Currently set to Index
Currently set to Follow

Is Amazon FBA Dead? (Why People Are Quitting)

January 28, 2022

Amazon FBA Dead

Hey, what's up!

So before I got started with Amazon FBA, I had some pretty decent success already with a lead generation business I had started.

Then in 2017, I spent a considerable amount of time mastering the Amazon FBA business.

The result was that I created a 6 figure business with FBA, and I learned a lot about the model.

...But ultimately, I decided that lead generation was a much better vehicle for me, and I'm now making a solid $50K+ a month with this business.

This article is the rundown of the differences between the two business models, and it will show you precisely why I like lead generation more than Amazon FBA these days.

Allow me to reintroduce myself... My name is Ippei...

What is Local Lead Generation?

Local lead generation is the process of generating leads for local small businesses using my own websites (digital properties) that I rank at the top of Google.

I have more control because I don't have to rely on another company like Amazon.com & I'm dealing with far less competition because it's in these local cities instead of of these global suppliers to compete with.

Also lead generation is in such high demand because virtually every small business needs it.

What is Amazon FBA?

Creating your very own physical product business on Amazon.com without having to create the product or carry inventory, you simply pick out the supplier from overseas and then utilize Amazon's fulfillment centers (warehouses).

Your job is to find niches with weak competition and creating a product branding that's more attractive than others and creating some sort of bonus such as coupling a blender product with a recipe book to add a bit more value than the competition.

Much heavier initial investment is required to get things started and tougher competition but if you create a successful brand, you can reap significant profits.


Saturation & Competition

Amazon FBA

  • Competing with suppliers & sellers across the world.
  • Many niches over saturated with big name brands already.
  • Only around 6,000 different product niches in Amazon FBA.

Lead Generation

  • Only competing with local companies.
  • Most niches have very low competition.
  • Over 50 niches and 42,000 zip codes in the US alone. Each area acts like it's own market, which means 50 niches x 42,000 areas = 2.1m opportunities.

Everything changes when you go local.

Lead Generation provides a much smoother and easier path to victory (your first 6 figure income online) because by going local it cuts out the big whales that exist in the global eCommerce or Internet Marketing space.

Google Map Rankings

I'm not saying that you should be afraid of some competition.

In-fact, in business you should always look to have superior skills so you can compete with anybody, but with that being said there is something to the fact that a newbie that's still working a 9 to 5 job has limited resources & time.

So it's always wise to chose your battles carefully!

Going up against some of the eCommerce giants that exist on Amazon FBA is like an amateur boxer getting into a ring with a prime Mike Tyson.

With only 6,000 niches to select from on Amazon, and millions of sellers, you can be sure it's crowded.

With local lead generation, there are more than 50 different service niches to select from and over 40,000 zip codes in the US alone. This equates to around 2.1m different markets for you to go into, because every niche and area is its own market.

Zip Codes

Competition / Market Saturation is the main reason most people will fail to create their laptop lifestyle, but with local lead generation, these two factors just aren't a problem.

This is one of the main reasons why I chose lead generation over Amazon FBA as my primary focus.


How Long Does it Take to Make Money?

Amazon FBA

  • Thorough product niche research can take 1 month.
  • Ordering samples from overseas suppliers to do quality check can take up to 1-2 months.
  • Approximately 4-5 months before product launch because it can take 3 months to secure your inventory.
  • 6+ months to rank the new product listing (which require real customer reviews).
  • Takes around 8-12 months before net positive income.

Lead Generation

  • Takes about 6 hours to build your first lead generation site.
  • 3-6 months to rank these sites to the 1st Page of Google (Building back-links which is so much easier to manipulate than getting customer reviews).
  • Takes around 3-6 months before net positive income.

Both of these businesses takes some time to build. It doesn't happen over night. In fact, I would be weary of businesses that promises profits over night because if its that easy, everyone would begin doing it and that creates saturation fast.

Therefore, I like a business that has some barriers of entry like it taking some time & effort to build because that keeps a lot of the tire kickers out.

With that said, for a beginner, I'd want them to be able to taste some level of success at around 6 months because its really hard to stay motivated if it goes beyond that with no signs of progress.

Amazon Inventory

The challenge with Amazon FBA is that there's a lot more steps involved with launching your first product listing, you can't just create fake listings to test markets, you need the actual inventory ready to ship.

From ordering samples & picking your supplier, creating your packaging, overseas packing slips, ordering & stocking inventory...combined with dealing with the unavoidable 4-6 weeks overseas shipping times. 

Supply Chain

After doing all of that, if your product still isn't a success it can be a real nightmare, because time is the one thing you can NEVER get back.

This is why real pros launch 3-4 products at a time but you need around $10-15K of investment for each product so its not the most feasible approach for a beginner.

Lead gen is much faster turn-around time to get results and its not that expensive to build & rank these simple sites so you can test out many different niches / markets much faster.


What On-going Work is Involved

Is it Passive Income?

Amazon FBA

  • Initially couple hours every 2-3 days to manage the PPC (Pay-per-click) campaigns to acquire reviews that boost your listing's organic rankings.
  • Once the listing ranks, you don't have to manage PPC campaigns anymore.
  • 1-2 hours every few days to watch over inventory levels, sales & profits.
  • Ordering / restocking inventory once a month.

Lead Generation

  • Initially couple hours per week for 3-6 months to rank the site.
  • Once the site ranks, you can pretty much leave it alone, you just collect monthly pay checks.
  • No need for providing clients with monthly reports because our call tracking software automatically lets them know the volume of leads they're getting.
  • Occasional tweaking of the website.

Both of these businesses provide passive income once the listing or website ranks on the first page of the organic search results (which equals free traffic).

Being able to generate free traffic is the key to passive income on the internet.

This is why I place Amazon FBA my #2 behind lead generation.

Sure, I still prefer Amazon FBA over Dropshipping or running a Face Book ad agency, but overall, local lead generation is still significantly easier to get to the first page of search because you're competing against fewer people. 

This means it's easier to get to a passive income state than it is with Amazon FBA.

I have lead generation sites from 2014 still making passive income today, sites I haven't touched in years.

Tree Site

With Amazon FBA, you still have to manage inventory and keep a close eye out for new competition.

With local lead gen, not so much, because again there are so many cities & niches (100x times more markets than Amazon FBA).

Also most people don't know how to properly rank in Google, so this is why my sites stay ranking & banking long-term.


How Much Initial Investment is Required?

Amazon FBA

  • Long shipping times means you need to order more stock to get started.
  • All in all, you're looking at $10K minimum for inventory.
  • On top of that, you'll need money for warehouse fees, PPC, returns, promotions etc.

Lead Generation

  • Each site costs less than $20 a month to have built.
  • I got started with a few hundred bucks.
  • Easy to scale over and over again due to low costs. 
  • 90% profit margins means you can use your earnings to fund your business easily.

OK, so this is a big one for me.

As you can see, there's a pretty significant difference in initial investment to get these businesses off the ground.

Capital Investment

Although a successful Amazon FBA business may generate more income than 1 lead generation site, its kinda nice to be able to start multiple projects at once, because each project don't cost an arm & a leg to get going (less than $20 a month). 

The main reason why Amazon FBA has become so expensive to start is because unlike in 2014-2016 where there was still so many niches with weak competition, today you do have to run some PPC campaigns to get some momentum going.

Amazon place a lot emphasis on sales velocity in order to rank well, so PPC allows you to start driving a steady stream of customers to your product, and then generate sales (hopefully).

The problem though is that it is really expensive.

I've paid more than $5 per click on some occasions!

ACOS

Customer reviews are the main driving force to rank a new product listing, so you do have to spend $$$ on paid traffic so you can start getting some sales for the review, even if it means you're breaking even or losing money.


What's the Earning Potential?

Amazon FBA

  • What you can make with 1 product hugely varies with Amazon FBA with many different factors including time of the year.
  • Some months you might break even, $2K-$3K per month in profit is considered average.
  • $10-$15K per month in profit is considered a home-run..

Lead Generation

  • $750-$2000 per month per lead generation site.
  • Because each site is such low maintenance, you can easily have 100 lead gen sites without it causing too much issues on keeping them all in tip-top condition.
  • A lot of students get to $10K per month in their first year.
  • As you begin to build a team, you can stack on another $10K per month in additional revenue every 6-8 months.
  • Not so much ceiling to your earning potential because its all passive income, there's no inventory to deal with. Ceiling is only determined by your ambition.

I do fully believe the lead generation offers higher earning potential than Amazon FBA in general, unless you create some exceptional brand on Amazon which is partly luck. An exceptional brand can be sold for an exceptional pay-day. 

I do feel that Amazon FBA income is trending in the wrong direction as of late, for example in 2018 Amazon increased their fees once again and there's been an explosion of new FBA sellers that continue to drive the prices down.

Many of these sellers are suppliers from China, who are now selling their own products on Amazon as well.

Amazon Sellers

With Amazon FBA profit margins are around 10-20% so you really have to pay attention to the (Net Profit) not (Revenue).


FAQ

Q: If local lead gen is so much better than Amazon FBA, why isn't everyone doing it?

A: I do believe too often people get into the internet marketing space not to make a difference but to make $$$ so they don't have to work again.

They want that funnel, some hacks, anything other than putting the work in and building a REAL business. They also fall in love with the notion of being able to hide behind a computer screen, click 2 buttons and get rich.

With local lead gen, you actually have to get real skills that solves big problems and go out into the world and form relationships with real people, real business owners. 

It doesn't mean you have to be some crazy extrovert, especially when you can send people free leads, you don't really even need to do much selling because the results speak for themselves. But you can't be afraid to push yourself outside your comfort zone at times. 

I personally consider myself an introvert, yet I've been able to build this lead gen biz to great heights and today I actually LOVE the fact that I'm in a business that allows me to make a big difference in people's lives.

Its more rewarding when I'm able to be more personable with my clients versus selling to random people on Amazon.com that I never talk to.

So many people that are looking for money making opportunities online are seeking the easy & fast.

Business Skills

 I'm here to tell you that easy & fast is overrated. You want a business that's got some high-level skills involved, that takes some time to build because that's what creates that barrier of entry to keep that industry from getting saturated.

Q: Clearly you're promoting a local lead generation coaching program, so your opinions are biased?

A: I'm not as loyal to 1 business model as people might think. This is why in 2017, I pretty much put my lead gen biz to a stand-still so I can really master the eCom business including Shopify dropshipping and Amazon FBA. And for the record I made both models successful and I like Amazon FBA better than Shopify.

I'm very ambitious with big goals, I'm more interested in constantly researching for the best vehicle that's gonna get me to my goals the fastest.

I could have easily promoted an Amazon FBA coaching program on this blog if I felt that it was better than local lead gen. I would be busy launching various Amazon FBA businesses right now, not more lead gen sites. 

What I discovered is that selling digital products simply outperforms selling physical products long-term.

Amazon No

 Lead generation is all digital which is why its great & I still do it today. So is selling courses, which is why so many eCom guys eventually transition to selling courses as their main source of income.

Q: What if I'm not good at sales, can I still do lead generation?

A: Yes absolutely, we teach students results in advance method to close deals which means we build & rank the websites and get the leads coming in first, then we send local businesses free leads for few days so at that point, they already know you got what they need: leads.

No Cold Calling

 

They don't care where you live, how old you are, or your background. They will be asking you how they can keep working with you and keep getting those leads. Its almost like they're the ones selling themselves to you.

Q: What do you see is the biggest issue with Amazon FBA 

A: Every business has pros & cons and challenging aspects to it, and so I don't like to go on-on complaining about trivial things that comes as part of being an entrepreneur, but I will say that the biggest complaint I have about Amazon FBA is the fact that your business is not 100% your control.

At the end of the day, you're a middle-man that's allowed to make money on Amazon's traffic & platform. If Amazon decides to increase their fees (like they did in 2018), there's nothing you can do about it.

Amazon Storage fees

If Amazon decides to suspend your account (which happens more often than you think) your income can come to a halt. You can't collect emails of your customers as easily as you would if it was your own store. You are constantly being compared to other companies & their prices right on your product page, so the competition is the most fierce out of any eCom platforms out there.

Amazon FBA is a great opportunity to start your eCom journey because you can leverage their traffic, however because of the lack of control described above, it would be smart to eventually work on creating your own business that you own 100% of.


Get Started with Lead Generation Today

What's nice about lead generation is that compared to Amazon FBA it's not as daunting of a task to get things rolling.

You can get a lead-gen site up and running in 4-5 hours and begin the ranking process.

You can be generating phone calls & leads in 2-3 months.

Local Lead Generation Online Property

I still remember generating my first lead.

And then getting paid for it.

There's something about that first dollar you make online, you realize its possible and now you're more motivated than ever before to go 120% on the business model.

Even if you want to pursue Amazon FBA, the lead generation business is so passive once its set up, its worth giving it a try imo.

Click here to get started with lead generation.

Follow Me
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.

Share your experience with us.

Use below if you want to remain anonymous.

Leave a Reply

Your email address will not be published.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}