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Amazon FBA Case Study: 21 Things to Know Before Starting Your Private Label Brand

December 1, 2021

A Real World Amazon FBA Case Study (with examples and results)

ROKEY Vacuum Storage Bags

Hey, what's going on?

Ok so I gotta be honest, even though I’m a 6 figure Amazon FBA seller, I actually spend most of my time these days focusing on my lead generation business, which is making me over $50K a month now.

For me, lead generation is the real deal, and the #1 reason that I now get to live life on my own terms.

That said, I’m an entrepreneur at heart, and I’ve always loved the idea of building my own retail brand.

I’d heard about selling on Amazon, and decided to see what all the fuss was about.

Fast forward a couple of years and I've now done well over 6 figures on Amazon, and have my own brand that has served thousands of happy customers.

So I thought it would be cool to throw together an Amazon FBA case study, so you can get a look behind the scenes into what it takes to actually sell on the world’s biggest online shopping platform.

I'm gonna reveal...

  • How we got our Amazon FBA business started.
  • What product we sold.
  • How we launched our product.
  • How we got over 3,000 customer reviews.
  • How we got to $25K a month.

You may also be wondering if you can still make money with Amazon FBA?

Don’t worry, I got you covered...I’ll do a deep dive into the Amazon FBA business model and let you know if it’s still something you should be starting today!

Here's how this article is gonna break down...

Ok, hold tight...let’s go!

1. MINDSET: The Secret Sauce to Winning Online

Heads up...selling on Amazon is hard!

I’m not telling you that to scare you, I just want you to know exactly what you’re getting into.

Before you even think about jumping into the Amazon FBA game, you gotta get your head right. 

You gotta think like an entrepreneur does.

You’re building a real business here, that will require a serious investment (we’ll talk more about that later).

Entrepreneur Mindset

You’ll be investing in inventory, using shipping suppliers, building a retail brand that requires branding and packaging...and that’s before you even make a sale.

This isn’t just a “let me give it a try” type of business. 

You’re gonna need to make sure you have a long-term growth mindset when you tackle this business model - otherwise it’s gonna get messy real fast!

Luckily for my Business Partner and I, we knew this before we got started.

We’d listened to some killer Amazon FBA podcasts before launching our brand, and we knew that it wasn’t an easy business to be in.

TAS Podcast

Along with having a long-term mindset, we also decided we were going to be heavily customer focused...as in ridiculously focused.

We were huge fans of the Zappos story, and loved how they’d managed to build a Billion dollar brand based largely around their world class customer service.

Zappos Book

We loved this concept, and decided to make customer service the foundation of our own brand.

We also decided to launch our product on Amazon’s UK platform.

We knew the UK was a lot less competitive, and we thought it would be a good place to get started.

UK Amazon

Our mindset was that we could always look to launch in the US once we had a successful product.

So if you’re wondering if you can do Amazon FBA from another country, then the answer is “Yes”...we did it and still do.

Just because you live in the US, doesn’t mean you have to sell on the US platform...you gotta think outside the box a little!

2. AMAZON PROCESS: How does Amazon FBA work?

It’s probably worth doing a quick overview of the Amazon FBA process before we start diving into the weeds of this case study.

At the highest level, the process of selling on Amazon using their fulfillment model (FBA) involves you listing your own product on their shopping platform, and letting them handle the payment and shipping. 

Of course, they also supply the online shoppers...millions of them.

Amazon FBA Process

The Amazon FBA Process Explained:

  • Decide what product you are going to sell.
  • Find a supplier to make it for you.
  • Ship your product into Amazon’s warehouses.
  • List your product on Amazon’s shopping platform.
  • Buyers find your product and buy it (fingers crossed).
  • Amazon handles the entire process and takes a fee for doing so.
  • They pay you the rest every 2 weeks.

That’s it in a nutshell...looks easy right?

Well as they say, looks can be deceiving.

The process of selling on Amazon may sound simple in theory, but there are a lot of moving parts to the Amazon machine.

3. PRODUCT SELECTION: Finding the Right Product to Sell on Amazon

Ask any newbie to the Amazon FBA game, and they’ll tell you that one of the most daunting aspects of starting this business is selecting a product to sell.

Why? 

...Because if you get it wrong it could literally cost you $15K or more, which you’ll be flushing down the toilet essentially.

Amazon is expensive

Before we got started with our business, we’d heard horror stories of new sellers selecting the wrong product and then not being able to sell their inventory.

This meant that after dropping thousands on the stock, and then paying to ship it to Amazon, they ended up with boxes and boxes of product which sat idle in Amazon’s warehouses, all the while costing them money in storage fees.

Talk about a nightmare.

Amazon Inventory

So when it came to product selection for us, we decided to tread very lightly. 

First up, we took advantage of some of the awesome seller tools on the market, such as the ever popular Jungle Scout.

Greg Mercer

If you’re not familiar with the Jungle Scout tool, it allows you to carry out in-depth product research (as well as many other functions), that will allow you to make solid decisions about your Amazon business.

We installed the Chrome plugin, and soon we were able to see the details on any product already selling on Amazon.

We got inside data on statistics like the number of units being sold each month, the average price of competitors in the category, average number of reviews, revenue being generated etc.

Jungle Scout

With each product, Jungle Scout displays an Opportunity Score, in which their algorithm analyzes the data and then helps you mine for the Gold.

So we started trawling through hundreds of products, looking for opportunities.

We knew that one of the biggest keys to succeeding on Amazon when you get started, is not to try and reinvent the wheel from scratch.

Instead, you’re better off picking a product that already exists, and then trying to improve it.

This is where product reviews and feedback come in handy.

By browsing through negative reviews, we were able to get an idea of what customers liked and didn't like about products. 

Reviews and Feedback

All we needed to do then was to find a way to use this information to make our product better than the competition.

Another critical element of succeeding on Amazon is to focus on building a brand.

One of the biggest mistakes new sellers make is picking a product to sell, without having the mindset of building a brand around it.

Importance of Brand

Think of Starbucks...not only are they able to price up their products because of the branding and "experience" they create around them, but more importantly, they are able to cross promote their other products to their buyers.

Rather than picking a random product, we focused on picking a specific product that we could expand on.

We wanted to consider what products might compliment our first product later down the line.

A good example of this would be a Yoga brand selling Yoga mats, as well as Yoga blocks, towels, and various apparel. 

Serve an Audience

You see, when you do this, you are able to cross promote your products to your customer base, because they have already purchased a related product from you.

E.g. a Yoga company selling the same customer a yoga mat as well as yoga blocks.

By doing this, you’re serving an audience, and it’s a smart way to do business because you’ve already acquired the customer...why not maximize their full purchase potential.

Customer Retention

Looking back, we made a ton of mistakes when we first started.

Here are some of the biggest things we learnt about launching our first product on Amazon.

How to Pick the Right Product to Sell on Amazon

  • Find a product that is already selling well and improve it.
  • Focus on building a brand and serving an audience long term.
  • Pick a generic product that has one color and size to start.
  • Pick a product that doesn’t have competitors with 1,000’s of reviews.
  • Pick a product that sells for at least $20 or more.
  • Use the Amazon FBA Calculator tool and crunch the numbers (more below).
  • Consider launching in another country outside the US with less competition.

4. OUR PRODUCT: ROKEY Vacuum Storage Bags is Born

For about 3 months it looked like we were going to launch our own fitness glove brand, designed to help gym goers get a better workout. 

But after ordering a few samples, we soon realized that we’d struggle to find a product that met our quality standards, as everything we tested seemed to rip and tear after constant use.

Another issue was that fitness gloves are usually sold in a variety of different colors and sizes, which would be a nightmare to try and manage from a stock level point of view.

In the end, we decided to launch our own brand of Jumbo size vacuum storage bags. 

Vacuum storage bags

Now you may be thinking that vacuum storage bags are pretty boring, generic products, and you’d be right. 

But that’s the point...everyone else is out there selling fitness products, or iPhone accessories. 

We like plain and boring.

Our Product Ticked Most of Our Boxes

  • It was already selling on Amazon, and we had a few ideas how we could improve it.
  • We could build a brand around it.
  • It could be one size and one color.
  • At the time our competitors didn’t have 1,000’s of reviews.
  • It cost more than $20, meaning we could make a decent profit per unit.

After some careful thought and planning, our brand ROKEY Vacuum Storage Bags was born.

Now that we’d managed to decide on a product, our next step would be to find a reliable supplier that could produce it for us...

5. CAPITAL: You’ll Need More Than You Think

One of the biggest factors that caught us off guard about building an Amazon business, is just how much money you actually need to get started. 

Before we launched our vacuum storage bags, we figured we could order 500 units at a cost of around $3K, and “see how it goes”...

What we didn’t realize was that when you place an order with a supplier, it will usually take them around 30 days to complete it for you. 

From there, it will take another 60 days to get your product shipped into Amazon’s warehouses, so you’re looking at 90 days from placing your order to being able to actually sell it.

Supply Chain

So why does that matter?

Well because this means that even if you place your 2nd order with the supplier on the day you start selling your 1st order on Amazon, you’re still 90 days away from being able to sell it.

That means your first order needs to last you 90 days...if you’ve done a “test” order of 500 units like we did, that’s only 6 units a day.

So the reality is that unless you want to run out of stock (trust me, you don’t), you’ll either need to place a bigger 1st order, or chase that order with a 2nd and even 3rd order, before you’ve even sold your first unit.

In other words, you're gonna need more capital to get started!

Shipping

If you’re paying $6 per unit, that means that instead of needing $3K for 500 units, you’ll probably also need another $6K on top of that for order 2 and order 3.

Then factor in shipping costs, PPC advertising, warehouse fees etc...and you’re gonna need closer to $12K - $15K to get your Amazon business off the ground.

It didn’t take too long into our journey for us to realize this.

We were ok with this idea, as we had savings tucked away, but it was still a bit of a shock nonetheless.

6. CRUNCH THE NUMBERS: Due Diligence is King

When it comes to winning on Amazon, you’re gonna need to know your numbers.

Sure I get it, crunching numbers isn’t everyone’s cup of tea, but it’s essential to make sure you’re picking the right product. 

The good news is that Amazon has a cool tool which takes some of the pain out of this process.

It’s called the Amazon FBA Calculator, and it allows you to enter a competitor's product into the tool, to gauge what your likely profit margins will be.

As we were selling on the UK platform, this meant that we were paying our suppliers in US Dollars, but selling in British Pounds. 

This meant we had to do some fancy on-the-fly currency conversion, but below is a breakdown of our business costs.

Amazon FBA Fee Calculator

Of course these are just rough estimates, and assume we’re selling at the price listed above, and that the exchange rate remains fixed. 

Of course in reality, there are always changing variables, but these were the ones we used to start.

  • Estimated selling price per unit - £16.99 ($22.35)
  • Unit cost of manufacturing - $5.89
  • Unit cost of shipping into Amazon’s warehouses - $1.91
  • Amazon’s commission fee per unit: £2.60 ($3.42)
  • Amazon’s fulfillment fee per unit: £2.65 ($3.49)
  • Monthly storage fee per unit: £0.22 ($0.29)

Gross Profit Per Unit: $7.35

Thanks to this awesome tool, we could work out that if our selling price was £16.99, we’d make around $7.35 per unit sold.

We could live with that.

Now all we had to do was find a supplier that wouldn’t rip us off...

7. CROSSING OUR FINGERS: Finding a Supplier We Could Trust

Ok, so hands down one of the most terrifying parts of starting an Amazon FBA business is sending $15K+ over to a supplier you’ve never met or heard of.

I mean, how do you know you’re ever gonna see any inventory right?

Like most newbie selles, we found our supplier on Alibaba, which is basically a website that allows you to search for pretty much any product you can think of, and then match up your search with a company that will supply it for you.

Alibaba

Usually you’ll find that these companies are based in China, but not always.

After browsing through a few listings on Alibaba, we were able to find a few suppliers for our vacuum storage bags that we could order samples from.

After doing so, we decided to pick the sample that wasn’t the cheapest, but was clearly the best quality.

It may be tempting to go for the cheapest price per unit sample, but trust me when I tell you that low quality is a death sentence on Amazon.

Once the 1 star reviews start flooding in, it’s impossible to stop them if your product doesn’t meet buyer expectations. 

Negative Review

Top Tip: Instead of making your product decision based on it being 20c cheaper per unit than another, make sure you go for the highest quality item. 

Amazon is getting more and more competitive these days, with thousands of new sellers flooding the market every single day. 

Amazon Sellers

You’re gonna need to stand out from the rest, and having a high quality product is one of the best ways to do it.

So once we were happy with the quality of the samples, we took the plunge and placed an order for 500 units.

Now if you’ve been reading along, you’ll know that this wasn’t nearly enough, but hey, we didn’t know that at the time...

8. PACKAGE DESIGN: Making Your Product Stand Out From the Crowd

As I’ve already touched on, Amazon is becoming more and more saturated every day. 

Anyone that tells you otherwise is either naive, or trying to sell you something related to Amazon (a course or a tool).

This means that the game is changing all the time. Gone are the days of when you could just throw up a cheap product and make 100 sales a day. 

That might have worked back in 2014 when it was like the Wild West on Amazon, but things are a lot harder now.

We knew this, and we decided that we were going to use superior packaging as a tool to stand out from the crowd.

Dollar Shave Club

At the time we’d read popular stories about brands like Dollar Shave Club being bought out by large companies for hundreds of millions (even billions), and we loved the idea of creating our very own retail brand that we could potentially sell one day as well.

What we loved about the Dollar Shave Club story, was that they’d managed to take a boring and generic product like a razor and turn it into something cool.

Dollar Shave Club Packaging

I think this resonated with us, because just like them, we too had a boring and generic product...vacuum storage bags.

But not for long…

We knocked up a few different design ideas, and after a bit of trial and error, we managed to get a designer on Fiverr to create a complete design that we loved.

This would form the box that our bags would be sold in, and we like to think that the beautiful colors and fonts turn an ordinary generic product, into a retail brand customers want to buy!

Package Design

We made sure we paid careful attention to other retail brands, and studied the way they used color and fonts in their products.

As simple as this may sound, color and fonts are the key to effective branding as they create the “feel” of your product.

Brand Colors

9. SHIPPING: Getting Our Product to Amazon’s Warehouses

Once we had our package design created, we were able to send it over to our supplier to print and place our product in. 

Next up, we needed to find a way to get our product from China into Amazon's warehouses, so that we could start selling it.

We knew that air freight was out of the question, due to the high cost.

It would be a lot quicker, but it simply wasn’t on the cards as it would kill our profit margins. 

So we did the next best thing and looked for a shipping company to handle the logistics for us. 

Shippo

We found a high quality shipping company called Shippo. 

Once again, it was a nerve racking experience to part with a few thousand dollars and entrust our inventory with a company we knew little about.

Thankfully it worked out ok, and a few years later we’re still using the same company to handle all of our shipping for us.

10. IMAGES: Making Your Product “Pop”

While our inventory was making its way to the UK (it takes about 60 days from start to finish), we knew we had to get our Amazon listing ready so that once our stock arrived we could start selling it.

Next up, we needed some killer images to once again display our product in all its glory and make it stand out.

With competition levels being higher than ever, the days of throwing up just any images and hoping your product sells are long over.

Amazon shoppers have high expectations these days, and if your product images aren't up to scratch, you've got zero chance of making consistent sales.

Fiverr

We knew this, and once again took to Fiverr to find a graphic designer that could bring our boring, ordinary images to life.

After trying out a few different artists, we manged to find one that could deliver exactly what we were looking for.

Here's what we got back...

ROKEY Main Image
Rokey Image 2
ROKEY Image 3
ROKEY Image 4
ROKEY 5

It’s important to be aware that when it comes to selling on Amazon, it doesn’t matter how good your product is, or how good the packaging is, your customers' buying journey starts with the images of your product.

They can’t pick the product up with their hands like they can in a retail store, so they rely on your images to find out everything they need to about your product, before they buy it.

In other words...get your images right!

11. LISTING: Building a Listing that Converts

Once we were happy with the quality of our images, we then started creating an Amazon listing that would not only attract shoppers, but also turn them into buyers.

With our product only a week away from arriving at Amazon, we carefully crafted titles, and persuasive content that would highlight the benefits of our product. 

ROKEY Listing

We went out of our way to highlight the problems our product would solve, and the pain points they would address.

As our inventory started trickling into Amazon’s warehouses, we were ready to start selling.

Now all we needed was for people to buy it...

12. PRODUCT LAUNCH: Getting Sales Right out the Gate

It’s one thing listing a product to sell on Amazon, it’s another thing getting people to actually buy it.

Another huge challenge almost every new seller faces is getting eyeballs on their product. 

While there are many ranking factors when it comes to Amazon, their algorithm relies heavily on sales velocity.

Amazon Ranking Factors

This means that the number of units you sell will play a huge factor in where Amazon shows you listing on their page when someone does a keyword search.

Of course the problem is how do you get sales, if Amazon doesn't show your listing and shoppers can’t see your product?

The answer is paid traffic.

We knew we needed a way for potential buyers to view our product, and we realized that the only way we could achieve this consistently was by paying for traffic.

So with that in mind, we set about creating a Facebook advert that would announce our product to the world, at a discounted price of course. 

ROKEY Facebook Ad

This served 2 purposes.

Firstly, we’d hopefully see some sales start to trickle in which would improve where Amazon displayed our listing on their page.

Secondly, it would be a way to start collecting genuine customer reviews, a vital ingredient of a successful Amazon listing.

Amazon Reviews

Our Facebook advert targeted people who were interested in home organization (you can do that with Facebook).

We offered them a free box of our bags, in the hope that we’d then be able to request a review from them after they had purchased.

Now it’s worth pointing out that Amazon constantly moves the goalposts when it comes to how you interact with their shoppers.

They have incredibly strict Terms and Conditions, so it’s always worth making sure you’re up to speed before you start soliciting buyers for reviews.

Amazon TOS

This worked a treat for us.

Our Facebook ad started getting a solid stream of sales ticking in, even though they were all 100% off the listed price.

This meant that we had the opportunity to request a review, which many people seemed happy to do as they were so grateful for the free box we’d given them.

Once we had collected around 10-15 reviews, we then stopped running our free Facebook giveaway, and then switched on Amazon’s Pay Per Click advertising system (PPC).

As our listing was still buried deep on page 3, this was the best way we could drive highly quality, targeted traffic to it.

Essentially, we bought our way to the top of Amazon’s page 1.

Pretty cool, right?

Amazon PPC Ranking

Sure, but here’s the downside…

Every time someone clicked on our advert, it was costing us up to £2.50 per click.

Remember, not everyone that clicked on our advert actually bought our product.

So even when we were converting at 33% (not a bad conversion for Amazon), it was costing us £7.50 to get the sale (£2.50 x 3 clicks).

The problem was because we only had a few reviews, our launch price was only £14.99, which meant we were making a profit of less than £4 per unit.

Yikes! 

In other words, every sale was actually costing us £3.50 to make (£7.50 - £4)

PPC

13. SEEING THE BIG PICTURE: The Difference Between Winning and Losing

With each sale costing us more than we were actually making, it would have been easy to lose hope and even give up.

This is where you need to apply the entrepreneur mindset and see the big picture.

Growth Mindset

We knew that even though each sale was costing us more money than we were making, it was sending a positive signal to Amazon’s algorithm.

In other words, our sales velocity was increasing, which meant that so was our ranking.

Eventually, our listing climbed onto the first page of Amazon for our chosen keywords, which meant suddenly shoppers were finding our listing without clicking on our paid advert. 

In other words, it was free traffic!

As our free traffic increased, so did our sales, which meant our velocity kept going up and our ranking increased.

Amazon Sales

Free traffic led to sales that didn’t cost us any advertising which eventually mean that we started breaking even. 

14. AMAZON REVIEWS: The Key to a Successful Product Listing

As our sales started coming in more regularly, we started to get more reviews, but we knew we needed a solid review collection process.

At the end of the day, customer reviews will make or break an Amazon listing.

You could have the best product on the planet, but if it doesn’t have any reviews and is competing against products that have 1,000’s of reviews, then it has very little chance of succeeding until something changes.

Feedback Five

Knowing this, we decided to set up a Feedback Five campaign, and started to proactively ask our customers for a review after they made a purchase.

Once again, you’ll do well to remember that Amazon have very strict policies about how you contact their shoppers, and breaking these can put you in Amazon jail...which is not where you want to be as a new seller.

Once we’d set up our Feedback Five campaign, we started seeing a huge increase in customer reviews. 

To this day, we still use this tool and now have over 3,000 reviews...

Amazon Reviews

Remember how I mentioned we loved the way Zappos approached their customer service?

We went out of our way to carefully monitor any negative reviews that came in, and we made sure we addressed them wherever possible. 

The last thing we would ever want is an unhappy customer, which is why we did our best to make sure any unhappy customers were taken care of.

It’s worth noting that one of the frustrating things about Amazon customer reviews, is that you can’t always see which customer left them. 

When this happens, your hands are pretty much tied and it’s difficult to contact the reviewer, other than leave a comment on their review asking them to get in touch.

No Customer Details

So in some cases, we just had to put up with the 1 star review, but wherever possible we’d do our best to turn a negative review into a positive one, by following up with the customer and taking care of them.

15. STOCK: Supply Chain Challenges

There are two kinds of Amazon sellers. Those that have run out of stock, and those that are going to run out of stock.

But either way, it’s gonna happen.

With 90 day lead times, and fluctuating demand, maintaining your inventory stock levels is one of the trickiest parts of running an Amazon FBA business.

Amazon Stock

In our case, we soon found this out firsthand, as the 500 units we’d initially ordered all sold out before we had a chance for a new order to arrive in the UK. 

This meant that for a month we were closed for business.

Not only did this mean we lost potential income, but we also lost our listing ranking, as it slid off Amazon's page 1 to the wilderness of page 5.

Out of Stock

Of course once our new inventory arrived at Amazon and we could start selling again, our listing was buried where no one could find it.

This meant we had to turn expensive PPC adverts on again, which meant we were basically starting from scratch.

All that hard work essentially down the drain.

This theme continued a few times, with Amazon even losing our stock for 2 months at one stage.

We eventually managed to get them to pay us back for the lost stock, but that didn’t help us with out stock levels, and once again we ran out of stock for almost 50 days, meaning that our listing returned to the 5th page again, and we had to run PPC ads once we were back in stock.

Amazon Stock

Since then, we’ve managed to remain in stock as we now place 3,000 unit orders at a time, and then make sure we chase these orders with new ones so that our Supply Chain is maintained.

This requires working capital though, which isn’t always available when you’re first starting out.

Around 18 months after we first launched our product, we managed to have our first month in which we did $25,000 in sales.

This equated to selling around 1,200 units in a single month, which at the time was a record for us.

Success on Amazon

Now it goes without saying that we didn’t actually take home $25,000 ourselves. That was the sales generated for the month. 

The big thing was that we knew that if we could get one product to make $25,000 in a month, then there was no reason why we couldn’t do the same with a second...

16. GROWING OUR BRAND: Launching a Variety Pack

We knew that if we were going to have a real brand, then we’d need more than one product. 

We also knew if our first product had been successful, then there was no reason why our second couldn’t be as well.

So we decided to launch a Variety pack of ROKEY Vacuum Storage Bags. 

ROKEY Variety Pack

We knew that the demand was there, and we already had a supplier, packaging, a shipping supplier and a listing that we could attach our new variety pack to.

Rather than creating a totally unrelated product, it made a lot more sense to launch a complimentary product that we could use to grow our brand.

Amazon Parent Child

17. MORE EYEBALLS: Driving New Traffic to Our Listing

After launching 2 different products we decided it was time to investigate driving more traffic to our products.

Like I’ve already said, at the end of the day, the more eyeballs you can get on your product, the better. 

One of the cool reports you can run from Amazon Seller Central is the conversion report.

This lets you know how well your product is selling. 

Amazon Conversion Rate

From the screenshot above, you can see we were getting a steady 80-120 visitors to our Amazon listing every day, and between 40% - 55% of them were then going on to buy our product on some days.

This told us that people liked our product (almost 1 out of 2 people bought it), we just needed more people to see it. 

So with that in mind we brainstormed various ways that we could drive more traffic to our Amazon listing.

To start with, we built our own ROKEY website, and set it up to link through to our Amazon listing. 

ROKEY Website

We added an opt-in form to capture email addresses in exchange for a discount voucher. 

This would mean that we "owned" those customers addresses and could market to them again if we wanted to (which Amazon don’t allow on their platform)

Once our site was setup, we knew there were a ton of different ways we could drive traffic to it, which would then hopefully click through to our Amazon listing.

  • We could pay Influencers to promote our product.
  • We could run paid social media ads.
  • We could run Google Adwords.
  • We could rank our site in Google through Search Engine Optimization (SEO)
  • We could create YouTube videos.
  • We could build a mailing list to drive a steady stream of repeat visitors to our site.
Outside Traffic Sources

9 months later, and we’ve seen a steady increase in the number of visitors to our Amazon listing, and a steady increase in sales as a result. 

Most of this has come from ranking our site in Google, which has allowed targeted buyers to find us.

18. CRUNCHING THE NUMBERS: Some Fun Stats About our Business


157

Most units sold in a day.

2,534

Most units sold in a month.

2 Months

Longest period we were out of stock.

$63,231

Most revenue in a month.

$4,142

Most revenue in a day.

£184.32

Most spent on PPC advertising in a day.

19. REALITY CHECK: The Truth About Selling on Amazon

OK, so after reading the ups and downs of this case study, you might be wondering “Is Amazon FBA worth it?”

Here's the truth...

Honestly, I don’t think so!

Hear me out…

Amazon No

Yea, we’ve managed to make some decent money selling on Amazon’s platform, but the honest truth is that the business model is seriously flawed. 

First up, you’re gambling a small fortune on inventory you don’t even know will sell. 

You’ll need a lot more than you think due to the 90 day lead time between orders, otherwise you’re almost certainly gonna run out of stock, which is like a death sentence on Amazon.

One of the biggest things I’ve realized about my Amazon business is just how little control I have over it.

It dawned on me that I can pay my suppliers on time, handle customer complaints on time, pay my tax on time, but there are dozens of factors that are totally out of my control which could completely ruin my business. 

What if my supplier produces a faulty batch of bags that all get returned by my customers?

What if Amazon loses my inventory? (they have before)

Amazon Inventory Report

What if 100's of new competitors enter my category this year, and all drop their price by $5? 

Every day, thousands of new Chinese sellers are selling their products on Amazon and are able to do it at much lower prices, because they are cutting out the middleman (you and me).

Amazon Sellers

This means one thing...Price Wars!

It’s become a total race to the bottom with the average price across our category dropping every year.

Of course at the same time, our running costs such as shipping, warehouse fees etc. are increasing which means our profit margins are getting smaller and smaller every year.

Lastly, what if I woke up one morning and Amazon had suspended my selling account?

I’ve read horror stories about sellers making $100K a month, only to have their accounts suspended for reasons they can't explain!

Amazon Suspended

All in all, the longer I ran this business, the more clear it became that I’d never be able to rest easy knowing that my survival depended on a business I had no control over.

I knew that I had to find a better way...

20. A BETTER MODEL: My #1 Online Business Pick

The good news is that after doing months of research, I managed to find a business model that now gives me exactly what I want 

This is local lead generation, and I've now managed to get my business making $50K+ a month.

With local lead generation, you're building small local service websites and then ranking them in Google.

Once they rank, you drop a call tracking number on them, and redirect the number to a local business owner that's looking for more business.

Here's how it works...

Let's say you make a tree service site for your local area. 

Once it ranks in Google, you then divert the phone number on the website to a local tree service company in your area. 

As people start to find your site and call the number, they are directed to the tree company, who will take their calls and book in the jobs.

The company then pay you a fee for sending them the leads.

This could be a 10% commission on any job they close, or a flat fee per lead (maybe $20 each), or a fixed fee each month (perhaps $750).

The beauty of this model is that there is no limit to how many websites you can build.
You could have tree service sites for different areas, carpet cleaning sites, plumbers, electricians etc. 

Almost any service based business you can think of.

Imagine you had 10 of these sites paying you $750 a month?

Imagine you had 100 of them?

Do you see the potential here?

Why Local Lead Gen is Better Than Amazon FBA

Amazon FBA

  • Expensive to get started ($10K+)
  • Risky - Have to buy inventory.
  • Low profit margins (20% - 25%)
  • No control over the business model.
  • Competitive and over saturated.
  • Difficult and expensive to scale.

Lead Gen

  • Cheap to get started (few hundred bucks).
  • Low risk - no inventory to buy.
  • High profit margins (90% - 95%)
  • Full control - You always own the website.
  • Zero competition.
  • Easy and cheap to scale.

21. CONCLUSION

I hope you enjoyed reading this Amazon FBA Case Study. 

I loved putting it together, and I hope you got some value from it.

Most of all though, I hope it opened your eyes to the dark side of Amazon FBA, and that it made you realize that selling on Amazon is not for the faint hearted!

Sure, you can still make money starting an Amazon FBA business, but the question is "Why even start?"

With all the risk, uncertainty, and lack of control, I would never advise anyone to start an Amazon FBA business now.

As I mentioned above, lead generation is a much better business model, and I'm all in.

If you want to find out more about how I make $50K+ a month with lead gen, click here to take a look.

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Ippei Kanehara
Founder/CEO

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

His #1 online business recommendation in 2022, is to build your own lead generation business.

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