• Last Updated:
  • Dec 7th, 2018 3:17 pm
[OP]
Newbie
Feb 22, 2016
69 posts
9 upvotes
Toronto

Help w/ Amazon FBA

Hi folks,

I've recently become aware of this Amazon FBA trend through a friend who discovered it recently as well. I think I understand the basic theory behind it, but I'm wondering if any fellow Canadians can shed light on their experience with this as a source of income. Is this still a viable route to make an income for 2018/2019, or are people just banking of their phony courses and youtube vids? How much of an initial investment should I consider to start making a decent profit? What kind of special considerations are there as a Canadian? Any info or links to legit sources would be appreciated. Trying to tread carefully before dumping money into this.
11 replies
Deal Guru
Aug 2, 2010
12959 posts
3239 upvotes
Here 'n There
It's kind of like those Interwebs ads "You too can make $25,000/mos working 15 min a day with minimal investment". Unless you have an incredibly unique product that no one else sells your battling the masses with zero competitive advantage and therefore wasting your time and money. It's all about the product. Forget everything else.
[OP]
Newbie
Feb 22, 2016
69 posts
9 upvotes
Toronto
eonibm wrote:
Dec 5th, 2018 9:20 pm
It's kind of like those Interwebs ads "You too can make $25,000/mos working 15 min a day with minimal investment". Unless you have an incredibly unique product that no one else sells your battling the masses with zero competitive advantage and therefore wasting your time and money. It's all about the product. Forget everything else.
Yeah that's kind of the perspective I've been seeing it as. So you would say though if the proper research was done and using the proper tools to find the right products, it is a viable method?
Deal Fanatic
User avatar
Nov 18, 2002
6945 posts
577 upvotes
Toronto
It can and does work for dare I say thousands or hundreds of thousands of vendors out there so it's not all doom and gloom. But for a small one person startup the odds are against you. As said above finding a unique product is easier said than done. If you're reselling whitelabel China usb hubs good luck to you may as well invest in a timeshare.
Deal Guru
Aug 2, 2010
12959 posts
3239 upvotes
Here 'n There
Cadley wrote:
Dec 5th, 2018 11:09 pm
Yeah that's kind of the perspective I've been seeing it as. So you would say though if the proper research was done and using the proper tools to find the right products, it is a viable method?
Anyone can do the 'proper research using the proper tools to find the right products.' Millions of other wannabee FBA'ers are looking those too and they'll all start competing with you so where is your competitive advantage other than price? To provide a lower price means you have to make large purchases or suffer a much lower margin that your competitors. Don't forget that Amazon takes a huge cut, they fine you for every tiny transgression, they refund returns when they shouldn't so it costs you, etc. Then you also have to provide support for your product, repair, etc. If it's a low support low repair type item then where is your value add?

The only way to succeed at FBA is to provide a product no one else can. That means either having an iron-clad exclusive on a product so that no one else can purchase it from the manufacturer (very tough to get) or have it manufactured strictly for you. If the latter then it better not be something easily duplicated, which Amazon who has a huge building full of data scientists watching what sells and then manufacturing it under their own label at a lower price than you (Amazon Basics & Amazon Essentials), effectively destroying the business you built up. Nice eh? You show Amazon where the profits are to be made and they use that info to destroy you!

Having said all that, the best way to learn is experience. So, go do your research and find the 'right product'. Who knows where it might lead? I know a guy that has a huge business now importing a packaging product from China that anyone can. He start out buying the packaging to use to package his own product to sell. He needed to buy a high volume of the packaging product to get a good price on it and sold his excess. He found his profits on selling the excess packaging product was greater than what he was selling. So he started buying more of it and now selling that packaging product is 90% of his business! He beats most competitors on price, but then has to hold almost $1.5M in inventory on a monthly basis in order provide the competitive price.
[OP]
Newbie
Feb 22, 2016
69 posts
9 upvotes
Toronto
eonibm wrote:
Dec 6th, 2018 9:43 am
Anyone can do the 'proper research using the proper tools to find the right products.' Millions of other wannabee FBA'ers are looking those too and they'll all start competing with you so where is your competitive advantage other than price? To provide a lower price means you have to make large purchases or suffer a much lower margin that your competitors. Don't forget that Amazon takes a huge cut, they fine you for every tiny transgression, they refund returns when they shouldn't so it costs you, etc. Then you also have to provide support for your product, repair, etc. If it's a low support low repair type item then where is your value add?

The only way to succeed at FBA is to provide a product no one else can. That means either having an iron-clad exclusive on a product so that no one else can purchase it from the manufacturer (very tough to get) or have it manufactured strictly for you. If the latter then it better not be something easily duplicated, which Amazon who has a huge building full of data scientists watching what sells and then manufacturing it under their own label at a lower price than you (Amazon Basics & Amazon Essentials), effectively destroying the business you built up. Nice eh? You show Amazon where the profits are to be made and they use that info to destroy you!

Having said all that, the best way to learn is experience. So, go do your research and find the 'right product'. Who knows where it might lead? I know a guy that has a huge business now importing a packaging product from China that anyone can. He start out buying the packaging to use to package his own product to sell. He needed to buy a high volume of the packaging product to get a good price on it and sold his excess. He found his profits on selling the excess packaging product was greater than what he was selling. So he started buying more of it and now selling that packaging product is 90% of his business! He beats most competitors on price, but then has to hold almost $1.5M in inventory on a monthly basis in order provide the competitive price.

Thank you so much for the insight and detailed reply! Makes a lot of sense now. I'll be keeping an eye out for products/manufacturers that may provide the opportunity/competitive advantage and I'll go from there.
Deal Guru
Aug 2, 2010
12959 posts
3239 upvotes
Here 'n There
Cadley wrote:
Dec 6th, 2018 12:20 pm
Thank you so much for the insight and detailed reply! Makes a lot of sense now. I'll be keeping an eye out for products/manufacturers that may provide the opportunity/competitive advantage and I'll go from there.
NP. So, find the product and then see how much you have to buy to get a decent profit selling it at the same price as the many other thousands of people are who are selling the exact same thing on amazon. Oh and don't forget to deduct from your retail selling price the monthly FBA fees, storage fees and selling fees (varies by product category), etc. and the list goes on and on. Allow something for returned products that you can't resell and fees to get those back to you if there is an issue with them.

I don't sell on amazon as I feel it is a deal with the devil. I also provide better customer service than they ever can 24 x 7.
Newbie
Aug 20, 2018
49 posts
33 upvotes
Sometimes, you have to be creative. Offer a bit more value added than your competitor. Sometimes, that is enough to set you aside. Like for example, if you are selling binoculars, also include a microfiber cloth for free.
Deal Guru
Aug 2, 2010
12959 posts
3239 upvotes
Here 'n There
AlphaStar wrote:
Dec 6th, 2018 5:52 pm
Sometimes, you have to be creative. Offer a bit more value added than your competitor. Sometimes, that is enough to set you aside. Like for example, if you are selling binoculars, also include a microfiber cloth for free.
Yes because no one else will ever be able to figure out that if they had only offered a free microfiber cloth with their binocs their sales would be much higher... :rolleyes:
Member
User avatar
Mar 18, 2013
209 posts
47 upvotes
Toronto
We used to be an FBA as of last year. The problem was that there was ~10 orders that customers purchased near the Xmas season only to return them because the person receiving it didn't like the gift. The high rate of return all at once caused our account to become suspended - then dealing with non-English speaking support people caused our account to be completed closed never to be open again.

In the end, due to A-to-Z claims, the customer is already right and even if the products were not returned to our office, Amazon would issue a refund. Therefore we were out products and payments.
Deal Guru
Aug 2, 2010
12959 posts
3239 upvotes
Here 'n There
webpromoinc wrote:
Dec 7th, 2018 11:24 am
We used to be an FBA as of last year. The problem was that there was ~10 orders that customers purchased near the Xmas season only to return them because the person receiving it didn't like the gift. The high rate of return all at once caused our account to become suspended - then dealing with non-English speaking support people caused our account to be completed closed never to be open again.

In the end, due to A-to-Z claims, the customer is already right and even if the products were not returned to our office, Amazon would issue a refund. Therefore we were out products and payments.
Exactly. Amazon plays fast and furious with their FBA return policy, accepting basically anything that is returned regardless of whether the customer has no right to return it, it was well past the return period, the customer defaced it or even destroyed it, etc, That's because Amazon has ALL the power in the relationship and use it to their advantage. They realize that any damage to reputation will happen to them, not you as a vendor, as they are doing the fulfillment and the customer is buying it on their website so they are the customer-facing entity. So, you suffer the horrendous and unfair cost of Amazon keeping their image intact. Then, to make matters worse, they will often just cut you off as a vendor without any justification whatsoever after you complain about their unfair tactics,, as they did to the member above, and then you are stuck with vast quantities of inventory that you cannot sell. They are also more prone to cutting you off in this situation if you are small potatoes in the profit stream.

Nice...
Deal Fanatic
Nov 17, 2004
6234 posts
786 upvotes
Toronto
A general rule of thumb is whenever you come across a product that is interesting to sell, look at the number of reviews and multiply that by 25 and you get a rough estimate on the product's sales volume. That is an easy litmus test to apply, if the product meets your minimum criteria in terms of sales (reviews x 25) then look into the cost price of the product and go from there.

I forget where I learned the x25 rule of thumb from, but it seems to be the right ballpark number based on my own experience selling on Amazon.

Amazon is run with an iron fist, so at one point or another you will get iron fisted, that risk is part of business.
I workout to get big so I can pickup bricks and ****.

Top