The most passive income?
February 16, 2012 10:07 AM   Subscribe

I recently bought a camera from a third party retailer on Amazon (in the US). The retailer used Amazon's fulfillment service to ship the items and to give Amazon Prime members their free shipping. They also priced their wares at a couple bucks less than Amazon itself, so theirs was the default way to purchase the camera. My questions are: What is expected from the third party retailer in this case? Just buying the stock and cashing the checks? Is there anything to prevent, say, me from doing the same thing?
posted by CutaneousRabbit to Work & Money (4 answers total) 1 user marked this as a favorite
There is nothing preventing you from doing so but you as the merchant pay for the fulfillment services that Amazon provides.

Learn all about it.
posted by FlamingBore at 10:29 AM on February 16, 2012

They buy the stock and ship it to Amazon's warehouse. Amazon charges them storage and handling fees regardless of whether it sells or not (as well, as IIRC) comissions on the sales themselves.
posted by Jahaza at 10:29 AM on February 16, 2012

You buy the merchandise. You pay to send it to Amazon. (You hope they don't damage or lose it, you wait a long time to possibly but not always be reimbursed.) You pay a fee whether it sells or sits. You either add your listing onto the current ad, or you create an ad, or you edit the ad (only the first option is available if Amazon is a seller.) You make sure your listing/the ad reflects your merchandise/shipping options accurarately, as even if you didn't create the ad you're responsible for supplying merchandise that fits it - if you don't, you pay the refund and eat the negative feedback if applicable. You pay a commission to Amazon when it sells. You pay to send it back to you if it sits for a long time.

Aside from all that, what also prevents you to do the same thing is not just the money that goes into it up front, but the fact that it's actually not the lowest price that determines who gets the default page listing - there's a ton of other factors that go into it as well, and it often switches during the day to reflect other sellers. So you'd have to either sell something you aren't competing too heavily with, or you'd have to learn how to price things competetively.

I think I covered everything I remember about this process. It's not actually an easy slam dunk in terms of income/profits, but can be rewarding if you are willing to put time and money towards it, sometimes in massive amounts, sometimes perhaos not so much.

[/former Amazon retailer filter]
posted by sm1tten at 10:40 AM on February 16, 2012 [6 favorites]

I wouldn't say there's a "just" there. Even before they do fulfillment, just selling on Amazon means a commision that would mean, say, that you'd have to be able to buy a $500 retail camera for less than $460 before you even paid for anything else in order to make it worth selling there. The fulfillment doesn't cost a lot extra and is probably a good deal as far as that goes if you're already selling there, but it's hardly "passive income"--you'd still have to buy wholesale, have it packaged to sell through them, deliver it to Amazon, keep track of your inventory, do your own accounting, deal with any products that don't meet their specifications, deal with negative customer reviews, pretty much anything else that would go with being in business online, and also the knowledge that at any time, someone else or Amazon themselves could start undercutting your prices.
posted by gracedissolved at 10:44 AM on February 16, 2012

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