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Amazon FBA: The Truth and Nothing but the Truth


 

Hello, if you are reading this post it will be because you are interested in the AmazonFBA business and you must have already watched hundreds of videos, hundreds of hours and even thought about buying a course from one of the gurus you found on the net.

I am going to tell you my experience, as a sample of what the Amazon FBA world really is. A case, my case, does not create jurisprudence but it shows a reality that I did not see in many Youtube videos, in contrast to the hundreds of videos telling wonders.

Let's start at the beginning. If you came into this world as a way to be a passive income, there I can assure you to forget about it right away. The first thing you have to keep in mind is that it is a business like any other, it takes a long time to start and manage so it is difficult to combine it with another job, although if you are organized it is possible, but not easy. And above all forget about those who say that you should only spend an hour a day or even a couple of hours a week.

On the net there are hundreds of videos to learn how to have the notion of the steps to perform or tasks that you will have to do before starting or once you are already selling your product, but the hard part is when you get stuck in the thousand and one stones that you will find along the way.

I started to get seriously interested about a year ago, although I had already seen many videos before that. In July 2023 I thought I was going to try it, not with the idea of reaching the thousands and millions of euros that many sell but with the idea that it would be great to have a small recurring passive income every month in addition to my main source of passive income which is investing in P2P / crowdfunding (if you do not know what it is I invite you to watch some of my videos on my channel @carliaconsulting). For now, I think it's one of the only real passive income businesses out there that I've been able to successfully test.

But let's go back to the Amazon world. As I said in July I decided to jump into the pool and then I was presented with 3 options: the first to hire a course from one of the experts of the network that shows lots of videos with successful experiences of hundreds of students.

The second, with what I learned in Youtube videos, was to launch myself on my own and finally the third option, and the one I chose, was to make a hybrid, that is to say, to learn with the videos but hire a Virtual Assistant, VA, to accompany me from the product search to the launching of the product. Why did I choose this option? because the courses I saw were skyrocketing in price and we were already talking about more than 3,000 euros and I know those courses, their owners do them and it requires a lot of effort but then they just want to start selling and charging and little to have to be correcting the videos and syllabus, so in such a changing world in a few months 30% of the information, sometimes the most valuable and most valuable, is outdated.

Also when you see that the same people who sell the course for 3000 eur sell you the creation of your LLC for 900 eur, when I created it in a few hours for 150 eur, it makes it clear that who does not charge a fair and reasonable price for creating an LLC will not charge you a reasonable price to help you in your Amazon business.

In addition, I think they really help but when you look for the cases of no success of these courses, which there must be many, even if it is because the user is useless and the course is not to blame, you find that there is not a single bad reference. And I have already found some cases of receiving contacts from teams of lawyers to the few who decided not to speak well of one of these courses. Who requires lawyers so that their carpet always shines.... does not give me much confidence as to the honorability of some people and makes me suspect that anything goes to continue generating revenue, even to suppress the discrepancy at any price.

I think the most important thing would be to join their student chats where you can feel supported and advised in those problems that you do not know how to solve and that delay and block you, and with how bad is the Amazon customer service can take more than a week to give you an answer, if you receive it or they understand you and you do not have to repeat the question or send more information.

So, the student groups for me were the most important thing, but I also know how they work and 1500 people writing sometimes is a cage of crickets and not very effective for punctual problems you may have.

Regarding going totally on my own, I think I immediately understood that it is such a complex subject that no matter how many videos you watch, you would have 1000 questions that would take you many days to solve.

Therefore, I thought that hiring someone to accompany you from the beginning, for about 450 eur versus 3000 eur for a course, was the best option. You get a more personalized treatment, you learn more and better and safer, so I went on Fiverr and hired a guy who seemed knowledgeable and nice.

We started working there at the end of July 2023. While he was looking for the product to sell I was doing some of the administrative work that needs to be done.

Open the Amazon Seller Central account, open a checking account, as I wanted to sell in the USA I created an LLC, set up a mailing address, bank account, telephone, apply for a trademark and register it, hire them to design the company logo, and a long etc. that takes time and .... money.

Another small criticism to the course sellers, where the priority is to sell courses to people in need even if they have little income. To attract the largest number of buyers they sweeten very much the time it takes this business and especially the money needed to start selling, without considering the price of the course itself, we speak only of the costs of Amazon, brand registration, logo creation, listing design, content A +, administrative and accounting management, computer tools and of course product price, transportation, customs, and a long etc., which greatly distances the information that you can start with 3000 euros to sell on Amazon FBA.

In this that my VA proposed me about 3-4 products where I saw potential. Of course, I already hired Hellium 10 which is $ 80 per month and that as I have already spent 10 months I have already spent $ 800 for nothing (still to this day May 2024 I have already spent about $ 10,000 and not even started to sell, during the video I explain it better).

With Hellium 10 you can see of the selected products how much they sell, how many competitors there are for your product, what sales they make, etc. It is a very good product but it is not cheap and especially if you do not use it because you did not even start selling after more than 10 months since you hired it. And thank goodness that Amazon FBA does not charge me the 40 dollars to have Seller Central open because otherwise we would be talking about another 400 dollars thrown away.

But let's move on to product selection. After reviewing the products, which according to your VA with the information presented are adequate and with sufficient margins to make a profit after all the expenses that would come (logistics, advertising, transportation, etc., everyone recommends that the product should leave you as a 25% margin to be a good product, I think that there already lie most because without having sold even one product I think that in the end if you get most people 10-15% will be so happy ... then I will explain why this assumption).

Of the 4 products presented I selected two as the strongest candidates. Then, as recommended, you analyze the customer feedback to see how to improve them, because as the gurus say it is not enough to launch the same as the others, you must differentiate yourself and improve your product.

So I was able to write down the 5-6 main defects that users complained about my ideal product. Then you enter the phase of entering Alibaba and try to deal with Chinese manufacturers that offer your product (that is very easy to do).

At first I let my VA take care of it, and he started contacting the manufacturers telling them that we wanted the product with these improvements. That's when the first reality begins, because of the time difference you coincide a few hours with the working hours of your manufacturer so any question is very easy to answer the next day and if you ask him a question again he will answer you two days later.

And then the days and weeks begin to pass without any progress and some points I have already started to learn. The Chinese are fantastic at selling repetitive products, they have 100,000 bottles in their warehouse, you pay and they send you 500 instantly, but if it occurs to you that you want to make them with a different color and shape, there is no longer so much interest, since in a distribution chain what matters is to manufacture the same product wholesale, not to stop machines to create adaptations and customizations for millions of heavy customers who write to them every day from all over the world.

The negotiation can easily take more than a month or a month and a half. You ask and they always say yes to everything and then tell you that they will send you a sample if you want. You ask them to take a picture to see if what you have been talking about for days and they say that what they have is like that, and then you see that it doesn't look like anything and start all over again.

They told me that they could make my product with an additional protection and with a material, after weeks negotiating prices, squeezing, that if my boss has to approve it next week at the weekly meeting that if you take that away and then put this other to see what the final price is, so after more than a month, the seller arrives and says that the technicians have told him that this material cann´t be done, it does not even exist, so he offers me another similar one.

But as it was not very similar, so I had to start from scratch again.

And not only that, but when you don't trust the seller, you start talking to several sellers at the same time, which increases the madness and I even got directly involved.

You can create a mass request, an RTF, which is that you put your product with its requirements published throughout Alibaba and the sellers themselves make you offers.

Then the madness multiplied by 10 and offers and offers started coming in, each one with a price and you had to try to figure out why those differences, which took weeks of exchanging messages in the few hours of matching or getting up at 6am to try to match more hours with the manufacturer.

Think of a factory with a room with 20 operators answering thousands of questions, budgets, orders, etc. and as thousands of messages do not end in nothing or are simply curious asking, it is not that they do not put great interest and many times you have to be insisting.

So we were already in October and I still had not been able to have a final price offer for my product. And then the end of the year begins, when the manufacturers only think about taking new orders for the Christmas campaign, and then a new customer no longer has preference and you are forgotten.

In October and after talking to the person in charge of my salesman, since he offered me bad information that made me lose a lot of time and then started trying to change prices with an unethical behavior, we finally got them to send us the final product, a sample by plane.

As the price of the product was 12 dollars but the sample was worth 200 dollars (sample price is 50 plus express air transport), the manufacturer created a "false" invoice where it said that there were about 15 products to reach the value of 200 dollars. To wait about 12 days to arrive and upon arrival, the customs that is not stupid sees a small package which was supposed to be inside lots of things, so the alarms went off and began to ask for information. We had to explain that there was only a 12 dollar product inside despite the fact that it was indicated otherwise and that we gave authorization for them to open it and see that we were not lying. Another 20 days stuck in customs and when it finally arrives home we see that it was nowhere near the quality or the product we had ordered.

It is now November and we have to start again more seriously with 3 other sellers. After more negotiations for weeks to finish adjusting prices we get that two who seem to have everything clearer decide to send two samples, another $80 more per sample by plane, another 12 days more.Upon arrival one was not the best quality and the other one was.

In this time, after the anger of the first deception with the first manufacturer and the weeks lost in customs, the first frustrated and disappointed VA offered me to retire and return my money, that he was sorry and that's it. Again to find a new VA, explain the product, features etc. etc. etc. Of course, we were already in the Christmas period and everything slows down a lot.

By January I get a new VA and we start to close the deal with the selected manufacturer with the best product. At the same time I start looking for an image designer for the listing and for the A+ content.

In Fiverr I hired up to 5 different people, first one that after a week of deadline sent a product of very bad quality, again to look for another, another week lost and the photos a horror, to look for another one that I ask him to send me the photos one by one as I finish them to not waste more time and so as another month until I could get the photos, without being wonderful at least acceptable. Another $150 for the photos.

And when I went to make the first payment for the product so they could start manufacturing it, they said that it was the Chinese New Year and that the factories were closed for about 3 weeks and that they would not start manufacturing until March. Then they started to manufacture and at the end of April I have the product in the warehouses.

After the inspection that you pay about $180, you detect damaged products, dented boxes, etc. that the manufacturer guarantees to replace, but you will never know until the customer complaints arrive if it was true or not or if they were damaged during the trip. Either that or go back and spend another $180 to do another inspection which is never total but 10-15% of the total goods.

In total to get a good price I had to buy 1000 units at a price of 12.50 dollars, that is to say that the 12,500 only in product is very far from the 3000 dollars offered by many course sellers as a start. At this $12,500 now you have to take the product to the port of China and ask Amazon to take it to their warehouses. Transportation will be another $1000 plus local freight of $200. Customs fee another $350 and still I believe another customs tax will come later.

With all this we are at the beginning of May. My product has not even left the manufacturer for the port of Sanghai yet. Now we have a week and a half because from the Amazon Global Logistics application, to contract the transport, the contract button does not work and we have to be opening claim cases to Amazon requesting more and more information and the days keep passing.

If all goes well and the transport by ship takes a month as for the end of June I would start selling my first product, since the month of July that I started. So this is my story, over $15,000 spent and almost a year later I can't even say I have sold a single product. And not because I am incapable, or at least I should be incapable, plus two virtual assistants who accompanied me in this launch year.

Then will come the world of advertising, I'll tell you about it when the time comes. But what I see reading and reading in forums is that it is a devilish world where all the possible margins promised and studied on the paper of any product go away.

For starters you have to give away like 20-30 products for the VIME program that allows you to deliver your product for free to Amazon selected customers with the commitment that they will rate you and write you a review, which doesn't have to be positive, but at least you will start getting reviews.

If you don't have reviews you are nobody and your product will not be positioned in the first pages. Nobody searches for a product on page 6 of Amazon, so when you start selling there is only one way to gain positions, lowering the price and waiting to gain reviews and spending money on advertising.

My two virtual assistants have already told me that in the first 6 months it will be normal to sell in negative or without losses, but without profits, i.e. what I sell will earn me 0 euros. In addition, advertising in the USA must be crazy and if you read Facebook groups is where people get more desperate and where they ask for more help hiring the services of experts.

That is to say, you will have to spend a lot of money to get your keywords positioned and for that you will have to bid more money than your competitors, plus you will have to be constantly adjusting your campaigns, playing with different options and strategies, a little bit with the idea of trial and error. Such mistakes lead a lot of people to despair as their 15-day budget is spent in less than a day and they have to keep having to put money in or stop bidding which would sink your product into the mud.

There are tons of groups on social networks of desperate people looking for advice or how to hire an expert to manage their ad campaigns to try to save their desired profit margin and not end up working just to pay the bills or even lose money. And as the information on Amazon is very diffuse and there is not a single screen where you can see your real situation (sales, expenses, income, etc.) you have to end up buying other software that allows you to extract the information from the complex systems of Amazon to show you if they paid you for the goods that were damaged in their warehouses or transport, or the returns that customers were making or the amounts spent on advertising.

Therefore, you find everyone talking about I bill so much, but few say I earn so much, which is the only purpose of any business. Only the net income is useful, if in the end you are able to find it out and I would like to know the margin that everyone talks about as a goal, 25%, if in the end we are not talking about 10% as I have managed to elicit from many sellers. And if to get a 10% net you have had to spend a lot of money, headaches, customer returns, bad reviews (sometimes from your competition to hurt you) that make your day because many of them are not true but that lower your rating and therefore reduce your sales a lot.

And let's not talk about the hundreds of sellers who comment that there are hijackers who resell your product, or accuse you of plagiarism or throw prices and before your complaints to Amazon, they will never do anything. Or you wake up one morning and your listing is blocked and a desperate struggle begins with a customer service that responds in automatic mode. You don't know the reason and you will struggle to figure out how to fix it and so there are many experts offering their services to solve these problems and thus sacrificing even more of your margin.

In short, there are people who are doing well and even very well, no doubt. But after saying that they have a turnover of 10 million euros, maybe they do not even earn 1 million euros, and for that they have had to manage 40 products with their thousand problems and have hired a couple of people to manage the products, advertising campaigns, data analysis, etc. In other words, it has very little passive income.

In these 3 years I have earned a net income of 12.5% of the money invested, my own and my clients'. This is that with one hour a day, not completely necessary since with one hour a week I would perhaps obtain 12%, but for the sake of obtaining the maximum income I usually check the investments every day, I can assure that I earn net and with 1% of the problems that Amazon FBA generates.

The business is very clear is for Amazon that has millions of workers doing the dirty work, risking their money and time, and when a product is good they sell it themselves or simply with what they charge you for managing your product and your advertising campaigns and get the millions they get and make it the largest ecommerce market in the world.

And finally about the sale of courses, it is clear. Those who claim to earn millions, or rather bill millions to finally enter 10% of the business moved, are forced to create products for selling Amazon courses to take advantage of their knowledge to try to bill after the sale of courses that are really profitable. What's more, some of the most famous Amazon gurus who claim to bill millions with hundreds of products have even confirmed that they earn more selling the courses and mentoring than selling directly. So, great that they help, great that people are launched but I hope they do not deceive those who have little money with the idea that anyone with 3000 euros can start, that in two months you are already selling (not earning) and do not tell the whole truth about a business that you need to have a large financial cushion to support the initial expenses, where your first order of 1000 units will not give you almost no income and, if all goes well, after 6-9 months that you are selling it you will begin to have net income, which will have meant having to invest in buying another 1000 units, pay another transport, and spend on advertising to start having your first income.

So I will keep trying and I hope to keep telling you when I finally get my product on sale and start running advertising campaigns, get my first customer reviews and can assess the real margin you get and the net income you get. If I get 10% of income I will be satisfied if it does not occupy more than 20% of my time versus the 12.5% of income and 1% of my time that generates passive income from investing in Crowdfunding platforms.

I hope you find my reflection useful. I am not trying to be negative, maybe I had bad luck with the suppliers I contacted in China. Improving a product, which everyone recommends, complicates a lot the manufacturing process but at least you create a small barrier to entry by not being so easy to copy the same product by your competitors. I also coincided with Christmas and Chinese New Year dates which wastes a lot of time. I was also unlucky in finding bad image designers and the time differences between China, Europe and the US makes negotiations and conversations take a long time.

But what makes me angry is to see hundreds of course sellers encouraging young people or people with few resources to quit their jobs, to invest their savings of 3000 euros with the promise of earning income in 2 months so if I get someone to listen to me and my experience makes them reconsider, I will be happy. I do not discourage them not to do it, but I do want them to know the truth, that they will have many problems, that they will have to invest a lot of money, that it will take many months to see results, that the results are not profits and that turnover is not the same as net income and that many times they will think about throwing in the towel when they do not see any sense in it.

That is Amazon and once you know the rules I encourage you to play, but without deception and with the truth first.

And the same happens with many other passive income that are sold as magic formulas to obtain passive income and thus soon obtain the famous financial freedom that allows you to work when you want, where you want or not working at all, letting the money work for you. But that will be the subject of future videos.

Thank you very much for making it to the end, I look forward to your comments and reflections, and it would be nice if other users tell their real stories of how their beginnings on Amazon went and if their story is closer to my experience to the world of Disney that sells the gurus selling courses on Social Networks. I encourage you to like the video and subscribe to get to know my own videos about the truth about many other passive income.

For more information and articles we invite you to visit our WEBSITE, where you can find information about PASSIVE INCOMEP2P CROWDFUNDING LOANS and more general economic information FINANCIAL EDUCATION.

You can ask for our services to invest on P2P Crowdfunding loans to design and/or manage your passive income portfolio to reach your financial freedom.

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