The FBA Chronicles: A look at the Year so Far with Amazon FBA
Since I’m trying to get caught up and/or recreate starting points for all my content it makes sense to give a full update on how everything is going with Amazon FBA. I’m going to take a look at some of numbers, some of the experiences, what’s working and what’s not, and of course what my plans are for the future. So lets get started.
What are the numbers?
Here is a list of my sales for each month (omitting November):
May = $0
June = $512.84
July = $816.53
August = $2,816.97
September = $2,136.79
October = $1,587.78
Of course, sales are not profits. If you read my last article you would know that I’m actually losing money. Here are my profits for each month.
May = $-42.56
June = $90.80
July = $-236.54
August = $33.49
September = $-23.34
October = $-603.96
I started off losing money in May from my initial investment, turned a profit in June as I made my first sales and then lost a lot of money in July as I ramped up my purchasing ahead of my trip to Brazil. I made money in August, mostly because my computer broke halfway through my trip so I wasn’t able to continue purchasing inventory. September was a small loss as the first half was spent getting back into the swing of things and October was a huge loss as I really sped up my inventory purchasing and doubled my VA’s hours.
There’s a lot more too it than that though so I want to get into the details here and examine the good and the bad.
The Good News: It’s not as bad as it seems
Things are not as bad as they may first appear. For one, I rarely lose money on anything I sell. It’s only after a product has been in my inventory for close to 3 months that I really drop the price down to below profitable prices. If I remember correctly, I have only done this with 3 different products and I may have lost a total of $10 combined. I do not carry a lot of any one product as breadth beats depth this early in the game. I have, unfortunately, had to write off products due to mistakes or damage. I’ll go into that later.
Also, one of things that these numbers do not account for is in-stock inventory. As I mentioned in my last post, I have a lot of inventory that is still ready to sell and with the high end of Q4 approaching it has all started to fly out the door. As of this writing I have $1,782.255 of inventory with a current retail value of $4,969.72. While having inventory doesn’t necessarily mean it will sell, or sell for a profit it is still promising.
The Bad News: High Expenses
With all that said my expenses are still too high for my current sales volume which has caused me to lose money.
My total expenses for up until the end of October are:
Cost of Goods Sold = $3,602.90
Amazon Commission = $1,374.76
FBA Transaction Fees = $1,801.09
FBA Inventory and Inbound transfer Fee = $571.88
Other Expenses = $3,004.97
Everything but the Other expenses are automatic. Cost of Goods Sold and the Amazon FBA fees and services are inescapable. It’s the other expenses that are killing me.
That’s not to say they are all bad as some are necessary for me personally. For example, I would have no interest in doing this if I had to touch all the inventory so in that sense all the expenses associated with my Prep company is necessary. That comes too $797.55.
There is also the original packaging costs of when I was getting started with FBA (I’ve still got to sell that lamp…). That came to $92.61 and those fees won’t be coming back.
Software is another thing that I can’t really work without. Well, I guess I could have in the very begining (in fact, I did) but at this stage the software is worth the time as long as I put the right systems in placce. The software that I pay/have paid for is Inventory Lab($39.99), OA XRAY($99.99) and Tactical Arbitrage($99.99). These are all monthly subscriptions and combined have added up to $793.95. That includes two months of OA XRAY that I did not use as I was switching over to Tactical Arbitrage.
There is one final thing that makes a big impact, my virtual assistant. So far I have paid my virtual assistant $1,331.87. That’s a lot of money, most of which has been spent on training and none of which has really seen a return. It’s definitely been a learning experience though and things are starting to get in order.
Going away to Brazil after only working together for a month really hurt progress. I also doubled the hours starting in October which has significantly increased costs. This is part of the business that I really want to get working though as having someone being able to do all the sourcing effectively would take a major burden off of me and I could focus on other things. I may have jumped into that a bit early though as I haven’t scaled fast enough where I don’t have enough time to source.
To recap the other expenses, here are the totals:
Prep Company = $797.55
First packaging materials = $92.61
Software = $793.95
Virtual Assistant = $1331.87
I’ve tried a lot of new things over this time period. I’ve dived into selling shoes and glass products. I sold a sweatshirt for $125 and tried my first oversize product. I’ve also been trying to test out different kinds of products to see how they work, mostly in the kitchen and home categories.
I’ve also run into trouble. I posted a product on the wrong ASIN and the manufacturer was not happy although luckily I resolved it quickly. I also got a email from a law firm about not being an authorized reseller of some kitchen products so now they’re listed as “used-like new.” Naturally, I’ve also made the mistake of buying 25 t-shirts that turned out to be extra-larges and now they won’t sell and I also have those bike racing shirts from June…
Not all of my products even make it too Amazon. I had to destroy a product when I found out I couldn’t sell it. There were 4 piggy banks that turned out to be seramic and broke on the way to the warehouse and of course there’s the 4 glass products that also broke. All of these went into the trash because it cost less than shipping them back to me and trying to sell them (they were all low cost items). I guess these are the growing pains 😀
I’ve also got 8 positive reviews on my seller profile now!!!
What is in the Future for Amazon FBA?
In the future I’ll be diving into a bunch of new things surrounding Amazon FBA. I’m working on getting ungated in the “big 3,” Grocery, health & beauty and health & personal care. This would open up a lot of possibilities on high profitability items to sell as it’s difficult to get into these categories so there is less competition and grocery in particular is a newer category that people are still figuring out.
I’m also doing a much more in-depth look through of private label and will have a product picked out by the end of the year. I’ve also done all I can for planning to sell wholesale which I will do once private labeling is up and running. Other than that it’s just seeing what Q4 is like, figuring out how to get more organized and consistent in purchasing inventory and, of course, turn a profit 😀
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