The S&P 500 return over the past 30 years has averaged over 9%.
Bonds have averaged approximately 5% during the same time.
The average salary increase is just over 3%.
In 2014, I had a 26,000% return after starting selling with Amazon FBA with $75! (that’s a little over $22,000 for those of you still following along).
Ok… I’ll admit that may have read like a sleazy online sales guy (or gal).
So let me clarify: This isn’t a post about how I invested $75 and collected a crazy amount of income from my laptop while sitting on the beach.
I worked my ass off!
I stayed up late, woke up early, worked on weekends, and studied Amazon FBA. The following year, 2015, I earned nearly $50,000 selling with the Amazon FBA program.
However, I did give up my Amazon business in 2017 due to career opportunities, kids getting older and different interests.
With that said – I still think selling on Amazon is one of the best side hustles available.
What You’ll Learn from this Post
You’ll learn how I started my Amazon FBA business, worked really hard, and still had a full-time job (with a family & 3 kids).
Let’s get started….
What is Selling with Amazon FBA?
Amazon FBA (Fulfillment by Amazon) is very similar to eBay but on steroids. Through the FBA program, you only have a few jobs:
1) Find products to Sell (the strategy I used was Retail Arbitrage)
2) Label Products
3). Send Products to Amazon
3) Price & reprice items through your online portal
Amazon handles the following (all for a small fee)
1) Finds customers for you (access to their 200 million + customers)
2) Collects payments
3) Packs and ships the items to the customers
4) Handles most of the customer service issues and returns
5) Sends the money to you
This program frees up a lot of your time so you can focus on sourcing (finding products).
As you probably noticed, selling with Amazon FBA is entirely different than eBay in a few key areas – you don’t have to create your product descriptions, there are no auctions, and you don’t have to send items one by one.
Getting Started Selling with Amazon FBA
I first heard about Amazon FBA program on The Smart Passive Income Podcast with Pat Flynn. He interviewed Jessica Larrew, and she discussed how she earned a ridiculous amount of money selling on Amazon.
Here is what I used to get started with my Amazon Business:
- Amazon Seller Pro Account ($39.99/month)
- Profit Bandit – This is an app you can download on your iPhone or Android that helps determine what sells well on Amazon ($9.99/month)
****Now You Don’t Need Profit Bandit – The Amazon App will work just fine, and it’s FREE
- $150 earmarked to start the business (I started with $75)
- Extra time
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What Should You Buy to Sell with the Amazon FBA Program?
I used a strategy called retail arbitrage – this is where you buy a product at a store (think Target, Walmart) and sell it for a higher price on Amazon.
Almost everything I sold with Amazon FBA, I found in retail stores. The items I bought were typically from the clearance aisles and could be sold on Amazon for much higher prices.
Here are just a few things I sold on Amazon during my FBA run:
- sporting goods
- food (yea, weird)
- health and beauty products
- home goods
You can also learn about the items Amazon allows you to sell by visiting the Amazon FBA Program page.
How Do You Know What to Sell with Amazon FBA?
When I discuss selling with Amazon FBA, this is the number one question I get asked, “How do you know what to sell?”.
Fortunately, it is not based on luck. It is more scientific than anything else.
As I mentioned previously, I would source items at local retail stores. To find what things to buy (and eventually sell on Amazon), I would utilize the Profit Bandit app on my iPhone.
Once I was in the store, I would open the app and use the camera on the phone to scan an item’s barcode.
The app would search all of Amazon for that product and give me information to help determine if it was a smart buy; this included the following information:
- sales rank
- current sales price
- profitability based on how much I could buy it for
- calculated all the Amazon fees
- how many other sellers were selling the item
Simple Buying Rules
When you first start out selling on Amazon, you should set some rules because its’ easy just to start buying any profitable item.
Here are the five Amazon FBA program rules I utilized when I first started:
1). Only buy an item if you’ll make a profit of $5 or more
2). Only buy an item with a minimum profit margin of 50% (this means if you purchase an item for $20, then you need to make a profit of $10.00)
3). Only buy items that have a sales ranking of less than 100,000
4). Reinvest your profits for the first 90 days
5). Learn everyday
So, How Did I Turn $75 into over $20K Selling with Amazon FBA?
All of my success in my Amazon FBA business I owe to my children.
When I first started, I had scanned items for weeks with absolutely no luck. You will probably do the same thing when first starting out.
There was a point when I thought about giving up. Then my children drug me into a toy store that was going out of business.
While they were looking at toys, I decided to scan items. I found a game called MindFlex Duel. It was selling in the store for about $15, but it was selling for well over $50 on Amazon.
There were dozens of the games in the store, but I was nervous about buying them all because they were going to be my first purchase. Plus I was pretty much broke at the time with little savings.
So I purchased 5 for about $75!
I went home, figured out how to properly pack up the items, and sent them off to Amazon.
A few days later, I got an email from Amazon, notifying me that I sold an item.
Then a 1/2 hour later, I received the same message. I sold out of all the games in a few hours.
I immediately called the toy store to see if there were any games left. Luckily, they had 26 games left, and I purchased them all.
Once I collected all of the money from my first sales, I reinvested in more inventory and training.
By the end of 2014, my original $75 investment turned into over $20,000 in profits.
Below is a screen shot from my largest sales period that first year. There was a little over $7,000 deposited into my bank account and approximately 55% would have been profit on that amount…so about $3,850 for that two week period.
Not too bad for a side-hustle.
I followed up in 2015, with earning almost $50,000 in sales on over $150,000 revenue!
Here are two snapshots from sales during Christmas in 2015:
Yes…over $30,000 was deposited into my account over this month! Crazy…nearly $15,000 in profits.
So What Happened to my Amazon FBA Business?
I absolutely loved selling on Amazon, but I also absolutely love my career, family, and health.
When I first started my Amazon business, I was only working about 5-6 hours a week. It was manageable.
Then I became obsessed.
I would put 20 hours a week into the Amazon business…then I put more hours in blogging about it…then, even more, teaching others how to sell on Amazon.
At the end of 2015, I was probably putting in 40 hours a week from October 15th through December 10th. That’s on top of my full-time job, family, and everything else in my life.
It all became too much. I sold a little bit in 2016, but eventually
stopped my Amazon FBA business in 2017 due to career opportunities, a growing family, and to focus on my health.
I still think it is a great side hustle for anyone who is looking to earn some extra money on the side.
Obviously, this business isn’t for everyone, but if you want to learn more about selling on Amazon, then here are some resources:
If you start your Amazon FBA journey, please let me know! If you have any questions, please reach out! And Good Luck!