AS 40: Greyhat Strategy that is Better Than Selling Amazon Private Label and Pulls Millions Monthly
29 Jul 2016
There is a massive grey-hat strategy I discovered today. I don’t know anyone talking about it. I have heard of a few people saying someone is selling their product at a more expensive price, but no one truly has talked about the ridiculousness and extreme nature about it.
NewsFlash for Amazon:
I think this is cake money for Amazon. The rich get richer. Yes, it’s true. Amazon has a ton of cash on hand but not only that, it is a powerhouse when it comes to automation. Why not connect the two. Automate they cash flow, into the form of loans, that pay back reliably to Americans. It is also a very solid way of diversifying their assets, and creating another massive business opportunity. Banks have become extremely large by lending money, as it can be lucrative with time. In all, if they got the resources, why not.
Discovered a Greyhat Strategy that is better than selling Amazon Private Label and pulls Millions Monthly?
Today I discovered a particular seller, who is deploying this greyhat strategy across the Amazon platform, and is probably making hundreds of thousands of dollars a day on it.
I say it is better than private label because they leverage all of Amazon, while working with literally no wholesalers, no manufacturers in China, there inventory gets to them in 2 days, and best of all, it arrives right to their door at the click of a button.
What are you talking about David!!
This one seller, has 95,000 listings. Basically what he does is he buys every single product in Amazon’s top 3000 best selling products, of each category, and gets them sent to his warehouse. He probably then keeps that product, in the same Amazon box, and just warehouses it in a specific location, probably using automation robots, or maybe a nice warehouse inventory system. All these products get to his warehouse in 2 days, as they are all prime products.
He then lists everyone of these 95000 products onto the existing seller product listings of which they are authentic products. He has reciepts from amazon proving they are authentic, hence if you complain, your complaint is technically invalid. He then prices that product approximately $30-60 more including a $8.99 additional fee for shipping.
Now you have a 3rd party seller on your listing. No big deal. Even if you’re a private labeler, his price is way above yours, and he’s selling a product he bought from you. So what’s the big deal.
The big deal, is how lucrative this strategy is. Every product, in the history of Amazon, I can safely assume has gone out of stock. Demand spikes happen, delays in manufacturing happen, but for whatever reason, products do go out of stock by the main seller, and every other 3rd party seller. It gets to the point where the sneaky grehatter, is the last man standing, with his price gouged rated, available to all of amazon buyers to buy.
Why does this strategy work so effectively? It’s because his massive spread across Amazon blanked 95,000 different listing. Using a flat file sheet, he can quickly populate his inventory. And because he’s doing it to 95,000 listings, the odds of him getting the buy box is much greater with more listings, say 1000 listings a day go empty.
Essentially, the seller is doing literally no heavy lifting. Inventory arrives in 2 days. He probably keeps the inventory in the same box it arrives, and places a new product label on top of that, or removes existing, and reships it out. The system is , I think legit, as long as his systems in place are solid to automate it all.
And with someone who has 95,000 listings, I guarantee you his automation skills are on point…even to the point where he has software automatically buying all his inventory on amazon at full price, then relisting it automatically at 60% markup, + $8.99.
The ultimate reason why this works, is because American will buy at any price, if they need it more than anything. Americans are product dependent, and need things right now, and will pay the hefty price.
So…err david how do I afford to buy 95,000 products, and do this? I by no means recommend you doing this, or no doing this. I think it is in line with TOS, but I have no idea. The seller account says it’s brand new, which could be an indicator that he was suspended before, and keeps recreating accounts under different aliases.
My goal here is to bring it to light, to level the playing field, and allow you to understand this grey-hatting technique better.
This fellow is definitely no the only guy doing it. I’m sure there maybe 10-maybe 100 ppl doing it. The costs required to pull something like this is very expensive.
If you wanted to by every item in the top 3000, of each category, and own 95,000 units, that is easily 10-30 million dollars of inventory.
With this strategy it requires long term game plan. It mean you must buy inventory that can sit a year or 2, and wait for that moment of out of stock, boo ya.
With this strategy, I assume Christmas /holidays is extremely lucrative for this fellow, as MANY products do go out of stock during this time.
At 95,000 products, lets assume, 1% of those aka 950 units are out of stock for him to have the buy box. That’s 950, listings that have really high bsr, that get a lot of attention, and for him to making a killing, every, single day.
That’s all for now folks.
David Aladdin, Out.
IMPORTANT UPDATE: 9/29/2016
This strategy is confirmed! I talked to a very large investment firm this week in unrelated to this topic – however they mentioned they had invested in a guy who did this very specific strategy, which confirmed the suspicions of this podcast episode. It wasn’t in a magnitude of thousands of products, they mentioned the MIT guy was in the hundreds of products.
Hhe doesn’t do it on this big of a scale, but I assume the investment firm is helping him fund the operation. Everything is super automated. They said he had worked for Amazon at some point, and started his own operation purely powered by software.
Selling your Amazon Business doesn’t need to be scary. In fact, I believe it should be exciting. The risks on Amazon are great – no doubt, and the journey has been long, from competitors jumping into our space, to highjackers, to amazon suspensions, and endless seller fees.
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