Staring an Amazon FBA business

Andrew

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Hey so after sucessfuly building up an eBay business from scratch I think it's time I follow @Jon s advice and diversify my income streams so I'm not just reliant on one platform. So I'm building up to star tackling Amazon FBA in March. Just wondering if anyone's aware of some good UK based bloggers/vloggers I can follow?

Ta
 
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homie

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If ebay is working then I would stick with that. You won't get the same profit margins from Amazon because their fees are so high.
 

Jon

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If ebay is working then I would stick with that. You won't get the same profit margins from Amazon because their fees are so high.
I think it's about not having all your eggs in one basket. It's a dangerous thing to do when it comes to online earnings I always feel (but maybe that's just based on my own past experience lol)

On ebay you can't control the competition that appears, their price or their promotion but I suppose you can control the content that appears in your listings.
 
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Andrew

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If ebay is working then I would stick with that. You won't get the same profit margins from Amazon because their fees are so high.
Aye plan is to sell stuff that has a higher margin on Amazon (like certain books and RA products). So I'm getting the best possible prices for my stuff.
 

Maifax

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bit of a Necro - but about to dip my toes into these waters and wondering how well your FBA experience has gone. Any hints/tips or watchout's appreciated!
 
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nate99

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bit of a Necro - but about to dip my toes into these waters and wondering how well your FBA experience has gone. Any hints/tips or watchout's appreciated!
Yup would love to know how you go too!
 

Maifax

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Yup would love to know how you go too!
I've done a few hundred quid of RAto test the waters - buying on deal/clearance and selling via FBA. That works ok, key learning - the fees are bonkers (£4.50 on a £15 item) so you need to be getting the product cheap & it might be that selling by Ebay is a more profitable route

Have also been thinking about launching my own product as that seems to be where the real money is & is basically what i do for a living in a corporate environment. I think I might have found something - so currently getting some samples from a couple of suppliers to see if they can make something I'd be happy/confident to sell.
 

Jon

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I've done a few hundred quid of RAto test the waters - buying on deal/clearance and selling via FBA. That works ok, key learning - the fees are bonkers (£4.50 on a £15 item) so you need to be getting the product cheap & it might be that selling by Ebay is a more profitable route

Have also been thinking about launching my own product as that seems to be where the real money is & is basically what i do for a living in a corporate environment. I think I might have found something - so currently getting some samples from a couple of suppliers to see if they can make something I'd be happy/confident to sell.
You have to pay amazon £4.50 for selling a £15 item?!!?!?
 

nate99

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Yeah Amazon sure like their cut!

Ah Private labelling? Is that a lot harder these days? Much cost involved?

Cheers
 
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Maifax

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You have to pay amazon £4.50 for selling a £15 item?!!?!?
to be fair it does vary - but that's the worst I have seen. This does cover listing fees (15% of selling price) + and a "referral fee" which I believe covers the handling, postage & packaging for prime delivery too so it's not completely ridiculous & probably varies by item size and weight. That said it was definitely more than I was expecting when I started with this.

Their calculator should be used before you jump in..
 
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Maifax

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Yeah Amazon sure like their cut!

Ah Private labelling? Is that a lot harder these days? Much cost involved?

Cheers
Yeah, I hear it's much tougher than it was 3-5 years ago - but I'm hoping my 10 years of professional experience designing and launching products gives me a bit of a leg up.

Cost-wise I've budgeted £3500 to get something started including my first order. My target is to break even on first order to get the ball rolling and cover all the one-off costs and then (hopefully) profit off top up orders after that.

I'm pragmatic though - so using this first one as a learning experience -
worst case I lose £3k, can put "launched my own brand" on my CV (good for the space I work in and cheaper than most professional courses) and get a good story.
best case I launch a product that gets me a recurring £500-£1000 profit a month and learn something I can replicate again and again.
 

nate99

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Yeah, I hear it's much tougher than it was 3-5 years ago - but I'm hoping my 10 years of professional experience designing and launching products gives me a bit of a leg up.

Cost-wise I've budgeted £3500 to get something started including my first order. My target is to break even on first order to get the ball rolling and cover all the one-off costs and then (hopefully) profit off top up orders after that.

I'm pragmatic though - so using this first one as a learning experience -
worst case I lose £3k, can put "launched my own brand" on my CV (good for the space I work in and cheaper than most professional courses) and get a good story.
best case I launch a product that gets me a recurring £500-£1000 profit a month and learn something I can replicate again and again.
Good luck - 10 years of experience should stand you in good stead!
 

Maifax

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So here’s a bit of an update on this FBA shiz.



As previously mentioned my background is in NPD (new product development) in a corporate environment. So I know broadly all the things that you need to think about when launching a product. I’m a logical thinker – so to help myself I’ve broken the “process” down into a number of steps.

Whilst I’ve written “we” a lot, most of this was done by me with a few family and friends acting as sounding boards to make sure I wasn’t deluding myself.


***Please don’t take what I have written as “fact” – II'm learning as i go and have done this mostly to clarify the thinking in my own head for next time – but the thought process and transparency might be useful for someone else here.***

Step 1: Identifying your goals.

I should have done this upfront, but instead, I worked these things out as I was looking at products. In the future, this is definitely something I would do in advance.

Set a budget – I settled on £3,500. This is the profit I have made from matched betting and eBay selling this year, so I wouldn’t feel terrible losing it. It’s also what a professional accreditation would cost me for my current role and this would give me potentially more of an edge when it comes to getting my next job.

The budget also sets some guardrails on the financials.

Work out how many units you want to sell – I want consistent sales - something that sells a few units a day at a lower price, rather than a few units a month at a higher price. If we assume we need to order the 1st two months stock up front then that means I need to be able to buy 5-600 units in one go. This set my max COGS (cost of goods sold) around £5 per unit (600X5 =3000)
Somewhat counter-intuitively this also means I couldn’t go for really fast-selling items – if its clearing 50 units a day I don’t have the capital to stay in stock which would quickly lose me sales rank.

We want to keep shipping costs low. There are two factors here size and weight. So we want a small and light product.

Minimum profit target is 25-30% of the Cogs price (£1-2) more would be better, but my thinking is that anything of much higher profit will be more competitive than I can handle right now. I need a safe space to learn the ropes.


Step 2: Identifying your product.

Not going to reveal much here as I haven't launched yet and want to get some momentum before competition moves.

I’m a strong believer that product design is part art part science. Data helps guide you, but designing and creating something that people want to consume requires some creative flair that no tool can do for you.

Anyway, the first thing I did was to pay for Jungle scout membership (£25 through referral) – this essentially gives you a load of Amazon selling data for all the products listed. A lot of people use this to identify products that they want to sell – but because soo many people now use it that way I think its value is limited for that. Instead, I think its good for confirming that an opportunity you have spotted is viable.

We wanted to tap into one of the big consumer macro trends – in our case, this was more sustainable lifestyles.

We then worked out who our target audience was.

We didn’t want to create a new product from scratch – instead, the aim was to improve or make an existing product specific for a certain consumer.
And then we used Google trends to validate that our product search was in growth.

From all this, we identified a product and had an idea of how we wanted to improve it so we moved to the next step.


Step 3: Finding a Supplier

I don’t want to sell anything I'm not proud of. So regardless of any changes we make to the design, the base product needs to be good.

So the first thing we did here was to go on Alibaba and look at existing suppliers of the product, read the reviews on there and also matched their product images up with listings on Amazon.
I then got in contact with about 15 suppliers via Alibaba’s chat function to basically check that they could communicate in English. All of this narrowed us down to 3 suppliers who we ordered samples from.

Note samples are NOT cheap – each pack cost us $45 (£35) so in all this step set us back £100.

Once the samples arrived we tested them and decided which one we thought was the best. That decided the supplier we pressed forward with.

Step 4: Adapting the product

As mentioned before we wanted to improve the product for our target market & already had a good idea of how to do this.

So the first step was to speak to the supplier and check what they could /couldn’t do and what they needed from us to make any changes we wanted.

We then wrote a design brief and hired a designer off Fiverr to do the work – which cost us another £45

These designs were then shared with the supplier and they created some samples for us to approve before we move to the next step.


Step 5: Production & Shipping

We drafted a product specification to make sure everything was crystal clear for the supplier. They then drafted a contract using our brief which both parties signed.

Terms of the contract stipulated that 40% of the order value be paid to start production with the remaining 60% to be paid at the end.
At this time I also tried contacting a number of freight forwarders (FF) to arrange the shipping of the product from the supplier to the UK.

After comparing quotes from the one FF that got back to us and the quote from the supplier for DDP (delivered duty paid) shipping we decided to go with the supplier for the first order whilst we find an FF that could hit the price we wanted for future orders.




And this is where I’m up to so far…..

The shipment is currently in the air and should be delivered to our house in early Jan. We will inspect the product then and start shipping to Amazon.

Will also try and sell some via eBay and a local shop that said they might be interested in taking 20-50 on sale or return trial.

All in this will cost a total of £3500 to get initial launch away – and if everything sells as I hope we will make about £1k profit off this first batch. This will depend hugely on the PPC costs though so could be significantly worse (or slightly better)



The next steps are:

  • Check the product & start shipping to Amazon warehouse.
  • Get some professional product photos (£250)
  • Start testing PPC and promotional campaigns to see what works!

Anyway wanted to share progress and process - happy to answer any questions.
 
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Jon

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Really fascinating read @Maifax !

I think you are spot on when you say about going for light / easily deliverable items when you stare starting out to help keep the costs down

also settling little and often is key as at least that way you are getting the eyeballs during the early days

Sustainability is a great 'hot topic' - Can see it driving trends for a good number of years

REALLY interesting stuff this!
 

Maifax

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Cheers, Jon. glad you enjoyed the read :)
 

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