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jasontayonline Blog

Chapter 4: Look before You Leap

29/7/2014

5 Comments

 
Having been introduced to the idea of selling on Amazon through the Amazing Selling Machine (ASM) marketing videos, I had the mindset of sourcing from a private label (PL) supplier from China. So I started to look on Amazon for potential PL products and then on to Alibaba.com in search of suppliers. I even went as far as to get samples sent to me and a designer design the packaging.

Then I worked out the numbers and realized the capital required was higher than I was comfortable with, the profit margin was not great, the competition was stiff and shipping from China was pretty costly. Bummer.  Long story short, after looking around a bit more, I decided to put this the shelf and explore other options.

In the end I started off with an order from Dollar Days International (DDI) which is a middleman wholesale directory.  My first order was for 2 products - a case of 25 steak knives and a case of 30 cutting boards. Both were not listed on Amazon so I created new listings. This was a case of not looking before leaping! The result? 9 months on and the cutting boards are lost in the Amazon jungle, languishing in some corner of a warehouse. The steak knives turned out quite well though. I sold 100 sets even though they ended up with a less than 3 star rating. I have since stopped selling them because DDI and Overstock (where I bought my subsequent 75 more for less than half the price on DDI) do not carry them anymore.

At the same time, since creating and importing a PL product from China had such a steep learning curve, I decided to explore looking for a private label manufacturer in the US. I researched several product categories online and finally settled on one. The next step was to Google for private label suppliers. I found almost 20 and sent them inquiries through either their website contact form or email. About 4 responded and out of those only 1 had margins that I felt were workable and who also seemed really easy to work with.

I designed a simple label on Microsoft Word (yup - no fancy software!), explained how to bag and label the product according to Amazon specifications and had the first shipment sent directly to Amazon in Dec 2013. It's been 8 months since my first order from that one supplier (which is a small family farm-based business) and I have sold hundreds of units! Sales were not super hot at first, but a combination of several things has helped the product rank in the top 1%-3% in their category after a few months. I will discuss those strategies in a separate chapter.

Reordering is real simple, I just drop them an email and say, "Hi, I would like to reorder 2 more boxes." They manufacture, prep, label and ship to Amazon, then send me an invoice which I pay by Paypal or Square. And I always pay asap - it's the way I like to do business and helps build a happy and solid relationship with those I work with.

In January, I finally started to pour into the Proven Amazon Course (PAC) materials before my next leap.  I spent about 2 weeks studying. The things that jumped out at me were Jim Cockrum's advice to go wide not deep, meaning buy a few units of many different products rather than a large quantity of a few. This is great advice for new sellers to minimize risks until you get a better feel for the market and what sells or does not sell. The other things were understanding categories, selling price, sourcing costs, sales rank and how to apply all that info into making purchasing decisions. From Feb-April, my sales were made up of 85% retail arbitrage items and grew from just over $1000 to $6000 a month.
5 Comments
Wendy Owen
20/12/2014 03:07:30 am

I have taken your advice on not starting to source from China. I started out with this in mind and couldn't find a profitable product. Certainly not the way to go if you're inexperienced...

Reply
Jason Tay link
29/4/2015 06:23:45 pm

Hi Wendy. Glad you are benefiting from the coaching and happy that your first PL is ready to launch after you learnt how the Amazon system works through OA! Up, up and away!

Reply
William Woon
29/4/2015 02:57:10 am

I am thinking of sourcing from my own country MY. However, the shipping cost is the one thing that will kill off my margin, the alternative is to ship via ocean, but the time taken will be longer. Kind of in a dilemma situation. Should I go for China? Or MY.

Reply
Jason Tay link
29/4/2015 06:20:57 pm

Hi William. I suggest you get your feet wet by first sourcing in the whichever country you plan on selling in. So for example the US for Amazon.com. If you read through all my blog post you'll get an idea of why I always suggest new seller start simply while learning the ropes of Amazon. Just yesterday, someone sent me multiple messages that they have ordered from overseas (doesn't matter China or Malaysia or wherever) and wanted to ship to FBA but their shipment is now stuck because they don't know anything about Amazon's requirements let alone US customs, CPSC, FDA, CBP or other relevant regulatory requirements.

Assuming you plan to sell on Amazon.com, start with sourcing in the US to sell in the US. This will minimize your risk. For example my 2nd shipment from Singapore to the UK was stopped and rejected by customs for product (Milo) that is banned from UK imports because it contains milk. Shipping there cost $350 and the return-to-sender would have doubled that cost if DHL had not waived it.

If you're shipping food related items to the US, you need to make sure the manufacturing facility is FDA registered and you have to file FDA Prior Notice for every shipment. This can be avoided if you simply bought from a US supplier.

If sending toys, you must have a safety test certificate issued by a US Consumer Product Safety Commission approved lab and issue a Children's Product Safety Certificate from the manufacturer or importer.

All these can be done. In fact I just received the lab safety tests documents from a China factory where I plan to private label from. But it is not something a newbie should be messing with. Source in the US so you can first focus on learning the ropes of selling on Amazon and all their listing, labeling, shipping and other requirements. After you are comfortable with that then proceed to the more complex requirements of import/export and all the complications that come with that.

Reply
Sally
24/7/2016 12:12:16 pm

Hi Jason,
For a newbie, do you encourage them to start with a product with an existing listing in amazon or to source for products that have not been listed. Does existing listing represent more competitions?

Thanks.

Reply



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  • About
  • Amazon FBA Guide
    • How to Register an Amazon Seller Account
    • Amazon FBA 101
    • Amazon Professional vs Individual Selling Plans
    • How to Sell On Amazon From Outside the US
    • Amazon FBA Prep Companies
    • Best Tools for Amazon Sellers
    • Code Confusion - Understanding GTIN, UPC and Amazon Barcodes
    • Amazon FBA Fees Explained
    • Amazon Coupons vs Prime Exclusive Discounts
    • How to Create Amazon Coupons
    • How to Increase Amazon Sales - Traffic, Click-throughs and Conversions
    • Optimizing FBA Inbound Shipping
    • Product Images and Photography
    • Amazon and Taxes - Income Tax, Sales Tax, and VAT
    • Amazon PPC Advertising
    • Insurance for Amazon Sellers
    • Amazon Seller FAQ
  • Reviews
    • Payoneer vs WorldFirst vs TransferWise vs OFX vs Airwallex
    • Helium 10 Review and Discount Codes
    • Proven Amazon Course Review
    • Amazing Selling Machine Review
    • Amazon Advantage Review - How to Optimize Copywriting for Amazon Listings
    • Amazon FBA Reimbursement Guide Review
    • Rebate Programs
  • Training
    • Amazon Seller Live Training
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