of organized effort toward getting rich becomes substantially easier. EVE is like this too. These people are also often derided as “not actually playing” the game.
  - mruts 7y ago
    Exactly, he gets the risk premium. One of the most straightforward ways of making money in markets is being compensated for bearing risk. This is a systemic factor and will exist no matter how many people are doing it. That’s not to say it will always be so lucrative, but in general he will always get compensated more than someone who is merely dropshipping.
  - turk73 7y ago
    Hope he's writing off the mileage for all that "driving around." At $.25 per mile he should probably just drive around more! Imagine driving around all day and all night, non-stop driving and writing off all that mileage. He could hire a bunch more people to drive around for him and he'd be a multi-millionaire in no time.
- addicted 7y ago
  Yeah, but his brother has also taken up a lot of risk. There's a much greater chance he could be out of business with absolutely nothing, or worse, he may buy batch of items that gets destroyed, and worst, doesnt sell. The additional income is to compensate for the risk.
  - excalibur 7y ago
    This is why Amazon handles the logistics for so many third-party sellers rather than simply buying their merchandise and reselling it. They get the little guy to assume all of the risk. Unsold products? Your problem. Some kind of defect? Your problem. All Amazon is on the hook for is shipping (and warehousing, although the cost there is a bit more abstract).
    - jjeaff 7y ago
      And when they are handling the logistics, they also get the benefit of just giving a full refund for whatever reason they like. It's nothing out of their pocket, and it makes them look good to the consumer. So, why not? They also get to look at all that sweet data and if any one product or group of products starts to look too good for those small 3rd party sellers, they aren't afraid to just drop right in on top of everyone and push their own product to the buy box everytime. After which they will drive away most of the 3rd party sellers before starting to creep the price upward.
- rtkwe 7y ago
  It shouldn't be surprising it's more profitable though because it's not just transport that their brother is doing it's transport in service of the real business which is essentially retail supply.
- wodenokoto 7y ago
  What a load of success-envy! It’s not the driving that he is making money on. It’s the risc of being able to buy the stuff and the know-how of what to buy.
- jtx22 7y ago
  Why this comment hasn't been downvoted into oblivious is beyond me.
- braythwayt 7y ago
  Nine hours a day of staring at a computer screen and typing something from time to time pays every other job about 1/10th what programmers make. Not advocating a race to the bottom, but... (Go ahead, you can fill in the rest.)
- bdcravens 7y ago
  Sounds like his brother doesn’t expect anything, but rather, understands hustle. To say he makes 200k driving around all day is like saying senior developers make 200k playing with computers all day.
  - scarejunba 7y ago
    All you do is type a few words on a keyboard!
echelon 7y ago
> Huge margins, I know. > Your margin is my opportunity. I don't your brother's business to last forever. While I'm happy for his accomplishments, I hope he's thinking about the competition from above.
- cabaalis 7y ago
  It sounds like his brother is one of those who identifies those opportunities. I think he'll be fine.
- matz1 7y ago
  Nothing last forever, one strategy is you milk it as much as you can till it dries then move on to the next endeavors.
ikeboy 7y ago
That's not wholesale. Margins like that mean he's buying liquidation.
- j-c-hewitt 7y ago
  Maybe his profit quote was vague or excluding Amazon fees. That's not that far off without having to do liquidation. Which is also a viable way to make money selling on Amazon.
  - ikeboy 7y ago
    Amazon fees using FBA typically run around 30% depending on average price. More if you do private label and have to pay advertising. Talking about gross profit without including fees is effectively meaningless. My rule of thumb for a successful wholesale business is 50% cogs, 30% Amazon fees, 20% margin. There are companies that do a lot worse, and I'm sure some that do better but it's extremely difficult to beat 30% margins at any kind of scale without doing liquidation, getting some lucrative exclusives, or otherwise find a very uncompetitive niche. Source: have done several million in sales across hundreds of thousands of units on Amazon in the last few years.
    - davinic 7y ago
      You were higher volume than I, and my Amazon fees across the board ran about 35%, so I completely agree with your assessment. However I was buying liquidation and my cogs tended to be lower, although my processing time/expense likely higher to compensate.
- thaumasiotes 7y ago
  > Margins like that mean he's buying liquidation. Not really. https://www.amazon.com/Polyhedral-Dungeons-Dragons-Pathfinder-Gaming/dp/B07BMX9JMV/ https://www.amazon.com/Polyhedral-Dungeons-Dragons-Pathfinde... is selling for $10.98 the same thing you can buy wholesale for $1.50. Of course, you can get it from https://www.krakendice.com/faux-stone-green-jade-dice-set-for-dungeons-and-dragons/ https://www.krakendice.com/faux-stone-green-jade-dice-set-fo... for the bargain price of $8.95. https://www.krakendice.com/dice-by-collection/pearl-dice/ https://www.krakendice.com/dice-by-collection/pearl-dice/ is selling sets for $5.95 when the wholesale price is $0.49. Even after accounting for the cost of shipping, I'm pretty sure these are margins of over 100%.
misiti3780 7y ago
what is he selling?
jjeaff 7y ago
Not only is that a lot of work, as you mentioned, but it is very volatile and a constant hustle to find the right products at the right price. And as soon as you find a good product to sell at good margins, you have to be moving to the next product because a wave of sellers, both legit and counterfeit will soon move in and start to encroach on your margins. Even the sources of auctions are a constant whack a mole. Any consistent auction source soon gets overrun with a constant supply of newbie buyers that overpay for anything and everything just to try and make their trip worth it. I used to frequent postal auctions for products to resell. Then the droves of bloggers and wantrepreneurs started moving in. I stopped going when people started bidding up the price of MacBooks of unknown provenance to higher than retail. You keep thinking, well these guys are going to lose their shirts and never come back. They don't come back. But 4 more will take their place the next month.

by adossi 7y ago

acollins1331 7y ago

9 hours a day of driving pays every other job about 1/5th what your brother makes. Not advocating a race to the bottom, but expecting to clear 200k a year by driving around to auctions all day is still insane relative to what other people make doing similar work.

jeromegv 7y ago
Are you serious? He's not being paid to drive around. He's being paid to go to auctions, analyze the price of things being sold in large quantities, and decide if there is a business opportunity to sell products in a different market. He then ends up with a large inventory that he must sell, otherwise he is stuck with unsold inventory (risk). He also has no guarantee that the aunction will be selling the same products the week after, so it seems like there is a scarcity risk as well (not having a homerun product to sell constantly) This is what the retail business is. He's not just "driving around".
- ccvannorman 7y ago
  Yeah, this whole thread is based on a false assumption, that the work he does is "easy and equivalent to driving around." It's not easy or trivial to start a business, plus he assumed risk up front. That's like saying "Property owners just sit around and collect rents, so they shouldn't make any money." It totally misses the point of using capital to invest in and maintain real estate, which is not "sitting around" at all - it only becomes easy after you've done a significant amount of work to make it so.
  - mAEStro-paNDa 7y ago
    Real estate is a very poor example considering countless cases of landlords neglecting repairs and maintenance. In some states in the US, there's little or no accountability for this.
    - bdcravens 7y ago
      Sounds like confirmation bias.
  - beatgammit 7y ago
    I've watched some YouTube videos about various arbitrage schemes, including refurbishing. It rarely makes sense at a small scale, but if you can get enough product, you can eliminate the waste by scaling up. I can watch videos/read blogs about how to duplicate a specific win, but by that point so has everyone else and margins drop. A few people who find the deal early can make a ton, and they get paid well for knowing what to look for in a good deal. Even then, I'm sure pretty much everyone who does well with this has plenty of stories where they lost big, and they only win on average. It's the same as stock picking; investors don't get paid well to watch their investments tick up, they get paid well for finding the bargains, and sometimes an investment opportunity is too good to be true.
- sreque 7y ago
  I find it interesting to see this similar kind of behavior in video game economies like with Path of Exile. There are people who spend all day looking for good deals or opportunities, and essentially buying and reselling, maybe with some minor tweaks. These people tend to be the wealthiest in the game, with far more in-game currency than people actually playing the game.
  - wincy 7y ago
    I think a big part of that is because most people don’t care at all about economics in a video game. When you’re mostly competing with children and people who just want to game and don’t care about being rich, putting any sort of organized effort toward getting rich becomes substantially easier. EVE is like this too. These people are also often derided as “not actually playing” the game.
- mruts 7y ago
  Exactly, he gets the risk premium. One of the most straightforward ways of making money in markets is being compensated for bearing risk. This is a systemic factor and will exist no matter how many people are doing it. That’s not to say it will always be so lucrative, but in general he will always get compensated more than someone who is merely dropshipping.
- turk73 7y ago
  Hope he's writing off the mileage for all that "driving around." At $.25 per mile he should probably just drive around more! Imagine driving around all day and all night, non-stop driving and writing off all that mileage. He could hire a bunch more people to drive around for him and he'd be a multi-millionaire in no time.
addicted 7y ago
Yeah, but his brother has also taken up a lot of risk. There's a much greater chance he could be out of business with absolutely nothing, or worse, he may buy batch of items that gets destroyed, and worst, doesnt sell. The additional income is to compensate for the risk.
- excalibur 7y ago
  This is why Amazon handles the logistics for so many third-party sellers rather than simply buying their merchandise and reselling it. They get the little guy to assume all of the risk. Unsold products? Your problem. Some kind of defect? Your problem. All Amazon is on the hook for is shipping (and warehousing, although the cost there is a bit more abstract).
  - jjeaff 7y ago
    And when they are handling the logistics, they also get the benefit of just giving a full refund for whatever reason they like. It's nothing out of their pocket, and it makes them look good to the consumer. So, why not? They also get to look at all that sweet data and if any one product or group of products starts to look too good for those small 3rd party sellers, they aren't afraid to just drop right in on top of everyone and push their own product to the buy box everytime. After which they will drive away most of the 3rd party sellers before starting to creep the price upward.
rtkwe 7y ago
It shouldn't be surprising it's more profitable though because it's not just transport that their brother is doing it's transport in service of the real business which is essentially retail supply.
wodenokoto 7y ago
What a load of success-envy! It’s not the driving that he is making money on. It’s the risc of being able to buy the stuff and the know-how of what to buy.
jtx22 7y ago
Why this comment hasn't been downvoted into oblivious is beyond me.
braythwayt 7y ago
Nine hours a day of staring at a computer screen and typing something from time to time pays every other job about 1/10th what programmers make. Not advocating a race to the bottom, but... (Go ahead, you can fill in the rest.)
bdcravens 7y ago
Sounds like his brother doesn’t expect anything, but rather, understands hustle. To say he makes 200k driving around all day is like saying senior developers make 200k playing with computers all day.
- scarejunba 7y ago
  All you do is type a few words on a keyboard!

echelon 7y ago

> Huge margins, I know. > Your margin is my opportunity. I don't your brother's business to last forever. While I'm happy for his accomplishments, I hope he's thinking about the competition from above.

cabaalis 7y ago
It sounds like his brother is one of those who identifies those opportunities. I think he'll be fine.
matz1 7y ago
Nothing last forever, one strategy is you milk it as much as you can till it dries then move on to the next endeavors.

ikeboy 7y ago

That's not wholesale. Margins like that mean he's buying liquidation.

j-c-hewitt 7y ago
Maybe his profit quote was vague or excluding Amazon fees. That's not that far off without having to do liquidation. Which is also a viable way to make money selling on Amazon.
- ikeboy 7y ago
  Amazon fees using FBA typically run around 30% depending on average price. More if you do private label and have to pay advertising. Talking about gross profit without including fees is effectively meaningless. My rule of thumb for a successful wholesale business is 50% cogs, 30% Amazon fees, 20% margin. There are companies that do a lot worse, and I'm sure some that do better but it's extremely difficult to beat 30% margins at any kind of scale without doing liquidation, getting some lucrative exclusives, or otherwise find a very uncompetitive niche. Source: have done several million in sales across hundreds of thousands of units on Amazon in the last few years.
  - davinic 7y ago
    You were higher volume than I, and my Amazon fees across the board ran about 35%, so I completely agree with your assessment. However I was buying liquidation and my cogs tended to be lower, although my processing time/expense likely higher to compensate.
thaumasiotes 7y ago
> Margins like that mean he's buying liquidation. Not really. https://www.amazon.com/Polyhedral-Dungeons-Dragons-Pathfinder-Gaming/dp/B07BMX9JMV/ https://www.amazon.com/Polyhedral-Dungeons-Dragons-Pathfinde... is selling for $10.98 the same thing you can buy wholesale for $1.50. Of course, you can get it from https://www.krakendice.com/faux-stone-green-jade-dice-set-for-dungeons-and-dragons/ https://www.krakendice.com/faux-stone-green-jade-dice-set-fo... for the bargain price of $8.95. https://www.krakendice.com/dice-by-collection/pearl-dice/ https://www.krakendice.com/dice-by-collection/pearl-dice/ is selling sets for $5.95 when the wholesale price is $0.49. Even after accounting for the cost of shipping, I'm pretty sure these are margins of over 100%.

misiti3780 7y ago

what is he selling?

jjeaff 7y ago

Not only is that a lot of work, as you mentioned, but it is very volatile and a constant hustle to find the right products at the right price. And as soon as you find a good product to sell at good margins, you have to be moving to the next product because a wave of sellers, both legit and counterfeit will soon move in and start to encroach on your margins. Even the sources of auctions are a constant whack a mole. Any consistent auction source soon gets overrun with a constant supply of newbie buyers that overpay for anything and everything just to try and make their trip worth it. I used to frequent postal auctions for products to resell. Then the droves of bloggers and wantrepreneurs started moving in. I stopped going when people started bidding up the price of MacBooks of unknown provenance to higher than retail. You keep thinking, well these guys are going to lose their shirts and never come back. They don't come back. But 4 more will take their place the next month.