Barely Making a Profit with FBA

FBABlues

8 years ago

Sorry, that looks like a cluster**** to read. Thought I had spaces between paragraphs.

Thanks

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accofranco

8 years ago

Originally Posted by FBABlues

Got the FBA blues fellas. Perhaps people can weigh in with their experiences and insight on my situation.

I feel like I did all the right things going into this. I picked a product in a specific niche without too much competition. I sought out a version of the product not everyone is selling. I invested in professional product images. I've written keyword rich copy in my title, bullet points, and description. I have almost 30 reviews, 92% of which are in the 5 star range and nothing below 3 stars. I'm doing PPC to get extra traffic.

Since I started selling a couple months ago, at least 15-20 other sellers have come into this niche. They all sell a low quality, cheap version of what I sell and are in a race to the bottom. Some of them have half as many reviews as me (and lower avg rating) and barely any text on their listing, yet are ranked higher than me organically. I can only assume it's because they're doing huge giveaways and have a much lower price.

My product goes for $40 and between COGS, shipping, FBA fees, and PPC I make around $8 profit per sale, and that number is shrinking. I don't sell that many units per day. Worse my sales rank is dropping fast, I assume because my item is priced higher. I'm beginning to worry I won't even break even on this order by the time I sell all my inventory.

I don't see how I can stick around on Amazon long. I may be able to use it as a channel where I can make a few extra sales per day, but the idea of building a long-term business here doesn't seem practical. I understand full-time sellers have lots of listings, but this is a capital issue for me and other small sellers.

Has anyone had similar experiences? What did you do?

My own problem is how to get started....I am really in need of guide....please can you help me out and we can do more research on what to sell and how to break even? Thanks

Thanks
2 replies

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jimmykier

8 years ago

Have you tried to do any giveaways?

Also, is this your first shipment of the product? A lot of seller do huge promotions on their first shipment, and may just break even in order to gain momentum. I wouldn't give up just yet.

Also, at that price, your profit seems really low. How much does the product cost you?

Thanks
1 reply

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FBABlues

8 years ago

Originally Posted by jimmykier

Have you tried to do any giveaways?

Also, is this your first shipment of the product? A lot of seller do huge promotions on their first shipment, and may just break even in order to gain momentum. I wouldn't give up just yet.

Also, at that price, your profit seems really low. How much does the product cost you?

Yeah, I've given away like 30 units for reviews. Maybe I should do more, just kills me to keep giving away product.

It's my second shipment. The first time I did a small test order of 100 units. It sold quickly and I did pretty well (50 bucks a unit, no PPC), but I was out of product for almost 4 weeks. When I relaunched about 10 days ago my sales rank was in the 300,000 range, so I had to crawl back up. Did a promotion to kickstart things and now I gravitate between a sales rank of 5000 - 10000.

My product is about $13 per unit shipped. What is killing me is FBA fees (about $11), and PPC costs, which adds about $7 to the cost of selling each unit. I also sent everything to one warehouse, which is another $.30 fee for each unit sold.

Thanks
1 reply

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jimmykier 8 years ago

Ouch. Those fees are killer. How much does your product weigh? Also, that PPC is really high. Spending $7 to make an $8 profit. Have you experimented with different keywords at all?
- Thanks
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FBABlues

8 years ago

Originally Posted by accofranco

My own problem is how to get started....I am really in need of guide....please can you help me out and we can do more research on what to sell and how to break even? Thanks

I understand, getting started is the hardest part. It's very easy to get paralysis by analysis doing amazon product research.

I think Jungle Scout is a good tool for finding products (it's what I used). Just keep in mind that it's not always that accurate. When I look at my own listing with Jungle Scout it says I'm making quite a bit more money than I am. It sees the promotion I just did and extrapolates that sales velocity over a period of 30 days. So just keep that in mind when you see a lot of people posting high numbers on JS.

Also, keep in mind that this is not a get rich quick business. A lot of people are presenting FBA that way, but the fact is you can only sell as much product as you can afford to buy. If you don't have savings you'll have to build your business very slowly, and running out of inventory because you did a test order isn't the end of the world, but it does slow you down quite a bit. You'll also likely have to spend money on PPC to stay in the game.

I think Amazon presents a nice sales channel for people to explore, but it can't be your whole business. If you're serious about e-commerce, I'd do everything possible to build assets outside of amazon. Amazon is a phenomenal traffic source, but that referral fee alone takes a huge bit out of your margins.

Thanks

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onikhasan011

8 years ago

If you want to get more sales from amazon FBA then you have to marketing your products. And you need to rank keywords on amazon and google, need to make a few products from your store BEST SELLER and you need to marketing. I am an amazon marketing expert, I can help you. If you need please contract with me. My skype: amz.marketing.com

Thanks

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violet0176

8 years ago

Time to head back to the drawing board. Never rely on 1 product to be your cash cow. Stick to the same niche or diversify, but do not depend on a sole product. I would start with at least 5-10. Buy smaller inventory of multiple products until to find what works.

Thanks

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DWaters

8 years ago

As mentioned above you do not want just one income stream. Work on expanding your product line. Also - look at your PPC to see if it is worth it or just wasting money.

Also - most importantly DO NOT give up easily. Show your persistence. Many people make very good money selling FBA and you will too!

Thanks

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chuff1026

8 years ago

Originally Posted by FBABlues

Got the FBA blues fellas. Perhaps people can weigh in with their experiences and insight on my situation.

I feel like I did all the right things going into this. I picked a product in a specific niche without too much competition. I sought out a version of the product not everyone is selling. I invested in professional product images. I've written keyword rich copy in my title, bullet points, and description. I have almost 30 reviews, 92% of which are in the 5 star range and nothing below 3 stars. I'm doing PPC to get extra traffic.

Since I started selling a couple months ago, at least 15-20 other sellers have come into this niche. They all sell a low quality, cheap version of what I sell and are in a race to the bottom. Some of them have half as many reviews as me (and lower avg rating) and barely any text on their listing, yet are ranked higher than me organically. I can only assume it's because they're doing huge giveaways and have a much lower price.

My product goes for $40 and between COGS, shipping, FBA fees, and PPC I make around $8 profit per sale, and that number is shrinking. I don't sell that many units per day. Worse my sales rank is dropping fast, I assume because my item is priced higher. I'm beginning to worry I won't even break even on this order by the time I sell all my inventory.

I don't see how I can stick around on Amazon long. I may be able to use it as a channel where I can make a few extra sales per day, but the idea of building a long-term business here doesn't seem practical. I understand full-time sellers have lots of listings, but this is a capital issue for me and other small sellers.

Has anyone had similar experiences? What did you do?

FBA is a cash intensive game and you seem (although i could be wrong) like you are new to ecommerce. I have always told people to start with dropshipping(if you do not have a big bankroll) get experience, build your bank and then do fba. ebay dropshipping is the cheapest to get into, then amazon dropshipping then I will get into FBA. And remember, this is for advice for newbies who have a limited budget.

Ive been able to build 10k a month profits from ebay dropshipping which allowed me to get into amazon dropshipping and then FBA. FBA first is an expensive way to learn

Thanks
3 replies

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ZanyZebra 8 years ago

Originally Posted by chuff1026

FBA is a cash intensive game...

Can be.

Depending on product cost base and the effectiveness of your pricing strategy.

Many newcomers to amazon (and ecommerce generally) don't fully realise there are 3 (and not 2) key indicators to your business' health:

1. Sales (ie overall volume indicating how much the market likes your product)

2. Margin (ie how well you have managed the construction of your cost base... and how well you can manage your pricing and promotions)

3. Cash (ie how much 'liquidity' you have to fund further rounds of product inventory and 'take home' payment)

It is this third element, cash, that newcomers sometimes find an issue when they get past their first round of inventory. Clearly something that produces 54% pure margin is going to be able to fund more inventory than a product producing 20% margin. Thus the overall growth curves of each will be different.

Of course as you progress through the rounds of inventory your margin should naturally increase as buying in greater volume should reduce unit costs, and you should be able to spread any fixed costs thinner too (my average of 54% margin, mentioned in my previous post, was not achieved overnight. When starting my first product's margin was 36%. Previous post is here - http://www.warriorforum.com/ecommerc...l#post10539732).

Thus the key metrics I encourage all newcomers to focus are not just sales and margins but also cash too.

Good luck with your ventures.
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ttados

8 years ago

Originally Posted by chuff1026

FBA is a cash intensive game and you seem (although i could be wrong) like you are new to ecommerce. I have always told people to start with dropshipping(if you do not have a big bankroll) get experience, build your bank and then do fba. ebay dropshipping is the cheapest to get into, then amazon dropshipping then I will get into FBA. And remember, this is for advice for newbies who have a limited budget.

Ive been able to build 10k a month profits from ebay dropshipping which allowed me to get into amazon dropshipping and then FBA. FBA first is an expensive way to learn

All the dropshippers I have found have 2+ weeks for shipping. Is that the case for your eBay products? Do your customers not mind?

Thanks
1 reply

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violet0176

8 years ago

Originally Posted by ttados

All the dropshippers I have found have 2+ weeks for shipping. Is that the case for your eBay products? Do your customers not mind?

Find legitimate Distributors, Wholesalers & Manufacturers that do not revolve around drop shipping. Every Supplier that I work with drop ships in 1-3 business days.

Thanks
1 reply

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ttados

8 years ago

Originally Posted by violet0176

Find legitimate Distributors, Wholesalers & Manufacturers that do not revolve around drop shipping. Every Supplier that I work with drop ships in 1-3 business days.

I'm in the US and looking at manufacturers/traders in China. Are you saying that there are some who will get the product to the US in 1 - 3 days?

Thanks
1 reply

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violet0176

8 years ago

Originally Posted by ttados

I'm in the US and looking at manufacturers/traders in China. Are you saying that there are some who will get the product to the US in 1 - 3 days?

No, I'm speaking about USA distributors. I make a point of not dealing with Chinese suppliers other than Aliexpress orders from one trusted seller from whom I order in bulk and ship myself.

The drop shipping model doesn't work if you're ordering product from China and expect your customers to wait 2-4 weeks. Only custom orders(like handmade jewelry) can justify that type of wait.

Thanks
1 reply

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ttados

8 years ago

Originally Posted by violet0176

No, I'm speaking about USA distributors. I make a point of not dealing with Chinese suppliers other than Aliexpress orders from one trusted seller from whom I order in bulk and ship myself.

The drop shipping model doesn't work if you're ordering product from China and expect your customers to wait 2-4 weeks. Only custom orders(like handmade jewelry) can justify that type of wait.

Ok, US distributors definitely makes more sense. Are their prices not much higher than the Chinese though?

Thanks
1 reply

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violet0176

8 years ago

Originally Posted by ttados

Ok, US distributors definitely makes more sense. Are their prices not much higher than the Chinese though?

Depends on the product, but typically a Chinese gadget is going to be less expensive than the higher quality American or Japanese original. For private label health, food, beauty or toys, I would only advise American made because our FDA standards and regulations are more stringent than anything coming from China.

Thanks
1 reply

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ttados

8 years ago

Originally Posted by violet0176

Depends on the product, but typically a Chinese gadget is going to be less expensive than the higher quality American or Japanese original. For private label health, food, beauty or toys, I would only advise American made because our FDA standards and regulations are more stringent than anything coming from China.

Ok, thanks. What about clothing accessories like ties, bow ties, watches, etc. etc.?

Thanks
1 reply

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violet0176 8 years ago

Originally Posted by ttados

Ok, thanks. What about clothing accessories like ties, bow ties, watches, etc. etc.?

Depends on the product. Get samples and use your discretion.
- Thanks
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mich800

8 years ago

Originally Posted by chuff1026

FBA is a cash intensive game and you seem (although i could be wrong) like you are new to ecommerce. I have always told people to start with dropshipping(if you do not have a big bankroll) get experience, build your bank and then do fba. ebay dropshipping is the cheapest to get into, then amazon dropshipping then I will get into FBA. And remember, this is for advice for newbies who have a limited budget.

Ive been able to build 10k a month profits from ebay dropshipping which allowed me to get into amazon dropshipping and then FBA. FBA first is an expensive way to learn

I think this is something that some forget with all the hype for FBA. This is still retail and retail is a cash draining business model. This is especially true for those starting out that think they will be pulling all the profit out to live on. One, you first must make a profit. Two, all or most of those profits will be used to purchase additional inventory. At least if your intention is to grow the business to actually provide a living wage/cash flow.

[ 1 ] Thanks
1 reply

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violet0176

8 years ago

Originally Posted by mich800

I think this is something that some forget with all the hype for FBA. This is still retail and retail is a cash draining business model. This is especially true for those starting out that think they will be pulling all the profit out to live on. One, you first must make a profit. Two, all or most of those profits will be used to purchase additional inventory. At least if your intention is to grow the business to actually provide a living wage/cash flow.

So true.

I have a handful of different ventures, but I'm currently working with a handbag distributor, receiving wholesale pricing and drop shipping. The bags wholesale for $18-$35 and I sell them on ebay for $59-$79. The bags are selling very well even with high competition. I'm averaging 10 to14 sales a day which is great considering how many are selling the same products. The profit margins make it worthwhile.

Unless you have additional steady income, It's a mistake, imo to spend your money on inventory when there is no guarantee if or when it will sell. Start with drop shipping, build your capital and expand from there. Finding a reliable distributor(that will drop ship) is not as complicated as people seem to think.

Thanks
1 reply

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dave_hermansen

8 years ago

Originally Posted by violet0176

So true.

Unless you have additional steady income, It's a mistake, imo to spend your money on inventory when there is no guarantee if or when it will sell. Start with drop shipping, build your capital and expand from there. Finding a reliable distributor(that will drop ship) is not as complicated as people seem to think.

I agree. Start with drop shipping and find US suppliers. The only thing easier but with less profit margins is to go with an affiliate site. It's not a bad place to start and then transition into drop shipping (i.e., no customer service, no inventory). If you can handle drop shipping, though, I'd start here.

Thanks

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Tim Geiger

8 years ago

[DELETED]

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Sheldon Slononazinski 8 years ago

This is becoming an epidemic in 2016. All the people who were given bad advice like these crazy 'giveaway launches' are starting to hit cash flow problems due to the fact that they are doing it for products that are not sustainable with this model.

Yes, there are products that this is appropriate for but they are by no means the majority. The 'giveaway/promo launch' model is not a 'one size fits all' solution.

The problem is that gurus and YouTube narcissists preach it as a solution for all products as an oversimplification of something they don't actually understand.

If you saw the products of people who are self proclaimed "amazing sellers" you'd be shocked at how poorly they are actually doing and how little they follow their own advice with their elastic exercise bands and tupperware containers.

If you are going to get advice on FBA from someone then insist on seeing evidence of their success. Otherwise your cash flow will evaporate into bad ideas, endless inane FB groups and worthless tools.

I'm saddened to post this but it is happening to so many people who are just trying to work hard and put some effort into this wonderful opportunity and they are being taken advantage of.
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ZanyZebra

8 years ago

Originally Posted by FBABlues

Got the FBA blues fellas. Perhaps people can weigh in with their experiences and insight on my situation.

I feel like I did all the right things going into this. I picked a product in a specific niche without too much competition. I sought out a version of the product not everyone is selling. I invested in professional product images. I've written keyword rich copy in my title, bullet points, and description. I have almost 30 reviews, 92% of which are in the 5 star range and nothing below 3 stars. I'm doing PPC to get extra traffic.

Since I started selling a couple months ago, at least 15-20 other sellers have come into this niche. They all sell a low quality, cheap version of what I sell and are in a race to the bottom. Some of them have half as many reviews as me (and lower avg rating) and barely any text on their listing, yet are ranked higher than me organically. I can only assume it's because they're doing huge giveaways and have a much lower price.

My product goes for $40 and between COGS, shipping, FBA fees, and PPC I make around $8 profit per sale, and that number is shrinking. I don't sell that many units per day. Worse my sales rank is dropping fast, I assume because my item is priced higher. I'm beginning to worry I won't even break even on this order by the time I sell all my inventory.

I don't see how I can stick around on Amazon long. I may be able to use it as a channel where I can make a few extra sales per day, but the idea of building a long-term business here doesn't seem practical. I understand full-time sellers have lots of listings, but this is a capital issue for me and other small sellers.

Has anyone had similar experiences? What did you do?

Tough love coming up.

Did you think you were playing the lottery and had the winning ticket?

You're about par for the course for absolute beginners. Does that help? I know this from my own experience, the experience of many others that i am friends with and, most importantly, the direct experience of many newcomers who i've coached inside the ASM program through the process.

Think about it, you're only at the very start of phase 1 and yet already to give up? You didn't really expect that running a REAL business would be easy and going gung-ho after only been working it for a couple of months with one single product. Seriously?

I blame the vast number of shitty internet marketing guru scammers for skewing the minds and expectations of so many with their get-rich-fast-selling-your-ebook-using-your-smartphone-from-the-beach-and-earn-$1million-a-day-for-2-hours-work crap.

Ecommerce is actually a REAL business and anybody who doesn't realise this is in for a shock. There is no easy button. There are smart buttons but no easy ones. Completely separate out 'internet marketing' and 'ecommerce' they're two very different things.

Amazon is highly profitable when you get it right, and many do (my own ecommerce business, including amazon, is a 6 figure a month and growing one with margins averaging 54%).

Completely re-adjust your expectations. Shake off the blues and start working. It may be you've got the wrong product. Is it private labelled? If it isn't then that's the beginning of your problems right away.

For every 10 products you launch, if you've researched them properly, expect 2-3 to do extremely well, 3 or so to do okay, and rest to bum out.

Each time you bum out is not actually a bum out. You just increased your learning and experience and skill set. Now put it to good use.

Hope this helps. Get working, completely readjust your mindset and good luck on your amazon ventures.

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violet0176

8 years ago

I must be hallucinating...went to get some popcorn for nothing.

Thanks
1 reply

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Importexport 8 years ago

Profit begins with buying, and it seems to me that you are not buying at the right price. Sure you must have a sound marketing program, but you need big margins to finance your advertising and other costs.

Do you buy direct from the manufacturer? It looks like you are buying overseas, so if like most people you have found your supplier on Alibaba, the chances are very high that you have bought from a trader. Most of the suppliers listed as manufacturers are in fact traders.

There are posts on this forum by people who make margins ranging from 300% to 1250%. I know they are genuine, because I have taught them how to do it.

You don't have to buy big quantities to buy direct from manufacturers. I also teach a version of "Just In Time" to minimize inventory size.

Walter Hay.

"If you think education is expensive - consider the cost of ignorance."
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dave_hermansen

8 years ago

Consider trying a couple things:

1) Same approach, but not with Amazon FBA. This means you will need to pick a shipping model, build a site, and deal with the brunt of tasks that FBA does for a generous amount of money. What you don't know or aren't willing to do, you are at the mercy of those who can - in this case, that's Amazon, lol!

2) Give yourself more time to become successful. Like the other guys are saying, eCommerce is just as much of a business as anything else, and it really does take time to learn and adjust. Some people can launch a store and hit the ground running quickly, but even for a lot folks with experience, it can take 8 months to 3 years before the keyword ranking, user experience, trust flow, and PPC all come together.

[ 2 ] Thanks

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Barely Making a Profit with FBA

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