Today Susan shares with us how she turned her brand new Private Label product into over $1,000 worth of profit by selling on Amazon using the FBA program.
Many of the people that we hear about who do Private Label get started by doing retail arbitrage (what we teach in the Amazon Boot Camp), but Susan jumped right into Private Label and has done really well.
I've asked her to share her story with us, and I know you will find it inspiring as well.
How Did You First Hear About Selling On Amazon?
I first heard about selling on Amazon through the Smart Passive Income Podcast that you and your husband did with Pat Flynn, episode number 99.
I was really intrigued by the fact that you were able to turn selling on Amazon into a six figure business working part time, but I will be honest, the business model didn't appeal to me.
I really liked that Amazon handles the fulfillment processes when you use the FBA (Fulfillment By Amazon) system. So they take care of the storing, packing and shipping once the items sell.
Having had a handbag business in the past, I certainly wasn't looking to start another product based business. I had been there and done that already.
So what changed your mind about Amazon FBA?
Well, a little while after hearing your podcast, I stumbled upon a podcast by Chris Guthrie where he interviewed a man named Brian Leyde. Brian is an accountant but started selling private label items through the Amazon FBA program and in only a year or so was making over $100,000 in sales a month!
Not a year…a month!
Jessica: That is impressive! I have actually talked to Chris about his business model a few times and think he is really a great guy. Thanks for sharing that podcast episode.
Yeah, I think I've listened to the podcast at least 4 or 5 times now. Chris Guthrie was so excited about Brian's success he started selling his own private label product on Amazon as well and has been killing it! I first listened to that podcast with Chris and Brian in early October. By December 10th I had my own private label product listing live on Amazon.
Jessica: Way to take action Susan!
If something feels right, you just have to take action, and this model of Private Label felt right to me.
Jessica: For those reading who would like to hear more about Chris' story, we recently recorded a webinar with him where he shares how he got started, and how you can as well.
What is private label? Since everyone may not be familiar with that term.
True, most people are familiar with the term “Retail Arbitrage” which is buying products locally from major retailers and then flipping them on Amazon. But with Private Label, you are actually buying products direct from the manufacturer and then placing your own logo and/or branding on the package.
Since the manufacturer is already making these products, you don't have to do any designing or inventing. You can pay someone to come up with a logo and label for you, then you are set to go! It's pretty cool when you think about it. This business model is a bit different from what you do with your Amazon business.
Jessica: Right, we mostly buy items on clearance locally and then resell them on Amazon FBA. We aren't branding these products. They are already brand name so we just use their credibility and the discount to provide a great margin. We are throwing around the idea of doing some Private Label ourselves, but we won't get into that right now 🙂
That model is working fabulously for you guys, but I just didn't think it was the right model for me. I really like the private label route as it seems like less work to me :).
Jessica: That's so funny because I feel the exact opposite. But, that is what is so amazing with online businesses! There are so many different opportunities, and we can all find something to fit our needs.
What is your product and how did you pick it?
Jessica: My guess is that you probably don't want to share your exact product, but can you share with us some of how you came to pick it and whatever you can about it?
I'm not quite ready to divulge my actual product, but I will say that I found a product in the Arts & Crafts niche that I wanted to private label. I'm not a super artsy crafty person myself, but I do love the idea of people having hobbies (I think it's very healthy!) so that niche appealed to me.
Picking the product was the hardest part for me. Chris and Brian both shared some insight into how to pick a product using various guidelines. So, I took their guidelines and did weeks of research to find my ideal product.
The guidelines included looking for a product with a Best Seller Ranking of less than 2,000 and with less than 1,000 reviews. A product with a Best Seller Rank of less than 2,000 means the product is selling well on Amazon while reviews of less than 1,000 means the competition isn't too high (you can find both of these numbers right on the listing of any product on Amazon).
Jessica: Very cool. So you are in the arts and crafts category on Amazon, and found a product ranked less than 2,000. Did you do anything special to make it unique or did you just send it in to Amazon as it came from the manufacturer?
I pretty much sent it to Amazon exactly how it came to me, except for I used special packaging that made the product look higher end than what is already on Amazon.
Where did you find a manufacturer?
Once I picked my product, I went to alibaba.com and searched for manufacturers in China that were already making this product. I then emailed the manufacturer I found and inquired about pricing and minimum order requirements.
It took 20 days of emails back and forth for me to finally pull the trigger and order 200 units of my product. It didn't need to take that long, that was my own fear holding up the process! Keep in mind,
I didn't have lots of money sitting around to order inventory, but I knew I had to give this a try, and 200 units is a pretty small order. So…I went for it!
Jessica: That's awesome. Some of the tips I have heard regarding manufacturers in China are to look for Gold Seller status and to do some communicating with various suppliers to make sure that they are responsive to you. We talk a lot about finding suppliers in the webinar with Chris as well.
How much did you invest to get started?
My initial order was just 200 units at $2.70 each. That total plus express air shipping came to a grand total of $775 for my initial investment. Now, in most cases the factory will label, package and ship directly to Amazon for me.
But I had them ship the product to me for this first round because I was still trying to figure out a label for my product which I ended up having designed on fiverr.com for $5! I then had to ship the product to Amazon from my house which cost about $25 (super cheap to ship on Amazon's UPS account which you can do as a FBA seller).
Jessica: Yeah, that cheap UPS shipping is a huge advantage to selling on Amazon FBA for sure! In our Amazon Boot Camp we talk about that as a main reason we use FBA instead of fulfilling the items ourself.
I actually think it is great that you ended up having the items shipped directly to you. That way there were no issues with the product that you wouldn't have known about.
Is your product actually selling?
Jessica: Here's what everyone is probably really wanting to know. You found items from China you could sell on Amazon, you had them manufactured, you private labeled them and now…Are you making money?!?
My listing went live the night of December 9th. December 10th was the first full day. I had my first sale on December 11th. No ads, no emailing anyone, no nothin'.
I just put the listing up on Amazon (which is not hard to do) and boom I was getting sales off the bat. Less than 30 days into this business as of today and my gross sales are already $2,489.63.
I've been timid about getting reviews and doing much advertising because I don't have a lot of inventory and would hate to run out! It happens, but I'm trying to prevent that.
My inventory is down to about 60 units now, so I just placed another order for 500 more units. Those 500 units will net me around $4500. I plan for my next order to be even bigger. My goal is to be selling at least 1,000 units per month by April or May.
Jessica: I don't know of any other businesses that you can start selling products in less than 30 days! Gosh I love selling on Amazon!
How much have you made so far?
So to recap, I bought my private label product for $2.70 plus some other minor costs for my label…plus shipping. In total it was less than $800. I sell my product for $18 on Amazon. My profit margin is around 40-45%.
I haven't even hit my 30 day mark on Amazon yet and my first check was $1,079! Amazon deducts their fees before sending me my net earnings.
My first real check (or direct deposit) from Amazon was $1,076.57. The balance of $507.35 below is what I've earned since then. I still have 7 days to go before I get that payment, so I will most likely hit another $1,000 payday on January 15th (Amazon pays you every two weeks).
Sales have slowed since the holidays ended, but I expect them to pick back up soon. So in less than 30 days I've already made a profit on this new business.
I've never had a business (besides my virtual assistant service business) take off so fast. And I spend very little time on it! It's been so exciting for me and my family. We are expecting big things from this and have complete faith in it.
I plan to have it replace my hubby's income so he can quit his job and be home doing fun things!
Jessica: Thank you so much for sharing with us Susan! I really enjoyed having you and I know our readers will be thrilled with your success. I wish you the best of luck and can't wait to talk with you again sometime to see how the business has grown.
Thank you for sharing my success story. It still seems pretty surreal to see this type of success already.
Wow, that is such an inspiring private label success story!
I usually I recommend that people get started using the retail arbitrage method that we teach, but there are many just like Susan who have made this work from the get go. Now it's time to decide which business model makes the most sense to you.
If you would like to learn more about the private label business model, check out this free webinar that we did with Chris Guthrie on how to find your first products and suppliers for a new private label business.
If you would like to learn more about starting a retail arbitrage business on Amazon, I would like to invite you to get our free 7-day course to learn the ins-outs of what an Amazon business is all about!
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