What is up guys! so a very common question that I get all the time is is
Amazon FBA still viable can you make money with all of the new fees right the
Updates and fees and so we're going to talk about that right now so they have
Different categorizations of size right so small large large one to two pounds
And large over two pounds these are the costs that it actually costs you one
From Amazon to fulfill these items so this is when the Amazon employees are
Actually taking your items off of their shelves putting them in a box and
Shipping them out so small one-pound or less 15 inches that's the longest side
So about 38 centimeters it's short its side 0.75 inches or less right so it's
Medium size 12 inches or less so they give you a good kind of example down
Here of common sized items with their weight and dimensions and their cost in
January through September and just October through December right so these
Are actually different costs in q4 because Amazon is incentivized to ship
Your items out of their warehouses so that they can make more space so it's
Actually cheaper to fulfill your items in q4 but it's significantly more
Expensive to store them so there's two different types of feeds you have to
Think about when you're doing Amazon FBA the first is fulfillment so January
Through September a normal t-shirt one pound or less large standard size
Dimensions of 8.5 by 5.8 by one 0.35 of a pound
Outbound shipping weight one pound $3 and 39 cents to fulfill the t-shirt so
When you want to think about the actual storage cost then you can go to the
monthly inventory storage cost so during the first nine months of the year it's
point six four per cubic foot and so if you come to this services amazon.com
slash fulfillment by Amazon pricing you actually calculate your storage fees
simply by inputting the dimensions of your product and I'm going to be linking
this in the description of this video so you guys can go and you can play around
with it so 0.64 per cubic foot right is a very
cheap cost to store your items if you ever use out outside warehouses besides
Amazon you know that this is a very fair price so during q4 that price goes from
point six four to two dollars and thirty five cents per cubic foot for q4 so your
sales are going to drastically increase in q4 so this makes sense from Amazon's
perspective to charge you more because you're going to be making more money and
space in their warehouse is much more sought-after and valuable so go ahead
and play around with these storage fee calculators from this site you can know
that 0.64 per month for the first nine months two dollars and thirty-five cents
per cubic foot for q4 right and oversize has a different calculation right here
so if your product is categorized as oversized right which they clearly
quantify right here then go ahead and look at the oversized monthly inventory
storage fees and so some examples of fulfillment fees are good to look at
three dollars and thirty nine cents to ship out a t-shirt if you're doing this
yourself you know you have to go to UPS you have to get the box you have to buy
the tape you have to print the labels it's a very good deal and the entire
business model of Amazon FBA is centered around the fact of allowing Amazon to
fulfill for you right fulfillment by Amazon FBA so if you're shipping a large
monitor 50 pounds it costs 75 dollars per unit to ship it's cheaper in q4
because they want to clear space in their warehouses but you're selling this
for five hundred dollars and then when you add up your cost of goods sold and
your shipping you can calculate your profit so we're going to run through two
real-life examples to show you exactly what the costs are what your profit
margin is multiplied by the number of units sold to show you whether or not
Amazon FBA is still a viable business model all right so let's look at an
actual product on Amazon FBA and let's evaluate from front
to back whether or not this is profitable whether or not the Amazon FBA
business is sustainable even with the fulfillment fees and storage fees so
let's take a look at a product that we've looked at before if you were part
of my course it's one of the products that I identified as an incredible FBA
product right so let's take a look at this Basin so the first thing we're
going to do is we're going to take a look at how expensive it is to actually
source this product from a cost of goods sold perspective so we know that this is
a silicon wedding ring and so the way that I like to do it is going into
Google Translate silicon wedding ring translating into chinese Simplified
taking this chinese Simplified text and putting it into 1688 so for those of you
who are not part of my course we're sharing some some tactics as far as
sourcing cheaper suppliers using the China side facing version of Alibaba so
we paste it in that text click search and if you guys want you can actually
translate this to English just by right-clicking and going to translate to
English and I'm using Google Chrome so you can see now in English some of these
different things so 50 RMB right so what we want to do is go into our Google
conversion currency converter to put in point five Chinese Wong and so that
equates to seven cents per unit so then if we head into the SBA profitability
calculator we put in 797 for the price because that's what they're charging
right here and then we go to shift Amazon we're going to estimate here I
like to use about 1 to 1.5 times the cost of product just to be safe it's
usually going to be a little bit less than that especially if you ship by sea
so we're going to go point zero 7 for cost of product that we just calculated
using our RMB 2 USD translation currency conversion so 10 cents to ship 7 cents
per unit selling at 797 it shows you right here after you click calculate
that the selling on Amazon fee is $1 and 20 cents right so this is actually the
Amazon referral fee which is 15% of the cost the customer pays and that's
basically a cost that you pay for Amazon to bring you a ton of organic traffic so
this is a cost you can basically think to yourself that you're saving as far as
Facebook advertising and driving paid traffic to your Shopify website if you
are selling but by another means so you're paying a dollar 20 and selling on
Amazon fees you're paying two dollars and 41 cents per fulfilled unit right so
we're looking at those same cost that we looked at from our other sheet where we
were showing the Amazon Fulfillment fees and then after all of that with our ship
to Amazon fees with our cost of product per unit fees it shows us that we're
actually selling at a 52 to 53 percent net margin and so if we're selling four
dollars and 19 cents of net profit per unit do is take that number go into our
jungle scalp take a look at the estimated sales per 30 days and this is
an estimate guy so if we were super serious about this product we would look
at the itraq $9.99 cart trick method numbers to know for sure how many units
this was actually selling per month but for now and for the sake of expediting
the actual estimate we're just going to use jungle shout numbers so on our
eternal is the product that we were looking at so on our eternal it looks
like it's estimated sales per month for on our eternal is 2260 so if we take a
calculator 2000 260 times and I think it was 419 4.19
then you can tell that we're estimating that you're going to make from one
product nine thousand four hundred and sixty-nine dollars of profit per month
and then when you exit when you annualize that to a year right if we
round that up to ten thousand you're making a hundred and twenty thousand
dollars in profit from one product and that's more than those people's salaries
and when you actually add up products after product that you're
stacking into your portfolio if you've done the correct due diligence it starts
to add up incredibly quickly so let's take a look at one example again from
start to finish to think about whether or not Amazon FBA is still viable the
second product that we're going to look at is a happy birthday banner and we're
going to show you again with a very low prime price to show you that even with
inexpensive products if you choose the right products do your due diligence
correctly with product research like I go over in my product research method in
my product research module in the course and all of my different YouTube videos
there's a ton of resources out there for you guys if you choose the right
products you will make a ton of profit so we're going to go seven dollars and
fifty cents here happy birthday banner so if we go happy birthday banner in our
Google Translate copy and paste the Chinese simplified text into 1688 which
again is the China side-facing version of Alibaba that we can see the exact
same products here right for the happy birthday banner so 4.6 RMB if we go into
the google currency conversion 4.6 Chinese one is 0.68 US dollars so then
if we go into the Amazon FBA fulfillment fee calculator plug-in 750s for the item
price we're going to estimate about 50 cents to ship to Amazon even though
that's probably a drastic overestimation especially if we sit ship by sea because
these are incredibly flat small compressible products so it'd probably
be much lower but we're going to conservatively estimate about 50 cents a
unit 0.68 as we just calculated in our currency conversion so we can see that
even at an incredibly low price we're still making a almost a 37% net margin
and so if we again take a look at the estimated sales and if we were doing
this just to repeat one more time if we were doing this for real we would look
at the itraq $9.99 cart method for you know seven days and then multiply that
number by four to get about the monthly average right but for this sake of this
video we're going to use a jungle Scouts estimated sales here so five hundred and
sixty five x two dollars and seventy seven five 65
277 would be an extra $1,600 in profit per month and this would be a very quick
product to source it would be a very easy kind of conversation with your
supplier you can use these exact listings showing the price per unit to
leverage in Alibaba if you're not comfortable working on 1688 since it all
is in Mandarin Chinese right but what you can do even if you're not
comfortable working in 1688 realm is you know take images take screenshots of
these listing and leverage that price in USD against your Alibaba counterpart
suppliers supplying the same product right and so we looked through two exact
products here guys but something to think about as well is if you add you
know if you add bundles if you create value through a second product or you
make a premium version or you make a different color or you make a large
version or a small version or a travel version there's so many different types
of variations you can do to make it $17.99 and then if we if we rerun these
numbers right using a $17 and $0.99 price point instead of this 7.57 price
point right we can do that right now so let's try another product enter in the
ace in here right we're going to do this live for
you guys $17.99 was the cost right and so we're going to estimate a dollar here
just double it right because you're going to add in a few of those pom-poms
that you can compress right cost of product so that before it was 68 cents
lets you no more than double that and make it a dollar 50 to add in that
additional product right - I'm sure you can source from the same party supplies
suppliers who do make all those different products right so you can
bundle it right there in that same supplier with little to no additional
work for yourself and then if we run that calculation now we're at almost you
know 54 to 55 percent net margin right and so if we look at the jungle Scout
numbers for this one also let's run the jungle
Scout extension right and this is the birthday party pack by Sterling James Co
so let's run the jungle Scout extension on this specific product
and as you can see it's making a hundred and seventy-nine sales per month right
estimated so if we take the 179 179 and multiply it by the 978 margin right
again $1,750 profit per month from a single product and that's just a very
simple variance you can sell just a happy birthday banner as one of your
products you can add in the additional of pom-poms to the listing to create a
second product and out now all of a sudden you have three thousand dollars
profit in per month and it doesn't take you know you don't have to go find a new
supplier you don't have to do any additional research you know the demands
there because you've proven it with your first product and all you have to do is
just create that variation create a second product listing you know take a
few more photos and then for pretty much forever you're going to have a product
that's earning you an additional seventeen hundred and fifty dollars per
month in profit so in the end guys is Amazon FBA still a viable business model
the answer is an unequivocal yes absolutely it is a viable business model
it's not going to stop Amazon is not going anywhere they're one of the most
powerful influential companies in the world they're only going to get larger
and larger and expand into different countries and expand all across the
world and increase their fulfillment lines and it's not going anywhere guys
there's always going to be brand new products and different niches that you
can explore and dive deeper and deeper into the rabbit hole of Amazon finding
these incredible niche products and be the first entry BFS follower you know
create new value in a bundle create a different size color there's just
infinite combinations guys you can do it don't let ever let anyone tell you that
Amazon FBA is not a viable business model unless you want to save it all for
yourself guys so go out there find some products and let's make some money