While flying back from our $500 NYC trip in Feb 2016, I read in the NYTimes about people who make hundreds of thousands per year selling goods FBA (Fullfillment By Amazon) through retail arbitrage (buying low in a retail store, selling high on Amazon). I thought to myself, how hard can this be?
In typical fashion I dived in and started researching selling FBA in which you send your goods to an Amazon warehouse and Amazon packs and ships for you. Goods sold from the Amazon warehouse sell for higher prices because Amazon Prime members are willing to pay for two-day shipping convenience. I had sold my old unwanted textbooks on Amazon for years (merchant fulfilled, shipping from my house), but I had never sent goods into Amazon to sit in their warehouse.
After a bit of research, it didn’t seem hard at all to make money. Go to Walmart, scan some stuff on your phone with a special app, see if it’s selling based on sales rank and price, and verify with the app I can make a profit. Pack it up, send it to Amazon, wait for profits, rinse and repeat. I was blinded by the numbers and results that some people were getting, and missed some bigger points.
But my Walmarts didn’t have much good product. I started looking for other places to buy. I started buying and selling shoes (highly profitable) and books. And I did fairly well with shoes, despite the high return rate and the fact that Amazon lets buyers return used shoes…at the cost of the seller.
Books I actually thought were fun. I love books, and the thrill of the chase there is fun when buying used books. I’ve had plenty of 50 cent and dollar books sell for $25-$50 in profit (not all, of course). I also flipped books on amazon – buying books that sell high when fulfilled by Amazon, but cheap when fulfilled by the merchant.
But the time commitment was grinding on me. Time to drive around and scan books. Time to clean up and grade the books (Good? Like New? Acceptable?). Time to pack and ship. Time for the family. Time for my full time job. More importantly, time away from pursuits that would generate passive income.
I forgot about untethering my time from income generation.
And what I realized is that the way to make the Amazon gig work for “passive” income is to have people working for you. People to source books and other goods. People to sort and pack and ship. People to deal with the occasional customer issues. People to pull back and inspect the shoes that someone returned. But those people still need to be trained and hired and managed…
And at this stage of my journey, I am looking for opportunities that don’t require me to manage people.
And, to be fair, that probably means I’m leaving good money on the table. There are lots of folks making damn good money by having other people do most of the leg work for them. In books alone there is Reezy, Nathan Holmquist, Caleb with eFlip, and many others. Good for them. I have mad respect for their hustles. But they are on a different journey, and I recognize that (slightly belatedly).
Now, I may actually come back to this. There are great ways to minimize workload. For instance, you can find good wholesale products and have the wholesaler prep and ship directly to amazon, or using a prep-company to do the work. In this case, the time investment would be finding profitable products, but there would be no time handling product. That seems nice – relatively low time input – once the products are found, then it’s just ordering and reordering – and there are great tools for determining if product will be profitable (examples), but finding wholesale sources in the first place is the tough part.
You can also create a private label product and sell on amazon (and other channels). Great income if you can figure out the right product and the right marketing.
So can you use FBA to untether income from time?
Is it a good way? Maybe not for me.
But that’s for you to decide.
For me, I’m going to step away for a little bit. It’s textbook season and my inventory is moving nicely, but I won’t be adding to inventory any time soon.
Instead, I’ll be using the income from these sales to pay for my LLC. Time to get legit and cover my butt from businesses soon to come.
If you want to find out more about selling FBA, check out the links above as well as those below. There are no affiliate links here.
Jim Cockram’s materials: Great education products (some unpaid, many paid) with 100% money back lifetime guarantee, any reason. Lots of info on how to start and run teams to do the work for you. Also have a free Facebook group.
There is lots of stuff out there, free and paid. And sadly, there is lots of bad advice, both free and paid.
Are you an Amazon FBA seller? Do you enjoy it? Have you figured out how to get FBA to allow you to untether time from income?
Give us your two cents!