OK, so for most of this week I have been telling you about selling with the Amazon FBA program, and how there are a lot of pitfalls to doing so. Today, though, I am glad to turn the corner and start telling you about how you can employ a different tactic that will eliminate the competition, and, if you have the right product, start putting some money in your bank account!
Now, let’s be up front, this is, in most cases, not going to be a get rich quick type of situation. Probably you won’t have millions or even thousands of people buying your product, but you can make some respectable money if you hit on the right product.
Lower Risk
As I pointed out in my earlier posts on this topic, the two popular methods for FBA selling involve a lot of risks. You can tie up a lot of money into inventory only to be stuck with it when you can no longer control the buy box, or when there are a lot of competitors selling similar, not the same, products. I don’t know about you, but when I set out on a business venture, I like to keep my level of risk as low as I can.
So, how can you do it?
It is really quite simple. Create your own products.
It is really quite simple, if you create products of your own, you can eliminate problems.
Firstly, you cannot lose control of the buy box. That is because you are selling something that you created yourself, that nobody else can sell. Now, others can create a similar product of their own, but they cannot legally create the exact same product. So, you cannot lose the buy box on Amazon to the competitor. The truth is that unless your product is a very simple thing, the odds are that nobody is going to try to copy you. I have a product that I started creating about 7 or 8 years ago, and started selling not long after that. I am still creating it! As I improve it, I come out with new versions. Doing it that way does two things for me… it keeps the competitors away, because I have improved my product so much that it would be very difficult for them to complete, and also coming out with new versions creates more sales. It creates more sales because happy satisfied customers who bought version 1 will be likely customers when version 2 comes out, and when version 3 comes out, etc. So, continually improving the product, and releasing a new version on Amazon from time to time is a good sales strategy.
Another advantage that I have found with my product is that I don’t have to lay out a lot of money. The product that I am selling is on a DVD disk. It costs me only about $1 per disk. When I work in shipping, say I ship 10 pieces to Amazon, the cost for 10 pieces is about $15, or a total cost of $1.50 per item. This particular item sells on Amazon for about $60.
That is not bad, a product that costs me a total of $1.50 and I sell it for $60, that is a nice profit. But, I have years of sweat and labor into developing the material into a good product. It is not something that the average person could just spend a few days and come out with.
How many do I sell?
Well, it varies. This product that retails for $60 nets me a profit of about $48 per piece when it sells. Amazon gets a share for selling it, and I have to pay the manufacturer and the shipping company. Nice thing is that I can order as few as just 1 piece at the same cost.
On an average week, I sell 3 or 4 of these items. So, we are talking about a weekly profit for me of between nearly $150 to $200 or so. Some weeks I sell none (like this past week!). But, some weeks I sell 6 or 8 of them. It varies. But, the average is 3 or 4.
Nobody is going to get rich on $150 to $200 per week, but if you have other products, or if you have a job, a side income of say $700 to $800 per month is a nice supplement.
Now that I have the product developed and ready to sell, I probably spend no more than 10 minutes per week taking care of it. As often as once per week, or as seldom as once per month I have to go order more stock and ship to Amazon, but that is easy. I just fill out an online form, pay with Paypal and the manufacturer takes care of the rest.
Final Thoughts
So, a big commitment of time and effort years ago developed into a nice ongoing supplement for me. It can happen to you too, but you gotta do the work!
In my opinion, forget about the “get rich quick” methods that everybody promotes for doing FBA sales. Find something that you can develop yourself, put in the effort and reap the benefits down the road. It works for me!
I think your model works well for a variety of different kinds of entrepreneurs. Very little money up-front, but a significant possibility of pay-off. I think too many people still purchase large quantities of product and then try to sell it.
You offer good advice here (as always)!
Hi Tom, thank you very much. This method has worked very well for me, and I’m expanding on it, coming out with new products this year with which I can do the same. It creates sales on my own websites, both through membership and selling of a full course, and then an add-on with Amazon as well. It works great.