Starting An Amazon FBA Business: A Complete Breakdown Of Costs And Lessons


TLDR: In the video, Troy shares his experience starting an Amazon FBA business, detailing the costs involved, revenue generation, mistakes made, and valuable lessons learned.

Amazon FBA Insights

Setting Up the Business

๐Ÿ’ก Investigated a market he was passionate aboutโ€” tennis.
๐Ÿ’ฐ Invested about $5800 initially.
โš–๏ธ Balanced between product quality and cost-effectiveness while choosing manufacturers and products.

Growing Revenue and Adjusting Costs

๐Ÿ“ˆ Increased the product price which didn’t affect sales adversely.
๐Ÿšข Switched to ‘small and light shipping’ to decrease costs.
๐Ÿงฎ Started making a consistent profit by month three.

Navigating Mistakes and Unexpected Costs

โŒ Lost $1600 due to an unintentional widespread discount.
โœ… Took corrective actions immediately upon realizing the mistake.

Boost from Unexpected Happenings

๐ŸŽ‰ Experienced a significant sales increase post the promotional error.
๐Ÿ’ต Profitability increased, covering rent in Santa Monica.

Amazon FBA Video Summary

00:00: ๐ŸŽพ๐Ÿ’ฐ๐Ÿ“ฆ Troy, a former college tennis player, decided to start selling tennis products on Amazon as a passion project. His initial costs included trademarking, which he chose to have managed by a lawyer for around $100. Troy found a manufacturer through the platform Alibaba. He navigated through a variety of products and chose one that fit his budget, even though the minimum order quantity was larger than he had initially wanted. Troy received several samples to determine his favorite product to sell. However, Troy made a costly mistake that resulted in a loss of $1600 in a single day.

Key ideas:

  • Troy is a former college tennis player who decided to sell tennis products on Amazon.
  • He spent around $100 on a lawyer to manage his trademarking process.
  • He found a manufacturer that fit his budget on Alibaba, despite a larger than expected minimum order quantity.
  • Troy sampled various products before deciding on his favorite one to sell.
  • He made a major mistake that resulted in a loss of $1600 in one day.

02:47: ๐ŸŽพ๐Ÿ’ฐ๐Ÿšข Troy, a skilled tennis player, understands his product, a tennis grip, knew what makes a good one versus a bad one. He spent $100 to $150 on sampling and also incurred Amazon fees of $39.99. He also paid an additional $3600 for the first production run, which increased by a further $400 when he had to change the packaging due to a logo trademark issue. Despite his navigation around mistakes and their solutions, he wishes he had gotten advice earlier before committing to expenses. His chosen method of shipment was sea shipping which took around 40-45 days, more than the advertised 30 days.

Key ideas:

  • Troy is a passionate and skilled tennis player.
  • He spent between 100 to 150 dollars on product sampling.
  • Amazon fees amounted to 39.99 dollars.
  • Troy’s initial production run cost him about 4000 dollars including repackaging costs due to a trademark issue.
  • He utilized sea shipping which took around 40-45 days.

05:25: ๐Ÿ’ผ The text discusses some of the key aspects and difficulties of entrepreneurship, with a focus on establishing a sole proprietorship or LLC, dealing with delays, and the cost of setting up. It also highlights the importance of understanding bar codes for selling products on Amazon, and a software called ‘viral launch’.

Key ideas:

  • Entrepreneurial processes often take longer than initially anticipated.
  • Creating a Limited Liability Company (LLC) provides legal protection for business owners.
  • Selling on Amazon requires understanding codes like SKU, ASIN and UPC.
  • Getting a GS1 barcode is recommended for long-term business.
  • Software like Viral Launch is useful for businesses and has a good reputation.

08:02: ๐Ÿ’ผ The speaker discusses his experience starting an Amazon business. He mentions using third-party platforms such as Helium 10, Viral Launch, and Jungle Scout, and the importance of investing in quality product photos. He describes an initial spending of $5,800 to start, which exceeded his expectation of $3,600 due to unexpected fees. He also shares his sales performance in the first month, selling 250 units for a revenue of about $1,200 by leveraging friends and family for initial purchases and reviews.

Key ideas:

  • He used platforms like Helium 10, Viral Launch, and Jungle Scout for analytical purposes
  • He invested in quality product photos costing him $150 for seven pictures
  • The initial investment to start the business was around $5,800, exceeding his expectation of $3,600 due to unforeseen costs
  • In his first sales month, he sold around 250 units, generating revenue of about $1,200
  • He relied on friends and family for initial purchases and reviews

10:48: ๐Ÿ’ผ In an endeavour to increase sales and revenue, a seller on Amazon used paid promotional content (PPC) and optimised algorithm recognizability to drive product sales. Initially, the product was breaking even with a unit cost of 1.37 dollars and a selling price of 6 dollars. This allowed for a profit margin of only a dollar per sale. However, by effectively targeting suitable customers and adjusting the product price accordingly, the seller managed to increase the sales to 250 units with an impressive 1,600 dollars in revenue. By opting for ‘Small and Light Shipping’, the seller was able to reduce shipping costs and maximise profits further by selling exclusively on Amazon.

Key ideas:

  • The seller used paid promotional content (PPC) to increase sales and revenue
  • The initial profit margin per unit was only a dollar
  • Increased product price without affecting sales to boost revenue
  • The seller made use of ‘Small and Light Shipping’ to reduce shipping costs and increase profits
  • The seller opted to sell exclusively on Amazon to maximise profits

13:31: ๐Ÿ’ธ The text discusses a seller’s experience on Amazon over several months. The seller finds that increasing the price of products doesn’t deter customers, and this strategy is recommended over selling cheap, low-quality goods. Despite encountering problems such as unsold stock and additional costs, the seller is still profitable after three months. In month four, revenue reaches $1800 from 300 units sold. Adding product variety also boosts sales. However, a costly mistake of $1600 is hinted at the end, with a call to action to ‘smash the like button’ for learning from the seller’s experience.

Key ideas:

  • Price sensitivity is not always a key factor for customers on Amazon.
  • The seller advises that it’s better to aim for quality and higher prices than being the cheapest, low-quality option.
  • Despite initial issues and incurred costs, profits were still made after three months.
  • Introducing variety to the product range can help stimulate sales.
  • A significant mistake cost the seller $1600.

16:20: ๐Ÿ’ผ The text revolves around the author’s experience with business on Amazon. Initially, the author was making significant profit until one day they discovered their inventory was gone and they had accidentally given away hundreds of their grips due to misunderstanding Amazon’s promotion system, resulting in a huge financial loss. However, the author repositioned their business strategy, selling 15-20 units a day instead, and eventually coming to the conclusion that sometimes set-backs can lead to better business outcomes.

Key ideas:

  • The author was doing 10-15 units sales a day on Amazon which brings about $600 profit minus $300 spent on PPC.
  • The author accidentally gave away hundreds of grips due to a misunderstanding of the Amazon’s promotion system which people took advantage of.
  • The author’s error resulted in a loss of about $600 in a month.
  • Despite the setback, the author re-strategized and started selling 15-20 units a day.
  • The experience made the author realize that sometimes setbacks can lead to greater success in business.

19:15: ๐Ÿ’ธ The author reflects on their successful journey selling products on Amazon, where they managed to sell about a thousand units a month, profiting $2000, which is enough to cover the high-priced rent in Santa Monica, their dream living location. The author also highlights the importance of learning from others, suggesting prospective Amazon sellers seek advice on creating campaigns, choosing appropriate listing images, selecting keywords, and managing inventory. The author promotes a free course providing step-by-step instructions on launching personal products.

Key ideas:

  • Author sells around a thousand units a month on Amazon FBA, yielding around $2000 profit.
  • Selling on Amazon FBA allows the author to afford the rent in their dream living location, Santa Monica.
  • Author stresses the importance of seeking, learning from others’ experiences and mistakes.
  • Author provides a free course with step-by-step guidance on launching personal products on Amazon.

Amazon FBA Q&A

1. How much was the initial investment for the business?

Troy’s initial investment for his Amazon FBA business was about $5800, including trademark, product sourcing, production, shipping, and other little expenses like barcodes and imaging.

2. What was Troy’s major mistake and how much did it cost him?

Troy’s major mistake was unintentionally creating a widespread discount which led to a loss of about $1600.

3. What strategies did Troy use to increase his profit?

Troy increased his product price point slightly and reduced costs by switching to ‘small and light’ shipping. Adopting analytics software like Viral Launch also helped him.

4. How did the business fair after the promotional error?

The business experienced an unanticipated boost after the promotional error with a significant surge in daily sales.





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