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Amazon Side Hustle – Can Amazon FBA Income Replace Your 9-to-5?

Threecolts
Geri Mileva
Published
October 13, 2023
Modified
March 26, 2024
Amazon FBA as a Side Hustle

Amazon continues to hold the world record as the largest e-commerce platform, generating 103 billion dollars in third-party sales. Roughly 60% of the total units sold via Amazon are from third-party sellers who make an average of $1,000 in monthly sales.

This makes Amazon a lucrative side hustle for many aspiring entrepreneurs. However, the question remains: can your Amazon side hustle become a full-time job?

Amazon FBA as a Side Hustle

Amazon is an ideal side hustle because of its FBA (Fulfillment by Amazon) program. With Amazon FBA, sellers can focus on sourcing and growing their product lines while Amazon handles the storage, packaging, and shipping of these products. 

Amazon will also handle customer service and returns. Other benefits include gaining access to Amazon’s vast customer base and Prime shipping, which leads to increased sales. Moreover, the convenience of not having to deal with the nitty-gritty of fulfillment logistics is a big game changer for many entrepreneurs. 

As a side hustle, Amazon FBA offers the following benefits:

  • Flexibility: You can start small and scale up gradually, making it an ideal choice for those with limited time or resources.
  • Low Barrier to Entry: Compared to traditional business models, Amazon FBA requires relatively little upfront investment.
  • Access to Amazon's Ecosystem: Leveraging Amazon's infrastructure and customer base can give your side hustle a significant boost.

Time Investment for Amazon FBA

However, you shouldn’t make the mistake of thinking that Amazon FBA will require little of your time and effort. Even as a side hustle, you still need to invest considerable time researching the right products, setting up your store, and becoming familiar with the Amazon platform. 

You’ll likely spend several hours weekly managing your business and keeping your store operational. You’d also need to spend time marketing your products. 

A survey of Amazon third-party sellers reveals that 64% spend fewer than 20 hours per week working on their Amazon store. Of those who spend less than 20 hours per week, more than 50% make a decent 11-20% margin. 

But time isn’t the only factor affecting the success of your Amazon side hustle. You also need to learn about product selection and competition. You also have to choose the right business model and equip yourself with the right tools. 

3 Business Models for Your Amazon Side Hustle

There are three main ways you can run an Amazon business. Some are cheaper and easier to start, while others offer long-term potential. 

To find the right business model, you need to ask yourself about your goals for starting the business. Is it to have a second source of income or to create a long-term business that ultimately frees you from your job? 

You should also find out your ability to invest time and money in the business upfront and how much effort you're willing to commit on a weekly basis. 

Here are three of the best Amazon side hustle business models you can choose depending on your goals and situation. 

  1. Retail Arbitrage

This is the most popular Amazon side hustle because you don’t need a huge budget to start. You can also successfully do it without visiting a physical store in a process called retail arbitrage.

Retail arbitrage involves sourcing products from local retail stores or online marketplaces at a lower price and reselling them on Amazon at a higher price. Sellers capitalize on price differences to make a profit.

Pros of Retail Arbitrage

  • Low start-up cost: Retail arbitrage requires minimal upfront investment, making it accessible to beginners. You can start with only $500 to $1,000 as initial capital.
  • Wide Product Variety: You can sell a wide range of products, depending on what you find in stores or online. 
  • Quick Start: You can begin selling almost immediately after finding profitable products. Compared to private label sellers, 33% of retail arbitrage sellers started their Amazon business in less than one month.

Cons of Retail Arbitrage

  • Limited Scalability: Sourcing products from retail stores can be time-consuming, limiting your ability to scale.
  • Competition: As it's easy to enter, you'll face competition from other arbitrage sellers.
  • Fluctuating Supply: The availability of profitable products can be inconsistent.

To get started, you should visit local retail stores, clearance sales, thrift shops, and online marketplaces like eBay or Craigslist to find products at a lower price than their potential selling price on Amazon. You can use price scanning apps to scan barcodes and then upload them to a tool like Tactical Arbitrage to identify opportunities for profitable sales. 

Retail arbitrage is a good side hustle for those who already love to shop since you’d find the sourcing process fun. It’s also easy to earn a decent profit as long as you meticulously research your products. However, if you want a long-term scalable business, retail arbitrage may not be worth all the trouble. 

  1. Wholesale

Another popular Amazon side hustle business model is buying products in bulk and then reselling them on Amazon. This is called the wholesale business model and involves working directly with a wholesale supplier or product manufacturer. 

You’re still selling another brand’s product, but you’d be getting them at higher discounts because you’re purchasing a larger inventory. However, you need a huge amount of capital to make this business model work and maintain a good relationship with your supplier for them to provide you with quality goods on time. You still also need to conduct thorough product research and be certain of the product’s appeal to your customers to ensure you’re not stuck with inventory you can’t sell. 

Pros of Wholesale:

  • Scalability: Wholesale allows for higher volume sales and the potential for a full-time income.
  • Consistent Supply: Suppliers provide a steady source of inventory, reducing sourcing challenges.
  • Brand Recognition: You can sell well-known brands, benefiting from existing customer trust.

Cons of Wholesale:

  • Higher Initial Investment: Compared to retail arbitrage, wholesale may require a more substantial initial capital investment.
  • Competitive Market: Wholesale can be competitive, with other sellers offering the same products.
  • Supplier Relationships: Building relationships with reliable suppliers is crucial but can take time.

If you want a side hustle that can turn into a scalable business, the wholesale model might work for you. There’s a lot of upfront work and resources involved, but once you get past the initial stage, your business will be set for long-term rewards. 

To get started, you need to purchase product samples from suppliers and test their quality before committing to a larger order. As with any Amazon side hustle, you should already know which market you’d target and which products have the highest probability of bringing in consistent sales. When you’re confident with the product and the supplier, you can make the initial investment and set up your Amazon FBA store.

  1. Private Label

The majority of Amazon third-party sellers (around 54% of them) use the private label business model to sell their products on the platform. The private label model involves sourcing generic or unbranded products, usually from overseas manufacturers, and labeling them with your brand or logo. If you manufacture your own products, you’d also fall under this category. 

Free Socks in a Cardboard Box Packaging Stock Photo

Because the product is unique to your store, you won’t face competition in claiming the Amazon Buy Box. After all, you’re the only seller for said item. 

Pros of Private Label:

  • Brand Control: You have control over the branding and marketing of your products, fostering brand recognition. You are also in control of every aspect of your Amazon business.
  • Higher Profit Margins: Private label products can yield higher profit margins compared to reselling branded items since you determine the selling price and desired margins.
  • Less Competition: You create a unique product, reducing direct competition with identical listings. You can leverage your brand reputation to increase the value of your product. 

Cons of Private Label:

  • Higher Risk: There's a risk of investing in inventory that may not sell as expected. You also face the risk of branding a generic product with poor quality or one that’s easily copied by other sellers. This will be a liability to your brand reputation and could harm it in the long run. 
  • High Initial Investment: Building a private label brand often requires a significant upfront investment in terms of inventory, manufacturing costs (if you manufacture products yourself), brand development (logos, packaging, labels), and product research.
  • Slow Payouts: Because of the intense upfront investment, it can be slower to hit profitability since you need time to build your brand and drive sales to your product. 

The private label business model is the most time-consuming and capital-intensive of all the Amazon side hustles listed here. However, it’s the one that has the highest potential to become a long-term business. It’s also a business you can easily expand to other online and offline sales channels. 

To get started, you need to brainstorm brand names and product ideas. Invest time in learning how to build a brand and find the perfect products. You also need to think long-term and potentially consider creating your own online store and selling your products on other e-commerce platforms like Walmart.

Getting Started with Amazon FBA as a Side Hustle

Once you’ve decided on a business model to pursue your Amazon side hustle, it’s time to put your plans into action. For side hustlers, time is of the essence since you’re mostly working in your spare time. Here are the steps to kickstart your business:

  1. Create an Amazon Seller Account

The first step on your Amazon FBA journey is to set up an Amazon Seller account. You can choose between an Individual or Professional account. For most aspiring FBA sellers, the Professional account is recommended as it provides additional features and allows you to sell an unlimited number of products.

  1. Research your products and choose your niche

Before diving in, invest time in market research. Explore various product categories and niches to find those with high demand and reasonable competition. Tools like Amazon’s Best Sellers list, Google Trends, and specialized software like Jungle Scout, Threecolts, or Helium 10 can help you identify promising niches.

  1. Source products

Depending on your business model, you can either search for profitable products to resell online or look for manufacturers of generic items that you can rebrand. If you have an idea for a unique product, you can look for manufacturers who can bring the vision to life. Choose the sourcing method that aligns with your budget, risk tolerance, and business goals.

  1. Prepare your products

Before sending your products to Amazon’s fulfillment centers, ensure they meet Amazon’s packaging and labeling requirements. This includes labeling products with unique barcodes (UPC, EAN, or ISBN) and packaging them securely.

  1. List your products on Amazon

Create product listings on Amazon by writing persuasive product descriptions, using high-quality images, and optimizing your titles and keywords to improve visibility in search results. 

If you’re doing retail arbitrage or wholesale, there’s a high chance that the listing already exists, and you simply need to copy it. While this saves time, you need to watch out for the pricing and ensure your product is priced competitively. 

Speaking of price, you also need to research your competition to set competitive prices. Consider factors like your costs, shipping fees, and desired profit margins. Tools like Threecolts’ SmartRepricer can help you stay competitive.

  1. Send inventory to Amazon

Using Amazon's FBA program, you'll send your products to Amazon's fulfillment centers. They will handle the storage, packing, and shipping to customers. Ensure your inventory is accurately tracked in your seller account.

  1. Monitor and optimize

Regularly monitor your sales, reviews, and customer feedback. Adjust your pricing, advertising, and inventory levels as needed to improve the performance of your business. Be responsive to customer inquiries and issues to maintain a positive seller reputation.

You can use tools like Threecolts’ Feedback Whiz to ask for customer reviews and ChannelReply to make customer service efficient. 

  1. Market your products

While Amazon can drive organic sales, running Amazon PPC (Pay-Per-Click) campaigns can drastically help increase visibility. In addition, build your brand presence outside of Amazon through social media, Google and Facebook Ads, email marketing, and your own e-commerce website. 

If you’re a private label brand, use the Amazon Influencer Program to build brand awareness.

  1. Stay compliant and informed

Keep up-to-date with Amazon's policies and guidelines to ensure you stay in good standing as a seller. Regularly review Amazon's Seller Central for updates and important announcements.

  1. Scale your business

As your FBA side hustle grows and generates steady income, reinvest in your business. Source more products, expand into new niches, and consider additional strategies like bundling or creating product variations.

Balancing Full-Time Employment and Amazon Side Hustle 

Starting an Amazon side hustle requires a tight balancing act. Though you only have a fixed number of hours per week, you’ll have to squeeze in the time to launch and operate your Amazon business. 

Since it’s a side hustle, it’s normal to start working solo and juggle the initial stages with your full-time job or other income sources. Set clear boundaries and define your working hours for both your full-time job and FBA business. Stick to these boundaries to avoid burnout and maintain a work-life balance.

You should allocate specific time blocks for your FBA tasks, such as product sourcing, listing creation, and customer service. Use productivity techniques like the Pomodoro Technique to stay focused during these blocks. You can also utilize Amazon's FBA services to automate order fulfillment and customer service. Consider outsourcing tasks like bookkeeping, product photography, or listing optimization to free up more of your time.

Finally, leverage technology to make the work easier. Use inventory management software, repricing tools, and other apps to streamline your FBA operations and reduce manual work. For example, if you run a private label business, you can use Bindwise, an Amazon listing monitoring tool, to help protect your brand from hijackers who’d piggyback on your Amazon listings. 

Realistically, juggling a full-time job and an FBA business can be time-consuming and leave little room for your personal life. The stress can be mentally taxing, especially during peak seasons or when there are unexpected challenges. 

However, with the right mindset, an optimized process, and an arsenal of Amazon business tools, you can overcome these challenges and build a profitable side hustle that can potentially replace your full-time income. 

From A Side Hustle to a Full-Scale Business

It is every entrepreneur’s dream to turn their side hustle into a full-scale business that can afford them financial and time freedom. Starting an Amazon FBA business as a side hustle holds a lot of promise to become a full-scale business that can potentially last generations. 

With passion and persistence to keep the business going through the tough initial stages, you have a much better chance of reaching a breakthrough. Once you have a full-scale Amazon business, venture out to other sales channels to expand your products’ potential further. Leverage technology like the apps offered by Threecolts so you can efficiently grow your business from Amazon to eBay, Walmart, Shopify, and other online platforms. 

Becoming a full-time business owner from a side hustle that only takes 20 hours or less a week is possible. The key is to start now and not let the challenges stop you from reaching your goal. 

Frequently Asked Questions

Can I make $1,000 a month selling on Amazon? 

Yes, it’s possible to make $1,000 in monthly sales on Amazon. In fact, super sellers can make more than $100,000 per month. Your monthly income depends on several factors, like product selection, business model, marketing and promotion, and pricing. Remember, there are no guarantees, and achieving consistent $1,000 monthly sales doesn’t happen overnight.

It often takes time to build a customer base and optimize your business operations. Patience, dedication, and a willingness to learn and adapt are essential qualities for Amazon sellers.

How much time should I spend on Amazon as a side hustle?

Your side hustle can range from a part-time endeavor to a more substantial commitment, depending on your goals and situation. If you have a full-time job or other significant responsibilities, you may have limited hours available for your Amazon business. In such cases, you might start with a few hours per week.

If you're new to selling on Amazon, you'll need to allocate extra time initially to learn the ropes. Familiarizing yourself with Amazon's seller platform, understanding policies, and grasping the basics of effective listing creation take time.

Some business models, like retail arbitrage and online arbitrage, require more time spent sourcing products in physical stores or online. In contrast, private label sellers may invest more time in product research and branding. As your business grows, you might consider outsourcing certain tasks, which can free up your time for other important aspects of your business.

There's no one-size-fits-all answer to how much time you should spend on your Amazon side hustle. It's a flexible endeavor that you can tailor to your circumstances and goals. Start with a manageable amount of time, and as you gain experience and see results, you can adjust your commitment accordingly. The key is finding the right balance between your side hustle and other aspects of your life while working toward your desired income and business growth.

Is Amazon a source of passive income? 

Amazon can be a source of passive income, but it depends on how you choose to utilize the platform and the business model you adopt. Passive income typically refers to earnings that require minimal ongoing effort to maintain.

Running an Amazon business requires time-consuming tasks like inventory management, customer service, and marketing. You can outsource or automate most of these tasks, increasing the passive income potential. However, you still need to keep in touch with market changes to remain adaptable and achieve long-term success.