Table of Contents
1. Introduction
2. Truth #1: The Time it Takes to Get Started
3. Truth #2: 100K per Month Products
4. Truth #3: Product Launches
5. Truth #4: Profit Margins
6. Truth #5: Quitting Your Day Job
7. Conclusion
Introduction
So you're interested in selling on Amazon? You've probably come across a lot of content on platforms like YouTube, TikTok, and Instagram, offering advice and tips on how to get started. While there is an abundance of free information out there, it's important to be aware that not all content creators provide the full picture. Many of them are primarily focused on selling their own online courses and training programs, which can sometimes lead to a distorted view of the realities of selling on Amazon.
In this article, I want to take a different approach. I want to share with you five truths about selling on Amazon that are often overlooked or not discussed by many gurus. These are things I wish I had known when I started my journey as a seller, and I believe they are crucial for anyone considering getting started. So let's dive in and uncover these truths, providing you with a realistic perspective on what it takes to succeed on Amazon.
Truth #1: The Time it Takes to Get Started
One common misconception is the idea that you can start selling on Amazon within a couple of months. While this may be true for certain business models like wholesale, it's important to understand that if you're looking to create your own branded products through the private label model, it typically takes longer to get started.
From the moment you begin learning about the business model to actively selling on Amazon, you can expect a timeline of around 4 to 8 months. This may sound longer than anticipated, but there are several crucial steps involved. First, you need to learn the business model and conduct product research. Then, you'll dive into developing your product idea, creating your brand name, logo, and packaging. Sourcing the product, getting samples, finalizing a manufacturer, and manufacturing the goods all take time. Additionally, if you're shipping from overseas, you'll need to account for shipping time.
While the timeline may seem daunting, it's important to remember that going from a complete beginner to launching and selling your own branded product within 6 months is actually quite impressive. Understanding the time commitment required will help you set realistic expectations and stay motivated throughout the process.
Truth #2: 100K per Month Products
There is a lot of content out there showcasing how to find products that generate 100K or even 200K per month in revenue on Amazon. Tools like Helium 10 and Jungle Scout are often used to identify these high-revenue products. However, as a new seller, it's unlikely that you'll have the starting budget to launch such products.
Typically, you can afford to launch a product that sells somewhere between 1 and 1.5 times your starting budget in monthly revenue. For example, if your starting budget is £5,000, you can expect to launch a product that generates around £5,000 to £7,500 per month. Launching a product with a revenue target of £100,000 per month would require a starting budget of around £100,000, which is not feasible for most beginners.
While these high-revenue products do exist, it's important to be realistic about what you can afford to launch initially. As you grow your business and reinvest profits, you can aim for higher revenue products in the future.
Truth #3: Product Launches
When it comes to private label products on Amazon, it's important to understand that the majority of them are not profitable during their first 1 to 3 months. In fact, many private label products actually make a loss during this period. This is because new product listings have low organic ranking and visibility, resulting in low organic sales.
To gain organic visibility and ranking, a product launch strategy is crucial. During the launch phase, you'll need to invest in PPC (Pay-Per-Click) advertising and be aggressive with your campaigns. You may also set a lower selling price to drive sales velocity. These efforts often lead to a loss during the initial months.
While it may seem discouraging, this is a normal part of the process. It's important to understand that you need to invest in marketing early on to see a return on investment in the future. Building organic visibility takes time and requires a strategic approach.
Truth #4: Profit Margins
There is a misconception that Amazon sellers can achieve 50% to 60% profit margins. While it's true that some rare products may offer such high margins, the reality for most private label products is quite different. Profit margins on Amazon typically range between 15% and 30% after considering all costs, including Amazon PPC advertising.
The actual profit margin you can achieve depends on several factors. Firstly, the competitiveness of the market you're entering plays a significant role. Additionally, the quality and desirability of your product compared to competitors, the effectiveness of your product listing, and your PPC strategy all impact your profit margins.
It's important to have realistic expectations regarding profit margins. While higher margins are possible, they require careful planning, market research, and effective marketing strategies.
Truth #5: Quitting Your Day Job
Many content creators talk about quitting their 9-to-5 jobs to pursue Amazon selling full-time. While this is indeed possible, it's not always the best decision early on in your journey. It's important to consider the financial implications and the impact on your business's growth potential.
If you rely solely on your Amazon business to cover all your expenses after quitting your job, you'll likely need to withdraw the majority of the profits from your business. This leaves little available cash flow for future product launches and business growth. Instead, it's advisable to keep your day job initially, allowing it to cover your living expenses. By leaving profits in the business, you can accumulate available budget and cash flow for future growth.
Quitting your day job for Amazon FBA should be considered once your business is generating twice the income of your job. This way, you can still take out profit for personal expenses while having an equal amount building up in the business for future investments. Cash flow is a significant factor in growing your business quickly, and leaving profit in the company is a smart strategy.
Conclusion
Selling on Amazon can be a rewarding and profitable venture, but it's important to have a realistic understanding of the challenges and realities involved. By acknowledging the truths discussed in this article, you can set realistic expectations, stay motivated, and increase your chances of success.
Remember, the time it takes to get started, the limitations of your starting budget, the initial loss during product launches, profit margin considerations, and the timing of quitting your day job are all crucial factors to consider. By approaching your Amazon journey with a clear understanding of these truths, you'll be better equipped to navigate the challenges and build a successful business.
Now that we've covered the main points, let
