There are five mistakes that I’ve made on Amazon FBA that has cost me thousands of dollars. I will show you how to avoid these mistakes as well as let you know the truth about Amazon FBA.
Loser Products
This mistake has cost me about $10,000. While I’m a big fan of creating a passion product, there is still a chance that you will create a loser product with it. I did this when I created the PNB jars. My mistake was I did not ask anybody – my product launch group, my email list, my Instagram followers – if they like it or not. Another issue about the jars is that they leak and about 1000 units ended up going bad. I was not able to sell them and had to throw them away. The lesson learned is to make sure to validate your idea.
Numbers
The second mistake is not understanding your numbers. This is a mistake that a lot of new Amazon sellers make. I also made this one and it has cost me $3,000. You need to understand all your different numbers: How many sales are you going to do? What’s your product cost? What does your cash flow look like? The way this is a mistake for me is because I ran out of inventory. I did not properly project what my sales are going to be. Another mistake that new sellers make is not understanding all the little fees. Below is a breakdown of my monthly income report:
Revenue: $33,280.11
Pick-and-pack Fee: $4,910.21
Amazon Fee: $3,976.63
Amazon PPC: $2,986.80
Other Amazon Fees: $546.89
Other Fees: $1,000.00
Product Cost: $9,274.20
Profit: $11,132.27
Manufacturer Issues
Aside from the jars leaking, there are also other manufacturer issues that have cost me $12,000. There was one time when the manufacturer sent me the pouches without the pull tab. I ended up hiring people to snip the pouches so that they were easy to tear. My manufacturer is also sending me the pouches in a box of 200. There was a time when some of the pouches exploded and I had to hire again to clean the surrounding pouches.
One of the lessons I learned with all the manufacturing issues is to get a contract with the manufacturer. Make it very explicit. Another lesson is to get everything in writing. When you get on a phone call, I recommend that you send a follow-up email after. It will serve as your backup.
Missing Details
The fourth mistake I made is making stupid mistakes and this has cost me about $3,000. For instance, there was a point when I ordered 10000+ of macadamia nuts but ended up not being used as my manufacturer does not process them when they are processed in a facility that also processes peanuts. Luckily, I was able to return the macadamia nuts to the person I bought it from. You have to understand, however, that this part of the truth of Amazon. You are going to make dumb mistakes, no matter what you do.
Waiting
This is the biggest mistake I see new entrepreneurs making. They get stuck in the analysis paralysis. This is what happened to my PNB Cacao flavor. If I have launched it a year ago, I would have made $125,000. Because I did not, I lost that amount that I could have earned.
Amazon FBA is that it is not that great opportunity as people think it is. It used to be a better opportunity. However, that is the nature of entrepreneurship. Every time there is a good opportunity, it gets saturated and you are going to have to adjust. As the game adjusts, you need to adjust to it. That is why I believe strongly in the Passion Product method. However, if you are going to wait for five years, that market is also going to get saturated. If you’re going to wait for a year to launch that idea, someone else might do it first. The truth about Amazon FBA is that it can be scary. You are going to spend a lot of money to do a production run and you don’t know how long it is going to sell. That’s why I wrote a note “Be Fearless” because you will never know what is going to happen. Things might not run well on your first time, but if you keep trying you will succeed in the long run.