I sold $110K on Amazon in December

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Why is retail imploding before our eyes? The statistics of brick and mortar bankruptcies are alarming. Compounded with the launch of Amazon Go with a cashierless experience and an entry into pharmaceuticals, there is major displacement on the horizon.

Or is this just pie-in-the-sky thinking for people who don’t truly understand the mechanics behind Amazon’s success with their FBA (fulfillment by Amazon) program.

To sum it up, Amazon essentially was fighting in the low margin inventory discount business for the first ten or so years. They had buyers of all background scouring inventory channels to keep them stocked on a losing game of “demand prediction.” They were competing against the well funded rise of big box empires of any niche category. Toys. Pet supplies. Office supplies. Books. Food. Movies. Whatever you want. Instead of ma and pa shops imploding through an invasion of big box stores, a revenge is now happening.

As they entered the web services business, they understood the scale and profitability of becoming a services company. The technology would be the strength. Now, Netflix goes through Amazon to stream and store all their catalog of content, despite being a direct competitor.

For the retail portion, Amazon outsourced inventory risk to individual sellers. At first, this caused some price spikes with shortages in supply, especially at key times of the year like Black Friday. After a few years, competition has become so fierce, there is massive discounting that happens from inexperienced sellers as the gold rush to join the program continues. Now, over 60% of what is sold on Amazon is sold via FBA. Our products are shipped and stored and ordered from an Amazon warehouse. Many small sellers, with no business acumen or credit, get slaughtered in their first deep Q4.

The fees are high. In all, about three times as high as Ebay.

We pay to have items shipped to an Amazon warehouse. We eat the returns and pay for storage in the warehouse. Then, Amazon takes a hefty fee on top of that.

FBA has essentially paid for the massive warehouse expansion the last 8 years. Sellers are getting more savvy. We scour price disparities between vendors and arbitrage the difference. We hunt for clearances and buy in bulk. Many, who want scale, go for private label dreams and search on Alibaba and AliExpress for cheap products to “brand” and ship to the US.

This is a gold rush and it is killing brick and mortar. Call it the uberization of retail and nationwide clearances.

In my first full year of Amazon, I learned a ton. As a business major, I’d say more is learned in the first year of a startup operating under your own capital than business school. Application always trumps theory.

There are so many mistakes a I made through the year, so even though I sold $110K in just one month, I felt like I didn’t do enough. I could have scaled so much bigger. On Facebook reseller groups, there are people doing ten times the amount every month, which creates a followership cycle of business envy. It’s almost like Reseller Porn. “Hey, look at my sales!” We all have secret tricks. Amazon has gated so many categories and brands that there is an actual economic moat for many small sellers.

How can a brick and mortar store compete against an army of small business with extremely motivated and savvy sourcers who look for the smallest of price disparities on Jungle Scout? How can it fight whispers of special nationwide deals on social media? It can take six weeks for a department store to source a T-shirt in a rush. Now, a teenager in their basement can be the largest t-shirt designer in their state by uploading a design to Merch by Amazon. They don’t have to take on any inventory. They get paid a royalty when it sells.

This is sort of the concept behind self publishing. Anyone can do it. There is no barrier to entry.

There are a few safe places. Large items in particular are insulated. So furniture stores are okay for now. As Tesla knows, there is a dealership network that makes it difficult to do direct sales in the auto market. Walmart remains the only colossus that stands in Amazon’s way to win the last mile.

2018 is here. I’m still sourcing part time, on top of a full time job and other projects. I already have a list of SKUs to go deep on for next christmas season to 10X my sales. Do you?

 

 

 

I made $30K last month on Amazon

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I had become accustomed to Amazon publishing videos on youtube for quite some time and ironically, the google search algorithms must have put me as a huge Amazon fan. My ads and suggested viewings were all related to Amazon. Either that, or I needed to see Tai Lopez with his Lambo in his garage for the 94th time.

I then saw a new video about Amazon. How about selling other stuff? I used to sell books out of college about a decade prior but quit as physical book prices collapsed to pennies where people made money off shipping. I had a full time job, and the hobby soon became a pain. What did the new videos reveal?

Amazon FBA.

Fulfillment by Amazon is the breakthrough Amazon has found to win on price and margin. Instead of taking inventory risk, they let independent sellers send in inventory for them to sell, pack, ship, and any returns are the sellers risk. Amazon just takes a generous cut from brokering the deal that rivals their digital sales cut. The sellers then reverse auction prices to underbid each other with apps, and all of a sudden their prices beat Walmart’s because Billy Bob Inc got in a pissing contest with Sally Joe Inc over a jar of mayo.

Yep, it’s that big.

Anyways, I soon discovered after some light research just how littered the field is with promotional wunderkinds that can teach you anything and everything about the process for the low low low price of ________. (take your guess and multiply by insanity). I joined a couple groups. Paid one, and it was a scam from the get go. Advice: Most of them are scammers, otherwise they would be too busy scaling up with their business. This is the same reason why JK Rowling or Stephen King or James Patterson (oops) doesn’t peddle a “How to make millions by writing in under 30 days” courses. It simply doesn’t work. Only scamsters sell courses like that. On FB groups, they even have the stupid gimmick of posting motivation quotes on instagram filtered stock photos to build up likes, except it’s all business related instead of Elmore Leonard.

So I learned the old fashioned way (circa 2017). I watched a shit-ton of youtube videos and learned to source product. I began with thrift stores (which gets old fast) and garage sales (which is awkward and weird), to moving to retail arbitrage. I can probably write 500 tricks to making money on Ebay and Amazon now as there is a steep learning curve and even the paid scammers don’t know what they’re talking about. This is the thing. When you learn a secret in the reselling game, you basically lose when you tell others. Reselling groups are a highly secretive bunch now. There are seriously secret societies in America who work together to essentially bring the downfall of physical retail. Their partner/big brother is Amazon who has created an army of UPC scanners in stores from sea to shining sea.

There are courses that cost as much as $3000 for shit I learned in 8 minutes watching youtube clips. There is a $8000 course for private labeling that I learned in 50 minutes listening to a podcast. Nobody gives a shit. Some idiot will pay and people will fail and go broke just like gold miners in the Klondike. In the writing world, this is just like the mini-gold rush of people that made a business of formatting old books without copyright and posting them on kindle for a profit when the same book was free somewhere else. It is mind boggling the scamming that is going on in the veil of education and “life changing opportunity.”

This isn’t Tai Lopez pushing 67 steps in his mansion.

These are shady amateurs that basically would rather work from home pontificating obvious information with the “get 1000 people to pay you 1000 bucks” scam.

Here is my tip to Amazon. Join  bunch of FB groups, watch a bunch of youtube videos, and listen to a bunch of podcasts. The more you put in, the more you’ll learn. This is like Matt Damon in Good Will Hunting … you wasted your money paying for education when everything can be learned for free.

Don’t worry, I’m not selling shit. No course. No youtube channel promotion or affiliate marketing. I’m just telling it how it is for free. Why? I don’t know. With my traffic at next to nil after my hiatus, maybe it doesn’t matter. The scammers always win. Maybe I just want all my 6 months of learning to be kept a secret. Maybe there are hundreds of people that all know the easy money to make and want it to be kept a secret so the party can keep going.

So where am I now?

I still have a full time career doing something else, but now dabble in Amazon FBA and ebay as a side hobby after I stopped writing, and just about reached the $30k per month milestone in March (Now over $37K in April) which is insane considering how little work I put into it.

IMG_1651.PNGMaybe Amazon is the future. Their drones will deliver me a cheeseburger in 5 minutes or less as they put fast food out of business after big box stores are obliterated from our suburban landscapes. Maybe we’ll end up like those fat kids in Wall-E with everything fed and delivered to us by robots. It’s like David Foster Wallace’s prediction for us. We are a species all about instant gratification. Maybe I need to just get with the program and self publish my stuff and let Amazon make me a boatload of cash on their platform.

The End.