I Feel Your Amazon FBA Pain And Frustration

I’m feeling your pain and frustration. Every day I go through ups/downs with this Amazon business…

I know I’m still new enough at it that everything just will not be smooth sailing.

When you read someone say “it’s a numbers game” – doesn’t that just seem like a Non-Answer? Ha!

I think it is a numbers game – because business is really all about numbers. (and some gut instinct).

One thing that helps “me” is that I’ve been a “retail seller” all my life. Literally! My parents were “arbitrage” selling before I could walk. I learned the art of the deal long before I knew what it meant.

Now… I haven’t always been “successful” at retail selling – don’t get me wrong. No one has a perfect score… everyone has made mistakes. Not everyone will own up to them… but – Trust Me – Not one seller on Amazon hasn’t slapped their head for some bone-head stupid mistake. Each mistake is a painful lesson (some more painful in the wallet than others).

You just know this Amazon Retail Arbitrage works… you just haven’t figured out when/how yet. I’m happy to help those that are believers! 🙂

One thing you must understand is that Amazon is a huge (HUGE) mall of products. We are all just little fish in a great big ocean. We can never become “The Big Fish” – we all just want to be in business and making money with exactly the right products – in the right place – at the right time – at the right price.

Now – you see why we all say it comes down to “numbers”.  How do we do exactly that?

First of all… you must understand that $1000 of product purchases will not get you to retirement wages. I had this discussion with my hubby just last week when he saw the credit card bill.

You can’t (no one can) sell all your products in a certain period of time – for a certain profit margin. I just don’t believe it’s possible! You will have some products that sell right away – some that sell within a month – some that sell in a year – some that I’m not sure will ever sell.

Inventory is where a retail store has it’s money tied up! (I always look at this business as a Retail Store because I can get my head around it).

To “untie” money- sales must be made. (Not necessarily profitable sales – but sales).  I’ve untied some of my money by selling at break even or barely profitable prices (and some are even negative prices).

I really dislike marking product prices down… but I know it’s necessary in some cases (and in some cases it’s because I loose patience or just plain used stupid pricing).

When I’ve marked down my prices so that many products are now in the ‘buy box’ for low sales rank products… the sales just start to fly off the shelves. This is great to see all those orders… but I also know that I’m not making much “profit” on each of those orders. Grrrr… catch 22.

You see “retail stores” do this all the time. They need to open up cash flow – they need room in the store for new product – they need to get people in the door.  They can put themselves out of business just by trying to get people in the door. (And we can buy these low priced products to resell!)

This is one of the reasons that I (and others) say that the profit is made in the sourcing – not in the sale. We have to sell to “see” the profit… but if we didn’t buy the right products at the right price and list them at the right time – we won’t see the profit we need to survive.

Which would I rather have? Because I can’t choose option C (lot’s of sales with high profit) – I must figure out a balance between option A and B.

A – lot’s of sales without a ton of profit for each sale
B – little sales “With” a large profit (at least 3x COG).

Do you see where the “numbers game” is coming into play?

Lot’s of people in the forums talk about “selling” a lot of products … but what we don’t always know is what profit they are making on each product.

I read about someone selling a toy for not much profit. He was happy because he “turned” 6 toys into money quickly. But… it was only about $5 profit on a $30+ toy.

I have felt the need to do exactly that on some products. Turn inventory into money. I might make only $5 after the COG and Amazon fees, shipping etc…  selling 6 products at $5 profit is still money in my pocket. But… how much time and effort did it take to make that profit? I can’t afford to spend an hour or more to make $35.  If I only made $35 an hour for my time we would be working 24/7 trying to make a living. (Uncle Sam is going to take his bite out of that $35 eventually).

Then we all all need to include into the picture all the “business” time (this is not the scouting for products time/expense) – but the time it takes to list, ship and do all the Amazon paperwork (I call it that) online. Amazon has the ability to frustrate me with so many things I need to “watch” – like loosing inventory, not listing inventory (item not available) etc. This “paperwork” all takes time – time is money.

Then – if I spend a bunch of time going through my inventory – repricing. That’s time – time is money.

We all need to be sourcing (shopping)… Plus – we need to research. What are good brands? What are the exciting new things that people want to buy? What is going to sell well all year – and what is going to just sell at holiday time?

Research takes time – time is money… and research will not make you money as you are researching… however it will make you money in the long run.

At the end of July 2011 – I was still in the negative on Amazon (owed them more than I made).   My first 2 months were just awful. And most would have given up!

I didn’t give up. I couldn’t (in my head). I’d already been bold enough to tell the world that this was my new business and I was going to help hubby retire so he could help me grow this business.

I had to figure out how to make it work!

Don’t get me wrong. I’ve seen others make it work – so I knew I could as well. I’m was still having growing pains. I am NOT the expert here.

I can proudly say that it does work. I made a nice tidy profit over the last 6 months… and hubby is convinced now that this type of business works. I didn’t make as Much Profit as I would have liked… but I had grand plans and some of them were real stinkers. I learned so much about what not to do… and kept detailed track of what worked and what didn’t.

Experience will help me make better buying choices from now on.

Let me share one more little tid-bit:

Once you are in the Black – and everyone is paid off… you will relax and enjoy the ride! I am so much more relaxed about this business now that all the credit cards are paid off! I can make smarter decisions now that I have cash to spend on inventory that was made from my Amazon profits.

The really cool thing is this… I still have inventory to sell! It’s all paid for and sitting on Amazon waiting for buyers. AND… I also have some inventory waiting to be sent in (already paid for in full).  I’m pleased as punch about the current situation around our little home business.

Remember – I have lot’s of new ideas to share with you in the next weeks, months… heck – I have a whole years worth of ideas!

Stay tuned….