I have now been selling physical products on Amazon for about a year and half now. I've learned a tremendous amount over that time period, and best of all, I've created another significant income source in my business.
I've shared a few updates on my Amazon FBA business; however, its now been a couple of months before I've really last mentioned my Amazon business here.
So, today I'm dedicating this post to giving you an update on my FBA business: income report, what's working, and plans moving forward.
Let's jump right into it…
Ambitiously Launching Products
A year and a half ago, I didn't have any products listed on Amazon at all. I then started with 1 product and it did well right out of the gates. However, by the end of last year, I still only had 4 or 5 products selling.
However, I could see the huge potential and so I set a goal to launch 15 new products in the first half of 2016. I accomplished that goal.
In fact, Jake and I have been ambitiously launching products all year on Amazon…and we continue to do so. You see, there are a couple of ways you can grow a business. Get more sales from your existing products, or launch new products.
We certainly try to get as many sales out of our products as possible, but after analyzing things, I felt like the fastest way to grow was to launch additional products.
So, as of today, we now have 20 products live on Amazon! (And technically one of these products has 5 different variations, so we have 24 product listings).
This post is not meant to be a step by step guide on how to launch products, I've covered a bit of that in the past here and here. However, in general, we've followed 3 different strategies when launching products.
- Launch nearly identical private label products to what competitors are already offering. We find a manufacturer on Alibaba.com that can slap our brand name on the product, order a minimum order quantity, and list it on Amazon.
- Quickly launch products using AliExpress with nothing unique or special branding. There is basically no minimum order quantity on AliExpress. So, we search for something that isn't really selling on Amazon, then order 10 units or so and list them on Amazon. If they can sell on their own without any special promotion, we then consider finding a manufacturer to make the product more unique and add our branding.
- Launch products with a unique angle – not exact copies like in strategy 1. My very first products on Amazon were of this variety and sold extremely well right out of the gate.
Our best selling products are all from strategy 3, launching unique products. This is obviously more difficult to do since you don't always know exactly how the market is going to respond when you offer them something slightly different.
When I say “unique”, it doesn't have to be patented. I won't be revealing any of my products; however, lets say you were looking into selling shower heads. Perhaps there are square shower heads ranging in size from 2 inches to 10 inches. Well, perhaps you come in as the only seller with a 12 inch shower-head.
You suddenly become the only seller on Amazon selling that exact size of shower-head.
So, from my experience over the last year and a half, the more unique offering you have, the better your products will do.
Okay, now that you know that I've been ambitiously launching products, what has this done to the bottom line?
Here's a look at some earnings numbers:
The above screenshot is from August 2016. So, we sold just over $60k worth of product through Amazon…awesome! You can also see that this is just about double what we were selling during August 2015.
I'm very happy with the growth of the business.
Now, unless someone thinks that $60k is actually how much money I put in my pocket, I'd like to share another screenshot that shows expenses as well.
The below screenshot is the month to date for September (as of Sept. 22nd). This shows both top line revenue and net profit (after ALL Amazon fees and ALL manufacturing/shipping costs).
The above screenshot is from a tool called Inventory Lab. I absolutely love Inventory Lab to track profits, losses, inventory, and more. Using Amazon's interface is difficult to find anything very accurate; whereas Inventory Lab calculates what is a giveaway product and what actual profits and losses are.
So, with about a week to go in September, I'm sitting at about a net profit of $16,000! I'm very happy about that.
Now as you can see, some of the refunds, etc have not been pulled in from Amazon for the 9/18-9/24 week…so this will lower net profit by 1 or $2k; however, this screenshot is good enough to show you about where we are at.
If my products are selling well in the US, would people would buy them in Europe as well? I now know the answer to that question is yes.
Over the last few months, I shipped 2 of my best selling products to Amazon UK and started selling in Europe. This was a long process and you have to jump through a few hoops. However, after all the work, my 2 listings are now live and selling!
Here's a quick look at the month of September for my Amazon UK listings:
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Now remember, these Amazon screenshots include promotional units sold, so really the revenue is likely less than half of what is shown above. The main point is that I've now dipped my toe into international commerce, and I'm seeing some good signs!
If all continues to go well, I see no reason to not bring over my additional products.
Fighting the Competition
When you have a unique product listing that is selling well, it's only a matter of time before copy cats come along with their own knock-off version of your product. I enjoyed a little over a year where I was literally the only one selling the exact variation of the product.
Now in the last couple of months I have at least 2 exact replicas of my product from copy-cats. I am still the top listing because I've established myself with lots of positive review and age; however, the copy cats aren't far behind.
Unfortunately, this is the name of the game and there is not much I can do about it. As a result, my sales for a couple of my top products have taken a dip (but are still my best sellers). This is one reason that my revenue isn't higher. (If you recall from an income report I did a few months ago, my revenue was also about $60k/mth).
The ultimate goal would be to create a product with an actual patent, so that I could fight off the copy cats. However, there is still something to be said for being the “first” to market. The copy cats still haven't outranked my listing and I still enjoy the fruits of being the first to come out with my exact variation of a product.
I suspect that these people creating the listings are all users of Jungle Scout. Jungle Scout is a great tool, but with so many people using it now, it's hard to come out with a new product and avoid having thousands of people see your success. Success breeds competition.
Another issue I've had to deal with more frequently is Hijackers. These are basically other sellers that try to take over your listing.
Unfortunately, Amazon hasn't been able to stop this problem on your own. So, I've been using ListingEagle.com to monitor my listings for me. When a hijacker jumps on my listings, Listing Eagle sends me a text message, and then I send a message to the hijacker asking them to get off my listing.
They usually leave the listing pretty quick.
Bottom line is that just because you have a great selling product, doesn't mean it's going to last forever or that people won't do everything they can to piggyback off your success.
At this point, we've seen that our more unique ideas tend to sell the best and so we are going to focus more on that. I would LOVE to come up with a patented idea, and hopefully I'll be able to achieve that some day.
So, the plan is to continue growing my existing listings, go international, and then try to create more unique product offerings.
If you are selling products on Amazon, I would love to hear how its going for you. If you have any other questions or comments, please feel free to leave your thoughts below.