Choosing The Amazon FBA Path

I was at a very critical point in my life. I was focusing on something without realizing how it would affect my future. This was a milestone that I didn’t realize I was reaching at the time. I was setting goals and determining the most effective steps to get there. This would eventually become a daily focus of mine, still unaware of what the Amazon FBA process was.

I would start thinking about another problem. I was still wasting time waiting for inventory to come to me. Once again, I found myself on YouTube, researching strategies. I needed to figure out an easier way to flip items for profit. Luckily, eBay can figure out how much I could make after estimating what the item would sell for.

I used eBay’s “Sold” function to gauge the market for items I could buy while still leaving myself with a profit margin after shipping them to a customer.

I ended up fully immersed in learning about shipping costs and basic customer service. In order to gain specialized knowledge on something, I would delve into specific categories, like men’s dress shirts. I needed to know what to look for without having to search online for information during the purchase.

Selling vinyl records on Amazon

I figured out another platform like eBay to sell some records I found at yard sales on a platform called Amazon. It had listings for most of the vinyl records I had once picked up from Craigslist’s free section. I could immediately list the records on Amazon by using the site “Discogs.” All I had to do was look up the records’ 6-digit code to find a UPC or title. I didn’t have to take any photos or write a description using Amazon.

Even better, listings were only $1 extra on top of their regular fees once the item sold. I used Amazon sparingly since I was selling used items. Amazon customers wanted to buy new stuff unless it was some obscure record, which was the majority of my inventory. I could make $7, $12, and sometimes $30 off the records a guy was giving away.

I was now watching videos on YouTube about Amazon and basic personal finance and budgeting in addition to all the regular content on eBay, shipping, and the likes of the legalities of getting caught in a GameStop dumpster.

Learning the Amazon FBA strategy

I found myself constantly following all these rabbit trails, trying to learn about words I had never heard before. While watching YouTube videos, I would come across terminology that piqued my interest. In the world of e-commerce and retail arbitrage, I could find clearance or discounted items in retail stores and sell them in new condition on eBay or Amazon.

I shipped all of these products directly to customers for a few months before deciding to try Fulfillment by Amazon.

It wasn’t until later that I understood how many individuals preferred to buy through FBA in order to have really rapid shipping. Then, I noticed purchasers were not purchasing directly from merchants in case the item they bought was defective. This, along with comprehending what a “buy box” is and its meaning, came later. Amazon was merely an option to eBay that I got curious about and wanted to learn more about.

Return on investment

ROI is a term used in calculating “Return on Investment,” and knowing this made me come up with a great plan. By tracking my expenses, I could figure out how much money I needed based on how much I previously made. I could estimate what I needed to do to afford to pay for my basic expenses.

After I wrote it all out, I started realizing how little I actually needed to spend. More importantly, I had to limit how much I spent on the main expenses like fast food. If I was able to cut those costs, I would have more money for inventory. I realized that since I was effectively the boss, I could decide when or if I wanted to work. I came up with the idea of creating actionable goals to keep myself accountable and on track with forward progress.

You can access your earnings within a few minutes if something sells on eBay. This helped me focus on weekly gross sales targets to work toward. It would take a week for my products to be posted for sale once they were shipped to Amazon. Once it sold, I’d be paid biweekly, allowing me to set monthly targets while I transitioned away from eBay.

A FBA basic formula

My basic formula was to create an arbitrary weekly or monthly gross sales goal and calculate an average ROI. I could determine how many items I would have to buy, list, sell, and ship to accomplish my goal. Finding inventory, and spending time figuring out how to incorporate a business had become important tasks. Picking up shipping supplies, and finding new suppliers were all written down on a spreadsheet as a task list. I would basically map out what I thought I needed to do to accomplish that week’s or month’s goal.

Here’s the interesting part of what is otherwise pretty boring, I would not always reach my goal. Sometimes I would do everything on the list, not reach my goal, and would need to figure out why. I refer to this as “figuring out what was broken…” Were my calculations wrong? Was I underestimating how long something would take to complete? Did I not have enough access to working capital? I figured out what was “broken,” and then I learned, fixed, and solved every problem that got in my way.

Well, I was bitten, I got things wrong and find myself in a position where I had less working capital than I did the previous month. I went through difficult and challenging problems, but I got through them and learned from them. Finally, I figured out what I did wrong and tried to limit my exposure to having to feel that pain again.

Learning risk mitigation

I could limit the risk to my company by acquiring three products to test the waters, then seeing what happens when my offer reaches the market. This is referred to as “risk mitigation.” Understanding risk and your acceptable levels of risk is critical to your firm’s future and success.

I created little charts: Buy this much stuff this week. Ship this many orders. What’s my current ROI? How close am I to my goal for the week? It worked until something happened that I couldn’t calculate. This ended up affecting my ability to buy, list, and ship inventory. In the winter of 2015 in Massachusetts, it snowed relentlessly for a month. Every time I wanted to go try and buy inventory, it would either be about to snow or the roads would not be safe enough to travel on because of the removal of several feet of snow.

During this time, I ran into a lot of problems that are typical for anyone trying to start a business. I found myself in difficult or impossible situations but could figure out how to get myself back on track. It was then decided the new primary function of my role would be “Problem Solver” since I recognized it played a big part in my success.

Taking into consideration how much time I had spent learning about these tiresome details. Things like how the USPS rate chart works or how a parcel is designated for first-class postage. I was able to swiftly establish how much competition could keep its competitiveness while merchants delivered orders by using FBA.

All this knowledge would create a really strong foundation on which to build a business. If I never started selling trash on eBay, I would have a foundation built of sand and not concrete when eventually selling on Amazon.