Amazon FBA Income Report for October 31, 2014
Update Jan 2016: I’ve been selling on Amazon for nearly two years. All new posts related to Amazon selling and private labeling are on my new site PrivateLabelPreneur.com.
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My last Amazon FBA income report was for July 31, 2014. Three months have passed and so it’s time to give you an update. As much as I’d like to tell you that I’m raking in the dough, I’m not…yet.
After six months I’ve made some made major progress on figuring things out and I still believe there is a business to be made out of selling via Amazon using their Fulfillment by Amazon (FBA) service. I’ll explain but first we’ll touch on the financial picture as it currently stands.
So far I’ve spent $3,510.85 on inventory, $702.35 on tools and supplies, and $325.23 on marketing costs; that comes to $4,538.43 in out-of-pocket costs.
Amazon has paid me $1,966.75 so that leaves me $2,771.68 in the hole. Click here for a detailed listing of my expenses and income.
Let me point out a few things about this chart that will help explain why I’m so badly in the hole. I:
- Changed strategy,
- Made a large purchase, and
- Began Marketing
A Strategy Change
Up until mid September all of my product was being sourced from various brick-and-mortar and online retail stores. I learned a lot from doing that, but decided it wasn’t my cup of tea. I’ll explain more in a future post.
If I had continued on the same path and not made a large inventory purchase in September, I would have pretty much broken even by the end of the month. Notice that by the end of August I was only down $421.35. In September, I received $436.50 in payments from Amazon.
However, I felt that having my own product and developing a brand around that product would better suit my lifestyle and interests. When I set up my Amazon Seller account and posted this video, I said that I was going to keep my seller name a secret so that I could report accurate numbers.
But now that I’m changing strategies, I’ll let you see what I’m selling. Look for upcoming posts where I’ll explain which of these items are good sellers, and why, versus those that, well….suck.
You can view my Amazon inventory here: My Beer Cozy Amazon Inventory.
A Big Purchase in September
Once I decided to pursue creating my own product and brand, I mapped out the criteria for what I wanted, did some research and came up with my product. I’ll provide more detail on exactly what I did and why in a future post.
I made the first order in mid September, which cost me $1,677.44. Here’s the product (click the cans to see the complete Amazon listing):
I realize that this product doesn’t seem to line up with the overall theme of Escaping Dodge. On one hand, it seems like I’m encouraging people to drink and on the other it might feel like I’m encouraging frivolous spending.
Here are some of the reasons why I don’t see it that way:
- I have no problem with responsible drinking. Having fun with friends and family is important to me. We camp, have BBQs and go on trips. Often a nice beer is involved. I hate holding a wet can/bottle and I don’t drink fast enough for the beer to stay cold. A cozy solves both those problems for me and when they have a silly saying, it makes it more fun and I can easily find which beer is mine. Nice.
- I don’t believe in never spending money on fun things. I do, however, promote working toward living debt free and spending in alignment with your values.
- A product like this is a great gift to give. Most of us enjoy buying a gift for someone for a birthday, holiday or a house warming gift. This doesn’t break the bank but lets the person know you thought of them.
Began Marketing Strategies
In October I added a Marketing column to my cash flow report. I spent $230 for a professional photographer to make the images for my cozies because I believe that beautiful images sell.
I would never have paid for professional images for a product I couldn’t replenish so for those products I took the images myself or used existing listings. For the record, I think it’s always better to write your own listing whenever possible!
You can most likely find a less expensive company but this one was close and given it was my first time using a professional service, I wanted to meet them in person.
Some of my marketing expenses come from ads I created using Amazon’s Ad Campaigns and Google AdWords. I did have some success with Amazon’s ads and they are far less expensive than Google Adwords. I don’t much care for Google Adwords so I’m going to try Bing/Yahoo next. Stay tuned!
The remainder of the expenses came from promotional give aways to help generate reviews on my cozy listing. Reviews are really important because they help move the listing up on search results.
Profitability: Product vs Cash Flow
I will post about the profitability of individual products, but I feel there are too many people out there who talk about their success at the product level. That’s too narrow of a focus from my viewpoint and I fear that it misleads readers into thinking that this is easy or a slam dunk. It’s not.
Besides making sure your products are profitable, you must look at the big picture and keep in mind whether you are in the black or red overall. To me, this is similar to tracking your spending and tracking your net worth. Both are important!
Please Tell Me What You’re Thinking!
I’d love to hear from you. What are your thoughts on being a seller on Amazon? If you’ve tried it, what recommendations or insights can you share?
If you’ve been considering giving it a try, what are you learning from my experience? What else would you like me to post about this test?
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Affiliate Disclosure: Please note that some of the links in this post are affiliate links, and at no additional cost to you, I will earn a small commission if you decide to make a purchase. You can learn more about this by reading my Affiliate Income Disclosure page, which includes a list of companies whose programs I participate in.