If you shake up the way you look at selling online, you will notice that it isn’t that far away from investing (actually it is almost identical). This is a business model that I put together based upon some of my readings and knowledge. This is not something that I recommend, but it might work perfectly for some people. I like to toss ideas out there for you to consider to expand your mind and ways of thinking.
Most people think of selling online as a business, but I look at it as an investment (and a business). In the world of investing, the magic sauce that makes it all work is compound interest. If you look at your initial investment into inventory as your principal and your ROI as your interest, you can learn some interesting things about how to make some serious money. The chart below is something similar to a chart that I saw back in high school in regards to retirement accounts. I am going to take the same concept of retirement and convert it into Amazon selling.
Take the following chart for example:
| Investment | Return | Total Money Back |
| $1,000 | 10% | $1,100 |
| $1,100 | 10% | $1,210 |
| $1,210 | 10% | $1,331 |
| $1,331 | 10% | $1,464 |
| $1,464 | 10% | $1,611 |
| $1,611 | 10% | $1,772 |
| $1,772 | 10% | $1,949 |
| $1,949 | 10% | $2,144 |
| $2,144 | 10% | $2,358 |
| $2,358 | 10% | $2,594 |
| $2,594 | 10% | $2,853 |
| $2,853 | 10% | $3,138 |
| $3,138 | 10% | $3,452 |
| $3,452 | 10% | $3,797 |
| $3,797 | 10% | $4,177 |
| $4,177 | 10% | $4,595 |
| $4,595 | 10% | $5,054 |
| $5,054 | 10% | $5,560 |
| $5,560 | 10% | $6,116 |
| $6,116 | 10% | $6,727 |
| $6,727 | 10% | $7,400 |
| $7,400 | 10% | $8,140 |
| $8,140 | 10% | $8,954 |
| $8,954 | 10% | $9,850 |
| $9,850 | 10% | $10,835 |
| $10,835 | 10% | $11,918 |
| $11,918 | 10% | $13,110 |
| $13,110 | 10% | $14,421 |
| $14,421 | 10% | $15,863 |
| $15,863 | 10% | $17,449 |
| $17,449 | 10% | $19,194 |
| $19,194 | 10% | $21,114 |
| $21,114 | 10% | $23,225 |
| $23,225 | 10% | $25,548 |
| $25,548 | 10% | $28,102 |
| $28,102 | 10% | $30,913 |
| $30,913 | 10% | $34,004 |
| $34,004 | 10% | $37,404 |
| $37,404 | 10% | $41,145 |
This chart assumes that you reinvest all of your earnings back into inventory. You can see that a simple $1,000 investment can turn into $40,000 in as little as 40 full turns of your inventory at a 10% profit margin.
A ton of people focus on high returns (which is my preferred business model), but how many times have you passed on an item that had a return of 30% with a really low sales rank? There could be a business out there for someone who is looking for these kinds of deals.
Now lets look at an example that shows what a 30% return would look like:
| Investment | Return | Total Money Back |
| $1,000 | 30% | $1,300 |
| $1,300 | 30% | $1,690 |
| $1,690 | 30% | $2,197 |
| $2,197 | 30% | $2,856 |
| $2,856 | 30% | $3,712.93 |
| $3,713 | 30% | $4,827 |
| $4,827 | 30% | $6,275 |
| $6,275 | 30% | $8,157 |
| $8,157 | 30% | $10,604 |
| $10,604 | 30% | $13,786 |
| $13,786 | 30% | $17,922 |
| $17,922 | 30% | $23,298 |
| $23,298 | 30% | $30,288 |
| $30,288 | 30% | $39,374 |
| $39,374 | 30% | $51,186 |
| $51,186 | 30% | $66,542 |
| $66,542 | 30% | $86,504 |
| $86,504 | 30% | $112,455 |
| $112,455 | 30% | $146,192 |
| $146,192 | 30% | $190,050 |
In just 20 periods (or turning of inventory), you could take $1,000 and make it $190,050 by just finding inventory that returns 30%.
The biggest issue with this idea is scalability. Are you really going to be able to find enough inventory to purchase during each period. With enough research and planning, I think it is possible, but it will take some work.
I’ll do one more example if you were able to find 40% return on all your items.
| Investment | Return | Total Money Back |
| $1,000 | 40% | $1,400 |
| $1,400 | 40% | $1,960 |
| $1,960 | 40% | $2,744 |
| $2,744 | 40% | $3,842 |
| $3,842 | 40% | $5,378 |
| $5,378 | 40% | $7,530 |
| $7,530 | 40% | $10,541 |
| $10,541 | 40% | $14,758 |
| $14,758 | 40% | $20,661 |
| $20,661 | 40% | $28,925 |
| $28,925 | 40% | $40,496 |
| $40,496 | 40% | $56,694 |
| $56,694 | 40% | $79,371 |
| $79,371 | 40% | $111,120 |
| $111,120 | 40% | $155,568 |
| $155,568 | 40% | $217,795 |
| $217,795 | 40% | $304,913 |
| $304,913 | 40% | $426,879 |
| $426,879 | 40% | $597,630 |
| $597,630 | 40% | $836,683 |
I hope this has given you a new way to look at Amazon selling. Like I said above, this model is something that is shared to sharpen your mind and get you thinking about new ways to make money by selling on Amazon.
Cheers!
CW