Selling With Amazon FBA – My Private Label Experiment

amazon fba

 

You may have read in my last few posts that I am about to start a new business endeavor which involves buying bulk products from Chinese manufacturers, sending them to an Amazon Fulfillment center and then selling them via Amazon Prime.   I have zero experience selling products online or e-commerce in general.   Does this sound crazy or what?  Why am I doing something crazy like this?  It sounds risky and quite honestly it sounds down right scary having to deal with importing from overseas and dealing with the Chinese manufacturers.   I mean at the end of the day, I will most likely be wiring thousands and thousands of dollars overseas to a person I have never met before and barely speaks a lick of English.  Gulp!!

I don’t know about you but the idea of all this gets me super pumped.  I might be what you call a risk taker and I feel that I have always been like this.   🙂 I have driven a motorcycle over 160 MPH before, no joke, multiple times actually!  I have jumped out of an airplane twice and I own 4 properties in a different state from where I live.   To the average person, all of those are just flat-out crazy!  Haha!   I can see how they would think that and I am perfectly okay with it.   My latest experiment may not be as crazy as those previously mentioned stints but it does not come without risk for sure.  So why am I doing this?

Frankly, To make money!!  Making additional income is my sole reason for jumping into this Amazon game and from what I have read, there are plenty of people making a killing by doing this very thing.  I am hoping that my passion and dedication for success will help me achieve similar success with the Amazon FBA experiment.

“But Alex, I can see in your net worth tracking that you have plenty of money and income, why do need more?”

Because I want MORE RENTAL PROPERTIES!!   There is no other reason I want more income other than fact that I need it to buy more rental properties.  All this extra side hustle income I get whether it’s from this blog or amazon or whatever will be used to buy more rental properties.  I say this over and over again but my financial independence will come from my real estate investing.  Cash flow is what I want and the whole point of this blog even is to help motivate me to make more cash flow!!   At some point, I will be making 10k or more per month just from rental income.  It’s only in my best interest to try to get there faster and in order to do that, I need to make more money!!

So now you know why I am getting into this and selling with Amazon FBA. Here is a detailed outline of how I am going to do it.

Amazon FBA Experiment Checklist

 

1) Research, Research, Research!

– COMPLETED – I will actually never stop the research phase as I will want to improve in every aspect however I have done enough research now to start the process.

2) Select Potential Products

– COMPLETED – I have chosen 4 different products to sample that fit my criteria for selling on amazon.  My criteria involves not having a lot of competition on amazon, being able to make the product better or cheaper than the current competition and the product having a decent amount of monthly sales.  It was not easy picking the products and some say this is the hardest part of the whole process.  Whether or not the product I choose will be successful is yet to come.  Ill keep my fingers crossed.  I think based on the research I have done that I will be okay with either of these items I have selected.  Please also note that due to the fierce seller competition on Amazon that I will not be disclosing any of my products.  This is to protect my own business and try to allow for maximum returns.   I hope you understand.

3) Contact Suppliers and Request Samples

– COMPLETED – I spent weeks communicating to different alibaba suppliers in hopes of finding the right manufacturer(s) to work with.  I was eventually able to find 2 suppliers per product selected and have requested samples from each one.  I have only received one sample out of the four products so far.  I should be receiving the remaining product samples within the next few weeks.  It is a very time-consuming part communicating with the Chinese suppliers on exactly how you want the product and waiting on the international shipping.

4) Choose Final Product

– Once I have all the product samples in hand, I will make the final decision on which one(s) I will choose to start with.  Yes there is a chance I may end up picking two of these.  Just depends on how good the projected numbers are and the quality of the product.

5) Design Logo/Brand and Packaging

–  At this state I will need to create a logo to put on these products and send to the supplier.   This is where the term “private label” comes to play.  These items will be branded with my own logo and printed on each product.  My plan is to also include the logo on the packaging.

6) Make Final Product Adjustments, Negotiate Bulk Purchase with Manufacturer, Place Order.

– I lumped all these up into one because they are all part of the process of making the final order once I have chosen a final product to work with.  I am hoping this part of the process works out in my favor.  At this point, it will take anywhere from 25 to 35 days for the items to be made.

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7) Choose Freight Forwarder/Shipping Vendor

– Depending on the final products selected will dictate whether or not I need to do this step.  Two of the products I have chosen are small and weigh very little which means I can ship the items via air and these can be shipped typically within 1 week.  In this scenario, I will not have to choose a freight forwarder.   However two of the products I have selected are bigger and weigh a lot more which will rule out Air Shipping due to the high costs.  In this scenario, I will have to have the items shipped by Sea in which I will have to work with a Freight Forwarding company to accommodate the shipping and to handle customs paperwork.  This method of shipping will take an additional 25 to 30 days just to ship.   So in other words, there is still a chance that my first listing won’t go live until June.

8) Create LLC and Apply for EIN

– COMPLETED – I took the initiative of doing this step already.  It cost me $300 to create this here in the State of Texas and applying for the EIN was free.  The name I chose was a generic name so that in the future I can sell multiple products under it if necessary.

9) Create Amazon Seller Central Account

– I plan on doing this step this week sometime.  I had to wait for the LLC and EIN to come in so that I can use this information to sign up with the new Amazon Selling Account.

10) Create Listing and Shoot Photos

– Once my product is ready, I will have the manufacturer send me a few of the final versions exactly how it will be sent to customers.   This will act as a final inspection as well as give me the opportunity to take awesome listing photos to upload into amazon.  Great photos and good reviews are major factors when it comes to selling successfully on Amazon.

11) Ship Items to Amazon Fulfillment Centers

– Once the bulk merchandise arrives in the United States, I will have to have the items prepped and shipped to Amazon Fulfillment Centers.  Doing this will allow amazon to fulfill the product themselves and sell it via Amazon Prime.  A big part of the reason why I am doing this has to do with the fact that Amazon does in fact handle all the ordering, shipping and customer service on these items.   Once I get to this point, it should be smooth sailing and just a matter of placing additional orders as my inventory runs low.

12) Start Selling and Making Money!!

– Wow!!  That seems like a lot of work and research that needs to be done to finally get to this point.  Believe me when I say this won’t be easy and I will be learning as I go.  My plan at this point is to advertise my product and setup email campaigns to get reviews on the products as they sell.  The more and more I can do this, the more money will be made.   The good news is also that once you get to this point, there should be very little work involved and the income should be become somewhat passive.

 

These are the steps I will be taking to start my new Amazon business and it will take months to do all this.  I am anticipating and hoping that my first listing will be live on amazon and ready to sell sometime within the next few months.  Wish me luck and periodically I will provide updates on the blog about how it is going.

Are any of you selling using Amazon FBA?  How is it working out for you?



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Cash Flow Diaries

44 Comments

    • Hi Brian! The potential i see with selling on Amazon is huge. It’s exciting and I am really hoping it works out for me. Even if it lasts only 1 year I will be happy. As long as I can make enough money to buy at least one more rental property my goal will be met.

      As for the products, unfortunately it would not be a smart decision for me to disclose the products due to the heavy competition that exists in the amazon marketplace.

      Thanks

  1. As always, when dealing with overseas companies, and Chinese companies in particular, be very careful with your cash. A friend of mine lost her money and her business when her Chinese supplier took her money and disappeared. It happens all the time, and you never hear about it. So never send more money to anyone, especially in China, than you can afford to write off as a complete loss.
    Jack recently posted…Buy CostCo Checks and Save Money (even if you’re not a member!)My Profile

    • I think this type of thing happens often where you get scammed sending money overseas. Its a huge problem and its vital to do as much research as you can on the supplier/receiver in question to try and mitigate the risk. Its scary for sure!

    • Thanks Yeti! Im sure it will be very entertaining whether win or lose.

    • Hi Gracie! Yes I paid for Jungle Scout Chrome Extension and I also use Unicorn smasher which is essentially the same thing but its free. The free one doesnt seem to have all the data like Jungle Scout though which is why i use both for researching. The info you can pull from amazon from those two apps should give you enough knowledge to make a decision but its still tough finding products.

      • Thanks for sharing your journey so far Alexander. I was actually looking for some tools to join you – have you used Amasuite before? http://getamasuite.com It looks to be a bit more useful further along the process. Not just for product research. Are you learning from somewhere specifically? I like The Amazing Seller Podcast quite a bit too (http://theamazingseller.com)

        • Oh yeah the amazing seller has been pretty much where I learned most of everything that I have done. I have not checked out Amasuite though. Will have to give it a peak. Thanks for the suggestions.

    • Thanks Rachel!! Best of luck to you too with your KC venture!! 😉

  2. Can’t wait to see how it turns out! So I know you aren’t telling the product and I completely understand, but can you tell the suppliers? Or are they product specific? I would love to know!

    • Hi Hannah! Thanks! The suppliers are actually product specific to a certain degree so I would prefer not to disclose that but what I can tell you is that I found them all on alibaba and made sure they had multiple years as a gold member with trade assurance and with 3rd party verification. So I think they are legit! Wont know until after I pay them and wait for the product though!!

      • I understand! Thanks for the tip about Alibaba and gold members. As you said, it can be completely time-consuming and overwhelming trying to figure out what to choose and WHO to use. Thanks again and best of luck. I’ll be following the results!

  3. Man, this sounds like an awesome venture! 🙂 Loving the details there and the hustle you’re getting into..
    The key thing about you is that with your enthusiasm, curiosity and drive you’ll smash it out..

    Sure there’s risks involved as people have pointed out although there’s risk in anything and sure you’re not putting every cent or penny 😉 you own into it haha..

    Looking forward to hearing your updates and keep up the hustle!

    • Hey Jef!

      This is going to be an epic venture for sure. I have a feeling its going to work out for me. I really love when you comment on my site because you pump me up!! Thanks man!!

      • Man call me an eternal optimist however I like to pump up people doing cool s*@t 🙂 haha…
        You’re welcome and glad to be following your journey along with mine!

  4. Quick question…for the prep’ phase, it needs to be labeled and prepped before it reaches the Amazon Fulfillment Center. Are you going to do the prep yourself or find another company to do it?

    • Hi Nick! It does in fact need to be labeled and prepped. What I plan on doing is have the manufacturer place the FNSKUs on each product packaging, then have my freight forwarder add the shipping to amazon specific labels for me.

      Does that make sense?

  5. Very interesting. I’ve sold things on Amazon but mostly just things I wanted to get rid of and not FBA. I definitely think there’s potentially good income in it and have researched it as well, but never really pulled the trigger on it. Will be following how it goes for you. Keep us posted.
    Andrew@LivingRichCheaply recently posted…Do You Really Need That?My Profile

    • Hey Andrew, yeah everything I have read is pointing to good profits as long as its done correctly. It will be very interesting seeing how it plays out with the numbers and I will be fully transparent about it on this blog as I am with everything else so keep an eye out. Let me know if you ever get started with it and we can talk offline.

  6. Hi Alex. As a Chinese who grew up and lived in China for over 20 years, I hate to say that you have to be extremely cautious dealing with them especially with money. I like your Amazon FBA idea but it is a really risky move to import from a manufacturer you never met and he/she barely speaks English. At the same time, reward always comes with risk. Wish you good luck!

    This makes me think the same thing but I might have the privilege to directly talk to them before making any faulty move. But definitely I need more research on this, thanks for sharing your thoughts, they were very helpful.

    • Thanks Bin! Yes I plan on being as cautious as I can be for sure.

    • Thank you Brian! I am indeed super motivated to get more rentals. I would be happy if I can purchase at least 2 more rentals this year. I do think once I have the amazon product listed that it will become very passive. Its only really difficult to get it up and running and of course finding a product that sells. If I do those right, it should be smooth sailing.

    • Youre the best! Thanks for rooting for me Aliyyah! I will try really really hard to not fail at this. 🙂

  7. Very cool, I look forward to hearing how this turns out in a year. Have you given much thought to possible liability insurance? I’ve dreamed of doing this, but I never put in the work to actually choose a product and get going!

    • Oh man hopefully a year from now I will have a few different products being sold on amazon. I have not given much thought at all into liability insurance. I havent read much about people doing that to be honest and I think it depends on the kind of product you are selling. I will look into this but for right now, I am not concerned with this.

      I think you should start pursuing this dream of yours and get on it. We can do it together!! 🙂

    • Hey Jonathan!

      Thank you for the encouragement and the feedback on the new blog theme. Really appreciate it!

    • Hi Tracy!! I look forward to letting everyone know how it ends up. 🙂 Thanks for stopping by.

  8. I have been selling on Amazon FBA for about 2 months now. I buy things on clearance at retail stores and then ship them to Amazon. I started off making nothing at first but now im making well over 100 a month and its growing fast.

    • That is awesome Tyler! I have read many articles about others doing that successfully. Its called retail arbitrage right? That is great its starting to pick up steam and you are making money!! Keep it up!

  9. That was smart to get an LLC and get it out of the way. I am working on that right now. I think for me investing in the stock market so hard last year got me in the right state of mind for Amazon FBA. The scared feeling I first got when I bought more than $1000 worth of one individual stock was the same scared feeling I had when I wired money over to China for the first time. Neither are guaranteed to make me money, but I’m willing to take the risk.

    • Thanks! Oh yeah I definitely got that scared feeling when I sent my first payment in. It was for over $3k and it still scares me actually. But like you, I am willing to take the risk. Hopefully it works out well for the both of us.

  10. This is great! Thanks for sharing. I have been cleaning out my closets on eBay and looking for a pivot to keep the side hustle going. Thanks for sparking the thought!

    • Hey Richelle! Youre welcome! Side hustling is part of the key to being successful and I love that you are trying to do that. The amazon stuff is not easy at all and takes a long time to do but its getting there. I will have an update soon on where it is at for me.

  11. I have been wanting to try selling with Amazon but never knew you can buy your own products to sell. I’m curious, why wouldn’t you test this hustle out by first buying already produced products to just sell? I can’t wait to see how this goes for you. Like I said – I really want to try it.

    • Hi Beth! Already produced products are already saturated with tons of sellers. I want to sell something unique and have very little competition. Just makes more sense to me but its not bad idea at all to start off selling already produced products. 🙂

  12. 1st, I want to thank you for your article and appreciate the efforts you are willing to put here. I learned a lot from you.

    However, I read through most of the comments, and am I the only one? I hate to rain on your parade, but I don’t think your plans make money. Or, at least it’s not worth your time and effort, even your risks.

    If my comments below can save your time and make you sleep well at night, consider this as my thanks to your contribution to the community and my thanks to the things I have already learned from the tools you mentioned in your article.

    So, please allow me …

    Assuming you are willing to risk some money and time and effort, as sunk costs, your plan will still can’t hold up …

    “… My criteria involves not having a lot of competition on amazon, being able to make the product better or cheaper than the current competition and the product having a decent amount of monthly sales…”

    That means there is an incumbent product, no matter less competition is. This is particularly true when “the product having a decent amount of monthly sales.”

    You said you are “able to make the product better or cheaper” … To compete (compare) with incumbent, You can NOT make it cheaper, because: A). you are new to suppliers and don’t track records and established relationship with them; and B). you don’t have purchase quantity or production scale to your new suppliers.

    If you source the same product, but with your own logo/brand, that means you are new and you have no review at amazon, I can’t see why customers will buy yours, not incumbents.

    Not sure what you meant you are “able to make the product better” – quality or features? I assume “features” because the points “cheaper” above pretty much shut down the “quality.”

    Features mean improvement, and improvement mean modifications.

    99.99% of the people you can contact through alibaba are sales people. They SELL “What’s On the Truck!” You rarely have a chance to talk to their engineers to ask even a single question, let alone to verify the feasibility of the features you want. Forget about modifications.

    OK, let’s say you have overcome all those … Ohh, I haven’t mentioned about the freights, custom duties, etc.

    Now, here is the killer: by now, I’m sure you have some tastes on alibaba and amazon already – the price pretty much is transparent between them. Why?

    A). Because amazon allows Chinese suppliers to list directly their products at amazon.
    B). Many e-comm shops in China are already doing the thing you mentioned, and they are in China, and they knew those manufactures already.
    C). amazon itself already started its own sourcing and its own ocean freight and direct procurement company.

    You may ask, why I went great length to write this down here? 1st, I do want to thank you sincerely. I started using those tools I never heard about before reading your article. 2nd, I do want to communicate with you if you don’t mind.

    • Hi Tanna! Thank you so much for your feedback. That is great info and really good for newbies to read. Since I originally wrote this post a lot has changed. It has now been about 9 or 10 months since I started all this and as of now, I have been selling on amazon for over a month. The product is selling pretty good, im averaging about 5 or 6 units a day. If it all continues to go as its going now, I should clear about $8k profit. Thats $8k after all expenses and initial costs which would give me a 40%+ ROI. Everything has worked out for me so far and Ill keep my fingers crossed that it continues to do so. If you want to read details on how its going now for me you can check out this post: http://www.cashflowdiaries.com/amazon-fba-business-update/

      Thanks for the comment!

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