Why Amazon FBA Wholesale Might Not Be For You [LNIM165]

Considering starting an Amazon FBA Wholesale business? Afraid that building a business on Amazon might not be for you? Well, let me tell you — Amazon businesses are not for everyone. In this episode, I recap my experience selling wholesale items on Amazon and explain my reasons for leaving Amazon behind.

Show Notes

Today, we are going to talk about making intentional decisions – may it be about life in general or about internet marketing. Don’t just let stuff happen. Use a framework which involves understanding of what it is that you’re trying to accomplish, and then make decisions that support that.

So, I quit Amazon FBA. It was an intentional decision and I’m going to share with you my line of thinking which led me to this intentional decision.  To start off, let’s talk about the pros and cons of Amazon FBA.

Pros

• The barrier to entry is low. It’s very easy to get started. Just sign up for an account on Amazon and find wholesale suppliers who are willing to sell you products and you’re in business.

• There’s not a lot of moving parts. You don’t have to worry about building websites and finding traffic because Amazon is the one doing all this for you.

Despite these advantages, it didn’t turn out to be a great business for me. I got excited because I thought it was scalable and I have acquaintances who were making thousands in revenue, but it turned out that I didn’t like it very much. And so, I quit Amazon FBA very intentionally.

Cons

• The profit margin capability of this business is in the order of 15 to 20%. As businesses go, that’s not a very good profit margin and it makes it difficult to have room for mistakes and to have room to reinvest. It means the you must manage the cash flow of the business tightly.

• It’s easy to erode that margin. When you buy the wrong product or have shipping problems, that costs money. Because I was still figuring things out, I was inefficient. I was operating in relatively small volumes and while I had products selling at a profit, I also had products that sold at a loss. When it was all said and done, it was a break-even affair.

• I am not a fan of the fact that it’s an anonymous business. You’re just the middle man and there’s no room for creative expression.

• The grind involved in finding products to sell is the hardest part of this business. I didn’t like the treasure hunting aspect of it and repeating work over and over again to find that one nugget of gold.

• The constant churn of always needing to find new products because once the price collapses on that product, you won’t buy any more of them. You’ll be lucky if you can sell out. It is essentially the opposite of passive income.

• I didn’t like the fact that there were so many things outside of my control and one of the most annoying one is having Amazon as your competitor. If you find a product and Amazon sees that it’s profitable and would sell that directly as well, it wipes out your profit because they can sell it at a lower price.

All these things add up but what also impacted my decision are the other business projects that I’m working on that I really do love and I’m choosing love. I’m choosing to work on the things that I really care about. By doubling down on the things that I really want to work on, I end up building a lot better business for myself.

Do the most important things and have the courage to kill those which are taking energy away from the projects you love. Make this intentional decision and you’ll feel so free.

Links Mentioned

• The One Thing
• Necessary Endings
• The Gay Hendricks Book (The Big Leap)
• Amazon FBA Wholesale Explained [LNIM155]
• Subscribe in iTunes

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Amazon FBA Wholesale Episode Transcript

Interested in the transcript of this episode when it’s ready? Transcripts are available to all of my subscribers. You can find them along with all the other episode transcripts and special bonus content in the Late Night Internet Marketing Podcast Vault (sounds mysterious, doesn’t it?)