Very interesting, great guide. As a seller, it's actually very tempting.
On the other hand however, this is everything that's wrong with Amazon. This feels messy and like wild west ecommerce. If I, as a customer, wanted to shop with little to no curation I'd do that at eBay. Since I'm rarely interested in buying that way I'd prefer Amazon to focus on quality products instead of setting up a free for all environment.
Really interesting. I also followed on to this: http://www.arbing.co.uk/create-sell-physical-product/ which is worth a read.
Nice to see all the steps laid out, it's impressive how smooth the process can be for manufacturing and selling something these days.
How risky is it to ship straight from the factory to Amazon? It seems like a supplier could switch to shipping duds/rejects, Amazon would sell them for you, and you'd get a pile of 1-star reviews on your listing. Do FBA businesses do anything to deal with supplier risks?
From experience - really really research your suppliers as these will make of break your business. Many 'suppliers' on Alibaba, are not manufacturers just on-sellers. Also use other non-alibaba methods of sourcing suppliers, hire sourcing agents who speak the lingo and help vet the factories for you. Also focus on quality.. don't sell junk ;)
This looks fantastic. I am curious about reselling Chinese products - why do Alibaba sellers value FBA businesses? Why don't they just set them up themselves?
I have been selling on Amazon for about a year now.
If you have not sold on Amazon you do not understand the scale of their platform.
If you are interested in getting started I would recommend going the retail arbitrage approach first. It is a great way to get your feet wet without much risk. Trust me you will be amazed.
I have a small factory in Arizona, and we sell products on Amazon as well as through multiple other distribution channels. A few thoughts came to mind while reading this:
1. China isn't the only place to get stuff made. Look locally. We manufacture our products, as well as products for two other companies who also sell partially on Amazon. You probably have local contract manufacturers like us who would appreciate a chance to compete with China. We use lots of automation, and we are cheaper than China on heavier metal goods (over 20 lbs). We are also cheaper in small runs, or MOQ is typically 1; in China it is often 1000. You probably have someone near you that can do the same.
2. Getting a hit product isn't easy. Mostly it seems to be luck. Manufacturing is like software development; sometimes you have to iterate for a while before it all clicks with the customer. Once it clicks, its off like a rocket. One basic path to a hit product is to create a product that is a combination of others. I have a friend who makes a kit out of a bunch of specialty tools for EMT. His is the only kit on the market and is a great seller for him. Another friend had great success with an automotive accessory this Christmas season on Amazon. He sold up to 50 units a day, that season he sold 3000+ units. He was #1 on the “top seller” list. Don’t forget that he had to have 3000 units in stock before this; that is a huge gamble if you are just starting out.
3. Having a hit product isn't easy to manage. Once you get a hit product it goes 0-1,000 real quick. I had to manage 50-100% growth per month in the first year of manufacturing. Per month. With a product made out of steel. If your hit product is coming from China, I hope it is lightweight because you will end up air freighting it constantly. I once air shipped a 1000 10 mm bolts with a special head from China and it cost me $1000 in fees, $1 in shipping per $0.13 bolt. If you ever run out of stock, you will fall of the "top seller" list and your volume will plummet. China can take 3-6 months for a restock order to get made, shipped, through customs and onto Amazon warehouse. How do you keep stock for 3-6 months on hand? My friend who sold 3000 units before Christmas, he had to ship those units to Amazon FBA well before then and pay storage the whole time. The storage is sold by the cubic foot, and he had thousands of cubic feet to pay for at elevated Christmas rates.
4. Single Point of Failure. If Amazon suddenly decides that they don’t like you, sales can go from 100-0 instantly - and now you have money tied up in product, fees in storage, and no cash flow. Even if you have multiple channels, Amazon will be a BIG customer. They are about 10% of our business, and if they disappeared tomorrow it would hurt. If they are over 30% of your business, getting shut off could mean bankruptcy for you.
5. Building a brand is hard, and a different skill set than manufacturing. The article is correct that there are thousands of manufacturers wanting to build stuff for you. How well could you build a brand in a foreign country? Especially if you are a manufacturer (focused on efficiency) and not a marketer (focused on A/b, Social, advertising)? This is why the Chinese manufacturers are happy to let a marketer take on the risk of developing a brand, seeking out a customer base. As a USA based manufacturer I am happy to make whatever you want too! We take Visa, Mastercard, Paypal, Bitcoin …..
The article is fairly complete though, I believe the author has actually done this stuff.
The article glosses over a critical element: Getting Amazon reviews and positive ratings.
Unfortunately, many sellers of new products take the easiest way out, and go to Fiverr or a similar service to pump up their product with dozens of fake reviews. A few also use fake reviews to bring down competing products. It's a broken mess that misleads buyers and hurts legitimate vendors.
Great article.
I'm in the process of making a physical product: a new quick-release plate for DSLRs; I did find a manufacturer in China for CNC machining and had a couple of prototypes sent to me (in France), which were of very good quality.
The problem is however, the final product will be made of several parts from different manufacturers: the plate, a rubber pad, screws, washers, a box for "clean" packaging, etc.
Are there factories that specialize in assembling/boxing a product, and what would the proper keywords be in order to look for them?
Quite enjoyed this. I've been toying with the idea of using Amazon distribution to increase scale.
Very helpful to see the steps laid out. Thank you
I don't buy stuff on Amazon because I'm in Australia (the shipping from US or UK is too expensive), but I use Ebay and there are a number of local resellers for any small electronics items I want to buy. Does anyone know of a similar site about 3rd party fulfilment centres that can do Ebay shipping?
It's incredible how efficient the market is these days. Great article.
Perfect guide indeed, exactly what I needed. Lovely that some people take the time to put things like these for free on the internet.
I've worked with quite a few old school manufacturers that have expanded their business by selling direct on Amazon.
Amazon's easy to use marketplace is the only online medium that has ever worked out so well for companies that make products but are not savvy in e-commerce. The profits from Amazon are giving these businesses the opportunity to dip their toes in e-commerce.
The real advantage to the world from all of this is just starting to appear: In every example that I know, the manufacturers are now getting the confidence to start seriously selling directly outside of Amazon, because of their experience on Amazon.