My Results Selling On Amazon FBA After 4 Months And The Pros And Cons Of The Platform

On MyWifeQuitHerJob.com, I often write about the need for motivation and determination when it comes to starting a business. After all if you don’t have the drive, then you will never take any action.

Well today I have a confession to make. I had major problems motivating myself to sell on Amazon.

Our online store was doing very well on its own, growing in the double digits and I didn’t really see a strong need to sell on a platform where I had little control.

But thanks to my friend Lars Hundley, I finally saw the light towards the end of last November. For all of you who don’t know Lars, he runs 2 successful ecommerce stores, CleanAirGardening.com and YoyoPlay.com, and he was also a featured guest on my podcast for episode 29.

Here’s what the guy did to get me off of my butt. Every single week, he started sending me emails politely reminding me to list my items on Amazon.

Then, he started telling me how much money he was making off of selling a small set of products. And when that didn’t do the trick, he started telling me about all of these cool strategies that he was using to make his Amazon listings more visible, strategies that very few people were using.

After several weeks of hounding, I finally broke down and decided to list a few items on a whim. And the results were immediate.

Within 8 days, we sold out of our initial inventory of 60 units as a completely brand new seller and sales have been going up ever since.

It just goes to show that sometimes you need a bit of external pressure to get yourself off of your butt which is why it’s EXTREMELY important to associate yourself with like-minded people on your entrepreneurship journey.

Note: I also wanted to give a special shout out to my friend Kenric for sending me his Amazon income reports as well which were ridiculous and served as a great motivator as well:)

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Table of Contents

Jumping On The Amazon Bandwagon

Before I talk about my experiences selling on Amazon, it’s worth noting that everyone seems to be jumping on the Amazon bandwagon right now.

And the reason is because selling on Amazon is almost too easy. In fact, I would argue that you could practically list anything on Amazon during the holiday season and it would sell.

Whenever things are too easy and whenever people get too excited about making money is when red flags light up in my head. This happened with EBay in the early 2000’s and it’s starting to happen on Amazon as well.

Eventually, these platforms will become saturated and it will be harder and harder to make money.

In the long run, you can not rely on a 3rd party marketplace as your primary source of income.

In order to ensure long term success, you will need to establish your own platform and brand.

However in the meantime, Amazon is there for the taking and you should use it as a means to validate your products and generate some early sales.

Fulfilled By Amazon

If you are going to sell on Amazon, you absolutely have to have your products fulfilled by Amazon(FBA). By choosing fulfilled by Amazon, it makes your listings eligible for free two day Prime shipping which is huge!

Anecdotally, having your goods fulfilled by Amazon will increase your sales by up to 3X. As a result, we only use FBA for our Amazon listings.

We also buy Amazon ads for all of our Amazon listings and for all of the products in our online store.

For example we purchase Amazon sponsored ads to make our Amazon marketplace listings more visible. In addition, we also purchase Amazon Display Ads(DSP) to drive traffic from Amazon to our online store.

Both advertising mediums convert extremely well and if I could spend more money on Amazon ads, I definitely would.

Our Results

In our very first month of selling on Amazon, we made almost 3K just selling 3 products using the techniques outlined in my ecommerce course

Just one month later, we were doing over 5K/month. Right now, we are making just over 6K per month listing only 8 products online.

While these numbers are only a very small fraction of what we make with our real online store, they are definitely on our radar screen. And what’s surprising is that our online store sales are up for the same products we have on Amazon.

Anyway to put things into perspective and to illustrate the potential, we sell over 460 different products in our store but only have 8 or so listed on Amazon at the present time. Eventually, we plan on incorporating more of our branded products into the mix.

The Pitfalls Of Selling On Amazon

The main negative of selling on Amazon is that it has thrown a major wrench into our inventory management. In the past, we only purchased inventory for what we knew we could sell in our online store plus a set percentage to account for growth.

As a result, inventory management has been quite predictable for the past several years.

But with Amazon added into the mix, all of our projections got majorly screwed up.

Now you would think that additional sales would be a good thing but that’s not always the case. Here’s why.

A significant portion of our customers are event and wedding planners.

And when they make a large purchase with us, it’s often all or nothing. If we have the quantities they need in stock, they buy. If we are short even a little bit, we lose the sale.

Because we were a bit overzealous with Amazon in the beginning, we lost out on a few major deals because the inventory was locked up in Amazon’s warehouse.

There were also cases where the opposite was true. We could have easily made more money on Amazon these past few months but we had product listings that were sitting idle because we couldn’t keep the Amazon warehouse stocked with inventory.

Here’s the thing.

It often takes 3-4 months for us to have goods made and shipped to the US so it’s not like we can acquire new inventory on a whim. Also, there was a major port strike recently which delayed several of our large shipments.

The Pros/Cons Of Amazon

Overall, I think that having an established online store prior to selling on Amazon has been a huge advantage for us. But if I were to start all over again, I would use Amazon as a way to test and validate my products before going full force with my own website.

Start making some money on Amazon, gauge the demand and then launch your own website to establish a long term brand for your business.

Amazon is great for making money fast because of its huge established user base. But keep in mind that the Amazon marketplace will eventually saturate.

Also, because people who buy on Amazon have no idea that they are buying from you, you can not establish any sort of brand selling on their platform.

Anyway if you are just starting out with ecommerce, here’s how I would proceed today.

Pick a niche and sell your products on Amazon to validate the demand
Once you’ve established demand and have real sales under your belt, work on your own branded website ASAP
Continue selling on Amazon but focus on your own website. Establish your own customer database, gather emails, etc…

In fact this is the exact methodology that I teach in my course on how to start a profitable online store. And today, I have an entire module dedicated to selling on Amazon based on my own experiences and what I’ve learned from Amazon veterans like Brad DeGraw and Lars Hundley.

I also regularly invite industry experts to give lectures to the class on various topics to further strengthen the curriculum.

For example, I recently had Brad Degraw on as a guest to talk about Amazon, Andreea Ayers to talk about marketing and publicity, Spencer Haws to talk about SEO…The list goes on!

If you are currently on the sidelines, sometimes all you need is your very own Lars Hundley to give you a kick in the pants:)

Especially if you are looking for some extra motivation to get started, then let myself and the other 1000 students in my class push you to succeed.

Nothing is more effective at getting your entrepreneurial juices flowing than interacting with other like minded entrepreneurs.

And sometimes all it takes is a little spark to light a fire under your butt. Start now while it’s still relatively easy to take advantage of what Amazon has to offer before it becomes too saturated.

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photo credit: Covered Wagon ii Bay Bridge Collapse

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14 thoughts on “My Results Selling On Amazon FBA After 4 Months And The Pros And Cons Of The Platform”

Anne says:

What a beneficial thorn in your side to have around!
I am rather impressed by the Amazon sales numbers. That is an amazing extra bit to add to your business, which is awesome. Inventory management must be a bit of a PITA though, that was my first thought when I clicked over here.
1. Steve C says:
  
  Inventory is a PITA but only because it’s still early. Once things settle down and a pattern is established, it should get much easier and more manageable.
Lars says:

I don’t know who that Lars guy is, but he sounds pretty cool. You probably owe him big time, considering those numbers you just laid out there.
Seems like you should buy him a new car or something to thank him. It only seems fair….
I mean, extrapolate out the dollar value of what a 12 to 18 month head start on Amazon is going to do for you! It must be REALLY valuable to you.
I wish there was some Lars in my life to keep me on track.
All I do is sit around all day and read Facebook and write blog comments.
1. Steve C says:
  
  Wow. What a coincidence that your name is Lars too. If you need some motivation, I’ll introduce you to the real Lars. SEnding email now.
  1. R.P. James says:
    
    Hi Steve,
    I saw your comment above to Lars, about getting him in touch with the real Lars. Could you also get me in touch with him? Last year I sold a few items on Amazon during Christmas and it went well, but obviously, after the holiday I was stuck with inventory. I am still new to amazon fba and I was curious if you still think it is worth it, to get involved today, since eventually it will become saturated. And so I would like to take your course, I am reading about jungle scout now and I think I need that ‘ kick in the pants’ you were mentioning earlier in this article. Thanks for your website and suggestions.
Chris says:

Any reason why you are not using something like Stitchlabs, ordoro or others to manage your inventory? You can use FBA whether its sold on Amazon or off.
1. Steve C says:
  
  Hey Chris,
  A lot of our stuff is personalized so we can’t use a 3rd party fulfillment house. Also, it is wayyy cheaper for us to carry our own inventory and fulfill ourselves.
Anouk says:

I guess that all options have the pros and cons.
The pros of Amazon is that you don’t have to worry about traffic. There is tons of traffic there and you don’t need to spend on advertisement.
Having your own website you can control everything, which is good, but driving traffic there is a lot of work (and money) and it’s also unpredictable.
I think Steve that one of the reason you started selling on Amazon was also because you are not getting as much as traffic than you want to your site because of Google’s algorithm.
Having both options (amazon and own website) is a great idea.
1. Steve C says:
  
  Always the skeptic are we Anouk:)?
  The last few Google algorithms were actually very beneficial to smaller websites. I just took a look at our year over year traffic stats and our traffic for our online store is up 61%. (From Jan 1 to March 31)
  My blog has seen similar jumps in traffic as well in the ballpark of over 100% yoy.
  Now…There is merit to what you are saying and often times running a business is about diversifying and hedging our bets. By having our feet in all traffic sources and marketplaces, we can be that much more resilient.
  1. Anouk says:
    
    Thanks for your answer, Steve.
Bianca says:

Hi Steve!
This post motivated us to finally sign up to start selling on Amazon (in addition to our Shopify store) here in the UK, including using FBA. You are basically our ‘Lars’! 🙂
I was wondering – we sell a small range of own-brand and known branded goods. We are starting off with the branded goods on Amazon to gauge demand and test the waters, but how do you think own-branded products do on Amazon, given the lack of branding possible on Amazon vs Your Own Store?
Jeannette says:

Hi Steve, 🙂
Inspirational stuff – good on you! I have been contemplating on selling a beautiful, chic, organic moisturiser stick that we make here in AustraliaI, that I am currently selling on my online store, and selling it on Amazon to try it out. The one thing that is holding me back is the that I need to get my inventory over to America, as I am in Australia. Do you have any tips on this? I am also a little confused as to how much inventory I would send. Any advice would be really appreciated, considering that you have been through the journey, with outstanding results.
Thanks for sharing your experiences :):):)
Jeannette
Dennis Moons says:

Thanks for sharing your experiences with Amazon Steve!
Interesting to hear the downside to the Amazon success in your business and the inventory challenges that it brings along. If those big orders make up the bulk of your business, it’s an important trade-off to think about.
Anthony Frost says:

Selling on Amazon is one of the best ways to grow a business.
I haven’t seen a platform that offers the scale and market size than what Amazon FBA offers.
The only downside is the competition now and the quality product and effort you need to become a top seller…. That said, no business success occurs without effort and dedication
A buddy tried selling on Amazon and spoke with Coach AMZ who helped him grow his Amazon business, though there are plenty of great ways to learn and educate yourself for growing an Amazon business
Business Education is an investment, not an expense….

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