What’s up everyone!
I’ve jumped into Amazon FBA and as you might have read in the last post, I had just found a product that I planned to private label and sell on Amazon.
Everything has been manufactured and shipped out but now I’m waiting on the shipment to arrive to Amazon’s warehouse. It’s been a bit of a roller coaster in these short 7 weeks since I started this journey.
Although living here in China has allowed me to move quicker than usual, it is apparently not quick enough. What I’ve found out so far about selling on Amazon is that it takes a combination of luck and skill.
The issue that I’m facing is a profitability one.
See, what happened was I found a great product at a decent price. I knew that if I could differentiate myself and make a great listing I would have a chance at making some decent money.
What I didn’t expect was for the average price of all the page one listings to drop nearly $6—and in such a short amount of time. Now the first page listings are all selling for less than $10 which, with Amazon’s FBA fees, makes it damn near impossible to actually make any money.
This was my biggest mistake.
I didn’t track the product as long as I should have in order to see the trend. I wasn’t aware that tracking was really a thing other sellers did with Amazon but slowly as I’ve learned the process and have read the forums, it’s quite common. You live and you learn.
The reason behind this price deterioration is mainly from Chinese sellers. Many Chinese factories start selling directly on Amazon, eliminating the middle men (us Private Label sellers), which then allows them to offer these products much cheaper. Furthermore, once they see that their competition is lowering their price, they follow suit and a price war to the bottom ensues.
At this point, my inventory hasn’t even showed up and I’m kind of like “FUCK” as I watch all this happen. However, I’m going to take a different strategy to try and make this work so that I can at least sell the 500 units that I sent in.
I was originally planning to do a launch with a large giveaway, which would help my products get to page one. But, if I do that, I’m going to lose out on thousands of dollars in both product costs and fees. So instead, I’m going to spend that money on Facebook ads and Amazon PPC.
My product is priced nearly $7 or $8 dollars higher than the rest of the competition but I also believe my listing and photos look a lot better than my competitors. The rest are all Chinese factories who have copied each other’s images and whose product descriptions are laden with spelling and grammar errors.
I have no idea if I can sell at this price but, worse-case-scenario, I can still lower the price $5-$6 and break even.
If I was going to do this over, I would have tracked the product a bit longer and looked at the pricing trend to see if it was going down or not. I now realize that most professional sellers are doing this. Or if they’re not, they’re willing to take a risk and accept lower margins.
I’m currently looking at a product for the holiday season and have some samples being shipped to my apartment now. I will track these much more carefully and also plan to do a smaller test order to see if I can make sales at the price point that I want.
The holiday season is always huge for e-commerce so I hope to have something substantial up and selling by then. I will continue writing about this FBA journey so stay tuned!