6 min read
The opinions expressed by the entrepreneur's contributors are their own.
This article was written by Matt Clark, Co-Founder and Chairman of Amazing.com, Co-Founder of Amazing Selling Machine, and Advisor to The Oracles.
This is not a popular opinion, but entrepreneurship is a terrible idea. While it is great for society that so many people are innovative, it is rarely in the best interests of the individual to take massive risks and work 18 hour days. Yes, the potential payout is huge, but the chances of success are slim.
At the same time, staying happy in a clerk job becomes increasingly difficult when you are bombarded with business success stories that seem too good to be true. But what if there was a reliable way to start a business that could vastly improve your life without sacrificing blood, sweat, and years?
Thanks to Amazon there is. Unlike most entrepreneurial ventures, you can start an Amazon business by spending as little as an hour a day and less than $ 2,000. You can create a multi-million dollar fortune offering you financial freedom and leisure. Here you can find out what it takes and what it costs exactly.
Research Product Samples: $ 100 to $ 200
Search Amazon's categories and products to identify an existing product to sell. Look for those with a bestseller rank between 100 and 6,000 in the high-level category, which means they are selling well but not too competitive. For example, this spatula is number 442 in "Kitchen and Dining" and number 1 in the "spatula" subcategory.
Then visit the Alibaba.com supplier market to find manufacturers making similar products and order samples of the ones you are considering. Most samples are around $ 50 or $ 60, and you shouldn't need more than two or three. You can often request customization at no additional cost. For example, you can ask the supplier to replace a plastic part with a metal part to improve the quality.
Order inventory: $ 500 to $ 2,500
Product inventory is your primary cost, including the cost of getting the product to the customer. The manufacturer's packaging is likely to cost around 50 cents for a $ 5 product. If it's from China, you will likely need a carrier to handle shipping and customs for a fee. The best storage option is Fulfillment by Amazon (FBA), where you order a certain number of products from the manufacturer and send them to Amazon in advance. Amazon handles shipping, customer service, and returns against a percentage of every sale.
We surveyed the hundreds of Amazon business owners we coach and found that they spend an average of $ 1,200 on this initial inventory cost. While you can get by on just $ 500, some products may be too expensive or require minimum order quantities. If you start with around $ 2,500, almost every option is easy to access.
I am often asked how this compares to dropship, where you send your orders straight to the manufacturer or another third party for fulfillment. While you don't keep inventory one way or another yourself, it's different day and night. There is no upfront investment in inventory with dropship, but you pay higher prices because you are not buying in bulk. You also have little control over the product, customer experience, or delivery, which can take much longer.
Design your branding: $ 5 to $ 800
While you can sell your product under the manufacturer's trademark, many manufacturers have your product "white labeled" and sold under your name. Creating your own brand can help you stand out from the competition and build a business proposition that you can sell later if you wish.
That means you have to design a logo. If you're on a tight budget, you can hire a freelance graphic designer at Fiverr.com for as little as $ 5 or $ 10. I recommend 99designs.com, where you are more likely to find a higher quality result for around $ 300.
Manufacturers have generic packaging with their logo on, and some may be able to make a small customization for free. For a completely custom high-end packaging design, spend between $ 300 and $ 500 on 99designs.
Start Your Marketing: $ 200-500
You can usually get by on just a few hundred dollars in upfront marketing. If you want to be more aggressive, check out around $ 500. Start with Amazon ads, which are usually the most profitable with a conversion rate of 20 to 30 percent. You can then switch to Facebook ads with a coupon offer or discounted promotion to drive traffic to your Amazon listing.
If you want to act fast and sell a product that is light and small so that it doesn't take long to ship, your business can be up and running in a month and a half to three months. If you run a marketing campaign at launch, you should see consistent profit within six months.
These are your only upfront expenditures as you can use your profits to invest in more inventory, build your own website, hire people to manage your social media, and otherwise scale as you grow.
Stay consistent: it's free
Building a profitable Amazon business takes a lot of learning and waiting – to hear from suppliers or receive shipments, for example – but it doesn't require constant work or long working days. If you can get an average of an hour or two a day, that's more than enough.
You don't have to be a workaholic driven by blind passion. You don't have to be at all excited about the product you are selling. You just have to be consistent and ready to experiment and splinter away month after month until you are successful. You can't give up if a supplier messes up your order or someone leaves you a bad review. But as long as you're in the long run and willing to work these things through, you already have what it takes.
Connect with Matt on Instagram and visit AmazingSellingMachine.com in October 2019 to access his new, free, four-part training series on Building a Successful Amazon Business.