Does Amazon FBA work?

[diamondpenguin]

Hey guys and girls of the internet. I have been plotting to start an ecommerce business on amazon fba online. I now know the business model and everything, but there is one slight problem with it though. It costs roughly 1500 dollars to get started selling. I am really pumped up about getting started but that's not the kind of capital I want to spend rn because I in college currently and need it for tuition. I do want to start because of the possibilities but have heard that private labeling is dead. I hope it's not and if any of you have done it, does it work for creating a living and what are the odds for success? Or If you know something about it that I dont, what is your best advice for someone looking to enter ecommerce?

[7thLetter]

Well you see other people having success with it right? So of course it "works."

The real question is do you work? Are you willing to put in the time and the effort to make it work? To ask if it works is like asking "Do relationships work? Do marriages work?" Everything is in your hands to make it work.

Of course its not that simple though, there's a lot of challenges that come with it. You have to deal with finding your niche, finding a product, finding a supplier, messaging suppliers, finding the right price point, understanding profit margins, understanding Amazon's fees, storage fees, creating your brand, designing your logo, designing your packaging, ordering a sample, finalizing the product, purchasing the supply, waiting for the supply to be finished, creating your Amazon sales page, SEO, taking product photos for your sales page, finding a freight forwarder, getting the products shipped to Amazon. No you're not done yet, you have to deal with paid advertising, understanding PPC, finding the right keywords to target on a daily, dealing with competition, etc. And your PPC & SEO must be updated frequently, you don't just list your product and you get to sleep on a beach for the rest of your life. You're working not a lot but at least a few hours each day in order to maintain the business.

If this sounds like what you want to do then by all means do it. But you need to understand its a real business, and like all business, 90% of businesses fail. And this applies to Amazon sellers too, only the top 10% will succeed and have succeeded.

One thing I want to say though is, if you're worried about spending $1500 because of college tuition then you shouldn't do it. There's no exact amount that you will end up spending in this business, that's just a lie that gurus tell you. There's a lot of fees that come with it, you might end up spending more than what you expect because of those fees, paid advertising, paying your freight forwarder, etc. It's not just a one time payment of $1500 and then that's it.

[fridjonk]

6 hours ago, diamondpenguin said:

but have heard that private labeling is dead.

90% of products on Amazon are private-labeled, It will never die. 

[Space]

@diamondpenguin Yes it can work. But like many of these types of businesses, only a small % of people will be able to make it into something thats profitable long term. There is only one page-1 after all, and if you're not on the 1st page for your niche then forget about it. Very very difficult to get onto the 1st page because so many niches are already taken up. I spent about 1.5 years doing private label, did around £30k in sales, but I couldn't properly get it off the ground or make any significant profit. The profit margins are so small because you have to factor in all the FBA fees that Amazon add on, and then you end up spending all the profit on paid advertising. I had one of my products get into the top 3 position on 1st page, which is the holy grail of Amazon FBA. I was getting 10-20 organic sales every day (roughly £5 profit per sale). However I couldn't get more stock for various logistical reasons so I couldn't continue it. 

There are a lot of hurdles and challenges you need to over come, particularly sourcing the products, dealing with the manufacturers (who often don't speak very good english), and getting the products shipped over to your country. Correctly doing paid advertising on Amazon is also key. Interestingly, since quitting FBA I moved into a paid search job as an employee. Slowly began to realise that everything I did on Amazon paid search was completely wrong. 

Amazon are also extremely strict with reviews. They have a super powerful AI that automatically removes any reviews it deems to be even remotely fake or paid for. However reviews are absolutely essential to the success of a product on Amazon. I had one product that got one 1 1-star review out of 30-40 4-5 stars. After the 1-star my sales plummeted to basically nothing. Had to close the product. So my point is, its challenging and you are at the mercy of your customers.

I suspect that these days, in order to successfully launch a product, you need to pump a shit ton of money behind the initial launch, loads of money into your Paid Advertising (super high CPCs etc). You will likely need more capital $1500. I could be wrong, I haven't looked into this stuff for a few years now. Things change so quickly.

Saying all that, if you can do it, it definitely can work. 10 sales a day at £5 profit each is £18k a year profit. Do-able, but also very very difficult.

My final piece of advice would be to spend your time building a life that is more tailored around your interests and skills, rather than doing FBA. 

 

[LfcCharlie4]

You need far more money than $1500 to start, sorry to burst your bubble

[7thLetter]

One thing I want to add, if you're going to be sourcing your products from China on Alibaba, then you need to realize that the market is already highly saturated for low-cost products. There's thousands of other sellers who have this same mentality of looking to source a low-cost product on a budget thinking they can get in business for $500-$1500, its not only you. "Hmm maybe I'll source a $1 product and sell it for $15." Good luck with that, you're competing with thousands of others. They're all probably looking at the same exact product as you. If you're going to compete, then your product better be 10x better along with your marketing.

So the only way out of this and to get a better chance is to go with the higher priced items that cost you more like $20-$100 wholesale per unit. But you already mentioned your budget is $1500 and that's just not enough so, but you could try though.

[diamondpenguin]

@Space ok, sounds like the market is too oversaturated and competitive to really get into without a lot of time money on my hands. Thanks guys for sharing your experience with fba. @7thLetter @LfcCharlie4 @fridjonk . It really doesnt sound like its inventive or takes a lot of talent other than pure will and effort to make it work along with a lot of money. I would imagine that around 5 years ago it was a way to make cash, but now everyone has the same idea of doing it and if one spends 3000 to get it off the ground and it fails which mostly likely it will then it is a waste. I will look elsewhere then. Thank you guys for sharing your experience, for second I thought that this was my ticket to financial freedom, but the search and skill building continues. I will go and try to start an internet marketing business to put me through university because rn I am in community college. I know leo gura did internet marketing and a lot of people say that internet marketing is a super practical way of gaining wealth. 

[Average Investor]

I would start with ebay, mercari, or facebook to get going. You can get free items and learn how to sell them and get some capital. You would need to package and ship yourself, but this would be a good route. 

You can do FBA book scanning or something like that pretty cheap and easy. A lot of competition in that market though. 

I do merchant fulfilled for the stuff I do. Not as big on Amazon, but I might do more media there in the future. 

You can set your Amazon to start by paying the $1 per item until you get enough inventory to justify doing more.

$1500 to start is a joke. You can scrounge together free stuff and sell it on facebook to get some cash going if you are serious. I have got plenty of free items that I sold for hundreds of dollars. I was mowing my neighbors lawn and completely stopped my last business to scrounge together enough money to get it off the ground. A year later I probably have close to $100,000 worth of inventory on hand. 

You mentioned in a post that you live in Oregon. You literally live in one of the best possible states to get inventory in. Anything about not being able to or needing a lot of money is just an excuse. 

[fridjonk]

@diamondpenguin Try dropshipping instead. I find it to be more of a realistic possibility of working. Most Amazon FBA marketers started off with Shopify dropshipping and Facebook ads, and It requires less capital. 

Edited December 19, 2020 by fridjonk

[Average Investor]

@fridjonk I do a lot of buying from other sellers right now. If you can spot items well you can just have them ship it right to you and make a good profit once you ship them out. Have to know what you are looking for though. 

The main thing I have a problem with is the reliability and quality of people. I can see instances where I could easily sell a product marked up really high and just buy it from people cheaper on platforms. I just don't like the risk of them canceling orders, or being low quality sellers. 

[Roy]

Don't waste your time getting into Amazon FBA or any of that bullshit. It's massively oversaturated and it's the equivalent of scalping or running a pawn shop. You offer nothing of real value to society. Just buying and reselling goods and products other people made at a higher price.

Go to trade school and learn a real skill.

You're going to be grinding endless hours for little reward with Amazon now. That gold rush has passed already.

[diamondpenguin]

8 hours ago, Average Investor said:

I would start with ebay, mercari, or facebook to get going. You can get free items and learn how to sell them and get some capital. You would need to package and ship yourself, but this would be a good route. 

You can do FBA book scanning or something like that pretty cheap and easy. A lot of competition in that market though. 

I do merchant fulfilled for the stuff I do. Not as big on Amazon, but I might do more media there in the future. 

You can set your Amazon to start by paying the $1 per item until you get enough inventory to justify doing more.

$1500 to start is a joke. You can scrounge together free stuff and sell it on facebook to get some cash going if you are serious. I have got plenty of free items that I sold for hundreds of dollars. I was mowing my neighbors lawn and completely stopped my last business to scrounge together enough money to get it off the ground. A year later I probably have close to $100,000 worth of inventory on hand. 

You mentioned in a post that you live in Oregon. You literally live in one of the best possible states to get inventory in. Anything about not being able to or needing a lot of money is just an excuse. 

how do you sell on facebook? @Average Investor

[Average Investor]

@diamondpenguin Marektplace is super easy. I mostly ship on there, but that is probably one of the easiest and most potent platforms for selling. All depends on what categories you well in too. I sell a lot of older vintage items and a lot of the buyers on there are older adults that like that stuff. It actually rivals my ebay sales pretty well. 

I actually have a local order on there this morning. I would advise only meeting people less than 5 minutes from where you live. Easy to do contactless orders too. I just have them see the item in the back of my suv with it open and they can set the money in there if they want it. I don't share to all of my buy and sell groups always, but I always set for local pick up and shipping on all items. 

It's also a great site for sourcing your inventory as well. 

[Striving for more]

@diamondpenguin try learn how to trade and get funded by FTMO. 

Edited December 20, 2020 by Striving for more

[Jacobsrw]

It does work but you need to invest far more than merely $1500. Also you need to likely work harder to differentiate yourself from the market. The generic method of selling is saturated hence you need to be creative and new.

A good starting capital in my view is $5,000-$10,000 This way the business has a sturdy foundation from which to grow. Otherwise there is no possible way for scalability.

[diamondpenguin]

That sounds like an Investmant. 

[Preety_India]

@diamondpenguin what is Amazon fba 

[diamondpenguin]

@Preety_India

[Preety_India]

@diamondpenguin thank you 

[diamondpenguin]

@Preety_India sorry to not explain it in big detail. It's pretty much Ebay but amazon does the packaging and more complex and evolved and it's more of a business than Ebay. Its dropshipping pretty much. You buy stuff from alibaba and sell on amazon for profit.