Taking The Plunge into Amazon FBA

I followed various rabbit trails on YouTube, blogs, and other online sources to learn about Amazon FBA. Along the way, I encountered terms like repricing, Scoutify, and FNSKU. I would Google these terms to learn more about them and continue expanding my knowledge of Amazon business practices. As my understanding of these practices grew, I became better equipped to solve any problems that arose.

What is Repricer?

A good example would be when a competitor began selling a product I was selling for a lower price. This meant the customers were more than likely to buy from them. So, I would lower my price to match theirs, just to see them lower their price shortly after I last changed mine.

When you begin adding a few dozen listings of products that you must regularly monitor the pricing for. Along with checking that you are not selling it for less than you have invested in the item. Then the cost of your time to prepare the item for shipment and postage to Amazon. There are a number of other factors and you quickly realize that setting a “Repricer” is very beneficial.

A “Repricer” is a piece of software that connects to your Amazon account and will automatically increase or decrease the price for you depending on a number of parameters, all for the cost of about $25 a month.

Fun Fact:

Amazon offers a similar “Repricing” feature. However, it took me a bit to realize that Amazon’s “Repricing” feature only reprices down, not up. I realized this after figuring out that Amazon hopes sellers will make poor assumptions. As their “Repricing” feature does not necessarily reprice up even though there is a “Max Price” box.

This means the sellers price will never maximize their possible return on investment in a number of circumstances such as other sellers selling out of inventory, being out of stock or competition changing their pricing strategy.

I would equate this to Amazon’s efforts to get merchants to provide Amazon customers with the best deal possible. The way functionality leads sellers to believe that their repricer has the ability to raise the price. Sellers had the opportunity to enter a maximum price choice. (At the time of writing, Amazon still configures its built-in “Repricing” tool with a max price choice when their program is unable to automatically increase the price.)

A slight success in liquidation lots and less profitable items

I experimented with buying liquidation lots and trying to make a private-label product. This was in an effort to test out various concepts for growing my Amazon business. There wasn’t a lot of success, so I coasted while earning more money than I required for a time.

I would eventually find myself at the end of the month having a larger and more considerable pool of cash for spending on inventory. Now my money did not have to work as hard to continue being cash flow positive and begun to open new doors of finding success with less profitable items.

After I achieved my goal of earning more than I needed, I started to get bored. To mix things up, I decided to buy a boat and live on it. This allowed me to cut my living expenses almost in half. I could work on my business at a local storage unit at night, thanks to the light bulb socket there. This arrangement allowed me to live on my boat while still processing inventory for my Amazon FBA business.

I used my ingenuity to start working out of a 5 X 15′ storage unit by having a game plan to stack and process inventory for shipment and drop off inventory at UPS the following day. Quickly I scaled into a larger 10 X 20′ unit but was still hustling to run a few minutes away to use the bathroom since there were no amenities for me to use when I was working for long periods of time.

I was renovating the boat while living in it and could really only live in half of it while the other half was being redone. Keeping as little as possible on the boat as when you live on a boat, every inch of space and weight you have is crucial. After finishing my renovations, I found myself in a place where I preferred to have less in the boat to not feel cramped.

I had to decide what was most important to have in the boat. Food or a Playstation? Spare sheets or a dress suit? I had already spent so long focusing on living minimally and enjoyed the lifestyle of waking up on the water. To be able to work when I wanted to, and stack away money. I accomplished this all while taking a break from the consistent push I made the past 2 years.

A whole new meaning to value

By effectively turning nothing into something, I reached this stage when I started to see money in a different light. After seeing what others bought for a few years, how little I needed, and how competitive the internet market was for items most people presumably didn’t need.

I spent a fair amount of time thinking about consumerism while practicing a relatively modest lifestyle in exchange for living an easier life. Money is now a tool and did not view it as unimportant. I started working on paying off past-due bills and improving my credit line while opening some new accounts. I found NerdWallet very helpful in figuring out ways to improve my credit score and generally improving my personal finance habits.

As per usual in Florida, a hurricane eventually came around. I had to go find a place to hunker down while hoping my boat wasn’t going to sink. Living with the idea that my home could go underwater did not sit very well with me. So, I sold the boat about a month later with plans to move into a house.

I rented a 2,500-square-foot home that had a big 2-car garage. I told the landlord up front that I would treat his property with the utmost care. Mainly, I had every intention of using the garage to run an Amazon company. Being the only tenant, I required a large garage. Surprisingly, it’s challenging to find a one-bedroom home with even a single garage. The second bedroom was used for storage to maximize my use of the garage for inventory.

A change in production

I was doing well although I was doing everything myself, I was becoming weary of having to prepare, process, and ship all the inventory. I made the decision to engage someone to assist me in processing inventory. Being quite clear about how I wanted things done. Additionally, I came to the conclusion that it would not be fair to restrict their work. So, I assigned them manual eBay labor while we increased our Amazon output.

I worked with him every day for three months before I felt comfortable letting him work unsupervised. While it was a difficult process, it turned out well since we got along well as a team. I gained their trust by installing a wifi camera in the garage to monitor everything. Eventually, I counted on him to finish a task while I traveled to see family or simply took a few days off.

At some point I ran into a problem, the days of only buying highly profitable items were long gone. Keeping work tasks consistent and ending up with more capital and credit than what was on the local shelves. I was literally clearing the shelves of all my retailers and had to find a new source of inventory. There had to be a way to monetize my ideas so I wasn’t doing all of the hard work.

Over the next few months, finding relatively unlimited amounts of inventory became easier. I wanted to get to a point where I didn’t need to be involved past signing weekly paychecks. The process of Online Arbitrage is more advanced and complex than a newcomer should focus on. My experience selling on eBay, doing retail arbitrage with FBA helped me when transitioning to an online arbitrage business model.