If you're trying to do old school private label or wholesale and that's because there's over 5 million Amazon sellers and over 4,000 new sellers join Amazon every day Amazon is getting really saturated but Amazon is a trillion-dollar company that's not a million-dollar company that's not a billion-dollar company they're a freaking trillion-dollar company and over 50% of all eCommerce sales happen on Amazon and the cool thing about this is 50% of all the sales that happen on Amazon are from third-party sellers this is random people like you and me and that's a really big deal there are over 200 sellers on Amazon that are doing over $100,000 a year but probably the most compelling reason why you're not too late to start selling on Amazon is this one chart right here this one chart made me realize that right now is the perfect time to start selling on Amazon
but there are right ways to sell on Amazon and they're wrong ways to sell on Amazon and in this video I'm gonna go over all the different Amazon FBA business models as well as the pros and the cons for selling on Amazon in 2020 and I'll also tell you what I think the future of Amazon FBA is and I think the data proves that I'm right on this and the truth is Amazon did used to be a lot easier to make money it used to be like five years ago that you could just take a crappy product from Alibaba or Aliexpress slap your brand on it and sell it on Amazon and the reason for this was there just wasn't that many people selling on Amazon but yet Amazon still had a lot of customers now the truth is I missed the boat on this like early easy days of Amazon as well but there's still so much opportunity on Amazon you just have to know the right way to go about it and I have one product that has done over $800,000 in sales for me these last two years of selling on Amazon and one thing I hear a lot of people saying is that Amazon FBA it's too late it doesn't work because all the costs and fees associated with selling on Amazon and I think that's true if you're doing private labeling or wholesale private labeling and wholesale is kind of a race to the bottom but
I can actually I'll show you my numbers in the last two years of selling this one product on Amazon I've done eight hundred thousand dollars in revenue remember revenue is not profit the first cost for me associated with selling on Amazon was the cost of the product which is around two hundred thousand dollars then I had the Amazon FBA pick and pack T this is the fee because you send your product for Amazon FBA you send your product into the Amazon warehouse and when you get an order Amazon picks it from their warehouse and ships it out to the customer they charge money for this and rightfully so it's a very valuable service I spent about a hundred thousand dollars in fees for that specific service on Amazon there's also a 15% fee for just selling on the Amazon platform itself which again I think is a hundred percent worth it Amazon has a ton of customers I think it's around thirty three million customers are on the Amazon platform so it's worth that 15% fee and I spent about $100,000 for that Amazon FBA fee there is also some storage fees and some other random fees that was around I think thirty thousand dollars I spent on those fees and then there is an optional fee of the Amazon PPC and I spent around forty thousand dollars over the last two years on Amazon PPC you don't have to do this my products want to sell sold really well even if I did not spend money on this fee but what I found is for every dollar I spent on Amazon PPC I made about three dollars so it was worth it now there are since Amazon is a business there are some other fees for selling on Amazon this includes things like LLC fees and for me specifically I have virtual assistants that run my business so it's it's relatively a passive income source and I spent over the last two years about eighteen thousand dollars in all those fees and so at the end of the day as you can see I did over 250 thousand dollars in profit it was around a thirty three percent profit margin now I've talked to some private labelers including a good friend of mine who did one hundred fifty thousand dollars in revenue and ended up only taking home $10,000 profit so yes I do think it's too late for typical private labeling and wholesale now with both of these can you still make money yes absolutely but I think it's becoming so saturated and there's so many people competing on the same products that it's a lot harder to make a profit and there's four main ways to sell on Amazon FBA there is retail arbitrage wholesale private labeling and creating your own product with retail arbitrage basically what you do is you go to stores retail stores and you find products that are on a deep discount maybe you find a product that's normally $50 but for whatever reason it's it's marked down to $10 maybe the store is going out of business maybe a bunch of different reasons and you take that product you buy it for $10 and you flip it on Amazon for the $50 it's worth now after all the different Amazon FBA fees that we talked about you're gonna go home with maybe $30 making a profit of $20 now the problem with this is it's not really a sustainable business model because you constantly have to be going out to retail stores and and trying to find deep discounts but I think for low-income households or maybe students it's a great side hustle with wholesale you go to companies you go to manufacturers and you buy their products at around half off the wholesale price and you flip it on Amazon so maybe you find let's say Nike shoes you contact Nike and you get a bunch of Nike shoes that are normally $100 you're able to buy them at $50 and flip them on Amazon for the the regular retail price and then after all the Amazon FBA fees and the cost to your product you might walk away with you know 20% margins depending on the product it could be higher or lower now can you make money from wholesaling on amazon right now yes absolutely but there's three main problems with wholesale on Amazon
The first is it's getting way too saturated there's only so many manufacturers out there that are looking to wholesale their product and every day there's new Amazon sellers new people joining Amazon trying to do wholesale which means that there's a lot more competition which means it's getting a lot harder to do the second problem I see with wholesale is there are some established sellers out there that are just so far ahead and I've met some of these people I've met some of these people doing tens of millions of dollars and they have better connections they are willing to operate on lower margins and trying to compete with them to me is like a no-go I would never want to do that and the third problem with wholesale is a lot of the manufacturers are just going direct on Amazon like as Amazon grows and more and more of the old-school manufacturers realize how good of an opportunity this is they're gonna cut you out there's no reason they're gonna want to sell their product to you at a discount when they can go directly to Amazon another business model and this is probably most common one that new Amazon sellers are doing is private labeling and this used to be extremely easy and used to work really well and it still can be profitable I still know people that are making money from private labeling but it has changed so basically what private labeling is is you find a product on Amazon that has high sales but maybe a low number of reviews and just overall the product page doesn't look very good you then create your own private label version of this product slap your own brand on it and you go to Amazon and you try to create a better listing and get more reviews because then obviously people are gonna want to buy your product over that other crappy product that had a lot of sales before and this is great in theory but there's four main reasons why private label is dead the first one is it's just too saturated there's so many people joining Amazon every day trying to private label the same junk products is is everybody else and I've seen this firsthand I had a friend that was trying to private label a product and in the time that it took from His product to get shipped over from China which is about six weeks there went from being one private label listing in his category to six so the competition had skyrocketed and the chance of him being able to rank first for the keywords he wanted to had completely gone away and this is the problem
I'm seeing with private labeling anytime there's a big Gold Rush there's the early adopters and then there's the the late comers and can you still make private labeling work absolutely but it's not nearly as profitable at what as it used to be and it's a lot harder to make it work and another reason why I think it's too late is the second reason which there are some sellers out there that are just way too far ahead and I've met a lot of these sellers a lot of these sellers that are doing tens of millions of dollars and they can just do it better than some newcomer these sellers know how to properly brand a product these sellers can work with lower margins they have connections with manufacturers so again I think you can do private labeling but if you don't have connections with manufacturers you don't have a lot of money to throw into brands and you're not okay with working on low margins it's gonna be hard a third reason why private labeling is dead is China China is going directly to Amazon nowadays there are a lot of times there cutting out the middleman which is American or Canadian private labelers because China is seeing the power of Amazon as a platform so they're creating their own private label brands and selling it on Amazon now China and Chinese manufacturers are not as good at creating a brand as you are but what they do is they're they're discounting their products so much so much cheaper than you can possibly compete with that it's making it very hard now branding private label products is potentially still an opportunity but I will share with you in just a minute but I think the much bigger opportunity is but the last reason why Amazon FBA is dead is that even if you find a really good
really profitable private label product Amazon will just copy it and create its own version of Amazon basics and I've also had a lot of friends that I see this happened to had one friend that had a backpack company in Amazon basically copied his backpack like down to the tea and sold it on the Amazon platform so obviously that products gonna come up first in the listings now I do want to tell you what I think the next big opportunity on Amazon is going to be and I'll tell you that in just a minute but keep in mind there are 33 million customers on Amazon as long as there are people buying things on Amazon there will be an opportunity but these opportunities change over time and as I said there are 5 million sellers on Amazon that's across all the different countries where Amazon sells on but within u.s. there is much less way less sellers in the US market and of the sellers that are in the US market which is the biggest Amazon market only about 1/3 to 1/4 of them actually ever end up selling a product so a lot of people sign up and they never follow through which is one of my biggest pieces of advice is to actually follow through to actually continue to take the next steps and launch a product but one other thing and this is probably the biggest reason why right now is the perfect time to sell on Amazon is this graph right here this is the percentage of sales that ecommerce as a whole ecommerce makes up in the United States and in the last year it was around like 12% it's been growing steady every single year now stop and think about that for a second that still means that about 90 sent of all retail sales happen in brick-and-mortar businesses now I think you've seen the trend if you go to a mall during Christmas time or if you go to a mall during any time it is dead compared to what it used to be people are buying more and more things on Amazon in my apartment
I see Amazon boxes all the time this number is going to continue to grow and it's going to skyrocket so it's not too late to sell on Amazon this is the perfect time but it is too late for all those business models I had already talked about what I think you should do instead is create your own product create a unique product create a product that you wish existed in the world that does not yet exist and this is what I did and I'll talk about how I created my company in just a minute but basically what you need to do is not just take a product that already exists and slap your own brand on it you need to create a product that's better than what already exists and this is so obvious but a lot of people aren't doing it because it takes a tiny bit more work but there's a lot of big advantages and one of the biggest advantages is you don't need a lot of money to do it because you can raise money via a Kickstarter and this is what I did I raised $15,000 on Kickstarter to create my product and the first company I started after quitting my corporate job seven years ago was a dance clothing company it was basically like a private labeling company we were making the products ourselves but there wasn't anything that special that unique about them and I struggled for a long time trying to make that business profitable and it wasn't until I released my unique product that was different better than the competition on Amazon that I really started to have success when I quit my corporate job I had the goal of making 300 ollars a day passive income and within two months of launching this product on Amazon I had hit that goal and here's how I did it first I came up with the idea and I saw that there was a trend people were eating more and more healthy fats and I even saw this in my own diet originally I was eating peanut butter and then I went to like organic peanut butter almond butter but there was a hole in the market nobody was selling like an ultra premium healthy fat on-the-go snack so I had this idea but I didn't I don't want to jump in full force into this I didn't have the money to do a production ROM so what I first did is I tested the market out I created an Instagram telling people this product's going to be coming soon I started posting in there and I had a link in my bio that if people were interested
they could interfer a chance to win a free sample they'd put their email in there and I'd start a conversation with them I'd send some messages back and forth to develop a relationship and get to know the customers from there I got them into a Facebook group which is a product launch group and in the product launch group I would ask all these different people I had friends family and potential customers in this group and I asked them hey which of the different logos for my company do you like the best what about the packaging design what do you think about this packaging design and they give me feedback and I would improve the packaging design based on their feedback basically they were helping me make a better product than anything else that was out there but as I said I didn't have a lot of money to launch this product and I wasn't sure if this actually was gonna work so what I did is I tested the market by launching it as a Kickstarter because a lot of people were telling me oh I'd love to buy this product and this was a chance for me to see are they just paying me lip service or do they actually want to pay for the product and my goal was $10,000 and within the first three days I hit that $10,000 went on to make $15,000 from there I ended up doing my first production run which honestly I was told so scared I had no idea how to manufacture a product but the cool thing of doing the Kickstarter was I had the motivation that I needed to get this done and I had like some kind of a timeframe so I ended up manufacturing my product and then I put it on Amazon and then as soon as I launched it I got everybody from the product launch group to I asked them to buy a box and leave a review I got 75 reviews within the first week and that spike in sales that spike in reviews snowballed into more and more success and as I said within two months of launching that product I was doing about $30,000 a month in revenue which led to about $10,000 profit which was above my goal of three hundred dollars a day now I have made a lot of mistakes in selling on Amazon I made a lot of mistakes with this first Amazon business and if you want to know every single mistake I made on Amazon in these last two years I did a video right here and in that video I talked about everything I've learned in the first two years of selling on Amazon and I share with you the biggest mistake I made which cost me about $120,000 so click on that video I'll see you in the next video and remember to enjoy the journey
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