For all of you following my Amazon FBA Business experiment, you will be happy to read this long-awaited post. It was quite difficult to lay out everything that I have gone through and also incorporate all my income, expenses and future potential income in the post so please be sure to read the WHOLE post to get the whole picture. For all the new readers, I am aggressively seeking to increase my passive income to speed up my early retirement and thought it would be a great idea to try to sell private label products on Amazon. The very first post I wrote on this was back in March in which I clearly listed out my game plan and a list of steps to make this whole FBA project complete. From researching a product to sell all the way up to having the item listed on Amazon and making money. Feel free to check out my complete list of steps involved in starting up your own Amazon FBA Private Label business. A few months later I wrote an update post when my bulk manufacturing in China had begun. You will be happy to hear that after a long excruciating amount of time, I have finally completed all the steps and my product is officially listed for sale on Amazon Prime right now as I write this.
I never thought it would take so long to get this experiment going and I want you all to know that this was not easy getting setup and it took a lot of patience and a lot of stressful days worrying about if I was getting ripped off and not to mention not really knowing exactly how to tackle each step. It was a trial by error experiment and learn as you go. I had no mentors showing me the ropes although I did utilize multiple other web sites, pod casts and even a facebook forum to help me along the way. I will break out for you the time line, costs involved as well as how my product is performing now that it is listed for sale. If you decide to start your own private label amazon selling business, then I hope you can learn from me and maybe even do better utilizing the info you will find here.
How long does it take to start an Amazon FBA Private Label Business?
For me it took 9 months total starting with when I began researching before even knowing what I would be selling. Check out my timeline below:
January – Initial research began. I learned about this business when I stumbled upon a blogger in which they were doing this and it appeared to be a successful business. From there I dove in head first into research phase and read everything I possibly could about what it takes to start this, how much potential money could be made and what all the steps involved would be. I was in research mode for almost 1 month before I was ready to start trying to find a product to sell.
February – Product search began. I started using JungleScout which is a software used to analyze and to help pinpoint potential products to sell on Amazon. It uses data analytics to compare and review products relevant to how many sellers are currently selling it, how many sales they are getting, how many reviews they have and just overall generic info on the product categories and individual niches within the Amazon site. Its a great tool to use and it’s what I used to find my product. I actually ended up choosing 3 different products using this software and proceeded with ordering the samples. Ordering the samples was done AFTER I had already negotiated price points for each supplier. All my suppliers were found using AliBaba. The more you buy, the cheaper it was per product. During this month I also created my own logo for each product so that I could have the supplier put my logo on the samples. Only 2 out of the 6 suppliers were able to accommodate the logos on the samples. The other ones said that after I commit, they would send me a new sample. For now I really just wanted to see the quality of the products so it was not a big deal for me.
March – Received samples. I requested samples of each product from 2 different suppliers on Ali Baba. So I had 6 total samples sent to me from 6 different manufacturing suppliers in China. After reviewing all the samples and doing as much research as I could on the suppliers, I ended up choosing to proceed with only one product. From a cost perspective, although it was super expensive and extremely risky, I placed an order for 1000 units of the product I wanted. You will see the breakdown of all the costs below. I also had to pay 30% up front to start the mass production.
April/May – Waiting!! During these months the ali baba supplier was producing the bulk order. Initially they told me it would take about 40 days so I was expecting a long wait but I admit, it did take a little longer then 40 days. I also took the liberty of researching and prepping a freight forwarder during this time to accommodate the shipping of the bulk items to the united states from China. I had to go with sea freight because of the amount and size of my products. It was just way too big and heavy to ship via air. It would have cost a fortune to try to get this delivered by air.
June -Manufacturing complete. I finally got the email that my bulk order was made from my Chinese supplier and I immediately had them ship me 2 units of the final product. I received my final samples and was impressed with what I saw. I also paid a 3rd party inspection company based out of China to actually go to the manufacturer and do QA testing, take pictures and confirm the item count. This was a very important step and I highly advise you do this. It will make you feel a lot more secure about not being ripped off. I actually did not encounter any problems with the inspection so it worked out quite well. Once I received the samples via airmail and had the positive inspection report I went ahead and made the final payment (remaining 70% of the total cost). From here I went ahead and finalized the shipment details with my freight forwarder and we had my products placed on a sea freight carrier. Initially the freight forwarder told me it would take about 30 days to get to the united states. See below for total shipping costs.
July – Waiting!! I had to wait for my products to clear customs in China which prolonged the shipment, then I had to wait to get it on the next ship that was headed out to California which delayed it about another week. At this point, I took this time to really put some time into making my Amazon listing and getting the product pictures ready. I reviewed all my competitor products and cleverly created my own unique listing that incorporated everything my competition had and MORE!! I also took my own pictures with a light box I created on my own and using a very good camera that my wife owns. I had trouble using photoshop to white out my background so I ended up paying $6 for someone to do it for me on fiverr.com. The pictures turned out nice and I was happy to have them posted on my listing.
August – My product lands in America!!! After waiting over 40 days I finally got the email from my freight forwarder that my products are in California and that I would have to wait a bit for it to clear US customs. About a week later which took forever in my opinion I got the final clearance. At this point I went onto my Amazon Seller central account and finally made my first bulk order pickup from Amazon direct from the warehouse in Cali. I shipped 1000 units to Amazon. I emailed the UPS labels provided by amazon to my freight forwarder where they took care of placing the labels on the boxes for me. One week later I received an email from Amazon indicating my products have arrived at the warehouse and they would soon be available for sale.
Late August – My item is finally listed on Amazon!! Woot Woot!! August 22nd was the first day that my product was active and ready to order on Amazon Prime. I was so happy and nervous at the same time about how it would sell. At this point I decided to pay a company called GetBSR to have amazon users review my listing so I could get some ratings and stars on my listing. Ratings/stars are HUGE in the amazon world and you really need them to help sell your listing. I basically ended up creating 25 coupon codes to have these reviewers purchase my product for $1 and then leave their honest opinion and ratings on my listing. This puts a big dent in my potential income because I am giving away 25 units. Worth it though in my opinion. During my first week the only sales I was able to get were from these reviewers with the coupon codes. 🙁
September (Now) – My product is selling! My product has now been on amazon for sale for about 3 weeks and I have sold approximately 65 total units with 25 of them being from the reviewers/coupon codes. So those don’t really count. In other words, I have sold 40 real units at full price to actual customers wanting my product. I’m averaging about 2 sales per day since I started selling and I am utilizing amazon PPC which is an ad campaign that promotes my product when people do searches on amazon. However my product actually appears to be picking up as the last few days it look like 3 to 5 sales have been occurring. You can find the costs for this below.
Amazon Product Summary
Here is a summary break down for my private label product. Please note that it is not a good idea for me to ever expose what my actual product is. Amazon is fierce with competition and product hijackers so it would only cause damage if I ever let you know what I am selling. I’m sorry! 🙂
Current Price of my product on Amazon: $37.99 – I initially planned on selling my item for $40 but after the first week of no real sales I was worried it was priced too high so I lowered it. I may modify this in the future to see what happens but I just need more time and data to see how my product does.
Current amount of reviews of my product: 20 Reviews (15 are 5 star, 5 of them are 4 star) Not all the coupon code reviewers have left their reviews yet which is concerning to me however I was told it could take up to 20 days from the delivery before they do it and it hasn’t even been that long so I have to wait a week or two to see if all my coupon code people leave reviews.
Amazon FBA Sales to Date Summary and Future Outlook
Keep in mind as you are reading this, my product has only been listed for 3 weeks and I am still trying to figure this whole thing out on how to increase sales and figure out this darn Amazon ad campaign PPC crap! It aint easy!
Total sales to date: 65 units (not including 2 which sold the day I was writing this post) I am averaging 1.9 sales per day so far however I feel like its starting to pick up and I am getting like 3 per day recently.
Total amount of money I have spent on Amazon PPC ad campaign since my product was listed: $234.44
Total amount of money made from all my sales minus my Amazon Fee costs and ad campaign fees: $893.35
Total amount of inventory left: 917 This number is actually quite concerning because it appears one of my boxes never made it to amazon. I am missing about 16 units which is exactly what each box contained that I shipped. I have yet to reach out to amazon about this but will do this very soon. These may be gone for good and I will have to eat the cost.
Total potential amount in sales for my remaining products: $34,836
Total potential earnings amount after taking away the amazon fees: $25,757.13
Total Expenses incurred to date for EVERYTHING: $16,788.44
Total potential profit to be seen (from selling the remaining 917 units at $37.99 plus the amount already earned and deducting the amazon fees): $9,862.04 This means I recover my initial investment of almost $17k and then make around $10k in profit on top of that. Not bad although this number will be less for sure due to any unforeseen returns/damages and ad costs that I have yet purchased. Im hoping that I am able to clear at least $8,000 in profit off of this amazon experiment. Better to have lower expectations as far as I am concerned. With that being said, with a total amount in at $16,788.44 and the possibility of earning a total of $26,650.48, that would leave me with a pretty darn good ROI as far as I am concerned.
Here is an actual line by line item break down of my income/expenses.
|Jungle Scout Ext||-78.00|
|product domain name||-20.27|
|Samples from supplier 1||-120.36|
|Samples from supplier 2||-267.00|
|samples from supplier 3||-62.70|
|sample from supplier 4||-102.80|
|sample from supplier 5||-122.56|
|Samples from supplier 6||-16.08|
|upc codes to put on product packaging||-10.00|
|30% of first order||-3,867.00|
|amazon seller payment||-39.99|
|sales tax late filing fee **||-104.00|
|amazon seller payment||-39.99|
|3rd party inspection||-100.00|
|final payment of product||-9,005.00|
|amazon seller payment||-39.99|
|amazon seller payment||-39.99|
|final invoice for freight forwarder||-2,004.06|
|fivver photoshop pics||-6.00|
|UPS amazon shipping to warehouse||-428.41|
|Amazon PPC fees to date||-234.44|
|TOTAL EXPENSES TO DATE||16,788.44|
** I was hit with a sales tax fee in my state because I did not file $0 sales in my first month of having my LLC that I created. I was not aware I had to file even without any sales. Lesson learned!
Income: (After 3 weeks of selling)
|40 actual unit sales minus amazon fees**||$893.35|
** Amazon is charging me $10.10 in amazon fees on each sale that I make. So $37.99 minus $10.10 is $27.89 I get back per sale.
After Thoughts of my Private Label Amazon Prime Experiment
My amazon FBA private label experiment is still in its early stages and I have a lot to learn still. I’m sure there will be future issues and problems that I will run into in which I will have to learn as I go. Although it seems to be going decent so far and is showing signs of promise, I still feel nervous about the whole thing. At the end of the day I will be happy as long as I at least break even. A lot of bad things would have to happen for me to get to that point though. I will try to keep an optimistic frame of mind and just see how it goes. As of now I am not thinking about ordering a second batch or even starting a 2nd product. I need to recover my initial funds invested first and see how long it takes to do that before I make any future decisions about this project of mine.
The whole thing is pretty crazy how I just jumped in and started doing this but that is just the way I am. You have to take risks in order to succeed and I really, really want to succeed! If I fail, then I will learn from my mistakes and move forward. Honestly though I am not thinking I will fail at this as it seems to be going decent so far. I mean the hard part is all done now and its pretty much on cruise control from now on other than learning how to refine my sales. After reading all this, what do you think about all this? Do you sell on amazon or are you thinking about doing something similar?