Case Study: My $100,000 Amazon FBA Product
Case Study: Our 100k Home Run Product
It’s October 2014 and my best homie Parker and I arrive in Chiang Mai for the inaugural Drop Ship Lifestyle conference & retreat. We each had our own drop shipping sites up and running for about a month, but getting very little traffic thru a $30/day Google PLA (Product Listing Ad) Budget, and no sales yet.
At the conference, there was a speaker who have his talk on his Private Label supplement product, selling thru Amazon FBA and making like $17,000 profit per month. It was a supplement product.
It seemed like most everyone at the conference was doing dropshipping, naturally, as it was a retreat for a drop shipping course… But I don’t recall meeting anyone who was crushing it with dropshipping. It seemed like all newbies were struggling to get traffic and make money like us.
But everyone seemed to love the idea of FBA, aside from the larger startup cost, to buy your own inventory.
So everyone’s plan went like this: make money with drop shipping first, then start a private-label business later when I have the enormous cash to source a product in bulk. Sounds great, right?
Meanwhile, while we grinded away with the other drop shippers, tweaking our online stores, checkout pages, product descriptions, google adspend for each product etc. at Punspace, the popular co-working space in Chiang Mai, someone at the conference quietly in the shadows decided to jump into FBA private label.
Flash forward to Holidays 2014. Kai had make something like $7,000 profit with his FBA product in December so far… I had made a few store sales during the holidays, but still broke even because of my $900/mo Google PLA Ad spend.
I remember there was a digital nomad meet-up somewhere, and another struggling drop shipper said what many were probably thinking… “Man F*ck drop shipping dude!” ? Parker felt his pain of DS struggle, and finally said the same thing. “Yeah, F this… We gotta switch it up.”
And rightfully so! Because it just wasn’t working for us. Now, most businesses are not expected to be profitable in the first year anyway, but we were running out of ca$h in our bank accounts and we wanted to continue the dream! *Correction – we HAD to make money online NOW to continue living in Thailand… or it was back to our corporate jobs for us!
We had around $3,000 each left in our bank accounts at the start of 2015 – down from the about $8,000 that we’d came out with in October. Based on Kai’s success, we decided we’d start researching this whole private label thing.
But how to get started?
Kai had saved up like $50,000+ cash from his inside sales job back home (crushing it!), and he bought the ASM (Amazing Selling Machine) course for $4,000. So he downloaded the PDFs and gave them to us. We also were working alongside him in Punspace asking him questions as we went. So we went into full-time product research mode all of January 2014… and well that’s the BEFORE the Product story! The rest is history!
Let’s get to the story of the product…
- Realized that our dropshipping stores weren’t going to be profitable the way we were doing it with just Google Ads
- Took note of Kai’s success on Amazon with his Private Label product at the time
The First Test Order – Canceled due to Patent!
- Began full-time product research in Chiang Mai at Punspace
- After 3-4 weeks of full time combing thru Amazon for ideas, landed on the Running Belt idea
- There was one name brand called Flipbelt crushing it, and only 2-3 copycat players
- There were some negative reviews talking about how items would fall out because Flipbelt had no zippers
- We thought there’d be opportunity to take a portion of the ‘elastic running belt’ sales by adding zippers
- And also an extra pockets in the back
- At least a couple weeks of back and forth with the Alibaba supplier on customization mockups
- Finally payed a the 50% deposit test order of 200 units – around $1000
- We had a Facebook brand page setup, and were excited about the product
- A number of days later, we get an email, with a photo attached….
Hello dear. Sorry about this order. Alibaba have patent issue with this type product. We take big loss for this time.
- It was a picture of the belts cut with a knife
- The FlipBelt company had sent a request to Alibaba to remove all copycat products
- We eventually got an 80% refund for the inventory – $800 back of $1000 paid, but after a couple months later.
This was crazy timing because if that crackdown had came just ONE WEEK LATER, the inventory would’ve been already sent to Amazon and we would’ve been left with a listing that Flipbelt surely would report as patent infringement – and we’d be out the full $1000! So we got lucky! (As always, in business and in life, every success take a little bit of luck)
- So now it was early February and we had to choose a NEW product idea.
- Chinese New Year was weeks away
- And we had only around $2000 left in our bank accounts each
- We had only one choice, SCRAMBLE to find a new product, and FAST
- If Chinese Holiday hit, the factories take 3 weeks off, and we’d be close to out of ca$h
- The only choice was to place an order BEFORE CNY
- We got back to combing thru Amazon and Alibaba, scouring for ideas
- I hadthis one idea of a product I’d wanted to buy, but couldn’t find on Amazon
- So I searched ‘selfie stick tripod’ on Alibaba
- I was looking for one with a 2-in-1 handle that flips out into a tripod
- I had actually always wanted one myself, even back home, to film videos at my home desk
- But couldn’t find one on Alibaba!
- It took me 2 days of digging (I remember the cafe I discovered it in – Ganam Cafe in Chiang Ma;)
- And finally on PAGE 50, yes page FIFTY of results, I found that model I was looking for
- There was no time to even order a sample!
- We went ahead and ordered 300 units of this straight to Amazon FBA, Chinese packaging and all!
First Successful Prototype Test Order
- Invested $2,000 in 300 units of a PROTOTYPE
- Sent one to like 20 friends family – they saw it before even we did! ?
- It hit started averaging around 10 sales a day, confirming that the market liked our product idea.
- We knew we wanted to continue with the product idea
- Received about $3,200 from Amazon in payouts after 300 units sold out
- But it got around 10 negative reviews, because the product felt cheap and broke easily
- So we had to improve the quality
Improving the validated prototype
- We looked on Amazon and found the AlaskaLife GoPro Pole selling 40/day at $39.99
- We supposed that we could use the same pole but add in a tripod do well at the same price
- We looked on Amazon for the best rated mini tripod that would go well with the pole
- We contacted the supplier of the Pole, and they had this tripod
- To further differentiate, add in a Bluetooth remote – goes with the whole selfie stick tripod idea.
- Throw in GoPro adapter
The Keyword Opportunity
- We checked ViralLaunch Keyword Tool search volume for ‘selfie stick’
- You can see all related search terms,
- Including ‘selfie stick tripod’ at 3,000 searches per month
- (It now has closer to 30,000 per month)
- There was no Rugged Selfie Stick Tripod on the market yet
- So we thought we could come in the game as the Premium player.
BUT… this idea was good and all, but how are we going to FUND it??
We had to use the $3,200 in Amazon payouts from the test order to use to keep LIVING in Chiang Mai! (Where we were living for around $1,000 a month each for everything)
Calculating Investment needed
- We knew the idea was validated
- Got the quote from the supplier for their MOQ of 1000 units
- It would be about $14 per unit including everything x 1000 = $14,000
- Plus $4 per unit for Express Air shipping! That’s $4,000 more!
- We didn’t have anywhere close to $18,000 cash…
- So, we had to find an investor!
The Pitch Book
What to businesses do what they need investment? Make a pitch book!
- Showed our prototype sales numbers
- Took note of the leading competitors sales
- Showed how we can improve on the prototype concept, make it like the bestseller but improve it in an obvious way
- E.g. Take the AlaskaLife Pole that sells 40/day at $39.99, add a Tripod & Remote, and also sell for $39.99
- We figured that a portion of people would buy us over the competitor because they’re getting more for the same price
- Even if they lowered the price, it’s still a good value compared to buying all parts separately (at least a small savings)
- Showed the keyword search volume, and the first page results
- Demonstrated that there was a hole in the market for the ‘selfie stick tripod’ keyword
Looking for Funding
We actually showed this idea to a friend who knew someone who’s a rep who does small business loans for a medium sized company. He told me to apply via the online form, explain the business idea, upload all the docs etc, and he’d put in a word for me to try to push the approval through.
I waited week by week and didn’t get any news about it. I’d ask my friend to check on it, but he couldn’t do anything…. A month passed and we were getting desperate!
After more than a month of no luck with the small business investment firm, we were running out of time because we only had a few GRAND left in our bank accounts. So we went to an entrepreneur/investor friend with our pitch book.
Luckily our investor believed in us, and was able to invest the capital for 1000 units of The SelfieStand, $18,000, for equal part ownership in the brand, or 33%.
May 2015: Got a loan for $18,000 to order 1,000 units.
- Had to create custom mold packaging to fit everything in a box
- Supplier created the mold for an up-front fee
- I got on Powerpoint and designed a mockup of the packaging myself, then sent it to Fiverr to make it clean
- Put the FBA Barcode right in the packaging design
- Make sure to include ‘Made in China’ somewhere on there too
- We since removed the Bluetooth logo (made it less likely to be inspected at Customs)
July 2015: Went live on Amazon July 6th.
- We had friends and family order one and leave quick reviews
- After about 10 reviews…
- Paid $400 to Viral Launch for their blast service. They blasted about 15 per day for 90% off. This boosts sales ranking.
- Had great photos (obv)
- Had a good title with all the obvious keywords (obv)
- Had a good bullet points and description (obv)
Other than that, there was nothing crazy special about the launch that led to the product’s success.
At the end of the day, it was a good product in an upward -trending category, it was the premium player, and it was a unique package.
Over the first TWO years, it consistently sold 20-30 units per day, essentially allowing us to stay in Southeast Asia and focus full time on building our online business!
At the end of the day, yes there is an element of luck in all businesses (and in life), and yes we did get lucky with the timing of the product and getting an investor in time. But the story started with us in our studio apartment with me sleeping on the couch for a year, willing do to ANYthing for a change. And the Chiang Mai conference was the excuse that allowed us to jump in with both feet. Yes we got lucky – but we also MADE our own luck. We were in the game… on the court… playing ball.
And when we saw the ball bounce into our court, we took a big swing, and luckily hit it out of the park.
But as they say… you can’t WIN without first SWINGING THE BAT!
Major Keys of Success
- Got in at the right time, in an Upward-Trending accessory niche
- Had a SPECIFIC keyword to target ‘selfie stick tripod’
- Unique Product – thru a unique bundle
- Premium Expensive product – higher barrier to entry
- Most important of all, it was a GOOD product, that people love, and that I would actually use myself. That’s how the idea started anyway – something that I personally wanted. It is not flimsy, doesn’t break easily, it’s durable, and it does what is says it does.
So now with this bit of success, and my YouTube following that resulted because of it, I’ve suddenly become an influencer in this online hustle space, so I consider it my job to help people navigate this path. Which is why I’m writing this. So cheers to you if you’re reading this… Let me know your thoughts!
— Riley in Bangkok
Wondering about profit margins?
Our product sells at $39.99.
Amazon takes 25%, or about $10 = so we get paid out about $30 per $39.99 sale.
Product cost = $12/unit
Shipping cost = $4/unit
(Express Air UPS 2kg, includes everything – customs and import fees. Sea Shipping is closer to $2/unit)
Total to Amazon Cost: $16/unit
So each sale $39.99 sale gets us about a $30 payout, minus the $16 product we bought = $14 … (but let’s say also $1.00 in PPC ads per sale…. it’s less than that because not every sale comes from a sponsored click, but just to be conservative, lets subtract $1 from the profit from each sale) = about $13 profit per sale.
So $13 profit / off a $40 sale = about 33% profit of sale price (…or $13/$30 = 43% profit per payout)
Amazon PPC (Pay Per Click)
Amazon PPC Placement Ads are necessary when starting out – and we keep them on all the time, because it makes money – it makes your product show up on the side or the bottom of the first search page as ‘Sponsored’ – and can $1.00 per click or up to $3.00 a click for the really competitive niches, so keep this in mind if you are going into a really competitive niche! It could shave a few bucks off your margin!
Breakdown of Amazon’s FBA fees: in the ‘FBA Calculator’ just type in any product ASIN and they tell you the fees. This is our product below.
Well below is a snapshot of a recent transaction… Looks like we actually get $29.59 per sale:)
Below is a screenshot of our bi-weekly payouts from 2016 so far: These are BI-WEEKLY payouts….
So I did the math, and the average bi-weekly payout so far in 2016 has been $5,543.145… x 2 weeks = $11,086.29 avg monthly payout. (not counting the last payout b/c we actually got approved for a $12,000 AmazonLending loan so that’s why it says an 18k payout last week on September 13th 🙂
So we get on Average $11,086.29 back from Amazon each month… x 43% profit per payout = $4,767.10 avg. profit per month in 2016 🙂
Thats $57,204 profit in 2016 — **Pre tax!**
We each pay ourselves a $1,500 monthly living salary (in Chiang Mai) for us 2 owners ($3,000 total) = so about $1,767.10 of the profit is saved each month towards new products… So every 6 months we have $10,600 to invest in a new product:) … See, if we didn’t have to pay ourselves we could do that every 2-3 months! ?)
The rest of that ~11k in payouts each month (about $6,300) stays in the account to re-up on existing product inventory.
In Bangkok, we live off a $3,000/mo living salary each.
And 2017 Sales Summary
This 2017 Statement shows about $400,000 in product sales, so around 30% profit margin is around $120,000 profit pre tax.
We have since launched another version of the SelfieStand called The GripStick. It’s the exact same except with a flexible tripod. It now does more sales than the Stand.
It was an idea I had as a spinoff product, because I literally (again) wanted one myself. It just took an existing home run idea and keyword that we were on the first page for, and added a new feature to it! Now you can grip it!
So essentially we were competing with ourself in the ‘selfie stick tripod’ keyword, but that’s what you’re supposed to do! Always keep improving your products, and launch spinoffs or improved versions when you can!
We also launched 3 other accessory products at $19.99, none of which are still selling.
The moral of the story was, they weren’t customized, and there were at least one other listing with the exact same model. They were just plain Alibaba purchases. Other than custom packaging and logo on the product, and sexy images and copy of course, they weren’t unique on Amazon.
Biggest Mistake – our first failed product.
After the success of the Stand in 2015, we got cocky and ordered 1000 units of a ‘pocket selfie stick’ before even testing it with a test order. It sold for $19.99, but there were 2-3 other listings with the same model at much lower price. We figured that we could leverage our brand success with the Stand, our sexy photos, sexy logo on the product and sexy listing copy to get shoppers to choose us over the cheap ones… but this wasn’t the case.
It only sold around 500 of the 1000 until ‘slow moving inventory’ fees started hitting, so we had to pull the plug and have Amazon just dispose of the inventory.
The other 2 products sold out of their 500 unit test orders, but they didn’t sell quick enough to continue. However, we have ideas to improve on them by differentiating them, and we are going to launch them hopefully later this year when our cash stacks up.
Failed Supplement Brand
- We’ve always wanted to get into supplements
- We had some cash to try a new product
- We were kinda fed up with the China lead times
- Thought we’d test a supplement
- Looked on Amazon and found a hot upward-trending niche
- Only a handful of players in the game… like 5-10
- But we still wanted to get into the same to potentially build a longterm supplement brand, for the obvious reasons
- sourced from USA so fast production times
- potential for customer re-order
- high profit margins
- So we made the bottle label, and after TONS of back and forth with the US supplier, and MONTHS of delays, it finally hit Amazon around Holidays 2017
- Invested around $5000 in 500 bottles.
- Plus a few grand more in product photo cost, packaging design, LLC startup costs, shipping costs
- But by this time… there were TONS of new players in the game! Like Double. Closer to 20 legit players selling this supplement.
- And my Spring 2018, there were even more.
- The market had just FLOODED in a period of 6 months. It was quite crazy to see.
- And I’ve heard this story time and again!
Total investment: ~$8000
- around $6000 for 500 bottles
- plus around $1000-$2000 more from…
- $300 product photoshoot cost
- $200 packaging design
- $300 LLC startup costs
- $900 paying VA $300/mo to get and manage reviewers, and build our FB brand page.
I don’t know what is the moral of this story but, just sharing that this can happen… its part of biz!
With the failure of the supplement investment, we are back in cashflow a bit, so waiting for that to stack back up.
I have 2 new product ideas that could sell at $29.99 and $59.99 respectively.
So they will take larger investments, as we want to stick to the Premium Player game. And only make Premium Products that no one else has.
But this means it will take longer to stack the cash to test them.
I have contemplated trying out a Kickstarter type campaign with a great product video, before ordering a 500 unit test order for example. Has anyone tried this? Let me know. I think this will be an essential strategy moving forward in the physical product game.
We Got Editor’s Choice for Best Selfie Stick!
In 2019 we noticed the SelfieStand sales were picking up! We thought ‘oh that’s great’ and never looked into it further. Then, one day I went to check our organic rankings and searched ‘selfie stick’ on Amazon.
Only to see our product right smack dab in the middle of page one in the Editor’s Choice section! 🙌 We’d never achieved this before for any product! Game-changer! This was surely the sales boost! After all, ‘selfie stick’ gets 1,000,000 searches a month! Yep! 1 Million!
The Journey to Diversifying income
While we have time to wait before our physical brand stacks up cash, I’ve had more time to focus on diversifying into creating digital products, like this very case study! ?
As all entrepreneurs say, the holy grail of Wealth is to have diversified income! So you may have noticed in 2018 that I’m trying to step up my game with monetizing LivinThatLife.
The way that I will do this is, for the long term, slowly build a personal brand, and create free content that helps people get to where they want to go, and also offer paid content, like courses, softwares, etc. Either my own products, or others thru affiliate links.
So to put it shortly, create a huge awesome and valuable *fun*nel that leads people to the best online courses, for those who are looking for it – monetized thru affiliate marketing.
I also want to continue creating my own digital products, courses, ebooks, guides, etc…. But I only have so much time! Which is why I’ve finally got a social media manager to handle the little day to day stuff for me.
That being said! What do you want to learn from me? If I could make a complete course to help you in your life, what would it be? (Non physical product related)
And of course, if you didn’t know yet and bought this module separately, I have my full step by Private Label course at theamazonmethod.teachable.com that goes thru the Nuts n Bolts of Product Research, Alibaba, Setting up the Amazon SellerCentral account, Importing to FBA, Listing Optimization, PPC, and Product Launches ..
… Yeah its a lot! Now some people are fine with ‘ironing out the details’ by watching free YouTube videos, and that’s totally cool! It can be done.
But for those who are into having everything laid out there in an organized and easy to follow, IN ORDER format, I’d love to have you. It also comes with a product-advising call so I can help you narrow down your niche selection and give my honest thoughts on your product ideas.
Ok cheers guys! See ya around! What are your thoughts & experiences!
Leave a comment in the comment section. ?