Transcribe of “How To Start On Amazon | Covid 2021 Update | What you need to know first!”
Hi, guys, Neil Waterhouse. How To Start On Amazon? This week’s video is an update about how to start on Amazon taking into account the latest COVID updates. If you’ve been following me for a while, you’d know I’ve shot videos in the past about how to start on Amazon. And I also did the first Amazon and Australia Roadshow with Amazon as their guest speaker back in 2015, where we helped new sellers start on Amazon.
COVID has forced us to pivot
However, COVID has forced us to pivot, as I’ll show you. Now, some of the strategies that used to work well before COVID. And even at the beginning of COVID, no longer work so well. Other strategies, because of COVID, are crushing it, as I’ll show you in this video. As most people know, COVID’s forced more people than ever to purchase online, and this is great news if you’re looking now to start on Amazon.
Getting stock from manufacturers is a really big issue
However, getting stock from manufacturers is a really big issue right now for everybody. As so many factories are closed, they’ve got skeleton staff due to their workers stuck at home, due to lockdowns all over the world. However, there is a great solution, as I’ll show you, but before I get started, make sure you hit the subscribe button to the no-fluff, ad-free channel that puts out weekly videos teaching step by step how anyone can build a seven-digit online business from their home using eBay and Amazon and using less than $100.
Give you some idea of supply issues
So to give you some idea of supply issues. One of our suppliers in Vietnam normally has around 300 staff in their factory. However, back in February this year, the majority of the staff went home for their Vietnamese holiday. Because of COVID, only eight people returned.
They’ve got a skeleton staff
And as of this morning, I talked to them. They’ve got a skeleton staff of only 22 instead of 300. Not only does this manufacturer have less than 10% of their workforce. Many other manufacturers in China, Malaysia, Vietnam, Thailand, Japan, et cetera, they’re in exactly the same boat.
This creates a domino effect
And this creates a domino effect because if one supplier cannot manufacture a part required for another manufacturer, that stops production for every manufacturer that requires that part. It’s like the old saying of if a light bulb manufacturer cannot manufacturer or cannot supply a light bulb for a car manufacturer, it can stop the whole production line for that model vehicle.
This is exactly what is happening right now
And this is exactly what is happening right now. If you look to start on Amazon today, it’s really important these days to take this into account when choosing which methodology you want to use to sell the items on Amazon. Let me show you. The most popular methodologies that get banded around these days for start on Amazon is the FBA, which is short for Fulfillment By Amazon.
Fulfillment By Amazon
This is where you send your inventory to one or more Amazon warehouses and when it sells, Amazon ships your inventory to your customers. Another Amazon strategy is FBM, which is short for fulfillment by merchant. This is where you ship the goods direct to your customers. Another strategy is private label where you or your supplier stick on your own private labels with your own brand names onto your inventory.
Another strategy is dropshipping
And Another strategy is dropshipping where your suppliers ship the products direct to your customers for you. And the big advantage of dropshipping is, is you’re always cashflow positive. As you get paid first, before you purchase inventory. Also, it just started raining, so let’s try to get through this quickly. Now, all these strategies have got pros and cons as I’ll show you, especially these days with COVID.
All these strategies have got pros and cons
As the host and founder of the four largest eBay, Amazon groups in Australia, I get to see inside not just our own businesses, but also the Amazon businesses for many of those sellers. So I get to see which strategies are working the best. To cut a long story short, each strategy has pros and cons, and you need to first decide which strategy suits you, your goals, your personality, and your financial circumstances.
For FBA and private label, you need to first purchase inventory from your supplier
For example, for FBA and private label, you need to first purchase inventory from your supplier, which means you obviously need to have the cash flow available to purchase the imagery before it sells. And if you don’t have the cashflow available or you don’t wish to allocate the cash, then you may want to check out dropshipping and you need less than a hundred dollars as with drop should be your customers pay you before you need to purchase any inventory.
I’m not going to go into dropship in this video
I’m not going to go into dropship in this video as I’ve done that before in previous week’s video. But if you miss that video. I’ll put a link on the screen and below to that free online step-by-step course. Let’s look at the pros and cons of each strategy. First let’s look at the Amazon FBA pros and cons.
The main pros of Amazon FBA
The main pros of Amazon FBA is that Amazon does all your warehousing for you as well. Amazon ships, all the products to your customers and Amazon also takes care of customer support for all your customers. The biggest downside of Amazon FBA for a lot of people is that you first need to outlay the cash to purchase the inventory.
On average, based on the surveys
On average, based on the surveys from the groups to make a thousand dollars profit per week. After all expenses you’ll need to outlay around $36,000 to make the $1,000 profit after expenses. To double that, say, if you want to make say, $2,000 profit per week after expenses. You’ll need to outlay on average around in about 72,000 that’s 72,000 on inventory.
These figures are based on making a 30% profit after expenses
Now, these figures are based on making a 30% profit after expenses and a stock turn of 90 days. Now for those new into importing and selling Amazon FBA on average, it takes most suppliers in China one week to 12 weeks to produce your order. Then your supplier ships the items to a freight forwarder. The freight is then packed into a container, it’s then cleared by customs and then put on the next available ship.
Shipping normally takes around 11 to 13 days
Shipping normally takes around 11 to 13 days, and then it’s unpacked from the ship cleared by customs, and then the items are shipped to the warehouse. All of this takes time, and this is why cash flow is required to fund the products before they sell. Most suppliers require a deposit of around about 40%. So when those items are finally in the Amazon warehouse, they’ll require some time of course, to sell.
Amazon will put the money back into your bank account
Then Amazon will put the money back into your bank account. And once the money is back into your bank account, that completes the stock turn. If all goes well, you should be able to have the stock turn within 90 days. That is have the money back into your bank account with profit after 90 days. Now, what can happen though, especially for beginners is when your order has finally arrive, you can suddenly find you’ve got many more competitors, including Amazon.
When Amazon spots hot selling items
When Amazon spots hot selling items, they sometimes start importing and selling those same items as well. Now don’t get me wrong, I think Amazon FBA is awesome. And you know, we’ve been in Amazon FBA now for over 10 years, but if you’re a beginner research is your best friend. What I recommend these days is a start dropshipping first and then start importing your top selling dropship items.
Dropshipping is the best way to go
For a beginner, I think dropshipping is the best way to go is you don’t need to spend any money purchasing inventory before it’s sold. With dropshipping, you get paid first. It’s the same with private labeling. If you want to get into private labeling. Start importing your top-selling drop-ship items and then private labeled those top selling items.
The beauty of this strategy is you can just purchase one of these top selling items
Now the beauty of this strategy is you can just purchase one of these top selling items from your local drop-ship supplier and test your private label before you invest and spend thousands of dollars on inventory. Doing this, the worst case scenario is your private label item does not sell. If that happens, simply peel your private label off and sell the item as it was already a hot selling dropship item before.
You’ve got no problem selling it
So you’ve got no problem selling it. If your private label item stats are like hotcakes, awesome, then import it and increase your margin. This is a much less risky strategy than the mistake that so many beginners make these days importing thousands of dollars of unproven products. There are literally thousands of first-time private label sellers with garages full of unsold, private label items.
COVID’s creating a lot of issues with inventory supply
Today with COVID, COVID’s creating a lot of issues with inventory supply. If we’re importing only, and you’re not dropshipping, you’ll find many of your hot selling items are simply not available from the suppliers. At the moment, over 40%, that’s four zero 40% of our import items are not available due to supply issues. We dropship, and this is not such a big issue.
As you can quickly pivot to the hottest selling dropship items
As you can quickly pivot to the hottest selling dropship items without the need to spend any money. With importing, you’ve got deposits tied up with your suppliers. We’ve got deposits that we paid six months ago, and the manufacturers haven’t even started production. They’re either waiting for parts or waiting for staff.
This is not an issue as we dropshipping
Again with dropshipping, this is not an issue as we dropshipping, there’s no deposits as you don’t pre-purchase inventory until it’s sold. So bottom line, Amazon FBA rocks, but only if you have the cashflow and only if your supplies have inventory available. Make sure that when you pay your suppliers in China, send the money by Escrow so you can get it back if your supply can’t supply.
If want to know more about how to build an Amazon FBA business from scratch
If want to know more about how to build an Amazon FBA business from scratch, I’ve got a complete free online step-by-step course. I’ll put a link on the screen and below. Same with private labeling, I love private labeling and I’ve been private labeling now for over 30 years. However again, only if you’ve researched the market and you’ve researched the product. And only if you’ve got the cashflow and only if your suppliers are having the inventory available.
Make sure that when you pay suppliers, send them money by Escrow
Again, make sure that when you pay suppliers, send them money by Escrow, so you can get it back if your supplier cannot supply. If private labeling is what excites you, again, I’ve got a complete free step-by-step online course, which I’ll put a link on the screen and below. If you’re new to private labeling, just be careful with private labeling. Research and diversification are your best friends.
Just be careful with private labeling
I know many people who have just a few private label items and this 40% rule of items out of stock is really hurting them. If you’ve got any say, two private label items, statistically, you may find that one of yours suppliers cannot supply one of your items. This is just half your revenue. Personally, these days dropshipping is what excites me the most and like I said earlier, dropshipping is the retail fulfillment method that’s flipping the e-commerce game on its head.
Many large retail companies, have moved to the dropship model
Many large retail companies, have moved to the dropship model. So instead of spending more money buying and storing products in bulk, they can source and sell products without ever physically handling the items themselves. When you sell a product using dropshipping, is shipped directly from the supplier for you.
If you want to know more about dropshipping
Again, if you want to know more about dropshipping, I’ve got a complete free step-by-step online workshop teaching that anyone can build a seven-digit dropship business from scratch using less than $100. Again, I’ll put a link on the screen and below.
Has this video helped you with how to start an Amazon?
Has this video helped you with how to start an Amazon? Please leave me a comment below and make sure you hit the subscribe button to the no-fluff ad-free channel that puts out weekly videos teaching step-by-step how anyone can build a seven-digit online business from their home using eBay and Amazon and using less than a $100. Until next week, stay safe. This small summer. This is Neil Waterhouse.
How To Start On Amazon and what you need to know first!
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