About 2-3 years ago, at the same time I was building up my Apple/Android mobile app portfolio, a new channel was emerging for online sellers.
Powered by Amazon, FBA offered the opportunity for anyone in the world to source popular physical consumer products (think silicone baking trays, garlic presses, supplements and beauty products) to sell them in the USA, Europe and beyond, WITHOUT having to handle the goods and do all of the packing & shipping themselves.
Fulfillment by Amazon (FBA) offered what many were looking for – a scale-able, profitable way to run a business from any location. Since then it’s grown.
I started with FBA last Christmas, and have been selling for nearly a year now.
I’m selling between 10-20 private label products with FBA, I’m live in 6 countries (USA & Europe) and just had my first 6 figure revenue (not profit) month, after just 10 months of sales.
Here are some of the most common questions I get:
Is Amazon FBA difficult to do? It’s all doable (as is everything in life) but yes there is a significant learning curve at the start. I spent about 2 months at the beginning working 18 hour days trying to figure it all out and deal with product research, finding suppliers, getting in samples, doing product packaging and figuring out how to ship everything from China to the USA.
But it has got a lot easier now. There are a lot of REALLY good podcasts all about FBA. You can learn nearly everything you need now there. Here are my favourite FBA podcasts.
Is there too much competition? Yes and no. Gone are the days you can look at the top 100 bestselling products, ship in 5000 units of your own versions and make a fortune. Instead its best to find products that aren’t as popular or competitive, and see how you can improve them. But be prepared it’s unlikely to be a home run first time round.
I’ve been helping some of my friends get started with FBA. One of my main pieces of advice is for any new products is to order in 250 units maximum for your first order. Minimise your risk by proving they will sell, before you put in for a big order.
How much money do you need to start? This business isn’t cheap. You can read the facebook stories of how someone got started with $500, sold everything and made a profit, then reinvested the now $900 and bought more stock – and eventually ended up retiring with 2 million dollars (I joke!). This is a capital intensive game. You can expect to spend up to $2000 on your first delivery, between products, shipping and import duty etc and also leave aside some money from PPC as well.
When do you start to make money? I’ve scaled up quickly, and any profits have been invested in reordering inventory and also in launching new products. I’m now in double digit figures for product skus and selling in 6 countries between USA & Europe. You can grow more slowly, and take out some of the money for wages, but for maximum growth, reinvestment, and a focus on launching new products as often as possible seems to be the way to go.
Do you need to giveaway a ton of products? Some people say yes. I say no. I tried some giveaways on 2-3 products early on. I got reviews but the products never took off. Then I got fed up and instead for my next products, I focused on getting 2 or 3 reviews early on, and then turning on PPC ads and that was it. My most successful products didn’t use any giveaways.
Do you use virtual assistants? Yes. I wanted to scale my Amazon business as fast as possible, and I didn’t want to have to work 25 hours a day. I had a VA from day 1 who I trained up on my Amazon business. He is amazing and does everything from customer service in 5 languages (ask me how ), checking for hijackers, following up on reviews, researching new products and vendors, editing product photos, doing keyword research and writing titles and descriptions for new products and lots of other really useful stuff.
I have a really good (simple) process to find & hire great VAs (which I figured out during my app days) and having someone to help me with this business has been the only way I could grow it this fast.
What’s your biggest challenge right now?
It’s been a busy year to get this far. One part of my business which I knew I wasn’t focusing my attention on, was checking to see if Amazon owed me money for any inventory problems – was I due any refunds for destroyed inventory, units that got damaged at their warehouses, units they lost or customer refunds? Where could I check if Amazon were actually charging me the correct FBA fees?
Anyway, I decided to devote some time to this. After wading through about 1527 horrendously complicated reports in sellercentral, I am now pleased to say that I have been refunded $2800.80 back in overpaid FBA fees and charges, which I probably wouldn’t have got otherwise!
This is a combination of $1806.06 back from Amazon USA with more refunds arriving each day, and £698.53 back from Amazon.co.uk and more due in too. As this is my businesses money, there is no point in Amazon keeping it!
Below is one of my refund emails from Amazon. I got back $974.37 and I was credited with 56 units of stock.
Crazy good huh?
UPDATED: 2 Feb 2016
I had some more refunds get processed by Amazon since I wrote this post. My total refunds now stand at $3848.85!
UPDATED: 5 Feb 2016
My final refund came through from Amazon.com for $1299.73. Total refunds now stand at $5148.10
I honestly never expected to get this much money back. If you would like the EXACT steps I followed (including email templates) to get back $3848.85 in various FBA fees and refunds, I’ve put together some step by step guides and videos.
You can check out the full process here.
If you have started an Amazon business, I’d love to hear how you are getting on. Leave me a message in the comments.
If you would be interested in getting help with your FBA business, please click here.
If you’d like to hear more about my Amazon journey, you can stay in touch here.