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.
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