How To Be a Middleman on Amazon | 3 Effective Methods To Earn Thousands in Monthly Profits

January 25, 2023

Are you wondering how to be a middleman on Amazon and make money online like millions of other people? A middleman is a person who plays a role in the exchange between two parties. Being a middleman is one of the best ways to make money because you profit by letting two other parties do the hardest part of the work. What about being a middleman for one of the richest companies in the entire world? Now that’s an opportunity to be excited about! Just think, in 2022, Jeff Bezos and Amazon generated over $500 billion dollars.. With Amazon, you can choose from three different middleman methods to get yourself a piece of that pie and potentially make hundreds of thousands of dollars each month!

However, Amazon isn’t the only way to make money as a middleman online. Local lead generation is another online business strategy where you profit as the middleman between a local business and customers looking for a service. With a local lead generation business, you create a website to attract leads for a local business niche. Then, you sell those leads to a local business to perform the work. You can make thousands of dollars a month just by helping a local business get more customers and grow! Local lead generation is an excellent opportunity to make money online, just like Amazon. Now, are you ready to learn how to become a middleman for Amazon? 

1. Amazon Associates

Amazon Associates is Amazon’s affiliate marketing program. Being an affiliate marketer through the Amazon Associates program is how you make money on Amazon without selling anything. As an Amazon Associate, you are a marketing middleman between Amazon and their customer. You promote products for other Amazon sellers and earn a commission if the product sells. According to Hootsuite, some Amazon affiliates earn up to $16,000/month promoting Amazon products!

The Amazon Associates program is often recommended for those just getting into affiliate marketing. The program is an affiliate network that has low entry requirements to get accepted. However, the major drawback to being an Amazon marketing middleman is that Amazon Associates pays out very low commission rates compared to other affiliate networks like ClickBank. Although you can earn up to a 20% commission depending on the product category, most Amazon Associates product categories will earn you just a 4% commission on the sale.

What are Amazon affiliate bounties? 

The Amazon Associates program is the method most people use to make money as an Amazon marketing middleman, but it's not the only way. The Amazon Bounty program is how to do Amazon marketing without promoting sellers products. Instead, you promote Amazon services and programs to earn fixed commissions, or "bounties". These include digital products like Audible, Amazon Prime, and Amazon Music. Because these are Amazon's own products, promoting from the Amazon bounties program can often be even more lucrative than promoting low commission products from the Amazon Associates program. 

2. Amazon dropshipping

Dropshipping is an Ecommerce business model where you act as the middleman between a supplier and customer to earn a small profit on each sale. Amazon dropshipping is how to become an Amazon seller without inventory, because you only buy products to sell after they have already sold on Amazon. Here’s how Amazon dropshipping works.

  1. Do research to find a product opportunity and supplier with the product

  2. Analyze if you can make a profit by selling the product on Amazon

  3. Add the product to your product catalog in Amazon seller central

  4. Forward customer shipping details to your supplier when Amazon customers purchase from you

  5. Your supplier ships the product directly to the customer, and, and you pocket the difference

Once you get the hang of the business model, Amazon dropshipping can be quite lucrative. You can make between $1,000 and $50,000/month dropshipping on Amazon, according to BlueCart. 

How much money do you need to start dropshipping on Amazon?

You need $500 to $1,000 to start dropshipping on Amazon at least. When an Amazon customer buys your dropshipping product, you do not receive payment instantly. It takes around 15 to 20 days to receive payment from Amazon for a domestic order and up to 50 days for an international order, according to SellerEngine. Therefore, you need to be prepared to purchase products from your supplier upfront by having your own money ready.

What are the rules for Amazon dropshipping?

  • You must always be listed as the seller of record for your products
  • Have your supplier remove any information that identifies them like invoices or packing slips
  • Identify yourself as the seller on all materials packaged with the product
  • Take responsibility for accepting and processing returns
  • Adhere to all terms in the Amazon seller agreement

3. Amazon wholesale

An Amazon wholesale business acts as the middleman in the supply chain between a manufacturer, distributor, or brand, and Amazon. Amazon wholesale works by buying in bulk to get products for cheaper than the market price and then reselling those products on Amazon for a profit.

Is Amazon wholesale profitable?

Amazon wholesale is profitable and you can earn anywhere from 10% to 50% profit on each sale, according to Helium10. Amazon wholesale profitability depends on many factors, including:

  • Market price of the product
  • Shipping costs
  • Amount of seller competition
  • Amazon fees
  • Relationship with supplier

You should aim to make at least 15% to 20% profit when selling wholesale, according to Chron Small Business. This is the profit margin most manufacturers and wholesalers aim for when analyzing a business opportunity.

How much money can you make with Amazon wholesale?

You can make up to $250,000/month with Amazon wholesale, according to JungleScout. However, only 1% of Amazon sellers actually make that much, and most are major businesses or manufacturers selling on the platform. The majority 52% of Amazon sellers make between $0 and $5,000 in revenue each month.

How do I become a small wholesaler?

  1. 1
    Do product research to find a product to sell
  2. 2
    Find a source to supply your products
  3. 3
    Create an Amazon seller account
  4. 4
    Add your product on Amazon
  5. 5
    Choose your Amazon fulfillment method
  6. 6
    Reinvest profits to grow your business

1. Product research

If you want to be a wholesaler on Amazon, you need a product to sell. Amazon product research is a comprehensive process of coming up with product ideas for your Amazon business. It can take weeks or even months before you find a good product opportunity. If you want to be successful, it's important to analyze the market and find the right opportunity or else you could end up losing thousands of dollars on your investment. 

2. Find a supplier

You have three options when finding a supplier for your wholesale products. You can source your products from a manufacturer, distributor, or directly from the brand. 

Manufacturer

A manufacturer is a business that actually produces the product you want to sell. Amazon wholesalers most often source generic products from manufacturers. These are the type of unbranded products you usually find when working with manufacturers from sites like Alibaba or AliExpress. 

Distributor

Distributors are companies that have deals with brands to place massive bulk orders to manufacture the brands' products. Distributors then often contract with smaller wholesalers to sell segments of the bulk order for a profit. A distributor is the most common way for a wholesaler to source branded products. 

Brands

A brand is the business that owns the rights to the product because they created it. Some wholesalers are able to coordinate deals directly with brands to get the best price for the branded product. However, you usually need to be an established wholesaler with past selling history for a brand to consider working with you. Therefore, it's often best to get started sourcing from a manufacturer or distributor. 

3. Amazon seller account

Once you order your products, you need to set up an Amazon seller account to wholesale on the platform. According to Helium10, getting approval for an Amazon seller account usually takes 24 hours or less if you have all your materials ready. To create a seller account on Amazon, you'll need:

  • Amazon customer account or business email address
  • Credit card that can be used for international transactions
  • Government issued ID
  • Tax information
  • Phone number
  • Bank account to receive sales proceeds

4. Add your products

Occasionally you'll need to set up the product listing yourself for Amazon customers to find you. However, as a wholesaler, you'll usually find your product listing has already been set up. There can only be one product listing on Amazon for a single product. Therefore, many Amazon wholesalers often share a single product listing and compete for the buy box. 

To add your product to your Amazon product catalog, you simply need to go into Amazon seller central and search with your product's ASIN. When you find your product in the catalog, tell Amazon at what price you want to sell the product for, its condition, and how many of the products you have in stock. 

5. Amazon FBA vs FBM

Before you finish adding your product to Amazon, you first need to choose who will be responsible for fulfilling your product orders. There are two choices for order fulfillment on Amazon, Amazon FBA and Amazon FBM. If you choose Amazon FBA, you choose to leverage Amazon's logistics capabilities and store your products in the Amazon warehouse. There are many pros to using Amazon FBA, which is why the majority 73% of Amazon sellers use this method, according to SellerApp. If you choose Amazon FBM, you are responsible for handling tasks like order storage and shipping yourself. 

6. Reinvest profits

If you want to grow your Amazon wholesale business and actually make money, you'll need to continuously reinvest your profits for at least the first year or two. An Amazon wholesale business is all about your profit margins and the quantity of products you can sell. For example, say you start your business with a $10,000 product order and average a 20% profit margin on all sales. Then, on your first order, your profit would only be $2,000. If you reinvest all your profits, you can buy a larger order of products and make a greater profit on the next order. Eventually, reinvesting your profits compounds like money in the bank and instead of earning $2,000 in profit per order, you can earn $4,000, $10,000, or even $25,000 per bulk order. However, if you don't reinvest your profits in the beginning, you're business won't grow. 

How much money do you need to wholesale on Amazon?

You need at least $3,000 to $5,000 to wholesale on Amazon, according to Helium10. You need to consider the costs of:

  • Using a product research tool - Product research tools like JungleScout, Helium10, and Viral Launch help you effectively understand Amazon product data so you can choose the right product to sell. JungleScout is probably the most popular option and starts at $49/month for the most basic package.
  • Buying the products in bulk - The whole point of wholesale is to buy enough of a product in a single order to get the lowest price possible. Furthermore, many manufacturers require a minimum order quantity (MOQ), usually around 500 units. For example, even if your product costs just $10 to manufacture, but the manufacturer requires 500 units, that's already $5,000 without considering any other costs like shipping. 
  • Shipping the products - Besides the cost of your order, shipping is usually the second largest expense. Most sellers source products from countries with cheaper manufacturing costs like China, India, and Vietnam. Although you can get high quality products for a fraction of the price, you also get a substantially higher international shipping bill and usually need to pay import taxes to receive the products as well.
  • Inventory storage fees - Once you receive your items, you need somewhere to put them until they sell. If you’re an Amazon FBA seller, you can pay Amazon to store the products for you. Amazon FBA charges you storage fees depending on the product dimensions and weight. If you fulfill your own Amazon orders and don’t want to store hundreds of products in your garage, you can pay a third party logistics service like 3PLGuys.
  • Amazon seller account - If you’re wholesaling on Amazon, you’ll need the Amazon professional seller subscription. This will set you back $39.99/month.

Can you wholesale on Amazon without an LLC?

You can wholesale on Amazon without an LLC and many sellers do so. However, there are benefits to setting up an LLC to wholesale on Amazon. For starters, forming a legitimate business can help you more easily secure sourcing deals with manufacturers and brands. Many brands limit the amount of Amazon sellers they partner with to sell their products on the platform. By taking the extra step of setting up an LLC or other legal business entity, you set yourself apart from the competition and improve your credibility. Beyond enabling you to secure better sourcing deals, other benefits of an LLC include:

  • Ability to secure business loans
  • Easier to separate personal finance from business finances for tax purposes
  • Protection from potential lawsuits
  • Allows you the ability to sell the business

Which tool is best for Amazon wholesale?

  • Jungle Scout Product Database, Opportunity Finder, Extension - Best product and competitor research tool to find selling opportunities.
  • Inventory Lab - Best inventory management tool to maintain sufficient product levels.
  • Amazon Seller App - Best Amazon mobile application to track Amazon account performance.
  • Adtomic by Helium10 - Best Amazon PPC advertising tool to promote your product to more customers.
  • Freightos - Best freight forwarder tool to ship product orders internationally.
  • Informed - Best repricing tool to adjust pricing and maximize profits.
  • Quickbooks - Best accounting software for Amazon sellers to track sales and analyze profits.

Can you make a living selling on Amazon as a middleman?

Yes, you can make a living selling on Amazon. The average cost of living in America is around $5,000/month, according to First Republic. Data from JungleScout shows that 22% of Amazon sellers make between $10,000 and $100,000/month in sales. When using a typical profit margin of 20% to estimate their take home earnings, those sellers earn between $2,000 and $20,000 per month! However, these are successful Amazon sellers at the highest range of earners. Although you can make a living selling on Amazon, most sellers don’t make enough to live off of from their Amazon earnings alone.

How much does the average Amazon reseller make?

The average Amazon reseller makes between $1,000 and $2,500/month in sales, according to The Balance. As a result, most Amazon resellers find Amazon a suitable side hustle to earn some extra cash.

Why do sellers leave Amazon?

There are many reasons sellers are leaving Amazon, including:

  • Too much competition on the platform
  • Shrinking profit margins from Amazon fee increases
  • Amazon account suspensions
  • Better alternative online business models
  • Tired of the long hours and stress required to run an Amazon business
  • Uncomfortable continuing to risk thousands of dollars on products
  • Unprofitable because of Amazon advertising costs

What are the fees for selling something on Amazon?

  • Selling plan - This is the fee Amazon charges to allow you to sell on the platform. You can either pay for the $39.99/month professional plan to sell unlimited products, or pay $0.99/unit sold with the individual plan. 
  • Referral fees - Amazon charges a percentage fee on each individual product depending on its category. Most Amazon category referral fees range between 8% and 15%, but can go as high as 45%. 
  • Fulfillment fees - These are fees Amazon charges you related to order fulfillment under the Amazon FBA program. Fulfillment fees cover picking and packing orders, customer service, shipping and handling, product returns and product storage. FBA fees are charged based on the size, weight, and quantity of products you send to Amazon.

These are the main fees you'll encounter when selling on Amazon as a third party seller. However, depending on the situation, you may have to pay other additional fees like advertising fees, long-term storage fees, or refund administration fees.

Do you need a license to sell on Amazon as a middleman?

You do not need a business license to sell products on Amazon, according to Swyft Filings. This is because most products sold online, including on Amazon, are consumer products that don’t require government approval. However, many Amazon wholesalers obtain a Reseller Permit. A Reseller Permit allows you to purchase items for resale without paying sales tax. This avoids the products you sell getting taxed twice, so the sales tax is only charged to the customer when they buy from you, instead of both you and the customer.

Do you need a tax ID to sell on Amazon?

You do need a tax ID to sell on Amazon. If you’re a sole proprietor without a formal business, you use your personal tax ID number. If you have a business entity like an LLC, you use your business tax ID number, or EIN. 

What is the best product to sell as a middleman on Amazon?

  • Electronics
  • Cameras and photography equipment
  • Clothing, shoes, and jewelry items
  • Beauty and personal care products
  • Home and kitchen products
  • Pet supplies
  • Sports and outdoor recreation products
  • Baby and children's toys

There are many great product opportunities when selling on Amazon. However, new sellers should avoid certain products like fragile items when just getting started on the platform. 

Where can you source products to sell on Amazon?

  • Supplier marketplaces like Alibaba
  • Online consumer marketplaces like AliExpress
  • Major retailers like Walmart or Costco
  • Thrift stores like Goodwill
  • Liquidation stores like Quicklotz

Which Amazon middleman strategy has the greatest potential for long term success?

Wholesale is the Amazon middleman strategy with the greatest potential for long term success. You earn substantially more with wholesale than the slim margins of dropshipping or the disappointing commissions of the Amazon Associate program. Furthermore, you can scale your online store much easier with a wholesale business than the other two methods.

Which Amazon middleman strategy is best for you? 

Although wholesale is the best option for long term success, not everyone has $5,000 laying around to invest. The Amazon middleman strategy that is best for you depends on your circumstances and preferences. If you prefer marketing activities like copywriting or blogging, the Amazon Associates program is likely best for you. However, if you prefer browsing through products all the time and finding great deals, dropshipping may be best for you. 

What are some other ways you can make money on Amazon?

Amazon Mechanical Turk

Amazon Mechanical Turk is a crowdsourcing marketplace that businesses and individuals use to outsource virtual tasks. Types of Amazon-related tasks you can start doing to make money with the MTurk Marketplace include:

  • Helping to select the best picture to showcase a product
  • Identifying incomplete or duplicate product listings in a catalog
  • Writing content for website
  • Rating the accuracy of search results

Private label products

Private labeling is selling products under your own brand name on the Amazon marketplace. As the brand owner, you can more easily distinguish your product from the competition and have your own product listing to take advantage of Amazon SEO. Private label is similar to wholesale, but has many advantages that make it the preferred Ecommerce method for many sellers. 

Amazon Handmade

Amazon Handmade is a program for artisans to sell handcrafted products like home decor, jewelry, accessories, and more. Sellers in the program enjoy a waiver of the professional seller fee and an automatic invitation to the Amazon Brand Registry. However, you have to pass a strict application process before they accept you into the program. Amazon needs to ensure you are providing their customers with genuine, handcrafted goods.  

Retail arbitrage

Many people find retail arbitrage is the easiest way to start making money on Amazon. Retail arbitrage is finding products at retailers like Walmart or Target that are on sale, and then flipping them on Amazon for a profit. There is no minimum inventory amount to sell on Amazon. So, you can literally pick one product up at a time and make money be reselling it. 

Are you ready to make money online as a middleman? 

Many aspiring entrepreneurs want to learn how to become a middleman online. You can be an Amazon middleman, a local lead generation middleman, or even learn to be a Craigslist middleman. However, I prefer local lead generation over every other online business model because of how quickly you can make passive income. 

Each local lead generation website you own can make you thousands of dollars per month. Once you set these websites up, they require very little maintenance or overhead costs on your part. They continue to churn out cash for you for the long term. For those looking for passive income in a matter of months, local lead generation is the best online business opportunity in 2023. Are you ready to become a middleman and make money online?
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