Vailen Venture Vlog 003: In this episode, we discuss everything Amazon FBA. If you’ve ever thought about selling products online, this is the episode for you.
**Update4/13/17: Will update this post more thoroughly soon, but wanted to share that we grossed $30k in sales last year from Amazon, pretty amazing given that we only started selling in April.**
**We Sell about 15 pacifiers a day, which results in about $1200/month of Profits**
The product I am selling is a pacifier, this very pacifier is the same one that they gave my Son when he was born. He got used to the pacifier, and didn’t want any others. Problem is you can’t find this particular model in stores or online. And you have thousands of baby being born everyday getting used to a pacifier that is not readily available. If after leaving the hospital you lose this pacifier like we did, you could be in big trouble!
So we thought it would be a great idea to source the product from the manufacturers and make it readily available to every desperate parent through Amazon. So everyone can get it within 2 days for free if you have prime, and if your really desperate go for the same day shipping.
I have tested the product on ebay and it sells fairly well, however I wanted to move it to Amazon because I believe there is a much bigger audience for this product at Amazon and also because I do not want to have to stop what I am doing and print a shipping label and create a package every time I get a purchase. We at FamilyFreedom are all about trying to create passive income streams, and Amazon FBA allows us to do that. Because we are doing Fulfillment By Amazon, Amazon will pick and package it for me and ship it out to my customer – all through their 2-day Prime Shipping program.
I would like to describe the steps involved below:
First source your product and create your listing. Just for histories sake, I want to show what ranking my product is under the Baby Category. Originally ranked 34,672 in the Baby Category – now it is 2,109 three months later.
If you selected Fulfill by Amazon, rather than you fulfilling your own orders, then you have to make sure your product is sealed, and labeled with your SKU.
So that’s about it. Our strategy is to gain dominance in the market, so we are
keeping price as low as possible, I think after fees and product costs at the price point of $6.21, we are only really making about a dollar per sale.
-Campaign to get good customer reviews
-Create a multi-pack for larger profit margin
Already only a couple days later and I have moved from a sales rank of 34,672 to 14,391.
Now at 4,813 sales rank. Starting to sell about 1-3 a day. I’m going to have to send another inventory shipment to Amazon since they are beginning to run low.
So in a matter of 10 days I completed sold out my inventory of 40 pacifiers, I am sending 100 more today. This time Amazon wants me to ship the pacifier to three different fulfillment centers: Florida(14 Pacifiers), California (27 Pacifiers), and Delaware (59 Pacifiers)
The 2-pack is here! Why am I so excited about this? It’s because before at the price-point of $6.21, we were only making an $0.80 profit per pacifier sold. And now by selling a 2-pacifier multipack, we raised the price point to $10.80, and because of that, we will now make a $3.42 profit on each Multi-Pack sold.
Why is there such a big disparity in profits? Its because of the huge cut Amazon charges for its fee’s. and since the fee’s are largely based on weight, and the pacifiers weigh less than an ounce, it is basically the same fee whether we sell them individually or at a multipack. We did the numbers and analyzed what we thought consumers would want and decided that the preferred multi-pack size would be a two pack.
So creating the multipacks is a lot more involved, and definitely takes a lot more time. We are trying to make this as passive as possibly, so I don’t really like this; however we were able to make a 100 multipacks while watching a webinar one Real Estate Investing, so it was a good use of time. It took about 2 hours for my Wife and I to package 100 multipacks. That’s about 1 minute per pacifier.
Heres the process: Heat seal one end of the bag, cut bag from tubing, put FBA BarCode sticker on, put “Do not suffocate” sticker on, put “Do not seperate” sticker on, Insert two pacifiers, Heat Seal bag closed. All that takes an average of around 60 seconds. Amazon can do the work of labeling and packaging for you, but I think I will keep the labor in house, and pay my sisters a quarter for every pacifier they pack.
*My Mother in Law is now our first employee. We pay her $.25 per multi pack she makes, she’s happy, because she can do it while watching TV, and it works out to about $12-$18/hour, depending on how fast you are.
*We are now selling about 12-15 pacifiers a day. although on Prime Day we sold about 40. Our two packs are definitely the most popular. Which is good because our profit margin on those are a lot better.
*We are now live with 4 Variants.
*We received a 1-star review… after 5 polite customer-service oriented emails over two weeks, we were finally able to get the reviewer to respond and change their review to a 4 star review. We then sent her a thank-you email for reconsidering, and she later changed it to a 5 star review. We now have 6, 5-star reviews.
*We are starting to explore a new product opportunity.