I am preparing my first shipment to be sent in to Amazon for FBA.
I am excited for whats to come, but I also am nervous about losing money due to any number of factors. Here are some of the risks that I have been thinking about:
Risks
My main concerns with this first shipment are:
Damaged product during shipment to Amazon
Inventory sitting at Amazon, not selling, and hurting my IPI score
Messing up product or box labeling
Incorrect pricing
All of these fears are rooted in the fear of losing money. This Amazon FBA project started off as an endeavor to make money, not lose it.
Risk Mitigation
Fortunately, all of the above risks can be mitigated.
But I will lose some money in the process and make some bad buys. All of that will be chalked up to a learning experience. But I must learn from the losses and not use learning experience as an excuse to roll over.
Damages
To prevent product from being damaged during shipment, I will efficiently pack each box to eliminate dead zones. If there is less room in the box for the products to slosh around in, then there’s less of a chance that they will be damaged during impact.
But car accidents, train derailments and other acts of God are possible and will be a risk I live with.
Inventory Not Selling
To prevent inventory sitting at Amazon, I attempted to find items that had a high sales rank. If I price competitively then the products should move within a reasonable time.
The Keepa tool can show me rank and price history. Even though the past doesn’t guarantee future performance, I can make an informed decision on how an item performs and if its sales rank is impacted seasonally.
Product Labeling
This should be straight froward. Cover up the barcode with my own label.
There are enough YouTube videos and resources on the Amazon seller university to help me learn correct labelling.
Pricing
I will learn everything I can about the Amazon pricing tool. I can match the lowest price and prevent myself from selling a product below any dollar amount.
I have been tracking all of my purchases on a spreadsheet and have already figured out my break even and 50% ROI prices. When it’s time to price, my life will be a bit easier since I have the sale numbers already figured out.
My pricing plan is to match the lowest prime price down to my break even point. I was thinking about undercutting by one penny but I think that will just be a race to the bottom if everyone else has an auto pricer following the same rule.
Next Steps
Set up an LLC
Get reseller permit
Buy more products