Amazon Business Update Part I

So I've decided to blog regularly on my successes and failures as someone trying to start a business as a seller on Amazon.  Maybe this will help inspire others who are on the fence about selling on Amazon, and maybe help you avoid some of the pitfalls I've encountered.

I stated that my goal was to make over $600 this month, and I didn't quite reach that goal.  Amazon will make deposits into your account around the 15th and the last day of each month.   As you can see from the attached picture, I had a payment for $257 sent to my bank on the 15th, and tomorrow they should be depositing $218.   While I didn't reach my goal of $600, I would've come close to reaching that goal if it weren't for all of the Amazon fees:

So from Sept 16th until today, I had over $400 in orders, but all the Amazon fees are killing me.   To be a professional seller on Amazon, they charge you $39.99 each month, which is included in the fees pictured.   I also set up some advertising for my products, and I'd estimate that about $60 was spent on advertising.   You'll also see that I offered some discounts on my products (Promo rebates for $51.34) in order to attract more buyers.

I also had to purchase more items to ship to Amazon, so the shipping fees are also included in the Amazon fees.  Using Amazon's UPS ground shipping service does save you a little bit of money, but it's still money that comes out of your profit margin.   

I think I'm going to eliminate advertising for this next pay cycle to see if I can increase my profit margin.  For you new sellers out there, I would recommend not selling any item below $10.99.  If you use Amazon FBA, the fees are usually going to be at least $4 for an item.  Right now I have an item in my inventory selling for $10.99, and Amazon is going to charge me a fee of $4.54 for processing and shipping the order to a customer.   That leaves a profit of $6.45, and then of course I have to subtract the $2.60 I paid for the item, leaving me a profit of $3.85 for each item.

 I also have another item I sell for $23.99, and Amazon deducts $6.27 leaving me $17.72.  Subtract out the $8 I paid and that leaves a profit of $9.72.   So as you can see, you can do much better the higher you price your items.

My goal in the next coming month is to bank enough profit so I can buy bigger quantities of each product so I can be in a better position to negotiate pricing with my suppliers.  The bigger your order, the more suppliers are willing to negotiate.   I also need to think about expanding into other products with higher profit margins.    

R.I.P. Club Sesso

Last month, Ron Jeremy's Club Sesso was forced to close it's doors here in Portland.   Due to a long standing legal battle with the city of Portland, they've had to pay out over $100,000 in attorney fees over the past few years, and it reached the point where it just wasn't worth the hassle anymore.

It's a shame because we always looked forward to the great Halloween parties they used to throw, as well as Ron Jeremy's annual birthday party.   It was also the only "classy" swingers club in the area that didn't look like a whore house.   Hopefully they'll open up in another location soon.

Also we've heard a rumor that a particular bar at one of the Red Lion restaurants in Vancouver, WA is closing down.   This place is a popular swingers hangout, and on some nights it wouldn't be out of the ordinary to see a woman dressed in a slightly see-through blouse showing off her nipples.   Seems like this area is going to be lacking for couples that love being part of the swinging lifestyle.

Starting your Business on Amazon

Sorry I haven't written much on here lately.  I've been reading a few books lately about how to sell products on Amazon, so I figured I'd take a stab at it.  First off, it's not nearly as easy as these books make it out to be.   There's a lot of things that can go wrong when trying to sell items on Amazon.  No one ever really mentions Amazon fees, having to pay to ship stuff to Amazon, or the amount of time it takes to label your products.  Also, shipping things to the US from overseas (China, Thailand) can be quite expensive, and you may have to deal with custom fees.

Not to mention that if you're not someone with deep pockets, you may have trouble finding an item to buy at wholesale because most suppliers require a minimum order quantity.   Nevertheless, I found a few items to sell, and I think I did okay for my first month.

I managed to make a little over $400, which is good I think for my first month, but of course that doesn't include the money I spent on a label maker, or the fact that Amazon will often make you split up your shipments to send to multiple fulfillment centers.   Also, Amazon actually lost one of my shipments so about half of that $400 was from Amazon reimbursing me for my lost products.

The first month was also tough because some items just weren't able to sell, and I also had to spend a little bit of money on advertising.  As with any business, getting started is the hardest part and I have definitely made my fair share of mistakes along the way.

Still though, it's a great feeling to know that I was able to make this money on my own as a side business.

My goal for next month is to make at least $600, and hopefully get to the point where I can consistently make over $1000 a month.