Amazon FBA Experiment
fbaexperiment.com
fbaexperiment.com
If you send too much stuff to Amazon and it doesn't sell, you will be liable for long-term storage fees and they can be expensive (https://sellercentral.amazon.com/gp/help/external/200684750?...)
The FBA universe is filled with stories of people having a manufacturer overseas make some low-cost product and encountering problems including low demand, poor quality, too many similar products available, and commingling with pirated or "third shift" inventory.
Protections against piracy and commingling include trademarks and the Amazon Transparency program (https://brandservices.amazon.com/transparency). Requirements for Transparency described here: http://leanmedia.org/amazon-transparency-what-is-it-and-how-...
But it's being done in a highly competitive environment, where everything is commodified. Alibaba has commodified manufacturing, shipping was always a commodity, and Amazon has commodified the marketing and fulfilment end.
The problem with commodities is that it's very difficult to create a competitive advantage - if you do happen to find one, it'll be transient and fleeting as others cotton on to it.
I hope the author is also keeping track of the time he spends on this. At $7.64 profit per item, assuming he does sell all 200 handbags, that's $1528 in profit. If he's spent 152 hours on this, that's just $10/hour for his effort. If he ends up spending 211 hours, he's earning less than the US minimum wage.
Most chinese suppliers are very willing to make changes to the product too, so it's quite possible to make some small design tweaks to improve the quality of the product (I always rewrite all the instruction manuals to be real english, and sometimes add weights to plastic items so they don't feel 'cheap'). That can give your product an edge over competitors with minimal effort.
sigh
Take an iPhone for example - it's more dense than pretty much any other phone out there.
People say they want light stuff, but they actually buy thin but dense stuff.
Weight, or more appropriately density, is a big part of how an object "feels" in your hands.
https://www.dailymail.co.uk/sciencetech/article-3131799/A-ch...
https://www.theatlantic.com/technology/archive/2018/10/trump...
>Niche is wallets/purses
Purses and wallets are quite competitive. The material cost isn't too high and they typically sell for quite a bit, but marketing is a huge challenge and being able to feel the product is important to buyers.
Another issue is that the factories manufacturing your product are competing directly against you on Amazon, which is sometimes true for any given product, but definitely true for something as fairly undifferentiated as women's purses.
I know many people who have failed here. It seems the only way to succeed in this niche is to either be the manufacturer, middleman, have some unique differentiator either in brand (tough to market such a difference as purses/wallets are infrequent purchases) or in the purse's utility itself, which will require a custom (and expensive) run.
>20% margins
These margins are way too tight for Amazon. You simply cannot stand out from the other 10,000 generic women's purses with such a budget.
Listing products on Amazon is the easy part, getting eyeballs is hard. Advertising is very expensive, and doubly so without a trademark.
>Buying codes off eBay
This is pretty risky. What would work better is if you apply for GTIN exemption. It's very easy to get and you don't even need UPC codes.
>Now i need to come up with a 5 bulleted list and description for my product
This is one of the most important parts of the page. You know your product and the target audience best so it's critical you write this yourself.
>Shipping direct to FBA with no intermediary QA
Yikes, there's no guarantee that what's inside those boxes is going to be anywhere near the same quality as your sample.
>[After shipping] I will use this 1 month period to do some research about marketing.
This likely going to be one of your biggest expenses. Using the advertising tools, you can get a rough idea of your costs before ordering product.
Edit: Removed all caps, substantially toned down/removed needlessly aggressive phrases.
But the author expects that option. It's an experiment. The blog post talks about spending 3k to 5k on the experiment, which I presume is not a lifechanging sum for the author. The experiment will fail, but apart from a bit of lost money there's not a lot of risk.
The problem is when people do the same thing, but don't consider the fact that they are inexperienced. They think they have it all figured out and spend their life savings on it. They sell their home, take another mortage, and end up with mountains of debt, and a product nobody wants.
It doesn't sound like that's what the blog author is doing.
I sold used books back in the day (not FBA; at one point I had 10000+ books kicking around my house, gotten mostly from estate sales and craigslist "a science fiction fan has died, and I don't want the books" posts) This was before it was common to see people with barcodes at booksales.
I wrote some software to do pricing (I used regexes to read the REST API call returns rather than proper REST libraries. lol. And it worked) and to go from mass market paperback barcodes -> ISBNs (the hardcovers usually have the ISBN on barcode, the mass market paperback have a weird system where the first bit of the barcode is a publisher specific prefix, second part is the last part of the ISBN. When you see a prefix you don't know, I had the system ask the person inputing to manually type in the barcode, then I knew that publisher prefix.)
I guess the lesson was that most books not only sell for under a dollar, (you make about another dollar in shipping? More if a user buys more than one thing from you, but I don't think amazon has a system to encourage this) but most books just don't sell, even with 10K books, if you didn't add new inventory, you'd sell a book or two every two weeks, once the in-demand books sold, which would happen within a few months of getting a new load of books. (note, uh, it wasn't like there were a lot of expensive books kicking around unsold... nearly all the more than a dollar books sold during the first few months. After that, it was all penny books that didn't sell. I think the problem was that the books would sell, but that the market wouldn't bear a price high enough to ship them one at a time. If amazon had a way of getting users discounts if they bought in a way that allowed a seller to aggrigate shipping, a lot of those could have been moved.)
(I mean, my goal wasn't to sell books, my goal was to write a platform. And... maybe there is still room for that? I mean, amazon is terrible for selling those books nobody wants to pay money for (and a lot of those are super popular books that people want, it's just they are also super common, and you aren't going to get $4 or whatever for a book that was a book of the month book that everyone's mother has a copy of.); the buyer has to pay like $3+ per book, of which the seller gets to keep like a dollar, but because there's no encouragement for the buyer to buy all from the same seller, even if the buyer buys a lot of books (which is common for those books; As a child, I was known to go to those friends of the library booksales and come home with my body weight in books at like $0.05 to $0.10 per) - so I think that if you figured out how to make it more like the friends of the library situation, and pay less for shipping, you could move a lot of these books. But another lesson, for me, is that you want to work with someone doing the actual selling, actually doing the selling is a lot of work and gives you all sorts of urgent problems and ends up taking away time from platform development)
I guess what I'm saying is that I don't see a lot of lessons here for FBA; i mean, in that market, pricing and reputation are important, but you don't do any advertising or ad copy. (maybe I would have done better had I done so? but the amazon platform doesn't have a lot of room for that.)
I mean, the FBA play I've wanted to do is to look for the things that I buy and love that amazon doesn't sell, say, like Jovy brand Fruit roll-ups (which are there but even the bulk packs are like 3x what you pay in the store) - of course, uh, grocery is traditionally not super high margin, and people are way more price sensitive of groceries than other goods, and considering the... issues of FBA, I would have to sell in large bulk packs, and even then I'm not sure what kinda margin I would get out of it, so I haven't tried... but I kinda don't think most of the bookselling lessons would be applicable. (other than, I guess, that you have a minimum per-unit price because shipping, and that at that minimum price, there are a lot of things that you just can't move.)
https://www.nytimes.com/2015/10/25/magazine/a-penny-for-your...
The complaint I'm making about the amazon system is the shipping fee is paid per book, with no discount (at least when I looked last. I haven't sold a book for more than a decade, and nearly all the books I buy are on the kindle.) for the customer buying more than one book from the same seller.
When I was doing it, sometimes you'd get lucky; some kind soul would buy a bunch of books from me at once, and I got to ship it out at once, and I got to keep most of the shipping surplus.
I say it’s a good start because it doesn’t require much starting capital, let’s you learn the fba system such as creating labels and shipping. And if you’re getting a well selling book it won’t stick around long enough to have storage fees.
Funny enough I know someone else that purely flips older blank media like vhs and casset tapes. Apparently really good money if you can source new ones still wrapped.
Does he, though? Maybe to him the experiment is the research. It's ok for you and him to have different approaches to learning. As long as he's comfortable with losing his investment, let him learn from his mistakes.
My concern is that Amazon will shoot first and ask later. If you get suspended for violating the rules on Amazon and your plan of action is denied, then that's it. There's no second chances. No "stealth" account that will get you back to selling long term.
That is why it's so important to research first, and act second. There is no undo.
I've written about it over the years: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu.... Unfortunately it seems to be a fundamental tradeoff rather than anything easy to fix.
I'd love to get more people to understand that editing out the nasty bits from their comments (not that the GP was nasty) doesn't mean making everything bland. We want posts to be alive, just as you say. The rules aren't a moral thing or even a cultural thing, just a safety thing: we want this place not to blow up or burn down.
I found this article really interesting.
I will add some of my own advice to your own valuable advice above:
After having sold a few thousand products via Amazon, I would recommend trying to ship and fulfill yourself, it's not rocket science. You will save $10 per product. You'll find that spending an hour Packaging and shipping 10 items will quickly pay for your time. Request the supplier to package the goods in untaped individual boxes. This cost adds pennies per product and saves you a lot here when reshipping.
Your points about doing QA in China is very valid, Alibaba even offers reputable QA inspectors as an upsell to your product purchase.
It may be worthwhile to find something that is selling well and list it New below the cost of the "sold by Amazon" version. You'd be surprised how many customers take the cheapest option over the fba variant (as long as shipping is quick and free). This way you do 0 marketing.
Marketing is important, but once you have critical mass and a good product you can relax a bit and coast off the reviews and Amazon algorithm to get some residual traffic.
Put up YouTube videos. These are the first things that come up in the search results when somebody searches for your product, free SEO and marketing. They will show the product in greater detail than Amazon product images and consumers will feel good seeing that it exists outside of Amazon.
Source premium packaging from other manufacturers on Alibaba. This can be very cheap and you can even cheat and send it to your product manufacturer for pre-packaging and ship it all together. The same notes about QA inspection apply. I've done this for complementary products like cables and bags.
Consider registering your trade mark, this is cheap and prevents your supplier or one of their other clients (ie their buddies) from at least copying it straight up and selling it on other marketplaces once you've done the hard work of making a coherent product page and videos.
Now, the hard part - customer service. Making sure you are responsive, that you're messaging properly post-sale and post-delivery and that you are responsive to Amazon's requests as well.
Doing your own fulfillment is a learning curve, and maybe you want to learn the ropes with FBA before jumping in, but really, giving >100% of your margin to Amazon for them to pick-and-ship is a bit heavy. At minimum I would list the product for FBA and new with free shipping at -5% so you can recoup a bit on those "direct" sales.
Most items cost less than $10 for FBA to ship. FBA fees for a 13 pound item is just under $10. There's no way you're getting $10 in savings unless you're doing massive volume and shipping really massive items (like 50LB) or with large dimensional weights
You can easily ship a light purse in domestic USA for $5 if you have a business shipping account with a carrier. Making $8 with FBA per sale vs $16 by shipping yourself when you already have boxes is pretty simple.
This 4 piece purse set is only $7.01 in fulfillment fees: https://amazon.com/dp/B07DS52Z28
OP’s approach makes sense to me. They don’t seem to expect to actually make money, rather they view the whole thing as paying for a valuable lesson. You seem experienced in the work OP is doing, how did you learn?
When I started, I would read through several FBA related forums on my commute home from work, including a few Facebook groups and the official Amazon forums. There is also the official "Seller University" videos by Amazon and the accompanying help docs. (Some people buy courses, I did not, but to each their own)
When I was confused, I would search various forums. Almost every single time, I would find the answer asked in almost the exact same phrasing I would have used, and when I couldn't, I just asked.
My response was partially because it would have saved OP a lot of headache. Simply searching "what should I budget for advertising" leads to a huge number of fantastic insights.
Thanks for the question. I could definitely stand to be more constructive, and I appreciate you giving me the chance.
Buy name brand things at the grocery store and resell them. Don’t put a ton of money into brandless Chinese crap expecting to make money.
I'm involved in selling high volumes of name brand, licensed manufacturer products on Amazon. Zero advertising and we move a lot of units.
We compete with Amazon, but we're also well rated enough to be in the Buy Box. People know the products and will buy it if they want it.
Getting this kind of product can be more challenging, but as a starting point, it makes more sense.
All I do is list the products with inventory, and between Amazon FBA and Seller Fulfilled Prime, we mostly just worry about product selection, availability and pricing. Of course, accurate SKU details, descriptions, images, etc are important, too.
we do use one of the SaaS tools out there for research and data though.
The better way to learn FBA is to sell third party one way or another. That way you don't have to learn Amazon and learn starting a brand at the same time. It is easier to learn Amazon independent of all the difficult issues involved in both building up a brand and building up an ASIN. It is so much easier to make money with pocket change startup costs by just selling popular products or popular brands that are not locked down.
JungleScout and similar tools are also extremely misleading to new sellers particularly now in a crowded marketplace.
So many things can go wrong with a shipment also.
You can easily start a profitable but very small FBA business with nothing but an introductory 0% rate business credit card that you pay off every month to avoid winding up in a nasty situation. $5,000 or less would be ample and the only business plan you need is "buy a few units of something, if it sells well, buy some more units of it, and if it stops selling or you get into trouble selling it go sell out of it and find something else."
Starting a brand from nothing is really expensive and challenging particularly if there is nothing that fundamentally unique about the product.
This person seems like english might be their n-th language, so I understand wanting to spend 20 bucks to get some help with that.
Amazon's support for sellers is obscene, it pendulums between non-existent and a knife in the back.
They haven’t made it completely unworkable for her yet, but it’s bad. Much of her line is unique, and we get these counterfeit cockroaches that sell on her listings (which is against this particular category’s guidelines) and ship some piece of crap and gets negative reviews attached to the listing. Every time she opens a case to deal with the counterfeiter or bad review, she has to walk it through various obstacles thrown out by the agent, like it’s day one on the job for each of them. It’s a total nightmare.
She is working to pivot to a different type of category and sell to brick and mortar department stores. The type of hell they offer is looking pretty good compared to Amazon these days.
Any predictions on the outcomes?
(1) I sold a bunch of product and made money
(2) I sold a bunch of product and lost money
(3) No one wanted my product and I lost money
(4) I sold a bunch of product then Amazon started selling it for less and I lost money ?
Separately, I have been following the Keyboard.io backer updates for years now ( https://shop.keyboard.io/ ) which provide fairly thorough slice-of-life pictures of every step involved in creating a consumer electronic product from scratch in collaboration with manufacturers in China. It's not an exhaustive guide to the process but every step of the logistics we do get to read is fascinating. Lately I've been feeling like they could make more money teaching hardware startups to navigate this landscape than they could by selling the keyboards.
Also separately, I used to log 100k+ miles per year butt in seat flying for work and recreation, flying with carryons only but with a 3x 70lb baggage allotment and a modest duty-free allowance I never used, and I always wished I understood how to buy off-the-shelf consumer products that are cheap in one country then resell them in another. It seemed like it would be low risk because consumers can usually return unused merchandise. I figured there must be some way to buy iPads and sell them on Gumtree, meet up in Covent Garden and trade them for cash, then return any iPads I couldn't sell at a profit. I never found good docs of anyone doing this and always wondered whether it was logistically very hard (i.e. issues with customs or reliable resale) or whether it was just an area where people were quietly individually making a killing and didn't want competition. Ended up pretty much only using the free 3x 70 lbs to help move house when we moved overseas & came back.
There are hundreds of thousands of people thinking about what the next niche to attack in online sales is. The work is on that end, not this silly, already done, repeatable, novel process of drop shipping.
Very interesting. I await the conclusion. How long do you think it'll take to sell the lot?
The bigger threat is Amazon itself, if your product is successful enough there will soon be an Amazon Basics branded version undercutting you and showing up higher in search results.
I also read an interview once where they got analysed on the US store, with frequent typos, but better images then in the past.
Trademarking MIGHT protect against people using your logo and brand name.
Source: I previously worked in the Amazon price optimization field, and basically all our customers experienced this.
This seems pretty risky. --Plus he still needs to store the items, sell them, ship them, and deal with the customer service aspect.-- (Clarification: He doesn't actually have to do these things, but pay the FBA fees for Amazon to do them: https://services.amazon.com/fulfillment-by-amazon/pricing.ht...)
If his items happen to catch on and his supplier in China notices, there's also no real barrier to stop the suppliers (or friends of suppliers) from just cutting him out and creating duplicate product pages with slightly lower prices (which overseas suppliers have already succeeded at).
This is an experiment afterall, so it would still be interesting to see the results of a random person reselling items that aren't particularly unique and in a market with plenty of alternatives (handbags/accessories) with over sellers probably doing about the same thing.
Losers in this scenario: Chinese laborers, American "wantrepreneurs", and the environment.
It's rare that consumers win but most of my chinese made shit is way better than american, especially for the price.
I feel similarly, because as an American laborer doing basic customer service in a high cost of living area, my wage is not enough to afford literally any discretionary spending.
The common scenario in China is that if someone can get a factory job they go do it, and then they send as much money as they can back to their family, so that nobody starves.
But mostly, I am in this area for my girlfriend, who needs to be here for her very high paying job that is more niche and non-transferable to other cities I feel. One day our finances will maybe be linked, but for now I am content to just barely break even :)
What happens then is that either one brand becomes dominant or sales start to decline because there is a lot of confusion and reviews for the poorest version get mingled with the original.
Then there is the ultimate accolade, which happens from time to time, it becomes an amazonbasics product. The rest is history.
If you have a successful product, could you mitigate this by secretly creating an additional 4 or 5 FBA accounts yourself? The 4 or 5 FBA accounts would have different photos and slightly different descriptions, but would be selling the same product. The purpose of doing this:
- Since all your FBA accounts are selling the same thing, there is no risk of some of them being poor quality and getting bad reviews.
- You discourage other sellers from entering your market because the market looks crowded.
- You can set different prices on your 4 or 5 FBA accounts and thereby capture people who are willing to pay a premium and those looking for the cheapest price.
And as an added bonus, you get to pay $2 each to have your units destroyed or $2 each plus shipping to get them back. And by “plus shipping” that means the standard package rate non-Prime customers pay. So if all your units are on the same shelf (never happens because FBA strategically ships between fulfillment centers) then you pay for one big box. Otherwise you get one package at full price for whatever is on that shelf or bin that the picker pulls your merchandise from. Times however many shelves your stuff is on.
Also, different accounts might help you erase bad _Feedback_ but product reviews stay with the product listing regardless of who sold it.
Edit: I should have put destroyed in air quotes. I believe this is where the items that have the “Warehouse Deals” badging come from. No proof, just a suspicion.
And whose tax id will you use to meet the 1099-K requirements?
I asked Seller Support about this because I started consulting to help people sell on Amazon, and was concerned about getting caught in a dragnet over multiple accounts. They said as long as my clients didn’t sell the same items it probably would not be a problem.
Nah, he already missed the holiday selling. Even if it arrives on the 14th, he’s got 3-5 business days under normal conditions for FBA to scan the merchandise into shelves. Items are not sellable until that time. Also, since it’s the rush, count on 7-10 business days for that check-in to occur. And the last viable selling day is the 21st for Prime Customers.
Amazon’s guidance to merchants is to have merchandise arrive no later than mid-November for the holiday season, and to not count on restocking midstream.
Depending on the factory you buy at, they will let you customize more than just the logo and box.
Using different materials, adding tools etc.
Sometimes you get an edge over others because your product is just made of different plastic and comes with a nice bag.
Here's the secret, treat FBA like you would any other business - that means focusing on competitive advantages, barriers to entry, customer acquisition strategy, and other general business model type stuff.
For example, one of our best selling products took 2 years to develop, over $150k in R&D expenses, multiple patents and thousands in marketing to build the brand. It's currently making millions, but the road to get there certainly wasn't easy and it certainly wasn't "Off the shelf". No one talks about that stuff though because it's not sexy, it's just like any other business, you really have to put in the effort and think about what you're doing to get anywhere - or else like multiple comments have already said, the Chinese sellers will just totally crowd you out. And why shouldn't they? You have nothing special going on.
I did just a bit over $1 million in sales over two years of my Amazon business and it was 99% existing major brand lines. Some I bought direct from manufacturer, some from other suppliers.
For me, it wasn't so much identifying top selling products, but rather ones that I could compete on price. I did use a good many tools for all aspects of the business, but couldn't really share them now as I've basically shut all that out of memory.
The night of that worthless settlement I started looking for a job back in trucking, there was a job fair for a local company the next morning, and I ended up there for 1.5yrs.
> Buying UPC codes from eBay or other websites. This is the easiest way and it costs only 2$ for a UPC code! I did little bit research and found out that many people are buying from eBay-like sites. So i decided to go with the second option.
DO NOT DO THIS. You will get banned from Amazon and the codes you bought will be worthless -- not just the money but the codes printed on the products that will have to be redone.
Registering with GS1 is the way to go if you're serious; the cost is usually much less than $250, depending on where you are and the size of your business; and then with the registration you can generate as many codes as you want.
Or you can register a brand with FBA, and then apply to have no codes; if you only sell on Amazon it's a good option. Your products will only need an FNSKU number than Amazon generates for you.
See for example (many articles on the subject exist, just Google it)
https://amzadvisers.com/amazon-gs1-barcode-requirements-are-...
[0]: https://www.gs1us.org/upcs-barcodes-prefixes/get-started-gui...
https://www.gs1.fr/Obtenir-un-code-a-barres/Consultez-nos-ta...
I wonder if after the monthly seller fee, the returns and any unsold merchandise, if they will make any profit at all.
If nothing else it's been a good way to teach myself marketing, imports, and more about IP law...I hope to do a hardware startup in future, which would likely involve Shenzhen manufacturing, so learning to find and interact with Chinese factories has also been valuable.
I wish the author tracked their time spent on this. The labor cost might be a killer overhead. Being very lean on process is probably a major factor in making it pay off.
Hilariously, they "destroy" your inventory by selling it and keeping 100% of the money.
I don't think that storage fees specifically are a racket. What do you want Amazon to do, store a bunch of non-selling products indefinitely for free?
The lesson is that you shouldn't send a ton of products to FBA unless you have good reason to believe they'll move.
Details for people not familiar with the Amz horror stories, please?
They ask for invoices from sellers to "prove authenticity", claiming that's the only purpose, then mysteriously the vendor named in the invoice gets a call from Amazon the next week trying to source the product.
They make their own private label products and put links to them on other sellers' product pages, giving themselves free advertising.
Super risky and not worth it.
I keep working normally in my normal job.
Ah yeah BTW. This topic feels like a 'everyone is doing it because a few people use this topic to upsell there videos and referrals etc.'
Per Amazon figures, there are 20,000 sellers who sell over a million dollars a year. I know a lot of people in that range, but it does take capital to get there.
I found the whole thing really interesting.
The troubles with Amazon accounts.
Designing your own products based on white label products.
etc.
I really wanted to do this, but I then learned that I had to send the products to my home first, so I can check if it's okay and then send them to Amazon for fulfillment.
It sounded like a virtual business, I'd think about markets, design products, find factories in China who create stuff for me and then let them deliver to Amazon so they would sell it for me.
But suddenly I would have to sit with hundreds of products at home, checking them, putting new barcodes on them and driving them to the post office.
My favourite part!
Out of curiosity, but to the layperson, does the Amazon third-party marketplace seem like an exciting place to be? I feel like in 2016-2017 all the pickaxe sellers were popping up, and by 2018 all I see are a ton of burnout in my circle of vendor friends as they deal with the constant influx of 3p vendors with blackhat tactics.
I wonder what the fallout will be like when the boxes arrive at amazon and the UPC codes are considered to be invalid.
It is still a lot of fun to go through the process and I learned a lot doing it.
It is the program where third party sellers can send their products to Amazons warehouses, and Amazon then handles the shipping to the customer. The big advantage is that this makes the products eligible for Amazon Prime, as opposed to products that get shipped by the third party themselves.
ಠ_ಠ
Love it, immensely :)
This quirk identifies the author as having as their first language Arabic, perhaps Persian (where both styles are mixed), or Turkish (that one surprised me - RTL origin didn’t): https://en.m.wikipedia.org/wiki/Percent_sign
The author is in the US, though.