Is amazon still a good opportunity in 2017?
You’ve probably seen some of the webinars on the private label business, or more likely, some of the pre-course sales pitch videos.
You watched it, it all sounds amazing but then you think to yourself ‘is this really possible, or is it just internet people making money selling a dream’?
So, I’ll give you my take on this – I’m not interested in selling you anything, network marketing, affiliate marketing or any of that shit. I make my money online, I work from home, don’t have a boss and here are my observations from the past 2+ years of selling.
Before the mega hype: Amazon – my first love
For me, private label was my first successful online ‘thing’ - the first internet shiny object that actually paid off and started making me real cash money. Before I tried amazon, I had just had my asshole ripped apart by trying my hand at selling supplements online in Russia (I lived in Moscow for many years, long story).
I had probably 15 thousand dollars worth of inventory sat in the hall of our flat, I website that I had spent another 5 grand on custom designing myself and I had just been freshly squeezed out of my once-nice paying job at a radio station like Putin’s old toothpaste (but FYI, not before I was forced to suck back a 50% pay cut while having my work load, essentially, doubled).
At this point, my wife was pregnant with our daughter too and guess what, I literally, only got ONE order, in months of my supplement site being live and me trying every trick in the book to get traffic.
I paid link farms, I spent money on google ads, I pissed away more money on Facebook ads, I emailed influencers, I emailed gyms, I told my friends... and nothing worked.
Eventually, I became quite depressed as all the money ran out, I couldn’t muster up enough freelance translating work and I was forced to use my parent's credit card to buy groceries. I felt like the world’s most pathetic loser.
To make things worse, when people asked how my business was going, I was sick inside and feeling like a complete idiot, because I had failed very, very hard.
The one saving grace was that I sold off all my supplements at cost to a supplement store, taking a loss, but getting out just in time before the Russian Ruble totally bottomed out.
During this death spiral, I had seen ASM’s videos and I knew that PL was a model I wanted to try so, instead of paying the big money for their course, I bought Jim Cockrum’s proven amazon course instead, using the last of my money to pay for it and buy inventory.
So amazon was really what pulled me out of the toilet and so I have a lot of love for it, but times have changed quite a bit.
The initial appeal of a private label business was just how easy it was to start and scale.
Now, these days, it’s STILL easy to start and scale BUT much harder to succeed like before - there is a lot more competition and other shit to deal with.
When I started there was basically NO software, but these days hundreds of thousands of sellers are all doing the same things, using the same software, sourcing from the same places etc etc
With all the info out there, there really aren’t many advantages left and anytime someone reveals something new, the advantage doesn’t last long. And I won’t even go into the invasion of Chinese selling direct, endless hijacking, dirty negative review farms etc.
But amazon still has huge potential
Before I blast amazon too much, there are a few important things worth talking about. First, amazon is, for the foreseeable future, only going to get bigger – bigger in the US, bigger in Europe and, duh, as it grows, our opportunities as sellers also grow.
If you are the kind of person that wants to take the time to test, brand, build something different, invent a little bit and really stand out – then amazon will always be a good place.
If you want to just source something from Alibaba, keep it generic, launch it – then long-term, you’re fucked.
It’s also worth remembering that private Label FBA is a solid business model but it isn’t the only online business model.
Sellers like to trumpet Pl as the be all and end all in e-commerce, but that’s not at all true. Having an inventory-based business isn’t always sexy and it has more risks than most other online models, especially when all your eggs are in the amazon basket.
Also, if you only have 1-2k ready to invest, while enough, PL might not be the best place to start your online earning.
If you are 50+ years old and not super comfortable with tech, PL will be very hard and very daunting and may take a long time to master, it’s overwhelming for many.
So I’m saying, if you’re not super tech comfortable and you don’t have a safe little money cushion to play with, research some other online business models first, PL isn’t going anywhere and neither is China.
There are other FBA business models too and there are plenty of sellers that do well with retail arbitrage and online arbitrage, wholesaling and lots more – one of these models might be a good fit for you too.
So is PL risky?
When I started, all the retail arb people in the seller groups would warn people away from PL because of how risky they thought it was – and all I could think was that retail arb is my own idea of hell – just ask my wife what I’m like in the mall.
They would say, learn the ropes by doing retail arb first but to me, PL was the only thing I wanted a slice of and you couldn’t have said a thing to convince me otherwise (fortunately when I set my mind on things, I’m very consistent) – the retail arb folk were stuck in their comfort zones and the idea of PL, with China, imports, having your cash in one product, was too scary for most of them I think.
But if you’re not stupid about it, you can easily minimalize your risks (I have some good tips on that here).
And, it’s pretty easy to try a product and break even at least. So while the risk isn’t as low as with other online models, compared to a typical brick and mortar business, amazon still wins ALL day long.
I was at the beach playing with my daughter the other day and I know the business is running in the background, my print on demand items are also selling in the background. It’s all good.
Meanwhile, my friend makes good money and owns a barber shop often works 7 days a week and doesn’t want to take a holiday because he’s worried about losing money and leaving the business.
That’s not a business guys, that’s a fucking prison and we don't want to build those. Even if you are worried about failure – you should still start.
Regardless of how well your products sell, if you follow the whole model through, you’ll have a very solid grasp of e-commerce, importing, PPC, perhaps some copywriting and a whole lot more.
When you are a boss at seller central, product research and more – you will have a lot of new, valuable skills.
With these skills, you can approach brick and mortar stores and help them get set up on amazon, visit trade shows and find clients whose accounts you can manage and much, much more.
Private label is a bit like MMA where you will get an all-around education – whereas say, being great at retail arb is kind of like the equivalent of taking a self-defense class down at your local retirement home (zing!).
New skills and personal growth will always come in handy and you still have time before AI eventually steals your job anyway.
But here’s my one main piece of amazon advice – as soon as you start, build an exit or alternate sales channel
Amazon is where the traffic is, it’s the proverbial big pond and once it’s much easier to make sales there than on some new website you built, Shopify or otherwise. But amazon is so good, it makes sellers lazy and complacent.
This isn’t a big issue when you just have a couple of grand in the game, but when you sell 10,20, 30k plus per month and more, you’re building a house of cards that can be wrecked by a few fake reviews or false safety claims by competitors. And this isn’t scare mongering, all this stuff happens ALL the time.
Just the other day I was reading a post by a successful seller who had his ASIN shut down because of 1 safety complaint.
The guy was looking at 3k in product removal fees and sitting on 25k of inventory. Virtually bankrupted over nothing more than ONE problem so while it's great, amazon has total control over you and your business.
That's why it’s important that you build your brand from the start, build your website, build your social media, list on E-bay too. It probably won’t get you many sales, not to start anyway, but you need to build your backup plan in case Jeffy B ever shuts down that sweet teet of his.
Jeff auditinoing for the expendables - Beware the teet
Of course, this can be hard because you can sell soap dispensers on amazon and, providing you buy at a good price, you can sell that stuff all day long – but building a brand around it is much harder and less sexy. So think about brand-ability from the get-go.
Always be trying to build your off-amazon channel and your customer email list. As a bonus, if you do this, you can get a better price for your business if you decide to sell it down the road because you’ll actually have a brand asset.
If you get any modicum of success on amazon, every day you should be setting things up so that you can survive your account being suspended. If amazon suspends me today, just how fucked am I? Rock out stoic style, image the worst case then build a system against it.
The average millionaire has 7 sources of income, so get hustling on yours! Start building your doomsday bunkers now.
If you are simply new to the world of online sleaze and wondering if anything you hear on these hype-alicious webinars about private label is legit, then yes, it is real, you can make money, but it’s not all as easy as it seems, you will need to learn, to work and, quite possible, get your ass kicked a few times.
Life begins outside of your comfort zone as the saying goes.
And while PL is still safer and easier than opening a restaurant (or pretty much any other traditional business) if you have lower capital, are less tech savvy or don’t want to deal with inventory or branding, you can still make money online with other business models, so don’t despair.