If you are thinking about starting a business selling on Amazon and are wondering if you can succeed, watch this video so that we can bust the following five myths:
1) There are too many other sellers and you are too late
2) Selling on Amazon is really hard
3) You should only use FBA
4) You have to do everything yourself
5) You should be immediately successful
If you have questions, be sure to post them in the Facebook group.
Click here to read transcript
Trent: Hey there everybody, welcome back to episode number 107 of Bright Ideas daily nugget. I am your host Trent Dyrsmid. And in today’s video, we’re going to talk about the top five myths about selling on Amazon. Now, before we get into that, in case this is your first time watching one of my videos, know that I do run an Amazon wholesale business that was started in September of 2016. And within five months, we were doing over $100,000 per month. In our first year, we did over 1 million, and we have continued to grow from there. So, I do know a thing or two about selling on Amazon as I’ve experienced a great deal in the last couple of years.
So you might be thinking, well hey, I want to start selling on Amazon. I’ve heard of people who are having success, I know people who are having success, but is it really right for me? So, let’s examine what those five myths are. Myth number one; too many sellers on Amazon. Well, yes, there are a lot of third party sellers on Amazon, last count there’s somewhere in the vicinity of 2 million sellers. Now, are all of them active? No. Are all of them really, really good? No. Like anything else, there’s always going to be a percentage that are simply much better than everyone else and they’re going to get a disproportionate share.
Now that said, consider some facts from a Forbes article, and I’ll put a link to this article down in the notes. 51% of US households will be Amazon Prime subscribers by the end of 2018. That is an increase of 45% from 2017. That is a huge increase. Prime subscribers spend an average of 4.6% — or sorry, 4.6 times more than non Prime subscribers. 70% of Americans with incomes over $150,000 who shop online have an Amazon Prime membership. Now, so obviously, lots of people using Prime in the United States.
But guess what, there’s the whole rest of the globe where Amazon is trying to make inroads. And even though you’re in the United States, that doesn’t mean you can’t sell outside of the United States. The Amazon EU marketplace is a very large and successful marketplace. Amazon US has over 200 million products. That’s a lot of products. So is it too late or are there too many sellers? No, definitely not. The key to having success is you need to pick your niche. And in video number 107, the one before this, I talk about one of the ways that we build audiences using Facebook groups and email so that you can be more successful in that niche.
The other aspect of knowing your niche is from the suppliers. If you’re going to pursue the wholesale model, which is what I do, knowing what niche you’re going to go after and curve out your reputation in as opposed to just scatter gun and trying everything is a differentiating strategy. And having an audience so that you can say to those suppliers, hey look, I know how to drive traffic to your Amazon product listings on demand is an absolutely critical part of that. So that’s Myth number one. And I think we’ve we busted that one.
Myth number two, selling on Amazon is hard. It’s not hard. It’s like everything else. There are things to learn. But Amazon is really, really good at building a backend interface in the Seller Central dashboard to make things a whole lot easier. And the other part of selling on Amazon being harder, not harder depends on the business model that you pick. Many people take the private label approach. I was not terribly successful with that approach. I chose instead to put all my time and effort into the wholesale approach. And I’ll put a link in the notes of another video that explains the difference between private label and wholesale — a little reminder to myself there.
And wholesale is actually relatively simple. You’re buying products wholesale at a lower price than retail and you’re putting them on the Amazon Marketplace, and then you’re selling them at a profit. It’s not really rocket science. So let’s bust that myth. Now, number three, you should only use fulfillment by Amazon. So, there are a variety of ways to get a product into the consumers’ hands. FBA, that’s when you see the Prime badge, is very, very popular. But last week I spoke with a woman who has $150,000 per month Amazon business where she does 90% of her business FBM which stands for fulfilled by merchant.
Now, her particular approach for her particular business has accomplished two really important things. Number one, her gross profit margin is actually much higher than ours, and that is the byproduct of the thing number two is how she sources products. So a simple decision to focus on FBM fulfillment, and her and her college age daughter on a part time basis handles the fulfillment. She’s built an extremely successful business. And one of the common things that brands will tell you today is we don’t want any more Amazon sellers. What they mean is they don’t want any more Amazon FBA sellers. But that does not mean that you could build a wide portfolio as this woman has of products where you’re getting FBM and build your business that way.
So, there’s all sorts of ways to skin the cat as it were. So we’re going to bust that myth as well. Myth number four, is that you should do everything yourself. And that is absolutely not true. When I started my business in 2016, I did not do everything myself. I made extensive use of virtual assistants, which you can employ in the Philippines for anywhere from three, four or $5 an hour. And you will get every bit the quality of work, if you give them a good set of instructions that you can get out of a US worker at a much lower cost with no payroll tax burden, no health care burden, no anything burden. You just simply pay them via PayPal, or whatever your preferred method is, and you can get these very fine folks to do a lot or all of the grunt work for you.
And that was my big secret to success when I started was I put a great deal of effort into creating standard operating procedures, which is a document. It provides a detailed level of instructions. I would simply provide a virtual assistant with that detailed set of instructions and they would go do whatever the thing was that I needed them to do that I didn’t want to do and didn’t have time to do. Now, if you want to learn more about how I did that, I actually created — that worked so well for me, I created a software company where you can put all of your standard operating procedures and I’ll put a link to that as well.
And that’s going to be at Flowster, F-L-O-W-S-T-E-R. So Flowster.app, and you can go there and you can get yourself a free account. And there will be an ever increasing number of free premade SOPs. And then we also have premium SOPs that are the SOPs that we use in our Amazon business, and you can inquire about those if you would like, so that myth is busted you. You definitely don’t need nor should you do everything yourself.
And then number five, you should be immediately successful. And again, that is not true. Earlier in this video, I said I went from zero using wholesale. I went from zero to 100,000 a month in five months; did a million on our first year and that is absolutely true. I’ve talked about that extensively in prior videos. But what I didn’t share in this video is prior to that, I spent four or five months kind of floundering around trying to do private label. I found that it just it wasn’t suited to me, or I wasn’t very good at it.
Now, I learned a lot about the Amazon Marketplace and Seller Central and so forth. But it never made any money. I never made any profit while I was spending those four or five months doing private label. But what did it give me? When I went and I talked to my very first brand, I was knowledgeable about the platform and pay per click campaigns and Lightning Deals and listing optimization, and all of the skills that you need to have in order to be successful in the wholesale model. So was I successful immediately? No, I absolutely was not. So we’re going to bust that myth wide open as well.
All right, so if this is your first time checking me out on YouTube, I would encourage you to click the little button and become a subscriber. If you have questions, go ahead and leave them in the comments. Another great place to interact with me and the other people in our community is in our Facebook group. We have a very active Amazon wholesale Facebook group that you can get to at Brightideas.co/Facebook. We produce a podcast where we publish one episode per week where I interview other very successful e-commerce entrepreneurs. You can get to that at Brightideas.co/iTunes. And there’s all sorts of resources on the start here page that’s on our blog which you can get to at Brightideas.co right there. Thanks very much for tuning in. I look forward to seeing you in the next video soon. Take care. Bye-bye.