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Amazon FBA Experiment (fbaexperiment.com)
319 points by testimoni 13 days ago | hide | past | web | favorite | 161 comments





After the shipment arrives at the FBA warehouse, it may be in a "reserved" status (processing, validation, transshipped, etc.) for at least a few days in a normal part of the year. This is not a normal time of year, so it may take weeks to clear into "available" status.

If you send too much stuff to Amazon and it doesn't sell, you will be liable for long-term storage fees and they can be expensive (https://sellercentral.amazon.com/gp/help/external/200684750?...)

The FBA universe is filled with stories of people having a manufacturer overseas make some low-cost product and encountering problems including low demand, poor quality, too many similar products available, and commingling with pirated or "third shift" inventory.

Protections against piracy and commingling include trademarks and the Amazon Transparency program (https://brandservices.amazon.com/transparency). Requirements for Transparency described here: http://leanmedia.org/amazon-transparency-what-is-it-and-how-...


I think "business" is far too grand a word for what's being described here. This is old school trading - buying something, and selling it for more than you bought it.

But it's being done in a highly competitive environment, where everything is commodified. Alibaba has commodified manufacturing, shipping was always a commodity, and Amazon has commodified the marketing and fulfilment end.

The problem with commodities is that it's very difficult to create a competitive advantage - if you do happen to find one, it'll be transient and fleeting as others cotton on to it.

I hope the author is also keeping track of the time he spends on this. At $7.64 profit per item, assuming he does sell all 200 handbags, that's $1528 in profit. If he's spent 152 hours on this, that's just $10/hour for his effort. If he ends up spending 211 hours, he's earning less than the US minimum wage.


I assume, if successful, he will be able to expand to tens of product categories and get volumes into the thousands or tens of thousands, and then his 'hourly rate' could end up looking better.

Most chinese suppliers are very willing to make changes to the product too, so it's quite possible to make some small design tweaks to improve the quality of the product (I always rewrite all the instruction manuals to be real english, and sometimes add weights to plastic items so they don't feel 'cheap'). That can give your product an edge over competitors with minimal effort.


"add weights to plastic items"

sigh


It turns out that density is a big bit of what makes you think a product is high quality.

Take an iPhone for example - it's more dense than pretty much any other phone out there.

People say they want light stuff, but they actually buy thin but dense stuff.


Have you ever opened an old phone earpiece, maybe as a kid? They contained a big slab of cut metal inside.

Weight, or more appropriately density, is a big part of how an object "feels" in your hands.



He said side income + experiment. If he can do many products we are talking about different price per hour. And you can do the work in Thailand near beach.

A friend of mine is making many thousands of dollars profit per month from FBA. It's real.

Through his own trademark or just like link above?

Like the link. Started with one product and was willing to loose a few grand, now has about 5 products doing really well. He just went over to China to meet people to expand into new products.

Is he aware that Trump ended the program that subsidizes shipping cheap products from China? I imagine this will pretty much kill all FBA when it goes into effect

https://www.theatlantic.com/technology/archive/2018/10/trump...


That's for direct to consumer mail shipping (USPS) that like DxExtreme, Wish, Aliexpress, etc use. FBA shipments are usually sent directly in bulk to an Amazon warehouse from China thru normal commercial shipping companies and wouldn't be affected.

FBA isn't just used for generic products from Alibaba, it will survive no matter what happens with China.

Almost all sellers I saw were happy about that. FBA sellers are importing in bulk, not in small packages that were subsidized under UPU.

Here are my two cents as an Amazon seller.

>Niche is wallets/purses

Purses and wallets are quite competitive. The material cost isn't too high and they typically sell for quite a bit, but marketing is a huge challenge and being able to feel the product is important to buyers.

Another issue is that the factories manufacturing your product are competing directly against you on Amazon, which is sometimes true for any given product, but definitely true for something as fairly undifferentiated as women's purses.

I know many people who have failed here. It seems the only way to succeed in this niche is to either be the manufacturer, middleman, have some unique differentiator either in brand (tough to market such a difference as purses/wallets are infrequent purchases) or in the purse's utility itself, which will require a custom (and expensive) run.

>20% margins

These margins are way too tight for Amazon. You simply cannot stand out from the other 10,000 generic women's purses with such a budget.

Listing products on Amazon is the easy part, getting eyeballs is hard. Advertising is very expensive, and doubly so without a trademark.

>Buying codes off eBay

This is pretty risky. What would work better is if you apply for GTIN exemption. It's very easy to get and you don't even need UPC codes.

>Now i need to come up with a 5 bulleted list and description for my product

This is one of the most important parts of the page. You know your product and the target audience best so it's critical you write this yourself.

>Shipping direct to FBA with no intermediary QA

Yikes, there's no guarantee that what's inside those boxes is going to be anywhere near the same quality as your sample.

>[After shipping] I will use this 1 month period to do some research about marketing.

This likely going to be one of your biggest expenses. Using the advertising tools, you can get a rough idea of your costs before ordering product.

Edit: Removed all caps, substantially toned down/removed needlessly aggressive phrases.


So, yes, this person is a total noob, and his/her experiment is obviously going to fail.

But the author expects that option. It's an experiment. The blog post talks about spending 3k to 5k on the experiment, which I presume is not a lifechanging sum for the author. The experiment will fail, but apart from a bit of lost money there's not a lot of risk.

The problem is when people do the same thing, but don't consider the fact that they are inexperienced. They think they have it all figured out and spend their life savings on it. They sell their home, take another mortage, and end up with mountains of debt, and a product nobody wants.

It doesn't sound like that's what the blog author is doing.


If anyone wants to get their feet with with FBA they should look into used book reselling. Don’t even splurge on the pro membership until you sell enough. Use the fba sellers app to scan all the books at goodwill/library sales and get the ones with decent profit and rank.

Why do you suggest that?

I sold used books back in the day (not FBA; at one point I had 10000+ books kicking around my house, gotten mostly from estate sales and craigslist "a science fiction fan has died, and I don't want the books" posts) This was before it was common to see people with barcodes at booksales.

I wrote some software to do pricing (I used regexes to read the REST API call returns rather than proper REST libraries. lol. And it worked) and to go from mass market paperback barcodes -> ISBNs (the hardcovers usually have the ISBN on barcode, the mass market paperback have a weird system where the first bit of the barcode is a publisher specific prefix, second part is the last part of the ISBN. When you see a prefix you don't know, I had the system ask the person inputing to manually type in the barcode, then I knew that publisher prefix.)

I guess the lesson was that most books not only sell for under a dollar, (you make about another dollar in shipping? More if a user buys more than one thing from you, but I don't think amazon has a system to encourage this) but most books just don't sell, even with 10K books, if you didn't add new inventory, you'd sell a book or two every two weeks, once the in-demand books sold, which would happen within a few months of getting a new load of books. (note, uh, it wasn't like there were a lot of expensive books kicking around unsold... nearly all the more than a dollar books sold during the first few months. After that, it was all penny books that didn't sell. I think the problem was that the books would sell, but that the market wouldn't bear a price high enough to ship them one at a time. If amazon had a way of getting users discounts if they bought in a way that allowed a seller to aggrigate shipping, a lot of those could have been moved.)

(I mean, my goal wasn't to sell books, my goal was to write a platform. And... maybe there is still room for that? I mean, amazon is terrible for selling those books nobody wants to pay money for (and a lot of those are super popular books that people want, it's just they are also super common, and you aren't going to get $4 or whatever for a book that was a book of the month book that everyone's mother has a copy of.); the buyer has to pay like $3+ per book, of which the seller gets to keep like a dollar, but because there's no encouragement for the buyer to buy all from the same seller, even if the buyer buys a lot of books (which is common for those books; As a child, I was known to go to those friends of the library booksales and come home with my body weight in books at like $0.05 to $0.10 per) - so I think that if you figured out how to make it more like the friends of the library situation, and pay less for shipping, you could move a lot of these books. But another lesson, for me, is that you want to work with someone doing the actual selling, actually doing the selling is a lot of work and gives you all sorts of urgent problems and ends up taking away time from platform development)

I guess what I'm saying is that I don't see a lot of lessons here for FBA; i mean, in that market, pricing and reputation are important, but you don't do any advertising or ad copy. (maybe I would have done better had I done so? but the amazon platform doesn't have a lot of room for that.)

I mean, the FBA play I've wanted to do is to look for the things that I buy and love that amazon doesn't sell, say, like Jovy brand Fruit roll-ups (which are there but even the bulk packs are like 3x what you pay in the store) - of course, uh, grocery is traditionally not super high margin, and people are way more price sensitive of groceries than other goods, and considering the... issues of FBA, I would have to sell in large bulk packs, and even then I'm not sure what kinda margin I would get out of it, so I haven't tried... but I kinda don't think most of the bookselling lessons would be applicable. (other than, I guess, that you have a minimum per-unit price because shipping, and that at that minimum price, there are a lot of things that you just can't move.)


There are a few companies that basically buy bulk lots of books sight-unseen for little above scrap and do their best to sell them at-scale, even for a penny (but pocketing some chunk of the $5.99 or whatever shipping fee):

https://www.nytimes.com/2015/10/25/magazine/a-penny-for-your...


Yeah, it's a business that could work. I was just trying to point out that at that level, the shipping fee dominates, so if the platform encouraged the user to pick multiple books from the same vendor, that would vastly increase either the margin for the seller or decrease the price to the consumer (and probably drive volume up for the seller)

The complaint I'm making about the amazon system is the shipping fee is paid per book, with no discount (at least when I looked last. I haven't sold a book for more than a decade, and nearly all the books I buy are on the kindle.) for the customer buying more than one book from the same seller.

When I was doing it, sometimes you'd get lucky; some kind soul would buy a bunch of books from me at once, and I got to ship it out at once, and I got to keep most of the shipping surplus.


There’s some books that actually do very well. I’ve got a friend that consistently flips .50 to 1.50 books for 20 bucks or more. If you send them in bulk shipping isn’t all that bad considering the weight alone. Books that end up doing well are the harder to find domain specific ones, such as art books.

I say it’s a good start because it doesn’t require much starting capital, let’s you learn the fba system such as creating labels and shipping. And if you’re getting a well selling book it won’t stick around long enough to have storage fees.

Funny enough I know someone else that purely flips older blank media like vhs and casset tapes. Apparently really good money if you can source new ones still wrapped.


Great idea to scan the books in the bargain bin.

Only problem I didn’t mention is there’s a couple companies that have partnered with goodwill and libraries to buy any book their system says ok to. So some goodwills will scan all the books they get in and grab the good ones before it even hits shelves. So there’s obviously money in it.

> You need to do more research before you hop in!

Does he, though? Maybe to him the experiment is the research. It's ok for you and him to have different approaches to learning. As long as he's comfortable with losing his investment, let him learn from his mistakes.


You're right, everyone is free to experiment as they please. I have removed that needlessly harsh comment from my original post.

My concern is that Amazon will shoot first and ask later. If you get suspended for violating the rules on Amazon and your plan of action is denied, then that's it. There's no second chances. No "stealth" account that will get you back to selling long term.

That is why it's so important to research first, and act second. There is no undo.


I think starting out private label with such low margins is a bad way to "learn" FBA and I have in the recent past as a consultant managed ad campaigns for one of the top sellers in the wallet category on Amazon for a period of a couple years.

The better way to learn FBA is to sell third party one way or another. That way you don't have to learn Amazon and learn starting a brand at the same time. It is easier to learn Amazon independent of all the difficult issues involved in both building up a brand and building up an ASIN. It is so much easier to make money with pocket change startup costs by just selling popular products or popular brands that are not locked down.

JungleScout and similar tools are also extremely misleading to new sellers particularly now in a crowded marketplace.

So many things can go wrong with a shipment also.

You can easily start a profitable but very small FBA business with nothing but an introductory 0% rate business credit card that you pay off every month to avoid winding up in a nasty situation. $5,000 or less would be ample and the only business plan you need is "buy a few units of something, if it sells well, buy some more units of it, and if it stops selling or you get into trouble selling it go sell out of it and find something else."

Starting a brand from nothing is really expensive and challenging particularly if there is nothing that fundamentally unique about the product.


I think you may have missed the most important part about failure and learning at the beginning.

I found this article really interesting.

I will add some of my own advice to your own valuable advice above:

After having sold a few thousand products via Amazon, I would recommend trying to ship and fulfill yourself, it's not rocket science. You will save $10 per product. You'll find that spending an hour Packaging and shipping 10 items will quickly pay for your time. Request the supplier to package the goods in untaped individual boxes. This cost adds pennies per product and saves you a lot here when reshipping.

Your points about doing QA in China is very valid, Alibaba even offers reputable QA inspectors as an upsell to your product purchase.

It may be worthwhile to find something that is selling well and list it New below the cost of the "sold by Amazon" version. You'd be surprised how many customers take the cheapest option over the fba variant (as long as shipping is quick and free). This way you do 0 marketing.

Marketing is important, but once you have critical mass and a good product you can relax a bit and coast off the reviews and Amazon algorithm to get some residual traffic.

Put up YouTube videos. These are the first things that come up in the search results when somebody searches for your product, free SEO and marketing. They will show the product in greater detail than Amazon product images and consumers will feel good seeing that it exists outside of Amazon.

Source premium packaging from other manufacturers on Alibaba. This can be very cheap and you can even cheat and send it to your product manufacturer for pre-packaging and ship it all together. The same notes about QA inspection apply. I've done this for complementary products like cables and bags.

Consider registering your trade mark, this is cheap and prevents your supplier or one of their other clients (ie their buddies) from at least copying it straight up and selling it on other marketplaces once you've done the hard work of making a coherent product page and videos.

Now, the hard part - customer service. Making sure you are responsive, that you're messaging properly post-sale and post-delivery and that you are responsive to Amazon's requests as well.

Doing your own fulfillment is a learning curve, and maybe you want to learn the ropes with FBA before jumping in, but really, giving >100% of your margin to Amazon for them to pick-and-ship is a bit heavy. At minimum I would list the product for FBA and new with free shipping at -5% so you can recoup a bit on those "direct" sales.


My mom’s business sells both ways, seller fulfilled and FBA. You’re leaving money on the table, the stark majority of Amazon’s users are Prime and want their 2-day shipping. Her volume for any item is 3-20x for the FBA version.

Exactly this. I have sold both ways (seller fulfilled and FBA). Not only does FBA end up being basically the same price due to the large discounts Amazon gets, but you also get the 'prime' checkmark on your listing, which can be worth a significant amount.

Virtually every size product is cheaper to ship FBA than shipping yourself. In what universe is it not only cheaper, but $10 cheaper to ship yourself?

Most items cost less than $10 for FBA to ship. FBA fees for a 13 pound item is just under $10. There's no way you're getting $10 in savings unless you're doing massive volume and shipping really massive items (like 50LB) or with large dimensional weights


It says $13.81 FBA cost. https://i1.wp.com/fbaexperiment.com/wp-content/uploads/2018/...

You can easily ship a light purse in domestic USA for $5 if you have a business shipping account with a carrier. Making $8 with FBA per sale vs $16 by shipping yourself when you already have boxes is pretty simple.


If it's $13.91 cost as in the screenshot, then it's not light. My guess is they have the wrong dimensions there and that's why the fee is showing so high - they don't include enough information to tell. But something that's $13.91 FBA is not going to be shipped for $5.

Yeah I think it's wrong too. There's no way a single purse costs almost $14 in FBA fees.

This 4 piece purse set is only $7.01 in fulfillment fees: https://amazon.com/dp/B07DS52Z28


I totally understand your frustration here, but I’d ask how else you propose learning the skills that OP needs?

OP’s approach makes sense to me. They don’t seem to expect to actually make money, rather they view the whole thing as paying for a valuable lesson. You seem experienced in the work OP is doing, how did you learn?


Great question! I should have led with this more constructive comment.

When I started, I would read through several FBA related forums on my commute home from work, including a few Facebook groups and the official Amazon forums. There is also the official "Seller University" videos by Amazon and the accompanying help docs. (Some people buy courses, I did not, but to each their own)

When I was confused, I would search various forums. Almost every single time, I would find the answer asked in almost the exact same phrasing I would have used, and when I couldn't, I just asked.

My response was partially because it would have saved OP a lot of headache. Simply searching "what should I budget for advertising" leads to a huge number of fantastic insights.

Thanks for the question. I could definitely stand to be more constructive, and I appreciate you giving me the chance.


Do the exact same thing he did with one big exception:

Buy name brand things at the grocery store and resell them. Don’t put a ton of money into brandless Chinese crap expecting to make money.


Agreed.

I'm involved in selling high volumes of name brand, licensed manufacturer products on Amazon. Zero advertising and we move a lot of units.

We compete with Amazon, but we're also well rated enough to be in the Buy Box. People know the products and will buy it if they want it.

Getting this kind of product can be more challenging, but as a starting point, it makes more sense.

All I do is list the products with inventory, and between Amazon FBA and Seller Fulfilled Prime, we mostly just worry about product selection, availability and pricing. Of course, accurate SKU details, descriptions, images, etc are important, too.


For managing pricing do you make your own software or use one of the many SAAS tools out there? I used to work for SellerEngine and we found that at a certain level virtually all of the big sellers were deeply reliant on their own in-house solutions and very reluctant to even evaluate other options.

we built repricing into CA and don't use anyone else's anymore. many of them are too expensive and too inflexible. we wanted to build our own external repricer, but there were too many CA dependencies (performance included) so we focused our dev efforts on.. uh.. automating parts of it.

we do use one of the SaaS tools out there for research and data though.


> This is one of the most important parts of the page. You know your product and the target audience best so it's critical you write this yourself.

This person seems like english might be their n-th language, so I understand wanting to spend 20 bucks to get some help with that.


Could you please remove more caps? This breaks the guidelines.

https://news.ycombinator.com/newsguidelines.html


Yes, thank you. I've read through the guidelines and also toned down / rewritten much of the comment. My apologies.

Jesus christ the tone police is at it today... I liked your original post, it was alive, and even though I disagreed with the premise, I loved reading it. The revised version reads a bit bland...

Yes, this is a real problem on HN. I've written about it over the years: https://hn.algolia.com/?query=by:dang%20bland&sort=byDate&da.... Unfortunately it seems to be a fundamental tradeoff rather than anything easy to fix.

I'd love to get more people to understand that editing out the nasty bits from their comments (not that the GP was nasty) doesn't mean making everything bland. We want posts to be alive, just as you say. The rules aren't a moral thing or even a cultural thing, just a safety thing: we want this place not to blow up or burn down.


As an FBA seller with mid 7-figure yearly revenue on the platform, I'd recommend it to no one as of about 6 months ago. I'm likely quitting soon.

Amazon's support for sellers is obscene, it pendulums between non-existent and a knife in the back.


Would love to have an email/chat with a fellow FBA seller as to why you're quitting and how you're offloading your store. I've had a few other vendor friends burn out and I'm curious as to what's going on for others.

How many units do you have in their FC’s, that you need to draw down?

About 10000 at this point; the biggest problem is that our "home base" comfortably handles about 1000 units at a time and is already at ~500% of capacity (i.e. basically unworkable) due to problems Amazon has been handing us. So drawing down is going to be a nightmare.

Best of luck to you. Maybe this will help you feel better. My mom had 50K items. It’s been a years long project of selling things at a loss (her stuff is in the $10-20 range) to have it cost less than the disposal fee, running promotions, taking advantage of the periodic disposal promos Amazon offers.

They haven’t made it completely unworkable for her yet, but it’s bad. Much of her line is unique, and we get these counterfeit cockroaches that sell on her listings (which is against this particular category’s guidelines) and ship some piece of crap and gets negative reviews attached to the listing. Every time she opens a case to deal with the counterfeiter or bad review, she has to walk it through various obstacles thrown out by the agent, like it’s day one on the job for each of them. It’s a total nightmare.

She is working to pivot to a different type of category and sell to brick and mortar department stores. The type of hell they offer is looking pretty good compared to Amazon these days.


you should write up your experience

Similar to @nyolfen, would love to read about your experience more in-depth.

It's very cool to see someone trying this out.

Any predictions on the outcomes?

(1) I sold a bunch of product and made money

(2) I sold a bunch of product and lost money

(3) No one wanted my product and I lost money

(4) I sold a bunch of product then Amazon started selling it for less and I lost money ?

Separately, I have been following the Keyboard.io backer updates for years now ( https://shop.keyboard.io/ ) which provide fairly thorough slice-of-life pictures of every step involved in creating a consumer electronic product from scratch in collaboration with manufacturers in China. It's not an exhaustive guide to the process but every step of the logistics we do get to read is fascinating. Lately I've been feeling like they could make more money teaching hardware startups to navigate this landscape than they could by selling the keyboards.

Also separately, I used to log 100k+ miles per year butt in seat flying for work and recreation, flying with carryons only but with a 3x 70lb baggage allotment and a modest duty-free allowance I never used, and I always wished I understood how to buy off-the-shelf consumer products that are cheap in one country then resell them in another. It seemed like it would be low risk because consumers can usually return unused merchandise. I figured there must be some way to buy iPads and sell them on Gumtree, meet up in Covent Garden and trade them for cash, then return any iPads I couldn't sell at a profit. I never found good docs of anyone doing this and always wondered whether it was logistically very hard (i.e. issues with customs or reliable resale) or whether it was just an area where people were quietly individually making a killing and didn't want competition. Ended up pretty much only using the free 3x 70 lbs to help move house when we moved overseas & came back.


Solid 3. The absolute arrogance of walking into a market as a complete amateur with low margins, admitting that he will "learn about marketing" while the product gets set up in the store is honestly laughable.

There are hundreds of thousands of people thinking about what the next niche to attack in online sales is. The work is on that end, not this silly, already done, repeatable, novel process of drop shipping.


Some people learn by preparing and some people learn by doing. It might be expensive but I bet this person will learn a ton for the next iteration. This guy is a hacker in my mind and I appreciate his approach.

Even if they come out below even then they have learned and can do better next time. It's better to try and fail then sit on the couch and wistfully dream.

I'll go against the other replies and suggest #2. This guy seems determined. I think once he realizes these purses won't fly out of the warehouse he will either buy enough ads to get them sold, drastically lower the price, or both. Probably both.

I'm going to go with 3. He only has a $7 margin not including ads/promos and his pricing is already on the higher end of FBA bags on Amazon. Like he's going to need to get early reviews and that is not free.

#3, followed by #2 (which he'll liquidate at a loss to not deal with returns in a year). No chance of #4, and if #1 happens we won't hear about it -- for what it's worth, most everyone I know in #1 are keeping it entirely on the down low. :)

#3 most likely, the challenge was never about getting it to Amazon, its how you generate fake 5 star reviews without getting busted.

So is the value proposition simply to buy items on Alibaba and resell on Amazon?

Very interesting. I await the conclusion. How long do you think it'll take to sell the lot?


He's spent over $2500 and his main batch of products from China haven't even arrived in the US yet. They still need to clear customs as well, which could further delay the items if any problems come up. That puts a lot of holiday selling in jeopardy.

This seems pretty risky. --Plus he still needs to store the items, sell them, ship them, and deal with the customer service aspect.-- (Clarification: He doesn't actually have to do these things, but pay the FBA fees for Amazon to do them: https://services.amazon.com/fulfillment-by-amazon/pricing.ht...)

If his items happen to catch on and his supplier in China notices, there's also no real barrier to stop the suppliers (or friends of suppliers) from just cutting him out and creating duplicate product pages with slightly lower prices (which overseas suppliers have already succeeded at).

This is an experiment afterall, so it would still be interesting to see the results of a random person reselling items that aren't particularly unique and in a market with plenty of alternatives (handbags/accessories) with over sellers probably doing about the same thing.


Winners in this scenario: Amazon, Chinese factory owners, consumers.

Losers in this scenario: Chinese laborers, American "wantrepreneurs", and the environment.


Speaking as the frequent victim of flipped AliExpress knock off items purchased on Amazon (at 100% markup over the AliExpress price) -- I think you should put consumers in the losers column.

The quality is unacceptable/not as advertised? Then you most definitely are in the losers column, I agree.

It's rare that consumers win but most of my chinese made shit is way better than american, especially for the price.


Is the American stuff actually Made in USA, or is it American company that outsources manufacturing so it's still Made in China?

Why are the laborers losing? More demand for labor means higher wages and better conditions.

Hmm, I don't disagree with you, but my assessment of Chinese labor situations is that laborers are paid quite low wages and the living/working conditions in proximity to the factory are probably worse than if they were just subsistence farmers.

I feel similarly, because as an American laborer doing basic customer service in a high cost of living area, my wage is not enough to afford literally any discretionary spending.


We are talking about a country where tens of millions of subsistence farmers died in one of history's worst famines, subsistence farming isn't something anyone does if they have other options--one or two bad years can mean starvation.

The common scenario in China is that if someone can get a factory job they go do it, and then they send as much money as they can back to their family, so that nobody starves.


If that was true, they would stay as subsistence farmers. If they are not doing that, they must have their reasons (probably that you're wrong and they're making more money).

That assumes they have a choice, which may not be the case.

It's the opposite problem in China. Too many farmers want to be industrial laborers. They have strict control (relative to other countries) preventing farmers from moving to cities. While totalitarian, it makes sense to reduce the speed of urbanization. Switching from agrarian to industrial is very disruptive. You don't want too many unemployed laborers in your cities.

Mass slavery would be a problem of a different order, and not really relevant to the economic discussion I think?

It's not necessarily slavery. If your hometown used to be a farm town, but a bunch of companies buy up all the farmland and convert it to factories and warehouses, you now no longer have a choice but to work in those factories and warehouses unless you move. And the cost of living increases because there's more competition for the same amount of living space because there's a bunch of engineers and management that are now living in the area where before it was just farm laborers and farmers. You might be getting paid the same as you were when you were farming but it's not stretching as far because everything else is more expensive.

That's not what happened in China, as far as I know.

Please take this question in the most pleasant, friendly, and honestly curious tone: Since your neighborhood is so expensive, why don't you move to a less expensive neighborhood or even a different city?

Not a problem at all :) For me, I am already in the cheapest neighborhood that is reasonably close and liveable to my job. I am not the world's most employable person, so I really have a hard time leaving stable jobs in search of higher paying ones.

But mostly, I am in this area for my girlfriend, who needs to be here for her very high paying job that is more niche and non-transferable to other cities I feel. One day our finances will maybe be linked, but for now I am content to just barely break even :)


No experience with purses or bags but what I see a lot with homewares, where I do have experience, is that something starts to become a big seller and within a few weeks there are 4 or 5 versions of the same thing from different fba sellers.

What happens then is that either one brand becomes dominant or sales start to decline because there is a lot of confusion and reviews for the poorest version get mingled with the original.

Then there is the ultimate accolade, which happens from time to time, it becomes an amazonbasics product. The rest is history.


> within a few weeks there are 4 or 5 versions of the same thing from different fba sellers

If you have a successful product, could you mitigate this by secretly creating an additional 4 or 5 FBA accounts yourself? The 4 or 5 FBA accounts would have different photos and slightly different descriptions, but would be selling the same product. The purpose of doing this:

- Since all your FBA accounts are selling the same thing, there is no risk of some of them being poor quality and getting bad reviews.

- You discourage other sellers from entering your market because the market looks crowded.

- You can set different prices on your 4 or 5 FBA accounts and thereby capture people who are willing to pay a premium and those looking for the cheapest price.


Maybe this explains the phenomena better than my theory of stuff being rapidly copied. Crowding the market with different versions your own product is a fairly common tactic elsewhere, afterall?

You sure can, if you want the Amazon Death Penalty. Muliple accounts are clearly prohibited by the TOS. They will find out, the seller forums have plenty of threads of people crying about getting caught.

And as an added bonus, you get to pay $2 each to have your units destroyed or $2 each plus shipping to get them back. And by “plus shipping” that means the standard package rate non-Prime customers pay. So if all your units are on the same shelf (never happens because FBA strategically ships between fulfillment centers) then you pay for one big box. Otherwise you get one package at full price for whatever is on that shelf or bin that the picker pulls your merchandise from. Times however many shelves your stuff is on.

Also, different accounts might help you erase bad _Feedback_ but product reviews stay with the product listing regardless of who sold it.

Edit: I should have put destroyed in air quotes. I believe this is where the items that have the “Warehouse Deals” badging come from. No proof, just a suspicion.


This is false. The return fee is 50 cents a unit flat, no shipping costs added onto that.

You can ask a few friends/relatives to open the account?

And use your friend’s computer for all access to that account, making listings, booking shipments, customer service. Because the tracking and identification they use makes Panopticlick look like a kid’s toy.

And whose tax id will you use to meet the 1099-K requirements?

I asked Seller Support about this because I started consulting to help people sell on Amazon, and was concerned about getting caught in a dragnet over multiple accounts. They said as long as my clients didn’t sell the same items it probably would not be a problem.


I mean literally ask them to start these FBA shops. Are cartels prohibited by Amazon? How hard is it to get away with it still?

I've talked to people doing this but it's a lot harder than it seems. Accounts need to be totally separate, different company/tax id/ phone/bank/IP address etc, then managing different shipments for each is complicated, etc

With homewares, especially food related I worry about quality and the plastics used etc... seems hard to trust some random FBA.

I believe that he does not have to worry about storing or shipping or selling the itemsas Amazon does all of that through the FBA program.

> That puts a lot of holiday selling in jeopardy.

Nah, he already missed the holiday selling. Even if it arrives on the 14th, he’s got 3-5 business days under normal conditions for FBA to scan the merchandise into shelves. Items are not sellable until that time. Also, since it’s the rush, count on 7-10 business days for that check-in to occur. And the last viable selling day is the 21st for Prime Customers.

Amazon’s guidance to merchants is to have merchandise arrive no later than mid-November for the holiday season, and to not count on restocking midstream.


Seems so. Honest question: what's to stop the manufacturer (or anyone who knows the manufacturer) from making copies and selling them themselves? Do business owners who sell this sort of thing on Amazon just have to stay ahead of the curve or are there protections in place for this sort of thing?

I don't think the alibaba shops have much interest in doing the legwork to list their own items on Amazon. They rely on other people (like the author) to do the research and marketing legwork, and hold the bag for unsold goods. They are focused on moving volume and keeping the factory at capacity.

The bigger threat is Amazon itself, if your product is successful enough there will soon be an Amazon Basics branded version undercutting you and showing up higher in search results.


Yes, they have. I only saw numbers, but 50% of new sellers on Amazon Europe is Chinese. I expect the same for the US.

I also read an interview once where they got analysed on the US store, with frequent typos, but better images then in the past.


Speaking of typos: s/then/than/.

Nice one, I blame auto correct, swype and 3 language dictionary

There is nothing stopping Amazon from getting in contact with the original manufacturers and selling it themselves if they see good sales number for a product. This usually happens after 1-3 months of good sales.

Source: I previously worked in the Amazon price optimization field, and basically all our customers experienced this.


Manufacturer gets paid even if the reseller can't sell them. No need to take risk on the US market if someone else is willing to bear it.

Amazon can also create a competing product.

Trademarking MIGHT protect against people using your logo and brand name.


They typically do not, how this works is Amazon buys out your store and puts in under their own white label ie: amazon basics brand. Lot of FBA businesses have this exit strategy planned out from inception and are building stores simply to sell them in the end, rinse and repeat.

Well, they often have white-label stuff.

Depending on the factory you buy at, they will let you customize more than just the logo and box.

Using different materials, adding tools etc.

Sometimes you get an edge over others because your product is just made of different plastic and comes with a nice bag.


The value prop is in getting the item much quicker via Prime. It's also a form of arbitrage.

It's called retail arbitrage

Selling existing products would be the smarter way to go at the beginning. Less risk that your unique product doesn't catch on, and just focus on procurement and sale pricing (as well as learning the process and policy expectations).

I did just a bit over $1 million in sales over two years of my Amazon business and it was 99% existing major brand lines. Some I bought direct from manufacturer, some from other suppliers.


Do you pick a niche or just look for any products which has good margin? Also, do you use any tools to identify products or categories which are top selling? Appreciate any information

I did have a very specific niche in the industrial categories. It was a business that I used to work for a supplier for, so I was familiar with products and manufacturers and distributors.

For me, it wasn't so much identifying top selling products, but rather ones that I could compete on price. I did use a good many tools for all aspects of the business, but couldn't really share them now as I've basically shut all that out of memory.


What kind of profits?

On individual sales including all fees, 20-25%. I currently owe the IRS roughly 20k or so from 2015, and I just started a new job at $16/hr. Guess how well that's working out for me.

That didn't seem to be a bad business if you made 25% after all fees. Why didn't it work out?

Combination of spending too much money on myself and taking too many short term loans. Eventually I needed more loans to stay afloat, and then when my settlements were going entirely to loan payments, I knew I was done. Well before that point I tried refinancing through a traditional bank/credit union and nobody would touch me.

The night of that worthless settlement I started looking for a job back in trucking, there was a job fair for a local company the next morning, and I ended up there for 1.5yrs.


> Buying UPC codes from GS1. This requires filling out a registration form on GS1 and it costs 250$!

> Buying UPC codes from eBay or other websites. This is the easiest way and it costs only 2$ for a UPC code! I did little bit research and found out that many people are buying from eBay-like sites. So i decided to go with the second option.

DO NOT DO THIS. You will get banned from Amazon and the codes you bought will be worthless -- not just the money but the codes printed on the products that will have to be redone.

Registering with GS1 is the way to go if you're serious; the cost is usually much less than $250, depending on where you are and the size of your business; and then with the registration you can generate as many codes as you want.

Or you can register a brand with FBA, and then apply to have no codes; if you only sell on Amazon it's a good option. Your products will only need an FNSKU number than Amazon generates for you.

See for example (many articles on the subject exist, just Google it)

https://amzadvisers.com/amazon-gs1-barcode-requirements-are-...


According to this[0] it costs 250 USD for 1-10 codes in the US. Where can you get them for cheaper?

[0]: https://www.gs1us.org/upcs-barcodes-prefixes/get-started-gui...


In France for a company with a turnover of up to EUR 500,000 it only costs EUR 85/year, for what I think is up to 1 million codes (you get a root number and can generate the codes yourself).

https://www.gs1.fr/Obtenir-un-code-a-barres/Consultez-nos-ta...


Would Amazon accept those for FBA in the US? If not, then it may be tedious to register a legal entity abroad just to get cheaper UPCs that you can't even use. If they do, then it would be worthwhile building a list of countries with cheap/easy UPCs and cheap/easy legal entity registration.

UPC are international by nature. But the point is to have products registered with the right entity, so (I think) you should be able to demonstrate that the company who owns the codes is somehow affiliated with the company that sells the products.

Great deal for Amazon. 50% of the sales goes to them with 0 risk.

I wonder if after the monthly seller fee, the returns and any unsold merchandise, if they will make any profit at all.


To be fair, 15% is what they take as fees, and the rest is the shipping cost, which are likely realistic to expedite shipping a bag in the US.

I'm an FBA seller doing mid 7 figures, it's certainly possible to be successful here and I have a lot of peers that are also pulling in multi 7 figures. The problem I see most beginners entering the business is that they're reading too many forums and watching too many Youtube videos thinking that there's a get rich quick scheme here. Let me tell you that there isn't.

Here's the secret, treat FBA like you would any other business - that means focusing on competitive advantages, barriers to entry, customer acquisition strategy, and other general business model type stuff.

For example, one of our best selling products took 2 years to develop, over $150k in R&D expenses, multiple patents and thousands in marketing to build the brand. It's currently making millions, but the road to get there certainly wasn't easy and it certainly wasn't "Off the shelf". No one talks about that stuff though because it's not sexy, it's just like any other business, you really have to put in the effort and think about what you're doing to get anywhere - or else like multiple comments have already said, the Chinese sellers will just totally crowd you out. And why shouldn't they? You have nothing special going on.


What strikes me the most here and there in this interesting blog is how the OP found immediate solutions to some of his problems just looking outside his door, instead of the internet. Why do not go with the full local route then, next time? Less adventorous than moving threads globally but hopefully more rewarding economically (time vs hassle vs ROI)?

Because most of the cheap production is in China / Indonesia / Vietnam. I doubt you can find many local products that you can sell with high margins, justifying all the Amazon fees and your time.

I've done this and continue to run a couple products on Amazon. I funnel all of my profits back into bizdev, including trademarks & patents, trying different advertising platforms, new product development, qa tools for my products, etc. I've done strictly private label so far, but there are some wholesaler price lists that I have which are intriguing.

If nothing else it's been a good way to teach myself marketing, imports, and more about IP law...I hope to do a hardware startup in future, which would likely involve Shenzhen manufacturing, so learning to find and interact with Chinese factories has also been valuable.


In many ways this is an interesting business model - the author is largely acting as the financial backer and publisher, whereas everything from product design to manufacturing happens in China.

I wish the author tracked their time spent on this. The labor cost might be a killer overhead. Being very lean on process is probably a major factor in making it pay off.


This reads like a guide released by amazon themselves. They’ve burned so many bridges with existing sellers they may be trying to lure in all new unsuspecting would be entrepreneurs that haven’t been given multiple black eyes by them already. “Hey look, amazon was really a gentleman, maybe I should go out on a date too”

Maybe. My money is on a post about the same time next year where he’s whining about FBA’s Long Term Storage fees catching up with him.

Its a racket for sure, once your inventory gets stuck in Amazon you either have to continually pay the LT service fee increases, or you must pay for them to "destroy" your inventory.

Hilariously, they "destroy" your inventory by selling it and keeping 100% of the money.


You can also have them return the product to you. Of course this costs money.

I don't think that storage fees specifically are a racket. What do you want Amazon to do, store a bunch of non-selling products indefinitely for free?

The lesson is that you shouldn't send a ton of products to FBA unless you have good reason to believe they'll move.


Racket may be too strong of a word, and no I don't expect Amazon to hold inventory for free. However, charging people to "dispose" of inventory (ie. sell for their own profit) is a bit shady.

You can. For the full rate a non-Prime customer would pay for shipping. If they happen to have several units in the same place, they'll send them in the same box. My mom asked for about 2 dozen items to be returned, she received about 10 boxes, at about $5 a pop (small merchandise, retailing for $10-$20 each).

> They’ve burned so many bridges with existing sellers

Details for people not familiar with the Amz horror stories, please?


They raise fees with little notice, they lose inventory and make it difficult to get reimbursed, they charge double fees on returns even if the item doesn't get returned (and on some categories triple fees, in other categories they refund the customer without requiring a return and deduct that from our payments), they suspend accounts with a Kafkaesque appeal procedure with Indians deciding whether 7 figure sellers should be allowed to sell with only a few minutes to decide each case. I'm personally familiar with several suspensions, including one where they just stole over a million dollars worth of inventory/funds and then stopped replying.

They ask for invoices from sellers to "prove authenticity", claiming that's the only purpose, then mysteriously the vendor named in the invoice gets a call from Amazon the next week trying to source the product.

They make their own private label products and put links to them on other sellers' product pages, giving themselves free advertising.


Amazon is liable to squeeze you out of a product you sell if it starts selling well. It's their platform, and they're a trillion-dollar company; there is almost no way you'll win.

I stumbled about that on YouTube, searched around and than accepted that it is probably something like Bitcoin.

Super risky and not worth it.

I keep working normally in my normal job.

Ah yeah BTW. This topic feels like a 'everyone is doing it because a few people use this topic to upsell there videos and referrals etc.'


Private label like OP is doing is the high risk high reward version. Wholesale is much less risk, but there tends to be lower margin. A lot of people recommend starting with wholesale or even retail arbitrage to get the hang of it.

Per Amazon figures, there are 20,000 sellers who sell over a million dollars a year. I know a lot of people in that range, but it does take capital to get there.


Yeah everything that I've ever seen related to this stinks of a scam and that it's too good to be true. Also, a lot of survivorship bias as well.

I bought a huge course about this topic once.

I found the whole thing really interesting.

The troubles with Amazon accounts.

Designing your own products based on white label products.

etc.

I really wanted to do this, but I then learned that I had to send the products to my home first, so I can check if it's okay and then send them to Amazon for fulfillment.

It sounded like a virtual business, I'd think about markets, design products, find factories in China who create stuff for me and then let them deliver to Amazon so they would sell it for me.

But suddenly I would have to sit with hundreds of products at home, checking them, putting new barcodes on them and driving them to the post office.


You can ship straight from factory to Amazon Fulfillment. But you better be sure your production is golden or you’ll get killed by refunds, return handling fees and poor reviews.

Amazon seller here, around a decade of experience, doing low eight digits on mostly exclusive products (trademark+IP on products).

Out of curiosity, but to the layperson, does the Amazon third-party marketplace seem like an exciting place to be? I feel like in 2016-2017 all the pickaxe sellers were popping up, and by 2018 all I see are a ton of burnout in my circle of vendor friends as they deal with the constant influx of 3p vendors with blackhat tactics.


> However i figured out how to solve crash problem without upgrading my plan. I just simply created a cron job which restart my server automatically every 2 hours.

My favourite part!


speedybarcodes says "At this time, you have no choice but to obtain barcodes from GS1 if you want to list your products on Amazon." on the additional information page.

I wonder what the fallout will be like when the boxes arrive at amazon and the UPC codes are considered to be invalid.


I have done some of this and it is as speculative, competitive and risky as product market fit in startup land. You can make some money but you will probably make a lot more writing software.

It is still a lot of fun to go through the process and I learned a lot doing it.


I have done this also, but not on Amazon. Amazon is pretty expensive + competitive + I simply don't trust them.

> to solve crash problem without upgrading my plan. I just simply created a cron job which restart my server automatically every 2 hours

Love it, immensely :)


Have you experienced Amazon selling your “destroyed” items? I’ve always suspected that was the case but haven’t confirmed it.

I'm pretty sure they do this. I also don't have a concrete case I can point to.

Sorry, what does FBA stand for?

It's literally in the 3rd sentence of the article! I highly doubt it was edited in the last 3 minutes. Even if it were, there is this fantastic website you can type queries into and it gives you results pertaining to those queries, literally the 1st result after the obligatory advert when searching just "FBA"!

I really did try scanning the article before this. Looked again, and sure enough it was there -.-" The upvotes suggest that I wasn't alone.

Fair enough, I was a tad harsh, perhaps some weird cache stuff was happening. I really should not comment on stuff early in the day.

Fullfilled by Amazon.

It is the program where third party sellers can send their products to Amazons warehouses, and Amazon then handles the shipping to the customer. The big advantage is that this makes the products eligible for Amazon Prime, as opposed to products that get shipped by the third party themselves.


It’s more insidious than that: Amazon commingling means that the merchants inventory which may be all counterfeit is indistinguishable from genuine articles prior to the buyer actually receiving it. If you want to be safe avoid any product that has both Amazon and FBA.

They have a program now for sellers to qualify for merchant-fulfilled Prime. I'm assuming they have to be able to guarantee they can do 2-day shipping, and there is some sort of oversight to ensure they're meeting that. I'm not sure how widespread the program is. I did purchase something within the last year that was listed as Prime, got to me in 2 days, but did not ship from an Amazon fulfillment center.

Fulfilled by Amazon, Amazon keeps your stuff at their warehouse and handles shipping etc

> Master Yoga

ಠ_ಠ


I'm pretty sure that's included to irk Trekkies.

I'm upvoting you on the assumption that was intentional.

The site seems to be down.

Yeah, getting ERR_SSL_VERSION_OR_CIPHER_MISMATCH

You'd think someone involved in e-commerce would at least know that the dollar sign goes before the number and the percentage sign after.

Author is not from USA. It’s common everywhere except for ‘murica to put currency sign after the amount...

Nope. And it’s not common to put % in front at all either.

This quirk identifies the author as having as their first language Arabic, perhaps Persian (where both styles are mixed), or Turkish (that one surprised me - RTL origin didn’t): https://en.m.wikipedia.org/wiki/Percent_sign


I can't think of anywhere it's common to put the dollar sign after. They put the Euro sign after in some European countries. Nowhere puts the percentage sign first.

The author is in the US, though.


Not true at all.

I assumed from the mistakes in English that they're not native speakers. Wonder if they actually live in USA



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