I Tried Amazon FBA For 1 Year... Here's What They Won't Tell You

I took a risk and I spent hundreds of thousands of dollars, and after 365 days, was it worth it? Well, today I'm going to break down every dollar that went in and out of my Amazon FBA business. There's going to be no fluff, it's just straight facts. And why does this matter? Well, most people only show their revenue online, and I'm going to be showing you the exact profit and loss statement, every cost, and how I made real money. Or lost it. And I promise you, by the end of this video, you're going to get a lot of key takeaways, like me losing over $30,000 on my biggest mistake and one simple strategy that helped me scale past multiple 7 figures. And at the very end of this video, I'm going to show you exactly how you can replicate this actual business model and maybe go ahead and surpass these numbers. But without further ado, here is the revenue numbers that everybody likes to go ahead and shell out. You can see over the last year I had made over $2.8 million on this brand called Maverick. And I mentioned earlier that I spent a lot of money, hundreds of thousands of dollars on this business. Well, you can see that in July of 2022, I actually went ahead and spent $190,000 to acquire this business. And in just 2 and a half years, I went ahead and listed this business back on sale on Empire Flipper for $1.78— so $1.8 million just a few days ago. So again, this video is going to be jam-packed with information, but also the true P&L statement, which is compiled of a lot of different types of information. But trust me, I'm not going to bore you to death. We're going to get straight to the actual numbers. So you can go ahead and see here, I'm going to zoom in just a little bit and we're going to go ahead and see exactly how much everything costs me when it came to Amazon FBA. And let me go ahead and bear with me. I don't like making any edits on our actual videos, but here it is. So as we go through the entire P&L, you can see one year I made $2.8 million and you can see what of it came organically and what of it came through sponsored products and sponsored display, sponsored Basically advertising on Amazon FBA. So you can see the different variations. And how does this help you? Well, you can go ahead and kind of judge it for yourself. Compare my numbers with your numbers, whether that's you making way more money than me, you can go ahead and scale these numbers up. Or if you're making less than me, you can go ahead and scale that way. But these are just benchmarks as far as what you can go ahead and see based on me selling on Amazon FBA over 1 year. So after we see here is we have an advertising cost. And this is how much I actually spent on advertising to make this amount of money. So you can see, as far as advertising, I spent over $626,000 in a single year, which again sounds insane to me, but Amazon is a pay-to-play type of service and you have to invest money in order to go ahead and make more money. And all of this money that we're investing in advertising is going to pay off in the long run because then we're also ranking organically as well. So that's why you see here, we have organic sales of this amount and we have sponsored product sales or sponsored display sales, basically advertising costs of that much as far as the ratio, right? So after that, we also have refunds, right? So something that people really don't talk about on Amazon FBA is the amount of refunds you actually get. And it makes sense, right? Amazon is very lenient when it comes to refund. They offer everybody a 30-day money-back guarantee as far as you returning your item, No questions asked, unless you're selling something like a supplement or something like an aerosol spray where it can't get returned. So you can go ahead and see it's all broken down there. This is actually my refund rate. So $135,000 of this amount went ahead and got processed as returns. And the big number that everybody goes and gets charged for is these Amazon fees. And what do these Amazon fees go ahead and break down to? Well, the first one is referral fee and everybody gets charged because it's a 15% fee when selling on Amazon. So regardless if you're selling FBA or FBM or however you're going ahead and selling your product, you're going to get charged a 15% fee every time your item sells on Amazon. And then the next one is this FBA fulfillment fee, which is actually shipping your, your product to a customer from the fulfillment center. So you can see just based on those 2 figures alone, I spent more than $800,000 dollars of me giving money to Amazon. And in reality, I gave them another $600,000 in advertising. So you can see how much money Amazon is just making off of me. And trust me, I am still a very small seller in this game of pawn called Amazon. So what other fees were associated with this, right? I also paid storage fees of $40,000. And again, I think this is a bargain. I sent so much inventory, whether that be Units or sizes or weights. I send a lot of inventory into Amazon FBA. And I feel like if I had my own storage unit, I was trying to fulfill these orders myself. One, I would waste so much time, but 2, most importantly, a lot of money in storage fees just alone in that, right? Another one is inbound transportation. So usually what I like to do is I like to ship all of my items from China straight to Amazon. But there's certain situations where, especially during Q4, when I'm limited in actual inventory I can ship into Amazon, I like to either use a 3PL or my garage to go ahead and get items delivered from China to the US. So I have a drip system available that whenever something is running low and I can go ahead and ship into Amazon, I go ahead and do that. So that was another $40,000 and everything else you can go ahead and see, uh, or $10,000. Sorry. That was storage costs. Again, I don't like to make any edits in my videos. So you can go ahead and just bear with me if I make any mistakes. So you can see inbound transfer fees close to $10,000 coupon redemption fee. This is a cool one too. I like to offer 5 to 10% off of my items just so I can go ahead and get a higher click-through rate. But that obviously costs money, right? I obviously have to pay a promotion fee for that. And Amazon also charges me every time somebody clips this actual coupon. So Amazon got basically $10,000 from me, well, basically for free, just by going ahead and offering this type of service. Another one is this inbound convenience fee. Well, I made a huge mistake last year and I came out with a brand new product that was over 45 pounds and Amazon allowed me to ship it to one fulfillment center. The mistake with that is that I didn't know I was going to get charged $7,500 by just shipping it to one fulfillment center. So that was a huge mistake on my part. I should have known better, but again, we live and we learn. And when you're dealing with these types of numbers, sometimes convenience is way more important. So what other stuff? Long-term storage fees, which we're going to go over in this video too, where I made mistakes here. So obviously long-term storage fee means that they were in Amazon's warehouse for over a year. This can mean 2 different things, which primarily tie back to the same thing. Number one, you have a product that just didn't sell, right? So it's just sitting, collecting dust in Amazon's warehouse. Number 2 is that maybe you ordered too much inventory. And that's why sometimes it's okay for you to have a 3PL or some units in your garage like I do, Because you don't want to send excess amount of inventory into Amazon because trying to get that inventory back is going to cost you way more. Trust me, I know. All right. So let's go over more important compensation clawbacks. I think this just means that they might've given me more money than they were supposed to, and they go ahead and claw it back. FBA removal fees. Again, that's another thing. So not only am I getting charged the long-term storage fees, but when I go to remove it, I got charged another $4,000 labeling fee. This is another one that kind of pains me is just that I keep on getting one of my products that Amazon says that I'm not labeling them correctly. So instead of just dealing with the headache of, you know, going back and forth with Amazon, I just pay Amazon 50 cents to go ahead and just label them themselves for one particular ASIN. That cost me $4,200. Again, it's one of those things where maybe I can go ahead and go back and forth with Amazon, but for a whole year, me only paying $4,000, I'll take the win on that one, or I'll take the L on that one. So you can see labeling fees, we can see liquidation brokerage prices. Again, this goes hand in hand with long-term storage fees and removal orders. Again, you don't want to send excess inventory. And again, we're going to go over exactly what these items were. Lightning fees, obviously to go ahead and create deals with Amazon FBA. You guys get to get the picture there. These are all Amazon FBA fees. And most importantly, the cost of goods sold. This just basically means whatever your actual product cost is plus shipping it into Amazon. So you can see out of $2.8 million $500,000, basically half a million dollars came from just cost of goods sold. So you can go ahead and see my estimated payouts from Amazon FBA, my net profit, and most importantly, what is my margin? So you can go ahead and see here, I have just below a 20% profit margin, which accounts for around 99% or 100% return on investment. This just means for every dollar I have put into Amazon FBA, I have gotten $2 back. So you always want to aim for at least a 100% return on investment. But again, we're going to go over some information in this video that I made a bunch of different mistakes. And let me kind of show you, um, going through my actual products, because I'm an open book. You can see, as I go ahead and filter through here, I've had a lot of products that I've lost thousands of dollars, right? You can go ahead and see over the last year, I lost $1,000 here, $700 there, another $700 there, $800. $3,800 right there as I move myself out the way. Um, $1,000 there, another $3,000, and a big one that comes up here is $7,000. So as you can see, I have made numerous mistakes when it comes to Amazon FBA. So that is why you're getting information from somebody that's actually in the trenches. So what exactly have I actually learned with selling on Amazon FBA? What What are the mistakes that I have made that basically resulted me in actually doubling my sales? So I'll show you exactly how I doubled my sales, but let's go over here. The one strategy that changed everything, right? So what would I do before? So before I used to chase new product ideas and you can see it from here, right? I came out with so many different types of products. And that was basically my strategy is that as long as we launch as many products as possible, as long as we hit one home run, it will be worth it, right? And my mind frame was, if I launch 10 products, 3 of them are bound to hit. And that's just the wrong mentality to have. And we'll go over exactly why. Well, always thinking the next launch will be a big one, like I mentioned before. So the shift happened when then I realized the secret. Instead of launching new products, double down on winners and create variations that customers already love. So most of my sales come primarily with 2 different ASINs. Right. And my mindset was like, these are great. Let me go ahead and have these being cash cows. And I can go ahead and just continue releasing new products that hopefully will become another cash cow. So what do I mean by variations? Right. So I'll come out with different color variations, size expansion, bundles, a combination of all of them. Right. Because the thing is that somebody loves one product by you offering different variations, they're going to be able to go ahead and pick one of them that they actually like. So having a combination of all of these, you're going to higher conversion rate. So how does this increase? Um, basically this increases lifetime value of a customer and reduces risk. Why does this reduce risk? Well, you get a higher conversion rate. And what I mean by that is somebody that lands on your listing is obviously interested in your product for a reason. By offering different types of sizes, different colors, different bundles, or just a combination of all of those, they're going to basically end up purchasing. And if a customer ends up purchasing, you're going to get better ranking on Amazon FBA. And if you get better ranking on Amazon FBA, that means you're going to get more organic sales. You see, this is all a flywheel effect. And I didn't really realize this until I started going ahead and trying to experiment different things within my own business. So what is the mindset shift, right? Why gamble on untested ideas when you can scale what's already working? Focus on product development after you have milked the entire cash cow. And do you want proof of this? Well, I literally doubled my business. And you can see, um, this is, this is actual raw information from Empire Flippers. So whenever you go ahead and sell your business, they want— they're rigorous as far as what information they're going to gather from you to try and get a precise profitability of your actual business. So when we go ahead and go down here, when I purchased the business and one year into it, you can see that this business was generating right over here. You can see the business was still generating a good amount of money, right? $17,000, $11,000, $16,000, $8,000, $17,000, $38,000 December of 2023. And just in itself, that is a successful, good business that's worth a lot of money. But let's go ahead and compare this year to the year 2024. So you can see that I actually started off negative, but after I started off negative, that's where the shift happened, where instead of focusing on launching new products that have lost me a shit ton of money, Let me double down on what's actually working. And you can see the net income just exploded from there. So again, just by going ahead and just making that one shift basically transformed my entire business. So what else did I go ahead and learn? Well, this is my $30,000 mistake and we've kind of went over it already. What did I do wrong? I launched too many products and I underestimated demand and got stuck with unsellable inventory. So you, you guys basically saw what exactly happened to my actual business, right? I launched way too many products where I lost so much money, and I even took my own advice and started, um, coming out with variations before I knew that these were actually winners. You can go ahead and see these products are different variations, different sizes of the actual same product. So I thought Well, if I'm doing really well on a different product, let me go ahead and come out with a different product that's similar and already come out with those variations. Because if it works for them, it's obviously going to work for this other product. And obviously that was not the case. I lost so much money, excess of $30,000 to $40,000 by making this mistake. And how do I basically lose that money? Right. Well, let's go over it. How can you avoid this? Order small. And test first. Don't jump to variations too quickly like I did, right? Focus on variations, not untested products. So focus on the variations of some stuff that are already working, right? So take your best sellers that's already profitable, already making money, and focus on those things first. Don't come out with a brand new product and do variations with that because that is the quickest way to lose all your money and basically lose your ass when it comes to Amazon FBA. And here's the truth. Bad product decisions aren't just lessons learned. They're expensive mistakes that can tank your business, both time and money. One failed product can waste 6 months of your time. And this is what I mean. By me going ahead and exploring a different avenue of trying to launch as many products as possible, not only did I lose a shit ton of money, I lost so much time. If I would have went ahead and just implemented these strategies from the very beginning, I would have made that $40,000, $50,000 every single month way quicker. We're talking about 12 months earlier. So this is why it's very important to actually get information from someone that's actually been in the trenches, because I test everything tooth and nail. And I wish I had someone that I can go ahead and have this information to, and they would have just told me this information because I would have been ahead and been able to sell this business way quicker or made a lot more money quicker. Right. So how do you scale your own business? So Amazon FBA isn't A to Z. It's not an easy course, right? You don't need another generic roadmap. You need someone to help you scale your business by avoiding the mistakes I made. And again, these are expensive mistakes, not only mistakes that cost me money, but they also cost me a shit ton of time. Right. And that's the most important thing that I can't get back. I can always get money back. I can never get my time back. So what do I offer now? Well, you know, now that I'm selling this business, I'm acquiring new other businesses. I want to go ahead and develop a one-on-one personalized coaching that I will identify bottlenecks in your business and help you scale profitably. And that's the biggest thing right there, right? Without wasting money on bad strategies or time. Most importantly, we all want to go ahead and get through A to Z, and everybody's going to get to A to Z eventually if they stick it out. The only time— the only thing that's different is the amount of time that it takes you to get to Z. Right? So if you're interested and serious about growing your Amazon FBA business, book a call with me. I'll have the link below and let's make your business better than mine. And again, only click the link and sign up if you are committed 100% to this, because you're actually working with me one-on-one. It's not some other coaches or brand managers that you're going to go ahead and be working with. This is an opportunity to actually work with me. But if you got any, you know, value out of this video whatsoever. The only thing I ask for in return is please consider liking this video, subscribe to this YouTube channel, because that's the only way I know how to go ahead and grow. And if you like this actual video and you're an Amazon FBA seller, it's going to be shown to way more Amazon FBA sellers that are going to benefit from this. But again, until next time, guys, peace.