A month and a half ago I disclosed to the world about my new Amazon FBA Private Label Side Hustle and revealed my plan to generate additional income so that I could buy more rental properties. This new side hustle is not easy and it just takes a super long time to get it going. Since I am 6 weeks in now I thought it would be a great time to give you an update on where I am at today with it. I will share my experiences (good and bad) as well as how many more items I have checked off from my checklist. Since the last post, I have now completed an additional 5 items and only have 2 remaining items left before I am selling on amazon and making money. Very exciting!! Based on my early calculations, I could be making 20k profit after selling all my items. (1000 items ordered). Imagine if i sold that in one month?? That of course is best case scenario, I imagine I will spend a few thousand on advertising and giveaways so even if I make 15k profit from it, that is still a huge win. 15k is pretty much a down payment on the kind of houses that I buy anyways. Check out the numbers from the last rental I bought here.
Anyhow, here is the original checklist of items. The items numbered in normal font were all the items that I had already completed back in my last post along with the original text I had written. The numbers listed in Bigger Font and Bold are the checklist items I have newly completed or are still pending and all have new updates so please take a look and let me know what you think.
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 – COMPLETED!!!
I literally had 7 different samples sent to me (4 unique items in total). So for 3 of those items, I had two different suppliers send me samples so I had something to compare to. This whole process of ordering samples and receiving them took literally about 6 to 8 weeks. It was a long drawn out process to order exactly what I wanted and negotiating with the Chinese manufacturers. Without giving away the actual products I chose, here is a quick run down of how it worked out and how I chose my product:
Item 1 – Received samples from 2 different suppliers and I adjusted this product by making the item size larger than the similar items currently listed on Amazon. This was the cheapest and smallest of all the items I had ordered and was shipped to me via DHL Air Express. After reviewing both products, one clearly was better quality then the other so I began negotiating the lowest price I could from the manufacturer. Once we agreed on a price it was back to research mode for me. I went back to my JungleScout app to look at competition, amount of sellers currently selling similar items and how many items per month these units are selling. I concluded with not wanting to proceed with this item because there are just too many other sellers selling similar items and by making this item larger, it really did not provide much more benefit. I just don’t think this would be a good item to start out with.
Item 2 – Received samples from 2 different suppliers. 1 supplier already had the product designed as how I wanted it and for the other supplier, I had to provide specifications on how to make the product so they could manufacture it. Well turns out that the quality of the supplier who already had the existing product was way better than the one who I supplied specs for. It was clear which supplier to use so back to negotiating. We ended with a very good price and I was getting excited about proceeding with this one. When I rechecked all my stats on JungleScout, I noticed there was a new seller now selling the same exact thing. So before there were only 2 sellers with this product and both of them were over priced. This was one of the main reasons I wanted to get in on this one because I could come in with better pricing and only had two other sellers to compete with. The drawback was that this item wasn’t really selling a ton. The best seller was selling about 500 of these per month and the 2nd seller was selling about 300. I figured I would come on board and maybe start selling 500 per month with my new price.
Well that all went to hell when I rechecked the stats and saw the new seller selling this same item at a cheaper price then both of the other sellers. They basically did exactly what I wanted to do but beat me to the punch. I decided to not proceed further with this one because the item just doesn’t sell enough to make good money. That is the one bad thing about using an app like Jungle Scout because there are probably thousands of other amazon entrepreneurs out there looking at the same data as you are. Your competition will go up! Okay so moving on to the next item.
Item 3 – This was another smaller item that I could have air shipped. The only modifications I really made to this one was just add my custom logo to it and I was hopeful that this one would work out but the truth is that there was already just too much competition out there for the same product. I regret even ordering samples of this one and I jumped the gun on it. I was just too excited and wanted to order samples of stuff. Don’t get me wrong though, the samples that came were great and the quality was good and i do think this would be a good product but just not sure on the demand for this product. I may revisit this item in the future after digging into the research some more or seeing how I can improve it to really stand out from the other competition. It’s a cutthroat world out there and I think that in order to be successful at this business, your product needs to be the best one out there and at a good price. Putting this one on hold and on to the next and final item.
Item 4 – Ahhh this is my baby right here!! This is the item that always gave me butterflies thinking about how it would be successful. Here is why. I really went out of my way to make this product different from the others and make it better. As a matter of fact, there are only two different sellers currently selling this and both are less quality and more expensive than what I am bringing to the table. In theory, I should smash the competition. Now here is the down side, this is the most expensive item for me to choose. My calculations predict that it will cost me about $18 per item on this which includes everything all the way to shipping it to Amazon fulfillment centers. But guess what? I will be able to sell this item for at least $40. Possibly $45. My conservative numbers have me profiting 20k after selling 1000 units. That’s right folks, I had to order 1000 units so that I could get the pricing that I wanted. The more units you order, the cheaper the cost. So at 1000 units and at about $18 per item I am looking now at being in $18,000 to get this product up and running on Amazon FBA. $18k is a HUGE investment to get started into something I have never done before. That is the same amount of money I have used to buy rental properties. But if it all works out, not only do I get my initial money invested, but I could get an additional 20k on top of that. This is why I am doing this people!! To make some more MONEY!!
5) Design Logo/Brand and Packaging – COMPLETED!!!
– I designed my own logo and designed my own packaging. I did this by using the skills I have learned from blogging and the years of technical experience I have from working in IT the last 12 years. I have been using canva.com to make my blog images and this is the same application I used to create my logo. As for the design packaging, same deal! I used my technical skills to provide the manufacturer with what they wanted. The manufacturer gave me an AI file with the basic specifications and I used my skills to add my logo and FNSKU label to the packaging using photoshop. The manufacturer has already showed me the final packaging sample through pictures and it looks great. I am really excited about selling this product which is Item 4 from above.
6) Make Final Product Adjustments, Negotiate Bulk Purchase with Manufacturer, Place Order. – COMPLETED!!!
– Once I decided on product item #4 above, the negotiations began. At this point it was a matter of figuring out a final total price which would include shipping to the Shenzen sea port as well as including the final packaging designs and specifications. When you sell on amazon, you have to put an FNSKU label on the product and you can do this by either printing out labels and sticking them on the packaging or having all the info printed directly on the package. The negotiation we ended up with was the manufacturer printing this label on the package itself. Gold!!! So now when I send this to the Amazon Fulfillment Centers, it will be ready to go and ready for selling!!
7) Choose Freight Forwarder/Shipping Vendor – COMPLETED!!!
– Once I confirmed what my initial product would be I had to get all the weight specifications from my manufacturer to get quotes. Because of the amount, size and weight of the product, I had no choice but to use sea shipping to send the product to the united states. The amount and weight of the product is just way too much to be able to send it by air and I will literally save thousands of dollars by sending it via sea cargo. The Chinese manufacturer was able to supply me size and weight specs on a per unit basis. With this info, I was able to get a quote from sea freight forwarders. I ended up using a freight forwarder that was recommended to me by multiple people and used the quotes provided to me to run my calculations. At this point, I have a quote and am ready to pay as soon as the bulk manufacturing is complete. The bad news is that it could take up to 28 days to ship the items from Shenzen, China to a Los Angeles port which is where my freight forwarder works out of. So with all that being said, I am still probably 2 months maximum away of having my product actually listed on Amazon and selling. That of course is an over estimation as I tend to always over-estimate. It’s always better to over-estimate on anything and be happily surprised when it comes through earlier or at a cheaper price.
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 – COMPLETED!!!
– As soon as I placed my bulk order and actually paid the Chinese supplier, I went into amazon and created my seller account. At this point, I had already created my LLC and had my new EIN so I was able to create this pretty fast. I have messed around with navigating and trying to figure out where everything is and how it all works on the account but don’t fully have it dialed down just yet. Which leads me to this next checklist item.
10) Create Listing and Shoot Photos – PENDING
– I have created the listing and uploaded one photo into amazon so that I could print out my FNSKU label which was needed to include in my packaging design. I have not yet filled out the full listing and I am still working on the final photos that will actually be used to sell my product. I am being frugal/cheap on this and decided to build my own light box and take my own photos. With my photoshop skills and using the light box, I am determined, willing and confident that I can take my own final product pictures. These pictures will be the ones used on my amazon listing. I have literally spent hours dialing this down by taking pictures of random items in my light box and practicing touching them up in photoshop. With these new skills I have acquired, I was able to take pictures of my final samples and am in the process now of photoshopping them to perfection. So as of now, I am still working on the final photos and havent even begun writing the actual text that will be included in my listing.
11) Ship Items to Amazon Fulfillment Centers – NOT THERE YET
– I am still weeks and maybe even months away before my completed products will be in the united states. Once they get shipped to my LAX warehouse where my freight forwarder works out of, I will be able to take care of this. This is a problem for future Alex!! 😉
12) Start Selling and Making Money!! – NOT THERE YET
– Wow!! That seems like a lot of work that still 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.
This is all super new to me, I am learning as I go and I am super PUMPED to finish all this and see if I can make some more money!! All I want in life is to be financially independent. I will reach my financial independence by building enough passive income with my rental properties to handle all me and my future family’s living expenses. The money I make from my amazon side hustle will be used to buy more rental properties and help me reach early retirement faster. That is my goal.
Nice update Alex. This stuff can get very exciting as I can feel through your post. One thing I wanted to ask was if you had calculated the Amazon selling fees when calculating your profit. Those can vary depending on the category you are in.
Im soooo excited about this! I really hope it works. I did calculate the amazon fees straight from seller central but I did not notice it was different per category. Ill have to double check and make sure my numbers are from the category I want to sell in. Thanks for letting me know about that.
Since you created a listing already, I like to use the FBA calculator.
Just enter the ASIN for your product and your target price. It will breakdown the fees which vary by category (most are the same but some are lower/higher).
awesome ! I wish you great luck. Thanks for sharing this. I have dreams of doing this myself but it is rather daunting. Who knows, maybe I will muster the courage at some point.
Thanks!! It is definitely daunting to get into it but once you read everything you can possibly read about it, its just a matter of jumping in! I say go for it!! 😉
Wow…. I see that you have made lot of progress since your last update!!! Good job 🙂
I have few questions (Though all this is very new to me and my questions may not make sense – Feel free to ignore them, if the questions are not relevant 🙂
1) The way new sellers came into picture for item 2, same can not happen with your shortlisted item? Any way you are safeguarding this?
2) Do you have a contract in place with your manufacturer to make sure that he doesn’t manufacture the same product for another seller? Or this is not how this industry works?
3) Why did you create a LLC? For tax benefits and to limit your liability? Or there were other reasons as well? Do you operate your blog as well under a LLC?
Because of the updates that you keep sharing, I feel part of your journey 🙂 Wish you loads and loads of luck !
PS: Will we ever get to know your product? 🙂
Hi Vivek, Yes a lot of progress has been made and am looking forward to more progress. Here are the answers to your questions
1) Yes the same can happen with the item i chose however I safeguarded this by making enough changes to the product that it will deter some people from making it because they will have to custom make the items with a supplier. This item is also higher priced which will hopefully keep some other sellers away.
2) No there is not a contract in place with the manufacturer so that they do not sell the item to others. Im not really sure if that is how that works to be honest as I have not read about that.
3) I created the LLC for easier tax keeping on this business as well as for liability reasons. If the business turns out to be successful, I might expand and start selling more products and I would much rather keep all that separate with the LLC. I currently do not operate this blog under an LLC but may do that in the future if I ever start making more money from it.
Im glad you like the updates and I appreciate you reading them as well as your comments. Thanks so much!!
Haha and no I will never reveal the product unless I decide to stop selling it in the future. 😉
Thanks for responding to my queries 🙂 Have fun and keep us posted on your journey!
How exciting! Can’t wait to hear how it turns out. 🙂
Are you concerned that over time, other sellers might copy your thing and duplicate your business model? Or do you think your version is sufficiently different and the barrier to entry just high enough that your work on the front end might pay off for several years or so?
Hi Yeti! Oh yeah that is definitely a concern of mine and it seems to happen to all sellers. That is the one bad thing about selling on amazon. Too much competition and people out there trying to steal your ideas. Hopefully I can sell this item for 1 year and make some good money from it. The plan was never to keep doing this forever but really just a short term income boost. Ill just have to see what happens.
I’m really looking forward to seeing the update on this after you’ve had a few months’ worth of sales under your belt. You’re really brave for trying this totally new method of earning money, especially with so many spectators! 😀
Im really looking forward to it also! Regardless whether it fails or succeeds, I will write about it so stay tuned.
Great post! This was actually encouraging and I know you will do great. Keep up the good work and I wish you all the best.-Chris Thompson
Hi Chris! Awesome! Glad you found the post encouraging! Thanks for letting me know.
Is it possible to buy 10 units at a break even price to see how quickly they sell? I know I would like some proof before putting up $18k, but that might give your competition a little more warning.
It probably would have been possible if I paid a ton of money for them to manufacture such a small amount and they agreed. But the whole point of the software I use is for analyzing how other similar products are selling. That alone provides me a base number to work with as for what kind of numbers to expect. But traditionally, yes if that were an easy option, it would be smart to do that.
Oh wow, this is so exciting! I know nothing about this world of income, but the more I read about it, the more fascinated I am by it all. You are going to do great!
Hey Kristen! Yes I was turned on to it when I first started reading about it and now I am knee deep into it. Should make for exciting blog posts in the future. 🙂
Great progress! Looking forward to hearing about the first month’s sales.
Not to be a downer, but 2-3 months is a long time in Amazon FBA, as you saw in your item 2 idea falling through. What’s your contingency plan for your moneymaker if someone comes in better / cheaper? eBay? Google Shopping? Or just stick it out with Amazon and get sales via the FBA round-robin approach?
Well if my item is hijacked like that then I will do my best to fight it with amazon. My item is will be labeled with my own image to try and deter exact copycats. Its more likely someone just starts selling a similar product. If that does happen then I most likely will just continue selling on amazon and get into a price war. The good news is I have a lot of wiggle room to lower the price and still profit. Obviously I don’t want to do that but worst case scenario I see myself breaking even and moving on with a big fat amazon business failure. But hey that is just part of investing and taking risks which is what I do.
Man loving this detailed steps you have here.. Good on you for giving us the blow by blow & you’re really on to a winner here :)!
Very grateful to have a bloke like you delving into this & I’ll have to get on the bandwagon at some stage.. Were there limits on the minimum you had to order from the Alibaba suppliers? Not sure if this has been covered although couldn’t spot it..
Hi Jef! Thanks bud! I am keeping my fingers crossed that it works out. Yes there were limits on my order, the minimum they would allow me was 500 but there was a significant price drop if I ordered 1000 which is why I went with 1000.
I’ve been looking forward to this post for about 6 weeks buddy. Thanks for sharing. I look forward to seeing how this business morphs and develops
I hope you’re having a great week
Thanks Bryan. I should have another update on this in a month or so. It just takes so much time for things to happen with this business that is why there is not very many updates. Next one should be great though. Hopefully!
If I remember correctly there were some suppliers that would play time games and then disappear with your money. I’m vaguely remembering though, just make sure your protected. Awesome progress
Yeah that thought has crossed my mind and its possible that could still happen but I would be really surprised because the supplier I used has 9 years gold membership in Ali Baba and they have been very responsive with all my communication. We’ll see what happens though.
Great post! Found it through a Google search for FBA research. Going to start following your journey. I’ve always been interested in FBA but found the process daunting. This is definitely going to help. Good luck!
Awesome!! Ill be writing up a new post on my amazon stuff next week so keep an eye out. My product is officially for sale on amazon right now. About 2 weeks in.
Interesting post regarding Amazon FBA. Thanks for sharing!