Is Amazon FBA a Profitable Online Business model?
There are two different methods of selling on Amazon via FBA. 1. You can sell your own products or goods. Things that you produce or have produced and sell with your own private label on them. Or, 2. You can sell products that somebody else has already produced and marketed.
Selling on Amazon the way that we are isn’t exactly a totally online business. There is plenty of offline stuff that we need to do to make it work. But the sales that happen on Amazon rely completely upon the online marketplace. And the sales just keep rolling in.
How profitable is this type of business? Profits are completely dependent upon how much money you are willing to spend. Spend more – make more. Spend less – make less. When you stay consistent with buying stuff and sending it in, sales keep flowing. When you take some time off, your sales numbers begin to suffer as a result.
Is Amazon FBA a Passive Income?
Yeah. To define passive income as money earned by not directly trading time for a specified amount of money (like with an hourly or salary paid job). In our case, we are spending as much or as little time as we want and the amount of money we earn does not correlate with how much time we spend.
In our case, we are doing the retail arbitrage version of this business. We spend time upfront searching for deals. We buy as much as we can during each shopping trip. We then prepare the items and ship them to Amazon. On average, we spend just a few hours each week doing these activities. Maybe 2 or 3 hours shopping and another 2 hours to get the stuff prepped and shipped. Some weeks we shop a little more and some weeks we don’t shop at all.
After doing those things, all we do is sit back and wait for the sales to happen and wait for the money to roll in. Sounds like passive income to me! This isn’t 100% true though. There are some things that you have to monitor in our Amazon Seller account on an almost daily basis. But spend just a few minutes each day.
How much money have we spent?
$10,486.76 – This is the exact dollar amount we’ve spent on everything related to selling on Amazon from the day we started until the day I published this post. That’s from September 2014 until February 2015. The following screenshot is taken from Quicken, where I track all of our income and expenses.
As you can see, the bulk of our spending is on inventory purchases, as it should be. In order to sell stuff, we need to buy stuff. A couple of other business expenses to note, including dining. Yes, we sometimes go out to eat while we are out shopping for inventory. And yes, this is a business expense! What a cool thing to do on a date night – go out shopping “on business” with My Lady and go out to eat as a business write-off.
Lastly, we’ve spent just over $300 on supplies. These include things like printer ink, labels, boxes, packing tape and a few other tools that have made life easier for us.
How much money have we earned?
$10,584.00 – This is the exact dollar amount that Amazon has actually sent to us. This is money in the bank! Amazon sends out payments every 2 weeks. We’ve opted for the direct deposit option. So, every 2 weeks we get a deposit into our business checking account. The screenshot below shows all of the payments we’ve received to date. Note: we have not received the top row payment yet, as it is a running total for the current pay period and this screenshot was taken only 5 days into that pay period.
It’s pretty clear to see how we benefited by jumping into this business right before the holiday buying season. For just getting started, we kind of made a killing during November and December! Our first January payment absorbed. And this was due in part to the fact that we stopped shopping for 3 weeks and also because the holiday buying season ended. But as you can see, our earnings picked back up in late January and February as we got back into the swing of things and started shopping again and sending stuff to Amazon to sell.
How much inventory do we have left?
$7,798.45 – This is the current total value (at the time this post was written) of all of the items we have left in Amazon warehouses that have not yet sold. Just like if we were running a traditional brick-and-mortar retail store, we have to carry inventory. Not everything we buy and send to Amazon sells immediately. Some stuff does. But other stuff could potentially sit in the warehouse for weeks or months before it sells.
To me, this inventory represents future passive income. Even if we do nothing for a few weeks, we still have inventory at Amazon and potential to make sales. In fact, we are currently in a bit of a lull right now. We are in the middle of our 3rd straight week of doing absolutely nothing towards the Amazon business – yet sales continue to drop in day after day.
Is it profitable? Is it worth it?
If you look at only the income and expense figures, it doesn’t appear that this has been very profitable at all. Those two figures are almost identical. But it’s all a matter of perspective. The income we’ve brought in has offset our expenses almost exactly and has completely paid for our inventory assets that are valued at over $7,000! Is this a profitable online business?
Considering the time we spend on this business is very minimal surely that it has been worth it. The weeks that you bring home a couple of shopping cart loads of inventory and get it all processed and shipped to Amazon, you spend less than 10 hours “working.” There have been many weeks that you have worked zero in the business the And money keeps rolling in. Worth it!From the above article, you should have understood that Amazon can’t be learning through a Simple Course. It’s a journey, which requires ongoing learning. To learn more the Amazon business for FREE, look at the Amz Trainer website.
Courtesy – dumbpassiveincome Blog