It has been 4 month since the last update on my Amazon FBA journey and I am excited to share what has been going on. I apologize for the long delay between updates but, I will explain the reason behind this in a minute.
My mindset on Amazon FBA has changed a bit since the last update and I will get into what those changes are and why. I will also give you all an update on my sales since the last update and the current state of my business.
First, make sure you are caught up on the previous updates first!
- PART 1 – Intro to Case Study
- PART 2 – The Game Plan
- PART 3 – How to Find Profitable Products to Sell on Amazon
- PART 4 – How to Find Suppliers on Amazon
- PART 5 – Info About my First Order + Calculating Profit Margins
- PART 6 – How to Utilize your Samples
- PART 7 – FNSKU Labels and UPC Barcodes
- PART 8 – I Placed my First Order + a Minor Setback
- PART 9 – How to Brand your Amazon FBA Business
- PART 10 – How to Setup your Amazon Sellers Account
- PART 11 – My Product has Shipped + Updates
- PART 12 – The Definitive Guide to Getting your Product Pictures Taken
- PART 13 – My Product has Arrived + My Initial Launch Strategy
- PART 14 – Results from my First Month of Selling on Amazon
- PART 15 – Increased Rankings and Sales + Ordered a New Shipment
- PART 16 – Details of my First 90 Days of Selling on Amazon
- PART 17 – The Plan for my Amazon FBA Business in 2016 and Beyond
If you are all caught up let’s get into the update.
Reason for the Delay Between Updates
Like I said, it has been 4 months since the last update and I have never had this long of a wait between updates. I always try to give an update at least once a month and sometimes even more, so why the delay?
Time is valuable
Let me explain what I mean. I only have 24 hours in every day and I can only do so much in that time period so I have to choose the best ROI for my time. These past few months I have been very busy with school because I recently declared my major and I am now in classes that require a lot more of my time. These classes have been a huge time suck and there isn’t much I can do about that.
Along with that, I have been spending a lot of my time working on various other business ventures where I have been seeing a lot of success and future potential potential. One of those areas being website investing, which I have talked about quite a bit recently here on PiP.
I love writing here on PiP and helping others start their own online businesses but, I realized I have been spending a TON of time writing and producing content which has taken away from me actually building my own businesses. This doesn’t mean that I won’t be posting anything new here on PiP because I will still be regularly posting here. I will still be posting quite a bit but I need to spend my time on things that will allow me to create my own career and not have to get a 9-5 job when I graduate from college.
I hope you all understand and can see where I am coming from! However, please know that I will still be active here on PiP and will continue to share updates on my various business ventures and all that good stuff 🙂
Another reason for the long delay between updates is because I haven not been seeing the best results from my Amazon FBA business and I have been seeing more success in my other businesses. So my time and effort has been pointed towards those other businesses which means there isn’t a whole lot talk about in this update.
With that being said, let’s take a look at the results since the last update!
Sales Stats Since the Last Update
The last sales update I gave was through the month of December 2015 so, the sales below are from the months of January 2016 – March 2016.
Sales Stats from January 2016 – March 2016
Sub par results to say the least and it’s even worse when you consider that 100 of these sales were from a giveaway that I did around the end of February!
So if you take 100 units away that means I sold a total of 214 units in 3 months. Let’s run some quick calculations:
Average Monthly Sales: 71 sales
Average Daily Sales: 2.4 sales
As you can see, my Amazon business has slowed down quite a bit compared to the first 3-4 months. I will get into why I think this is in a minute, first, I want to take a look to see how much money the business made during this time period.
Did The Business Make any Profit?
Here is a look at the summary report within Amazon that shows all of the revenue and expenses:
This report accounts for all of the revenue and the expenses from Amazon but, it does not show the expenses from manufacturing and shipping. It also does not keep track of ad spend. So to get an accurate look at the profit we need to take those numbers into account.
Revenue (minus giveaway fees): $4,308.13
Amazon Fees: $2,883.02
Ad Spend: $498.60
Manufacturing and Shipping Costs: $1,318.80 (314 units * $4.2 cost per unit)
Total Expenses: $4,700.42
Total Profit: -$392.29
I actually ended up losing close to $400 during these 3 months. The combo of ad spend and the 100 unit giveaway was the reason why I lost money but, it isn’t like I would have made that much money anyways.
You can see why I have been putting less time and effort into this business, it just hasn’t been worth my time as of late.
There are a couple of reasons why I think the sales have slowed down and why I am not seeing the success I did early on. I want to speak on these reasons and why they are affecting my Amazon FBA business:
This is the biggest reason behind my sales slowing down. When I first started selling on Amazon 7+ months ago there was a lot less competition and the product that I chose was superior to the other products in the marketplace due to some minor modifications that I had done.
However, since then my product has lost it’s competitive edge because the market that I am in has been flooded with almost identical products to mine and that has really hurt my sales. When you have an almost identical product to everyone else the only difference between you and them is price, which is not a good thing. This means that to have an advantage over them you need a lower price. This only leads to a race to the lowest price and this kills profit margins and makes it really hard to make a profit.
I will talk about this more in a minute but, I feel like to have long term success on Amazon you NEED to have a product that is unique to the marketplace that allows you to separate yourself from the competition.
Product Giveaways (possibly) Don’t Work Anymore
I did a 100 unit giveaway in February and I saw ZERO increases in sales or keyword rankings. It literally did nothing besides waste money and lose 100 units. Not to mention that I did this giveaway exactly like my first giveaway where I saw awesome results.
Amazon is obviously cracking down on giveaways and making them less effective, which is smart by them because sellers shouldn’t be able to game the rankings by giving away a ton of units. However, this sucks for us Amazon sellers.
With that being said, I am sure people are still having success with giveaways and there is more than likely a way around this. It is just not as effective as it once was to launch a product. The future of launching a product I believe will require PPC and utilizing your own source of traffic to drive sales.
What I mean by “your own source of traffic” is having an email list that you can leverage to generate a large amount of sales in a short period of time BUT, at the full price of the product and not for $.99 or for free. Amazon is not dumb and can recognize what is going on when 100 units are sold for $.99. However, if you sell 100 units in one day at full price Amazon will have to take notice and increase your keyword rankings.
The Amazon Market is Saturated
There are so many people selling on Amazon right now and it is making it a lot harder to have success. Don’t get me wrong, I 100% believe you can still start right now and have success but, it is harder than it was 6-12 months ago.
You can’t just find a generic product from China and slap your brand on it and have success anymore. You now need to actually have a good product that people want to buy and then build a brand that people can trust.
What Does this All Mean?
For everyone still looking to start or for the people who have just started, don’t freak out. There is still a ton of money to make as a FBA seller but, the game has changed. In my opinion, I think that you need a superior and/or unique product to truly have long term success on Amazon. Without one you will have no advantage over everyone else in the market. I also believe that you need to build up your brand both on and off of Amazon. I have been saying this for a while not but, it will become even more important as time goes on.
What I am saying is that the Amazon FBA business model is still a great way to build a business and make money but, just like everything else, times change and you have to adapt to continue to have success.
My Future Plans
My plan of attack moving forward is simple: create a unique product that solves a problem within my market. This is simple however, it isn’t easy to do.
The current product that I am selling has just about ran it’s time and I won’t be ordering any more shipments. My new focus is on finding a problem within my current market and creating a superior product to everything else that will help people solve that problem.
This is not going to be easy to do because this will require me to actually dive deep into my target market and fully understand what their problems are. 99% of the current Amazon sellers DO NOT do this and only look at the Jungle Scout stats to find a product. I think this is a reason why a lot of people fail. They are basing their product off of other products that are already in the marketplace.
To truly create a superior product and become a market leader you need to create something new that solves the customer’s problem better. If you can do this then you will have a ton of success naturally because your product is better, plain and simple.
You might be wondering, “How will I know if there is demand for my product if it is brand new to the market?”
You should not look at the demand for a product. You should look at the demand for the solution to their problem.
This is a small change in how you look at things but makes all the difference.
Every single product helps solve a problem that the customer has. If you dive deep into why people buy a certain product it is because they have a certain problem that they need solved and you need to create a product that solves that problem better than everyone else.
Let’s look at an example, you are a brand that sells products in the cooking niche and you are looking for a product to sell. You do your market research and discover that people that bake pies have a problem with their crust sticking to the bottom of pan and ruining there whole pie. This is the problem that you are going to solve.
You do some more research and find that there are a lot of people that have this problem and there is demand for the solution to this problem. You see that there are other non-stick pans selling well on Amazon but none of them are specifically geared towards cooking pies. This is where you have the chance to create a superior product.
You found this product because you first understood their problem and created a better way to solve it.
This is the same type of mindset that I am going to use to find my next product. I had a handful of other product picked out to be my next product but I realized that all I was doing was tweaking an already successful product and this wasn’t going to help solve the problem any better.
Here are some requirements that I need to meet before I can create a second product:
- The product needs to solve a problem better than any other product on the market
- The product has to be unique from the rest of the competition in terms of the design of the product
- The product has to bring something new and fresh to the market and not just build upon an already established product
My next product needs to match these 3 requirements first and foremost. If I can create a product that passes those 3 requirements I can then run it against the criteria that I laid out in my How to Find a Product to Sell on Amazon Guide. From there, I can start going through the normal process of finding a supplier, ordering samples and shipping my goods to Amazon.
So that is my plan moving forward, I will be looking for a problem in my current market and I will create a product to solve that problem. That will be the framework for which I will choose what products I will sell. I will no longer be basing my next products off of the sales, reviews and other stats found from Amazon.
The Future of this Case Study
Even though I am planning on putting less time and effort into my Amazon FBA business I will still try to regularly update the case study with reports on how I am doing in terms of sales and I will also be writing posts around tactics and strategies to use as an Amazon seller.
Over the next few weeks I want to put together a new update that really dives into the proper way (in my opinion) to do product research and how to go about finding a product to sell. The times have changed and it is not as easy as throwing up any old product and making sales, it now takes a high quality product that solves customer’s problems. I think this is really important and something that any new or old Amazon seller should think about. So in the next couple of weeks be on the lookout for a full post dedicated to this topic.
Wrapping Things Up
I have been getting a lot of emails from people asking when the next update was going to come out and I want to apologize one more time for the long delay between the updates. However, I hope that you enjoyed this update even though I didn’t have the best results from the past couple of months. Thank you all for reading and I truly appreciate every single one of you that reads my posts, leaves a comment, emails me, etc. The fact that you take time out of your busy day to interact with me and read my stuff is awesome, so thank you.