7 Secrets to a Recession-Proof Business Selling on Amazon

Just about a month ago, the major U.S. stock indexes (Dow Jones, Nasdaq, and S&P 500) collectively posted their worst week in 2019, with five days straight of losses. The culprit? A sluggish global economy.

It was a quick reminder that, while we’ve all enjoyed a booming stock market and a growing economy for the past few years, we’re never that far away from serious turbulence.

The easiest thing to predict about the economy is that we’re going to have another recession. Since the end of the Great Depression, the United States has endured fourteen recessions, or one every six years on average. This June commemorates the 10th year since the end of the Great Recession.

Make no mistake: Much like winter in Game of Thrones, recession is coming. It’s just a matter of when.

Are you ready for another crash?

Now that you’ve heard all that, don’t go stashing your retirement fund in a shoebox under your floorboards. For one thing, thanks to inflation, that money gets a little smaller every year it’s hiding out in your bedroom.

More importantly, we all know we need to put our money to work making more money. That’s how you get ahead in America and build the lifestyle you truly desire. Recessions don’t have to get in the way of growing your resources. Once you know the secret I’m about to share with you, you won’t just survive the next economic downturn, you’ll thrive during it.

So what’s the secret–hiding in plain sight–most people just don’t realize?

Certain companies do better during a recession.

How Amazon Delivers Gold During Troubled Economic Times

When money is tight, consumers avoid high-end restaurants and eat out at McDonald’s more often. Lavish overseas vacations are replaced with weekend trips to the beach. And Rodeo Drive is filled with tumbleweeds as penny-pinchers find better deals online. And by online, I mean Amazon.

In 2009, as half-finished hotel construction sites were abandoned in exotic locales, Amazon reported a 68% increase in profits.

More and more shoppers are turning to eCommerce, and that trend will increase if and when we hit our next recession. During busts, however, online shopping increases even more as customers try ever hard to find the best deals, which are usually on Amazon.

So how can you get in on this?

Getting in on the Gold: Selling on Amazon

Maybe you’ve heard of selling on Amazon before. Maybe you’ve even tried your hand at it.

Most people, however, are still totally clueless about this relatively new entrepreneurial path. For the past couple of years, now, a small group of smart individuals has been reaping huge profits by acting as middle-men on Amazon.

They simply study the market to see what people are buying, find a new or better product that fits into a gap, order the product from a supplier (often a Chinese supplier, made extremely easy thanks to Alibaba.com), and watch the money roll in.

If that sounds too good to be true, let me clarify: building an Amazon business is hard work (you can do it on nights and weekends, but it still takes focus). And if you don’t know what you’re doing, you are going to stumble in the beginning.

That being said, it is totally possible to build a six or seven-figure passive income business on Amazon. I would know, I did it.

Without a college degree or a background in eCommerce, I built a two-million-dollar Amazon business. And, trust me, you can too.

For more information about getting started on Amazon, check out my live Amazon Q&A Thursday, April 11 @ 9pm EST.

Building a Recession-Proof Amazon Business

But simply having an Amazon business doesn’t guarantee it will be recession-proof. Pick the wrong item to sell or the wrong supplier and you’ll be left with more boxes of inventory than you have room to store.

Follow the seven secrets listed below, on the other hand, and you’ll have a passive income generator that will add to your income, provide stability that will insulate you against market volatility, and give you the flexibility to live wherever you want in the world.

The Seven Secrets Of A Recession-Proof Amazon Business

Number 1: Avoid fads

Remember the PT Cruiser? Nobody, not even Chrysler itself, predicted how popular the retro-inspired hatchback would be. Dealerships tacked on fees and special editions and new trims, turning a $25,000 car into $35,000 or even $40,000 by the time it made it off the lot, and consumers were more than willing to oblige. Chrysler ramped up production to meet demand, dealers were minting money, and everyone was happy.

Then the buzz wore off–long before Chrysler had realized it. Suddenly, Chrysler had more PT Cruisers than it knew what to do with, and dealerships were refusing to take on new inventory. Daimler AG, which had purchased Chrysler in 1998, sold the company in 2007 to a private equity that went bankrupt soon thereafter, and the last PT Cruiser was produced in 2009.

So many new and inexperienced sellers fall into the trendy product trap (hey, if it happened to Chrysler, you can see why). New entrepreneurs jump into Amazon looking to cash in on that cool product they saw, only to be left with boxes and boxes of unsold inventory.

My fellow AMZ Millionaire Blueprint coach (and million-dollar Amazon seller) Jamie Vie almost fell prey to this trap as well. The fad that lured him in? Fidget Spinners. Jamie was actually one of the first guys on Amazon selling fidget spinners, and he got out just in time before demand for the product evaporated.

The lesson? Don’t pay attention to fads. The “popular” items you see everywhere may be passé by the time you start selling them. You might make a little money in the short run, but soon you’ll be left with boxes of unsold products as customers move on to the next thing.

Number Two: Pick a product that sells

What’s the opposite of a fad product like a fidget spinner?

Something common, boring, and useful. Maybe something like… a veggie peeler?

That’s exactly the kind of product you should be trying to sell on Amazon.

Put another way, approach your Amazon business the way my dad shops for clothing: Ignore anything remotely cool and make a beeline for the mesh polos.

The Amazon Marketplace is divided into 20 categories and countless subcategories. You can find products with a high utility in many categories, but if you’re looking for more direction, start by focusing on: Baby Products, Health & Household, Home & Garden, Home & Kitchen, Home Improvement, Office Products, and Patio, Lawn & Garden.

Even better are disposable essentials that you can’t cut back on, such as trash bags and diapers. The stock market might falter, but babies will always need a place to poop. Personal care items work particularly well. As long as people have hair, they need shampoo to clean it.

But be cognizant of the type of shampoos shoppers will continue to buy during a recession. Will they be going to Amazon looking for something that retails at $40 a bottle? Highly unlikely. Which brings us to…

Number Three: Sell products under $50, and preferably under $30

Shopping doesn’t cease during a recession. Consumers spend money differently, but they still spend money. People still need to eat, and although they may eschew dining out in favor of cooking their own meals, they will need to spend money to save money.

Starbucks closed 900 stores and laid off thousands of employees during the Great Recession. But Americans didn’t stop drinking coffee; they opted to brew their own instead of paying $5 a day for it. Cappuccinos may be a luxury, but caffeine is essential.

But brewing your own coffee means owning your own coffee maker and beans and filters and all the little things you don’t think about when a Starbucks barista is making your macchiato for you. And when you’re giving up your daily latte to save money, you probably don’t want to spend $300 on a home espresso machine. Even $80 for a coffee maker seems high when one can be bought for $25.

One example of a product that boomed during the Great Recession? Keurig Cups.

Work on the lower end of the price spectrum and stick to products that are light, small, and uncomplicated. Coffee filters are much easier to store–and less likely to break down or become outdated–than an automated espresso machine that pairs with your smartphone.

Number Four: Choose a Reputable Supplier

There are about 9 million suppliers—manufacturers selling wholesale products—on Alibaba.com. You can bet that one of them is the perfect match for your Amazon business.

But finding the right supplier takes strategy and patience, and the wrong supplier can leave you in a major bind.

Working with a reliable supplier is even more important in a recession when fly-by-night manufacturers might go lights out or change their policies, leaving you on the hook for unfulfilled promises.

Good suppliers, on the other hand, have ideas and connections that can help you navigate shipping and customs.

Here are a few ways to determine suppliers’ reliability. One, you can look at the trust badges that Alibaba provides, which ensure reliability and will cover your costs in an emergency.

Also, note how long they’ve been in business. Suppliers that have just now appeared on the scene tend to disappear just as easily.

Finally, the best way to distinguish between a supplier that looks great and a supplier that is great is to start talking to them. Notice how quickly they respond to your messages, and how easy it is to communicate with them. Suppliers who reply promptly and are easy to understand are much easier to work with and more than likely have a more substantial organization supporting them.

Number Five: Build a Brand That Lasts

Amazon recently realized that it made more money letting people like you and me sell on its website rather than selling to customers on its own. As a result, Amazon has been offering commerce features to third-party sellers that were formerly reserved for wholesale vendors. There’s never been an easier time to start an Amazon business. Perhaps that’s why there are so many of them.

At last count, the number of sellers across all Amazon marketplaces topped five million. Third-party sellers account for more than half of all units sold on the website. So how can your humble business gain traction? Two ways: dominate a niche or diversify.

If you choose to dominate a niche, your goal is to become an authority and build a reliable brand. When customers have positive associations with your company, they are more likely to buy from you again (and spread the good word). If you’ve purchased something from a third-party retailer on Amazon, you’ve probably noticed the bar is set pretty low.

As Amazon sellers, we have three venues to showcase our brand: on our Amazon.com product pages, in our communications with our customers after they purchase, and on our own websites.

It’s easy to set yourself apart by having a clean, clear, and professional page. Go above and beyond for your customers with thank you follow-ups and a rock-solid return policy. Craft your listings wisely. Be the master of your domain and study the trends and the competition in your niche.

If these tips sound familiar, that’s because they are: The way to stand out on Amazon is the same as good business practices for any company.

And there’s one more great reason to focus on branding–there’s a hungry market of investors out there looking to buy high-performing Amazon brands.

Number Six: Diversify

Starbucks’ unlucky fortunes during the Great Recession turned around quickly. By 2012, the company’s stock price, which had fallen below $5 a share in 2009, flirted with $30, a record high for the coffee king. How did Starbucks do it?

By being about more than just coffee.

Rather than stick to caramel macchiatos and frappuccinos, Starbucks unveiled new products that appealed to consumers who brewed their coffee at home and discount food options, especially breakfast sandwiches that paired well with its drink menu.

Starbucks has continued to add new products and diversify year after year, as its stock price has gone higher and higher, eclipsing $70. Selling French presses and kale-and-quinoa salads doesn’t simply help Starbucks during boom times; it ensures that the company won’t be hit as hard when the next recession comes.

By selling a range of products and hedging your bets, you are insulating yourself from the effects of a recession, which affects certain sectors disproportionately. You can also diversify your supply chain and work with different manufacturers to give yourself backup options. Even if you are preparing for a market downturn, that doesn’t mean your top supplier is.

But establishing a niche and diversifying are not mutually exclusive. Starbucks was able to diversify because it had established its niche; its core customers were willing to trust Starbucks’ breakfast wraps because they were familiar with its coffee offerings.

Diversifying your offerings helps you find new winners and customers during boom times that will stay will you during busts. And it may even help you find a new niche that you can leverage to diversify even more.

Number Seven: Partner With Someone

Finding a business partner to share the load may sound strange. Twice the people means half the profits, right?

Wrong.

Finding a business partner is one of the most strategic things you can do for your Amazon business, and that’s especially true if the market goes nuts.

Two minds are better than one when it comes to managing the financial and emotional stress of running a business, especially if you have other obligations that prevent you from devoting your attention 24/7 to selling on Amazon. A problem with a supplier that demands immediate attention? Your partner can cover when you’re unable to do so, and vice versa.

Forming a partnership is especially helpful when it comes to diversifying your product lines. It’s much easier for two people to spot a broader range of openings and icebergs, and you can balance your strengths and weaknesses.

There’s an added benefit of running a company 50/50: You’ll have someone to celebrate with when you hit the big time. Nobody likes popping champagne alone.

Want to Find Your First Product?

You don’t need to wait for the next recession before starting your recession-proof Amazon business. Because, and here’s a not-so-secret secret, all of these tips and strategies are really just best practices. You shouldn’t be chasing fads or selling high ticket items, you should be building a lasting brand and diversifying.

Selling on Amazon can be incredibly profitable in both lean and fat times, and the earlier you start, the more robust your business will be.

The secrets outlined above are just the beginning of the lessons I’ve learned while building a seven-figure Amazon company in less than three years.

Ready to get started on your own Amazon business? Already selling, and you’d like to take your trade to the next level? I’d love to help you! Join me for a free, live Q&A session covering all things Amazon on Thursday, April 11, at 9pm.

Author

Chris Graebe
Chris is CEO of StartupCamp, host of The StartupCamp Podcast, and an AMZ Millionaire Blueprint coach. He has started multiple businesses, from app development to a digital agency for Amazon sellers. Chris' mantra for life's curveballs is "It's all good". He lives in Texas with his wife and family of five, and all his friends call him "Graebe". Follow him on Instagram @chrisgraebe

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  1. Great advice. It is always good to avoid fads as they die down. Ride the hype if you can but know when to get out. diversify, sell low and find a reliable supplier.

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