32

The Truth About an FBA Business

A few months ago, there was a big guru launch for a product based on Fulfillment By Amazon (FBA). In this interview, we take an inside look at a real FBA business.

FBA is a method by which vendors ship products directly to an Amazon warehouse, have them listed in the Amazon marketplace and have Amazon do all the shipping and handling. True to form, the aforementioned guru launch presented this as a veritable golden goose. You’d be making untold thousands in no time, once you handed over the $4K that were being asked for the product.

At the time, I wrote an email to my subscribers about it and as a result, got to talking to Howard Lee Harkness, a reader who has some real-world experience with the FBA business model.

What follows is a cold shower to guru hype and a real look at the business model, for anyone interested in seriously pursuing it:

How Fulfillment by Amazon Works

FBA Explained

Source

Shane Melaugh: Can you tell me a bit about how you started with Amazon FBA and what you’re currently doing?

Howard Lee Harkness: My wife (Georgene) was the one who first got into FBA sales. It came about as a result of several other things we were doing.

Back around 2005-2007, my wife was an Ebay Powerseller, and she was even featured in a Kindle book written by a friend of hers. She got tired of working 50 or 60 hours a week earning about half minimum wage, and she pulled the plug. However, the fact that the Kindle book her friend wrote was still up on Amazon and still selling got us interested in Kindle publishing. Georgene then wrote several Kindle books on various topics, with mixed success.

The Kindle publishing efforts led to a couple of other things, including the purchase of Amazopia.com from Tristan Higbee, who had lost interest in the site. We decided to buy the site and take the plunge. The main thing we got from Amazopia was exposure to more Amazon-related ideas, since Georgene was spending quite a bit of time researching news about Amazon to curate for Amazopia.

The connections we made through the site led us to discovering the world of retail arbitrage and we got to know some people who’d been pursuing this business model for several years.

Next thing I knew, Georgene had invested about $800 in equipment and software to use for FBA sales.

Her initial idea was to round up a bunch of stuff we had around the house (mostly books) and sell those. Except for a few outstanding items, that really didn’t work all that well.

Following Chris Green‘s advice, Georgene then started “scouting” at various outlet merchants, looking for things that had a price low enough locally and high enough on Amazon to make us some money after the various fees. Amazingly, we were able to find quite a few items that fit into that criterion.

Now, we are doing about 50% “retail arbitrage” and 50% wholesaling.

SM: What does your FBA business look like today?

HLH: Our current operation is in a state of transition. I mentioned that, initially, Georgene started with getting rid of junk we had lying around the house. While there were some definite winners in that phase, we didn’t make much money that way. But it was a valuable learning process.

The next phase in the business was going to outlet and specialty stores and “scouting.” Scouting is the process of locating items that you can buy locally and sell for a profit through FBA.

We learned was that it was not worth our time to sell anything for less than approximately $15.
A major lesson we learned was that it was not worth our time to sell anything for less than approximately $15, even if we could get it for practically nothing. Due to recent Amazon fee increases, this is now closer to $20.  An item that we can buy for $100 and sell for $175 returns about $50 for roughly the same amount of work as a $2 item that we can sell for $10 (which returns about $1), so the lower-cost items are not time-effective.

That second phase was more profitable.

Now we are entering a third phase of our FBA business, which is a combination of retail arbitrage and wholesaling.

When we are “scouting” we are looking for items that are fairly expensive on Amazon — the more expensive, the better — and have good rank. In addition, the price difference has to be at least a factor of 3 for anything that sells for less than $30, and a factor of two for anything between that and about $100. Over that is a judgment call. Items meeting those criteria are difficult and time-consuming to find, but the payoff is much larger.

The other part of the combination, wholesaling, is similar to what is recommended by the $3500 system that you advised your readers not to buy (and I definitely agree with you about that). We have found some items that we can buy in bulk for about $10, and sell for $30. They have great rank, and sell quickly. However, as time goes on, we have found that some other folks have discovered the same item, and the price we can get is dropping.

In the wholesale portion of our business, we order items in bulk (usual minimum order is around $1000), and have them delivered directly to us.

The best possible item you can sell through FBA is something that is no longer in production, and sells at a significant premium. One of the problems with items that sell at a very high markup and are currently in production is that occasionally, Amazon decides to go into direct competition with FBA sellers on items that it perceives to be overpriced. Once Amazon does that, the price set by Amazon defines the most that any FBA seller will be able to get. Why?  Because people trust Amazon more than they trust any other seller (though the “Fulfilled by Amazon” designation helps a lot!). 

The best possible item you can sell through FBA is something that is no longer in production, and sells at a significant premium.
For that reason, we always check to make sure Amazon is not currently selling any particular item before we buy it, or we are satisfied with selling it at Amazon’s price. We are still taking a risk, because Amazon could enter the market for any item that is in current production. When we can find a closeout on a discontinued, but popular, item, we can eliminate that particular risk. There may be other risks, though — like the underlying reason the product has been discontinued, for instance.

Discontinued, but popular, items are harder to find, but we have found a few.

We are currently scouting two or three days a week, and continuously looking for new wholesale items. We are getting a good enough return on the process that we can grow the business. It helps a lot that we have other sources of income; otherwise that would make growing the business much more difficult.

As the business grows, we are still learning and improving. I think it has the potential in the next 6 months to exceed our income from all other sources combined.

Our main goal at this point is to decrease the amount of time and effort it takes to process our merchandise. Georgene currently does most of the scouting, and nearly all of the bookkeeping, labeling, and packing. I spend some time looking for wholesale sources, and I help her carry stuff to the UPS pickup point.

There are folks we know who do only retail arbitrage, and work at that full time, who list (and sell) more merchandise every month than we have listed in total since we started last November. Those folks have to really enjoy scouting. There are others who do exclusively wholesale because they don’t enjoy scouting, who do just as well as the scouters. Some, like us, do some of both. None of the folks we know are doing private-label wholesaling (or at least, they aren’t talking about it).

SM: What does a typical scouting trip look like?

HLH: Here’s one we did last week: We went to a charity thrift store which occasionally gets new merchandise (clearance items, bankruptcy liquidations, and some corporate donations), where we spent about $100 on merchandise that we expect to eventually sell for about $350. Then we went to a chain discount store, where we found another $150 worth of merchandise that we expect to eventually sell for about $400. We then went to our local Wal-Mart, and found some clearance items for $10 that are currently selling for about $50 (only 3 of them were available). That’s sort of a typical day of scouting. The 3 stops took us about 2 hours. Some days are better, some are not as good.

SM: Most small businesses hit a “growth ceiling” at some point, where the business can’t be scaled up further unless some changes are made (e.g. hiring more staff). Are you facing such scaling problems in your business yet and do you have a plan for how to grow beyond that point?

HLH: We’ve already hit a few growth ceilings, and I anticipate more.

One of the first things we didn’t get quite right was that we were not paying enough attention to rank. We learned that it doesn’t really matter what kind of margins we are seeing if the item takes a long time to sell. Another I already mentioned is that we discovered that unless something sells for at least $20, it probably isn’t worth the time, even if all of the other criteria are met.

I think that we are close to hitting another growth ceiling on our scouting activities. Scouting takes a lot of time and effort, and even applying the lessons we’ve learned, I don’t currently see a way to expand our scouting significantly. We plan to continue scouting indefinitely, and occasionally we do uncover an item that gets a really good return. Our main frustration with scouting is that once you find a really profitable item, you usually only have access to a few of them.

On a good day, we may find enough high-margin & high-rank items to clear $500-$1000 profit (eventually), which is not a bad day’s income. We may average $200 or so, and I don’t see any obvious way to do better without changing something, so that’s a growth ceiling.

We know people in the community who are satisfied with this level. $200-$400/day is not a bad living. From our experience, you can get to that level in about 6 months if you have the required starting capital and are willing to put in the work needed.

Another ceiling we have encountered is due to the sheer number of different items we have listed in inventory. It takes time to re-analyze the market when something isn’t selling as well as expected, and doing that manually means that you can’t react to market changes in a timely manner. Georgene was spending enough time on this that it was impacting the time available for activities like scouting. Since there are people who maintain ten times as much inventory as we do, we knew we had to change something.

So, we recently bought and installed a software tool in our system which helps us do better analysis of the market and allows us to apply more intelligent re-pricing as the situation changes. This tool increased our sales to the point that our online inventory is actually shrinking! There was a bit of a learning curve on the software: It took a few round trips of repricing to make sure that the tool was doing what we wanted it to do, before we “turned it loose.” After that, the tool easily paid for itself in less than a day.

We are getting around the growth ceiling of scouting by finding wholesale items. There are two different approaches to take here. First approach, which is the one we are using now, is finding an item to buy, and getting it shipped directly to us for re-packaging and labeling. There is an obvious growth ceiling there, because there is a strict upper limit on the amount of inventory we can label and re-pack ourselves.

The second approach is outsourcing the re-packing and labeling to the vendor. In that approach, we pay the vendor a fee to apply labels and ship directly to Amazon. We can even pay Amazon to re-label inventory for us. That greatly increases the passive component of the business at the expense of reducing the margins by the amount paid for that service. The growth ceiling is raised considerably with that approach, and our activities become mostly management. A danger there is that if the vendor catches on, it would be easy to cut us out of the loop.

On the positive side, if you never have to touch or even see the inventory, the business becomes geographically independent. That is even more important to us right now than the element of passivity.

You have to diversify. The market for any one item could tank quickly and with no warning. If you are doing really well on something, other FBA sellers are going to notice, and move into that niche with you. The tradeoff is that the more unrelated items you have, the more time required to manage them, but the impact of any one item that has to be dumped at a loss in reduced. We will probably increase the number of items until we we hit that particular growth ceiling.

A variant of the second approach is private labeling. That might raise the ceiling a bit more, at the price of some increased risk. Markets change, and if you are involved directly in any part of the manufacturing, you can’t react as quickly. You also have the risk of product liability. In my more cynical moments, I speculate that may have something to do with the fact that the guys behind that $4000 course are pitching it from a location in France.

We are looking into private labeling, but we have not made a decision to do it. I may try it on a relatively small scale to see if it works for us.

SM: When I was doing a bit of research on FBA, one of the things that stuck in my mind was a quote I read somewhere, that said to succeed in this kind of business you have to enjoy retail. You have to enjoy thinking about, looking for and working with these products. If that’s not your thing, this business won’t be for you.

I get a similar impression from your story. Would you confirm this? Or do you know people who have removed themselves from these processes almost from the outset?

HLH: That really depends. Some FBA’ers do only retail, some do only wholesale, and some do a mixture, and there are robust and successful businesses in each group. Most FBA’ers start out with retail, but there are some that have never done it.

If you stick only with retail arbitrage, then your income may be capped somewhere in the low 6-figure range, primarily because it’s difficult to outsource the work to any great extent. The sellers who achieve that level of income are working at it full-time, and usually pursue it as a family activity. In one case we know of, a lady (sometimes with the help of her daughter) will scout for several hours, bringing home a van-full of merchandise, and the rest of the family will immediately unload, sort, label, and pack everything under her supervision, and have everything ready for shipping the same day. It might be possible to hire some help, but that would not enable a lot of scaling, and would not increase the potential income by much.

There are some high-volume FBA retail arbitragers who outsource labeling, packing, and shipping. That outsourcing has a big risk: We know of one whose (now former) employee figured out what she was doing, and is now competing directly against her — with the advantage of knowing exactly where to start sourcing.

I mentioned that an enjoyment of retail is not really needed. Case in point: Georgene does not like to shop. I like to shop more than she does, or more accurately, I dislike it a lot less than she does. When we do grocery shopping, we almost always go together, and we use a list so that we can grab what we need and get out of the store as quickly as possible. The shopping experience is definitely not something we live for.

So the enjoyment of the retail experience is clearly not the driving force. We are willing to shop, and the experience of shopping for merchandise to resell differs a lot from just shopping in general.

For her, if she wasn’t looking for stuff to sell, she would never enter most of the places we use for FBA sourcing in the first place. The process of scanning and evaluating as many items as we can typically keeps us in a store for an hour or so — and a lot of that time is spent waiting for the scan to return the information we use to make our purchase decisions. There is a bit of the “thrill of the hunt,” but I don’t consider that to be the same as “enjoying retail.”

It’s mostly just work, although it beats having to appear in a specific place every day wearing a specified costume and participating in a mind-numbing routine involving sitting in a cubicle or attending meetings whose sole purpose is making your management feel important.

Retail arbitrage is a really strange business. At its heart, it is only possible because of what the economists call “market friction,” and the process works by reducing that friction — just a little. If too many people engage in reducing market friction, it is eventually reduced to the point where the arbitrage opportunities go away. That was my initial concern when I saw the $4000 Amazing Selling Machine launch, which has the potential of dumping a bunch of clueless newbies into the business, thereby fouling up the whole business.

Fortunately for us, there are two large barriers to entry in the FBA business:

  1. It requires a lot of work, a lot of which is complex and time-consuming, and some of which is fairly difficult.
  2. You have to invest a substantial amount of money into the business, and the income you can expect is directly related to how much inventory you have, and how well you chose that inventory.

You mentioned in your blog that just the mention of something like 6 weeks of work was a tremendous deterrent to most Internet marketing wannabees. That gives us an excellent advantage! Here, we are taking about several months of challenging work, involving some risk with your own money, before you can expect to get enough income to have a decent living. If that prospect scares off most of the competition, so much the better.


To learn more, check out Amazopia as well as the Kindle book “Making a Great Living With FBA“.

UPDATE

Here’s a quick video response to some of the stuff happening in the comments:

Admittedly, this is likely to make things worse, rather than better, but it’s a message worth repeating. Also, if this video makes you angry, please mark the point in the video where I actually attack the course (like this: “at X:XX”) in your comment.

Shane
 

I'm Shane Melaugh and I'm the guy writing most of the posts on this blog. My goal is to provide you with useful, straight-forward insights on how to grow your business by creating compelling offers, driving traffic and increasing conversions.

Click Here to Leave a Comment Below 32 comments
Beeski Livius - July 12, 2013

Very informative post. Even though not interested specifically in this business, I did get some great ideas from their experience. Like the idea of outsourcing as much as possible to free up time for the most important money making activities. Thanks for the info Shane.

Reply
Chris - July 14, 2013

You know, if you or your Amazon pal had actually bothered to properly analyze that ‘$4000 Amazon course’, rather than make some outrageous generalizations and state gross inaccuracies about it, you’d understand its true value as a viable, long-term business model. There are countless people on that course enjoying considerably greater success than this guy, some of whom after only 4 months, are already generating revenues over $10,000 per month.

Reply
    Shane - July 14, 2013

    That’s cute. It doesn’t change the fact that for the vast majority of people who bought that course, it was a terrible business decision. That was my whole point in the email, as well. Of course I don’t know what the course is like or how accurate or inaccurate the claims made by the gurus are. But I have enough business experience to know that most people should NOT spend $4K on it.

    Reply
      Ken - July 15, 2013

      As the 4K course is centered completely around creating your own brands and promoting with marketing, it is a different business model than Howard has experienced. So no apples to apples comparison here.

      I believe that Chris is correct. There are many from the 4K course that are making replacement income in 4 months or less from what the course is teaching.

      I also believe that Shane is correct in that, as with all IM courses, only 3% to 10% of the purchasers will ever actually make a serious attempt to implement. It is not easy, even with a road map, as life events, personal doubt, the next great thing, etc get in the way. So, why spend so much on a course in the first place, given the odds of success?

      Why even pay for a road map/gps (course) in the first place? I see it the same way that I see driving to a destination that you have never been to before. Everyone knows that the location is south of where you are now. Some will ask “why waste money on a gps to find the most efficient way there when you can just spend that wasted money on gas instead so you can wander down a few deadends and get there eventually anyway?”. They will say, “Just drive in that direction”. The reason is the waste in Time. Time is the one thing that we cannot make more of. To me, that is the wrong question. The real question is “Can I trust the maker of this gps/map?” -Insert Apple Vs Google Maps jokes here-

      Howard has done a tremendous amount of work, and good for him. Barrier to entry is pretty high into that model. But don’t shoot the other business model out of hand just because the map cost 4K.

      Ken

      Ken

      Reply
      Brenda - May 11, 2014

      Truly enjoyed your reply, Shane. LOL!

      Reply
    Christina Lowe - July 15, 2013

    Yes Chris, there are a few who are doing very well with the course, but there is a much larger percentage that are not. Many are struggling and the golden goose is certainly not as easy to get to lay as was foretold by the Amazing Selling Machine launch.
    The “hand-holding” and “nobody left behind” that was promised is non-existent. The owners of the course are providing lots of information, but at $4000, you would expect a little more individual help for those falling through the cracks. Still, they have made their millions and are going to do it all again soon.
    The number of members who made their investment back in the first 4 months or so back would be in a very small minority. For many members it was an incredibly bad financial decision.

    Reply
    Howard Lee Harkness - July 15, 2013

    Of course, to “properly analyze” that $4000 course would require… $4000, right? No, thanks.

    I *have thoroughly analyzed FBA in general, and have compared notes with a few hundred others, so I’m not talking out of school. Which, by the way, makes it pretty easy for me to spot a shill. I have also looked into private labeling — and I may even try it out in a niche in which I already have some significant expertise. However, I’m really looking for something substantially more passive.

    Georgene did a presentation at a user group last month, which I recorded, and have finally managed to post to YouTube at http://youtu.be/FuoY1W0NKZg (I’m not all that good at video yet, but I’m working on it). I would guess that it contains about 30% of the information in the $4000 course — for free. Oh, and we also have a book for sale on the subject which covers maybe another 30% — which will set you back a whopping $5, or about one-tenth of one percent of that $4000 course.

    Reply
Erik Krämer - July 14, 2013

A great, realistic insight to FBA. FBA can also be used as the delivery system for private eCommerce sites (an alternative to dropshipping since not all wholesalers wish to offer that service).

As for the $4K+ course that was offered… why would someone pay that amount for nothing but information when they could INVEST that same amount and be learning real-world lessons and possibly turn a profit. I’m not discounting all courses, but that price was really jabbing people.

Reply
Miah - July 14, 2013

Shane and Erik
As someone that paid for that $4000 course I can tell you that it works very well and we have already recouped the entire cost of the course in just over a month. Truth be told most people that would use that $4000 to try it on their own would be more than likely to lose that $4000. Why try and reinvent the wheel when you can easily pay someone for their knowledge and prevent the pitfalls and self learning losses associated with it. Best course I have ever paid for bar none!

Reply
Enda McLarnon - July 14, 2013

I have been doing FBA for about a year now. From my experience of it there are a couple of things worth noting. Amazon are very helpful so why anyone would need a course is actually beyond me. Buy something as cheap as you can and sell it on Amazon for as much as you can is not that challenging.
Finding the products is tough though and the interviewee has got it spot on with the $30 price point. Books etc are an utter waste of time unless you get a really old one or a limited edition.
I by, ship to Amazon and pat $0.20 per item for them to label. I have found it works out at 33-33-33. Cost of product is 1/3, Amazon get a third and I make a 1/3 if I get the right product.

I like shopping and so does my wife and that really helps a lot. I work 7-8 hours a day on this in the comfort of my own home and make a decent living. $4-5K a month so that is enough for me.

Disadvantages are packing and shipping, not passive and yes you do need to buy really carefully and sell really quickly. Get this wrong and your cash flow will kill your business.

Initially there is a steep learning curve and I would say this is work but not hard work. Software truly helps though for listing and price changing but took me a month to master that.

I would have a lot in common with the interviewee and I am looking for something that is more passive. The day I stop buying products and shipping my income would be zero. Yes better than working to make someone else rich but not the perfect business model by any stretch. It does however pay the bills and we do pick up some amazing products.

Reply
Amos Patterson - July 15, 2013

This was a great post. Realy got my juices flowing. lot of great information. Thanks for sharing

Amos

Reply
jar - July 15, 2013

Get over yourself, buddy. I paid not $4K but $3.5K but that is just splitting hairs. It was WORTH EVERY PENNY. I have already made back that amount in sales and so have a huge amount of other “students”. I am not hearing any woe is me tales of failure. Even in every crowd of learners, you will find those too ill equipped to start any kind of business, those who cry about it not working when they have done nothing to make it work, and there are those who are under capitalized because they used their last dime without a thought that it takes additional money to get going (that little thing called “inventory” doesn’t pay for itself!)

The support and education was more precise than any “guru” selling a quick software program to just get your money, then promote some other “tool” to get more money. I spent 10 yrs. doing that and this is one of the few times I got everything I needed–but wait there’s more! I am STILL getting support and feedback for why I am getting sales and learning how to keep the momentum going.

As for the remark about “investing the $4K”–go jump in the lake! I have “invested” $4k over 20 times, not completely knowing what I was doing! I do NOW and that “$4K” ($3.5K) of education got me a business that is working. Until you understand that what works is WHAT WORKS, you will make snap judgements like yours.

Reply
    Howard Lee Harkness - July 15, 2013

    I was wondering about the timeliness of this topic, since the big launch was a few months ago. I was also wondering why the shills were out.

    Well, now I know… There is a new launch coming. I saw some preliminary announcements this morning. So this article is definitely still timely.

    Working the numbers… these guys made about $3,000,000 (before expenses, which I would guess to be in the low $100,000’s) from the last launch. I can see why they would want to do it again. It’s obviously more lucrative than actually doing FBA sales.

    Reply
      Shane - July 15, 2013

      Wait, by the same guys?

      I thought it was customary to wait for at least a year…

      Reply
      Ken - July 15, 2013

      Yes, I have heard that they are launching again in October this year.

      Yes, they are making boatloads of money from the course itself.

      I have just glanced at the course enough to see that it is about private label. So, I was just pointing out that it was not a direct comparison to your retail arbitrage and wholesale models.

      As to proof, I know 2 people that personally bought the course and went to the big event in Austin. To this day, they tell me it is the best money that they ever spend on IM. And they are long time IM ecom people. They have been around the IM block a few times and lost their shirts in bad courses. So, I trust their opinion. They are getting actual profitable sales on Amazon with this method.

      Most people buying this course are not like my 2 friends. Most people will not do anything with it, or be afraid to follow through. So, for them, it is a bad investment. But for those people, all IM courses are a bad investment, even the $400 course that Shane mentioned in the original article.

      So, frankly, I prefer none of you to buy it. The course creators don’t need the money, and I prefer less competition.

      Ken

      Reply
      Howard Lee Harkness - July 16, 2013

      Yes, it’s the same people. Doesn’t look to me that they are observing any customary time limits. Here’s a snippet from a posting on a forum that I frequent:

      ===================
      “In October of this year, the doors to the AmazingSellingMachine will be opening up again. If you are already in the ASM Course, there is no need to purchase this course.

      Nearly 1700 people joined the course last time the doors opened, don’t let your chance pass by again! You can see the number of people that joined the course by visiting this Closed Facebook Group https://www.facebook.com/groups/amazing.selling.machine/
      (You cannot join this group unless you are already a member of the Amazing Selling Machine)

      Learn how to make the big bucks selling on Amazon.com and on the internet in general with your own branded products. Get the tools not available anywhere else to make your amazon/internet business successful right out the gate.
      You’ll also get to connect with the already successful members of the ASM Community already utilizing the Best Online Selling Course Available ANYWHERE!

      Start Saving Now, the price could be nearly $4,000 for this Course (There will most likely be a monthly installment payment plan available, last time it was $1,000 x4 months). This might sound lilke alot, but I’m telling you it is COMPLETELY Worth It! Signup with me and get some AWESOME Bonuses!!”
      =====================

      That actually explains quite of bit of what I’m seeing. It appears that Matt and Jason are offering substantial commissions for affiliates, and I’m guessing that all of the folks that bought the original course have a chance to get their money back by recruiting others (the “bigger fool” approach). The numbers are a bit different than what I remembered. For some reason, I thought that they were cutting it off at 1000 customers, not 1700. Could be I just mis-remembered.

      As you mentioned in the video, it is unlikely that all of the gushing enthusiasm for this product is legitimate. Which is precisely the reason for all of the railing against this article.

      I don’t think it passes the sniff-test.

      That isn’t to say that the private labeling approach is not a good one. The main reason that I have avoided it so far is that when you are involved in any part of the manufacturing process (even if it’s just slapping on a label), you 1) increase your required up-front investment, 2) slow down your reaction time to unfavorable (or, for that matter, favorable) events, and 3) open yourself up to product liability.

      Perhaps you can get around that last problem by moving to France.

      I suspect the product liability issue is rare, but if you do get caught up in a PL lawsuit, you are guaranteed to experience financial pain even if you prevail in court (I have a long-time friend who is an attorney specializing in PL).

      Reply
Goddie - July 15, 2013

Will never choose this model of business even if I am paid $4000 to choose it!

Why would anyone compare this to ASM? This is like scavenging around the town and wasting creative thinking time.

Valuable information, yes! But I certainly prefer the ASM model where many who applied the steps and followed the course are making a killing in revenue right now! The good news is that with a quality private labeled product, you determine your mark-up and profits and will never be afraid of competition! Why choose another model. This is what makes the “gurus” real gurus because their course is changing the lives of many around the world.

Reply
Jim - July 15, 2013

I can vouch that there are a host of people who bought the course and are doing well within their 1st few months. I would venture a guess that if you use Paredo’s Law here, that 80-90% of those who did purchase aren’t seeing a thing.

I purchased and got a refund but took in enough to get going and am beginning to make a few sales.

It doesn’t come without effort and hard work but is a very viable model. I already have an eCoomerce store for a few years so I’m not foreign to working with vendors over the phone.

They way Howard’s wife is approaching it may be good for her, but quite frankly there’s a VERY good reason why you wouldn’t want to waste your time doing it that way.

Yes …. 4k is tough to swallow and I don’t know that it’s worth the price tag. Maybe $1997 but I suppose not 2x the amount.

Good luck.

Reply
Shane - July 15, 2013

Okay, I just added this quick video as a response to some of the comments. Hopefully it clarifies.

Reply
    Ken - July 16, 2013

    Ok, you are right. The Video made it worse. :D

    1) I have not bought the course, so no justification on my purchase going on here.
    2) I know people that are making profit from implementing the course, not affiliate sales of the course. Not 100k per month yet, but they did not have to capital to stock inventory as the course creators did, so slower start.
    3) Course is about private labeling, not wholesale or retail arbitrage, so effectively different business model than Howard outlined.
    4) I suspect most of the 1700 people buying this course have no business capital at all, and should not be buying IM courses in the first place. They are so desperate that they are throwing “Hail Mary” passes.
    5) I have no problem with Shane’s original assertions in his original article about business capital ratios. Again, most people have no business capital of any kind anyway, so rational thinking does not come into it.
    6) Howard is right that there are risks in private label. Business product liability is probably the worst, but that is what insurance is for. Unlike the course’s recommendation of “don’t worry about liability”, everyone should have liability insurance of some type. Some product liability is super cheap. Just depends on the product type and intended end user. Often the manufacturer(s) will add you to their policy. If not, ignore the course and get some.
    7) Howard does keep bringing up the “France” thing as being suspicious. I am not sure why that matters. Shane is in Bulgaria. He has liability for his products performance. Should I infer something suspicious about where he is located?

    I have tried to be reasoned with my responses. I am not here for a fight. But I don’t mind adding clarifications about my positions.

    Ken

    Reply
      Paul - July 16, 2013

      Thanks for taking the time to add some clarifications about this Ken. We’re actually in Romania (not Bulgaria) and moving to Hungary in a few weeks, but the underlying point you make is still valid.

      Reply
      Ken - July 16, 2013

      Sorry, Paul. Romania is a great place, I am sure. But everyone gets Hungary.

      Reply
      Howard Lee Harkness - July 16, 2013

      Yes, Shane is in Eastern Europe, a place where it would be even harder to sue him than to sue Matt.

      One important difference: Although some of Shane’s products do not appeal to me personally, they have always easily passed the sniff test.

      “Howard does keep bringing up the “France” thing as being suspicious. I am not sure why that matters.”

      Maybe it doesn’t.

      Reply
      Ken - July 16, 2013

      Howard.

      I agree. Shane and Paul rock.

      Reply
Alexander Umanets - July 16, 2013

I do not see any “point” to spend $3.5K for the info that is 80%-90% available for free online! For some 10%-20% of mysterious software and “secrets” I have to pay thousands of dollars?!
(Side note: I do not like this word “secret(s)” anymore because of IM gurus/launches/WSOs/FSOs etc. I am sick and tied to hear and read it in 99% of sales letters and WSO pitches!- they over use it trying to hype and lure people to spend money [sometimes their last hope money!] playing on people’s emotions!!!)

Below are a few links I just found in Google doing 5 minutes research.

FBA Overview: http://www.amazon.com/gp/help/customer/display.html?nodeId=200229160
How FBA Works
How to use FBA
How to get started with FBA

Sell on Amazon: http://services.amazon.com/content/sell-on-amazon.htm?ld=AOAssociatesHm

Fulfillment by Amazon – Benefits: http://services.amazon.com/content/fulfillment-by-amazon.htm?id=hm2

Fulfillment by Amazon – Pricing: http://services.amazon.com/fulfillment-by-amazon/pricing.htm?ld=EL-www.skipmcgrath.comAS

Labeled Inventory: http://www.amazon.com/gp/help/customer/display.html?nodeId=200243200

Global Selling with Amazon: http://www.amazon.com/gp/help/customer/display.html?nodeId=201063110

This is a very good article about FBA!:
Save Time and Increase Profits with Fulfillment By Amazon: http://www.skipmcgrath.com/articles/increase-profits-with-fulfillment-by-amazon.shtml

Reply
Brenda - July 16, 2013

Great interview Shane. I am doing FBA at the moment and would like to know what software Howard is refering to for re-pricing on Amazon.

Thanks

Brenda

Reply
Georgene Harkness - July 17, 2013

Hi, Brenda. He’s referring to RepriceIt. Inexpensive, easy to configure, easy to quit if it doesn’t suit your purposes.

Reply
Howard Lee Harkness - September 27, 2013

The folks with the Amaz!ng Selling Machine are baaaaaack! This time with a large affiliate army who are spamming the world.

I’m in the process of writing a post on my blog on this topic (it’s in the proofreading stage, so it should be out shortly).

Reply
Ben - October 10, 2013

I have unsubscribed from 3 lists for promoting this crap.

*It might be good content but for the promises and price, its crap.

**Peanut butter and jelly sandwiches are good, but if you bought it for $65 being told it was a steak… that PB and J now sucks.

Reply
    Howard Lee Harkness - October 10, 2013

    @Ben — good analogy!

    Another analogy that comes to mind is paying $4000 for a box of Legos, and being told that whatever it is you had in mind to construct would “build itself” with no effort, but then discovering that it just came with a set of elaborate instructions.

    Reply
Howard Lee Harkness - April 17, 2014

The Amaz!ng Spamming Machine is back for its 3rd round. The new round of spams started up about 2 weeks ago.

I’ve even seen some of the more recognizable names in the business pushing it this time. Seems there is a trend to forget ethics in pursuit of money. I have already unsubbed from a couple of FBA newsletters for pushing this crap.

Meanwhile, my wife and I have been moving more to the wholesale model in our business. It takes a bit more capital, and the margins aren’t quite as good as retail arbitrage, but it is much less labor-intensive. And when we land a good item, the turnover speed makes up for the margin.

We have not noticed a lot of impact of the clueless newbies on our business, since we generally stay in a different segment. Either that, or they give up quickly enough that it doesn’t matter much.

Like I mentioned earlier, I’m still looking into private-label, but so far, the disadvantages far outweigh the advantages. For starters, the required insurance (and yes, Amazon does require insurance) is MUCH more expensive for private labeling, even for stuff I would think would be pretty innocuous. We did find one possible private labeller who will cover us on their insurance, but that’s the exception rather than the rule.

We are coming up on our 2nd full year in the business, and we have spotted some counter-intuitive trends that we hope to use to our advantage for next year.

Most of Georgene’s book is pretty outdated now, and she is in the process of re-writing it. Prior purchasers should be getting the update for free. The update should be out in a couple of months.

Reply
Chris - February 7, 2016

How often does Repriceit adjust the prices?

Very informative Howard!

Reply

Leave a Reply: