My Amazon FBA Project: Part 4 – Rinse and Repeat

Michael QuanAmazon FBA, Education, How to, Making Money, Misc, Side Hustles23 Comments

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Amazon FBA Project

One benefit of catching FIRE is that you can pursue multiple side hustles at once.  A little over a year ago, I decided to try selling a product through the Amazon FBA program.  This is my journey as it unfolds…

*This is Part 4 of My FBA Project – Part 1Part 2, and Part 3 are found here.


Yes, it’s been quite a while since I had an FBA update.  The primary reason is that it’s been a slow process.  But I finally have some things to report!

Officially Out of Inventory

When I last left off, my inventory of 100 units was nearly gone.  Since I didn’t have any new inventory to send to Amazon right away, I increased the price a couple of dollars (~15%) to slow down the sales velocity.

It worked to slow things down a bit, but eventually, people purchased the remaining units and I was officially OUT.

Running out of inventory is both a good thing and a bad thing. It’s great because it means your item is selling!  I was also able to experiment with the pricing to see the demand curve.  Of course, it’s also bad because if you run out you’re no longer able to make sales.

Negotiating More Units

About the time of my last post, I went back to my supplier and requested a quote for additional units. I wanted 400 units this time (4 times the previous order), so I assumed I’d be getting a better deal this time around.

The previous order I had paid $0.95 per piece.  I sell this item in a 6 pack, so the total unit production cost was 6 x $0.95 = $5.70/unit.

I received a response from the supplier and she told me that raw material costs had risen since my last purchase.  So, the best she could do was $1.02 per piece even with my larger order.  What!?

Even though this was a 7% increase, I didn’t want to find another supplier as I had already made a lot of investment into this one.  I didn’t like paying $6.12/unit, but it was bearable.

Order Approval

Once we had determined price, I made sure to provide specifications and details to the supplier.  This is a necessary part of the process to ensure the quality if up to the standards you require.

For me, I made sure the dimensions, weight, and quality were clearly defined.

The supplier then emailed me a copy of the final invoice along with my specifications.

To start the production, I had to wire 30% of the order to my supplier (~$700).

Inspection of My Product

Since I was not physically able to pick up my 400 units in China, I decided to use an inspection company.

An inspection company will help go to the supplier’s factory to inspect the goods once they are manufactured.  In my case, there were 27 boxes (or cartons) and they opened up 4-5 random boxes to check the individual packaging was good.  They also opened several of the 6-packs to check the individual items.

Upon completion, they emailed me a comprehensive report detailing their findings.  I was caught off guard when I received the inspection report.  It had failed!  What??

After digging into the details though, I realized that it had only failed by a small percentage.  So, I decided to push the order to completion anyway.

After paying the remaining 70% of the order, my goods were now ready to be picked up.

Shipping costs

Production is only a portion of the cost. Shipping is the next largest cost.

I’d previously brought my product into the U.S. via air freight because my order was relatively small. But now with 400 units, this no longer made sense.  I could finally use the economies of scale with sea freight.  This would take about 3-4 times as long, but would also be 2/3’s the price (~$1500) vs. if I shipped via air.

Sea freight is an entirely different beast.  There is a lot of jargon that was brand new to me and I had to at least figure out the basics.  Thankfully I have a cousin also working an FBA side hustle so he was able to fill me in on some of it.

Freight Forwarder

The good news for FBA side hustlers like me is that you can outsource the majority of the sea shipping process to a freight forwarder.

Last time I just had the 100 units shipped to my house.  This was 9 boxes and it took up a lot of garage space.  This time I’d be bringing in 4 times the amount (27 boxes) which wouldn’t work this time.

The nice thing about the freight forwarder I used is that they have their own warehouse.  So, they would be able to store my units temporarily while in transit to Amazon’s warehouses.

Here’s the general process the freight forwarder helped with:

  1. They picked up my goods from my supplier in China.  This includes taking the goods to the Chinese port, managing the tariffs, ensuring the goods get on the boat, and providing me with an estimated time of arrival.
  2. Once the goods arrive at the U.S. port (Long Beach, CA in my case), they received the goods on your behalf and transport them to their warehouse.
  3. At the warehouse, they will do a basic inspection to ensure there was no damage during the shipping process.
  4. When the goods are ready to send to Amazon, I am able to log into Seller Central and arrange shipment to Amazon’s warehouse.

Back in Stock (Finally!)

In order to hurry things up, I sent 2 boxes to Amazon pretty much once it was received by my freight forwarder.  This allowed me to get 30 units back into stock within 10 days or so.

The remaining 25 boxes I shipped on a pallet to save costs.  The process is a little bit different but very similar.  It took me a while to figure it out, but by shipping the remaining boxes on the pallet, I was able to save a couple hundred dollars vs. shipping the boxes individually.

My inventory was officially replenished in late November (about 3-4 months from when I ran out).

Slow to Start Back Up

Apparently, I was a little delusional.  But, I thought it’d be simple to restart my sales just where I had left off.  All I had to do was flip on my PPC advertising and I’d be off to the races, right?

WRONG.

I restarted my PPC advertising campaign it was like crickets.  I did get some sales, but nowhere like I was doing when I left off.  In fact, there’d be days when I wouldn’t get any sales at all.

Amazon Storage Fees

To make matters worse, I had made a gross oversight.  I hadn’t calculated the storage fees that I’d have to pay Amazon.

In addition to the FBA fee they were collecting, I also had to pay storage fees for my units at their warehouses.  For some reason, I thought it was included for free and you were only charged if it sat in inventory too long (after 4 months of storage you are subject to long-term storage fees).

Well, I was right about the long-term storage fees, but there were also short-term storage fees!  And because I was selling right at the peak of the holiday season, those short-term storage fees were super expensive…. there goes more of my margins!

Ready to Quit (Again)

Well, with another big set back to my margins, I was about ready to quit (again).

I figured I’d just clear out my remaining inventory and call it quits.  Besides, I have several other projects vying for my attention!

But…

Momentum Swing

Although I was ready to hang up my Amazon FBA hat, I decided to keep trying to increase my sales because I didn’t want to encounter the long-term storage fees.

My cousin who is also working an Amazon FBA hustle told me about how he was using coupons with his listing.  So, I decided to give it a try.

My average sale price was $21.00.  So, I decided to offer a $2 coupon for my item.

However, I couldn’t afford for the item to sell at $19 because there wouldn’t be enough profit margin.  So, I increased the price to $23 to offset the coupon.

It wasn’t instant, but my sales slowly started to pick up in January.  I had my first 10 sales in a single day ($210).  This gave me some hope and I began to watch a trend of increasing sales through today.

Sales Are Accelerating

Before I knew it, I had sold over 300 units.  This time, however, I was accelerating sales AND getting more organic sales (sales without advertising).

Last month I hit the front page of my main category search word and the momentum shifted completely.  To give you some scope, I was selling $600/month back in December.  And, in the past 30 days, I’ve sold $3990 worth of goods.

The best part of this too is that my margins have come back too for a few reasons.  I found out that short-term Amazon storage fees are seasonal and dropped after December (whew).  The coupons have been great for marketing and even profitable because only 50% of the buyers who clip the coupon use them.  Finally, the frequency of multiple purchases is increasing.

Final Thoughts

Well, as of yesterday I raised my prices yet again.  I need to slow down my sales to manage my inventory again.

I’m in discussion with my supplier once again and am considering finding a backup one as well.  I will likely purchase 1000 units this time which will help to increase my margins even further.

It’s pretty funny, every time I was seriously considering quitting, it was as if it was some sort of catalyst that kept this side hustle alive and well.  I don’t know where it’ll end up ultimately, but I’m going to keep pushing forward to find out.

Running an Amazon FBA side hustle is like catching FIRE.  You need to climb over tons of hurdles to get to the juiciest fruit.  So, remember to use your frustration as fuel and listen to your gut.

Readers, thank you for your positive feedback last time (that momentum was just what I needed!).  Have you ever realized success just after the point of wanting to quit something?  What kept you going?

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23 Comments on “My Amazon FBA Project: Part 4 – Rinse and Repeat”

  1. I know this was posted back in 2018 and I am not even sure how I came across your blog but… I have been seriously considering selling on Amazon. I have seen video after video, companies who sell you the opportunity for them to help you sell and learn how to sell, priced from the top wanted $40k for their Get into selling Amazon to the lower individuals who cost a few hundred I refused to purchase any because I was researching myself and I felt I wasn’t even getting the warm fuzzies with their introduction to their company.

    With that being said, I have read the first 4 parts of your blog on your Road to Amazon FBA and have learned more than any of those companies that charge taught for trying to persuade me to buy their selling package!!

    That is seriously not even a joke!! The knowledge about getting your product here from your supplier, the costs of Amazon warehouse and so on is all new and VERY CRUCIAL INFORMATION THAT NOT EVEN ONE OF THOSE COMPANIES WHO WANT ME TO PAY FOR THEIR HELP ever offered! I have sifted through so many pages of crap saying How to Sell on Amazon etc.. You have provided more free information that is so very helpful than any one thing I have ran across! That is great but oh so sad how I see now my gut instinct told me those “helping you sell” companies are all full of crap and fill your head with so much nonsense and no get down to the brass tax information! You certainly have gained my readership! If you were to sell a How to Sell on Amazon booklet with steps and the in depth information you have already provided in these 4 parts with even more you would definitely have me sold! If you are interested I will be your first student if the price is right! No I definitely could not afford the $40k or $10k some of these companies asked for!! But a few hundred would go along way! Thanks so much for this information and I see a great deal of other info, like “how to start a blog” I am going to read next!

    Good luck in all your endeavors!

    1. Hi Dana, thank you for your thorough feedback. It means a lot.

      I am really glad this series has helped you as that’s exactly why I wrote about it… so others like you could get a real glimpse into the process and make an educated decision for yourself if it’s a path work pursuing or not.

      I will contact you off the blog to discuss your ambitions further, but I’ve certainly helped others to launch their Amazon business before. 🙂

  2. Hi Michael, Thanks for your reply. I thought it would be a good way to get out of financial difficulty. But what you suggest is logical, one thing at a time, thank you for taking the time 🙂

  3. Hello 🙂 I’ve been following your progress and congratulate you !
    Please I would just like your opinion.. Do you think this would be a good solution for someone who is in financial difficulty? I mean could it eventually be a viable source of income or do you think it’s too much of a risk?
    Thank you !

    1. Hi Karen, that’s a good question. I think it’d depend on the financial difficulty they are facing. But in general, I’d love to see them resolve any financial difficulty they have first before getting distracted with another project. However, after they get their financial house in order, I’d definitely suggest looking into Amazon FBA as a potential side hustle to ramp up side income.

  4. Any update on this? I really enjoyed the series and have considered doing something like this myself. Interested to see how it’s going 6 months later!

  5. I really enjoy these articles on Amazon FBA. I’ve been working hard over the last several months to monetize and grow my own website and when doing research I find a lot about this. Nobody talks about the difficulties of it though so I like the realism.

    I also see a ton of websites on places like EmpireFlippers that a ton of the highest priced websites are sites monetized with FBA. So, it’s definitely a great experiment you’re doing.

    1. Thanks, Eric. I’m just trying to keep it real! 🙂 Like most things in life, overnight success comes with a hidden trail of failures. It’ll be interesting to see how far I can take this little experiment and not lose $$.

  6. Amazing journey with Amazon FBA Michael, thank for sharing and for including the not so great details as well.
    There are plenty of other advertisers that are saying that’s the greatest thing ever, but I’m pretty sure that there’s nothing too good to be true.
    I’m really glad to see that you got it thru all the obstacles and figured out a way to be profitable as well.

    1. I’m happy to put it all out there… the good, the bad, and the ugly! It’s been a fun change of pace and challenging in many ways I couldn’t have anticipated.

  7. I’m looking forward to the future updates on this! I have a couple friends who individually did well enough with e-commerce to earn a full-time income. Importing can be a pain – I had 1000 pairs of sunglasses held in customs because they’re classified as a “medical device.” Oops!

    1. Hi Frankie, I have learned a lot by going through this process. It’s much different than any other business I’ve tried before. It’s definitely fun at times, especially watching it sell each day. 🙂

  8. Glad the gamble is paying off! As long as you keep going you can apply all that knowledge you are learning. If you stop, all the time spent wasn’t worth the money. What signal do you need to launch a 2nd product though?

    1. Oooh, great question, Brian! I’d like to get this first product ramped as much as I can, and then focus on an additional related product. It’s going to take additional research which could be time intensive, but a second product definitely could make sense.

  9. That’s awesome! I was so happy to see your update, and it’s a great one as well.

    Sounds like you did have to go through lots of trouble to make all on this happen. But no pain no gain!

    Congrats on the success. I look forward to your next update!

  10. Finally an update! I’ve been waiting for this one for quite some time! Thanks Michael!

    I have a few questions: Overall, what kind of margins are you realizing? How long does it take you to go through 400 units? If you don’t want to post the details on the blog, we can take it offline if you prefer.

    Love this blog series! Great experiment/side hustle!

    1. I knew you were waiting, Mr. Tako! 😉

      So, to give you some idea of sales velocity, I sold 148 units in the past 30 days. Prior to the acceleration, I was only averaging about 30 units every 30 days.

      The encouraging thing is that my sales velocity is increasing. And, in answer to your margins questions, you really need a decent volume (greater than $5000/month in revenue) to make it worthwhile in the long run. With a 100 units being sold at 30 units/30 days, I’d be lucky to break even. And that’s because there’s a lot of overhead to deal with on top of the production, shipping, and FBA fees. If I can manage to get it closer to $10k per month, then I have the potential to realize about 30% in net profit.

      Until then, I’m just reinvesting all the proceeds back into the project which is finally paying for itself and a bit more.

  11. Thanks for sharing your experience with Amazon FBA Michael. I am late to the blogging stage and just starting to learn this aspect of side hustle. ? I do own an investment property for passive income. I want to catch FIRE like yourself!

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