- Almost everyone knows about selling on Amazon,
but there's a lesser-known service
that's become more popular over the years
called Amazon Automation.
And although Amazon has the ability
to be a very passive business,
there is a learning curve
that needs to be taken very seriously,
and failure to do so has resulted
in tens of thousands of sellers
losing all of their money,
never to recover,
leading them to calling it quits
on their Amazon business.
And since 2017, Amazon automation businesses
have been popping up like wildfire
to attempt to solve this problem.
And they take out all of the stress
of running an Amazon business,
once you pay an upfront fee of,
brace yourself, 15-$30,000,
and they take 50% of all of the profit that's made.
However, there are some massive flaws with this business,
and I'm going to be talking about three of them,
as well as give you actionable advice
on what I would do if I was starting from square one.
And to give you a little bit of background about myself,
I co-run a seven-figure Amazon business,
and just this month,
I was brought on to advise almost an eight-figure store,
so I have some experience in the field.
And the reason why I'm making this video
is because there will be tens of thousands of people
that are going to try to sign up
for these Amazon automation businesses in the coming years,
and I wanna lay out the cons.
I haven't seen a lot of people do that.
And be sure to stick around to the end of the video,
because the action steps I give
on how to start an Amazon business,
you can do this with less than $500.
And this is something you can do,
regardless of whatever type of markets are happening.
Whether it's a bear market or a bull market,
selling on Amazon will always be there.
Well, first, if you could automate your mouse or thumb
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Amazon automation is a service
that runs an Amazon FBA,
or a fulfilled-by-Amazon business, for you.
And if you don't know this already,
anyone can create an Amazon seller account,
and 70% of the time, when anyone buys on Amazon,
you're buying from businesses
or individuals such as myself.
But to find and source profitable inventory,
deal with returns, customer messages, and other issues,
these services will handle all of that for you
for a 50% of your net profit.
And this sounds like a great deal on paper,
but when a seasoned Amazon seller
looks at the fine print,
you start to see some glaring problems.
The first problem is the profit share model.
And this is hinged on the fact
that there's no real incentive for these companies
to help their customers succeed,
because they don't have any skin in the game.
And Charlie Munger has a quote that says,
"Show me the incentive,
and I'll show you the outcome."
So this is exactly how the fees break down.
The way it works is there's a one-time fee
to be able to use these systems
that Amazon business has in place.
Essentially, it's a business
operating hundreds of other Amazon stores,
and they're putting a price on this.
I've seen ticket prices just start
as little as $10,000,
and as much as $30,000,
and they claim that this charge employee costs.
However, I've seen Amazon automation businesses
still charge a monthly fee for employees as well.
And on top of this huge upfront cost,
the person signing up still has to buy
all of their inventory as well,
which they say will cost around an additional 10-$20,000.
And this segues into the second biggest problem,
which is account suspension and loss of all of your funds.
Just as there are an endless number of things
to sell on Amazon,
there are just as many, if not more, ways
to get an account suspended,
the biggest way to do that being drop shipping
on the Amazon platform,
which is what many of these Amazon automation businesses do.
And if you don't know what drop shipping is,
let me fill you in on what exactly is going on.
Imagine going to Amazon.com and purchasing something,
but instead, it arrives in a Walmart box.
And not only does it arrive in a Walmart box,
but there's a receipt inside of the Walmart box
cheaper than what you paid for it on Amazon.
And I've actually had this happen to me before,
and this is because that product was drop shipped.
And what they're doing is they're listing these products
from Walmart or Home Depot or wherever they're from
on Amazon.com for a markup,
and once that customer buys that product on Amazon,
they're going ahead and they're plugging your information
on those retail websites
and shipping those items to you.
And this is 100% against the Terms of Service on Amazon.
Reason being is is that it's going to lead
to unhappy Amazon customers,
and less people are going to shop on Amazon
if that type of business practice continues to happen.
So it's not a matter of if,
but when your seller account would get suspended
by doing this.
And you may be thinking, well, what's the problem?
The problem is is that every person
only gets one shot at an Amazon seller account.
You can only use your ID one time,
and if that account gets suspended,
you will have to find someone else
to open that account for you.
So you may be trusting your account in the hands of people
that may not even have
any seller experience on the platform.
And it's also worth noting
that if your account does get suspended,
not only will your inventory be held,
but the pending funds in your Amazon balance will as well.
And obviously, if you're asking these companies about this
when you're trying to sign up,
they're going to say this never happens
or it's a very rare instance
of anything like this happening,
but that's obviously what they're going to tell you.
Let's keep in mind that they already have
15-30K startup cost, and that's non-refundable,
so your account could get suspended in month four,
and you're already out 15-30 grand.
And the third and last problem
with these Amazon automation businesses
are the breakeven time,
and they claim that the breakeven time
on a typical Amazon automation business
is around two years.
And the argument is is that most businesses
don't break even until around the two-year mark,
which is true.
However, I have some anecdotal evidence
that I wanna bring up,
that in my half a decade in selling on Amazon,
I've not once met a profitable person
from one of these automation businesses,
and I've met thousands of people
who make a full-time living
selling on the Amazon platform,
running their own business.
Let's get this straight:
You get charged a huge upfront fee,
you have to buy all of the inventory,
and still split 50% of the profits,
and maybe after two years,
if everything goes well, you'll break even.
To me, it sounds like the only person
getting a good deal out of this
are the actual Amazon automation businesses themselves.
But you're like, "Chris, I don't have time
to learn an Amazon business.
What should I do?"
And if it were me and I was starting from square one,
and I really wanted to automate this thing,
what I would do is I would take a course,
or even better, I would hire someone from overseas
at about $5 an hour to take that course for me,
and then set up everything from there.
And you only need three tools to start your Amazon business,
all costing around $100 in total.
And those three tools are asinzen,
which calculates the profit of the item;
there's Keepa, which calculates sales consistency;
and the last one, depending on the business model
that you go for,
whether it's online or arbitrage or wholesale,
I would say either Tactical Arbitrage
or AMZ Analyzer or ScanUnlimited.
And I actually have a 40-minute crash course down below,
which, if you haven't taken it yet,
it's 40 minutes of your time.
I recommend checking it out.
I'm working on a course
that will cost under $200
that will show you step by step
on how to do everything,
and you can hire someone overseas
to do this for you.
And the reason I'm doing this
is because there's no reason to go to one of these services
or to pay thousands of dollars
to learn how to sell on Amazon.
However, knowing what I know now about business,
I understand how important it is
and costly it is
to pass those learning curves
as quickly as possible,
which is why I'm setting this option up,
and I think it's a steal.
This means that by the time you got your tools,
you buy your inventory,
and even if you decided to use this program
that I'm going to make,
you would be all in at this point
somewhere between a thousand and $1,500,
which is a fraction of this 30 to $40,000 price point
that these Amazon automation businesses have.
And I'll have a link down below
for anyone who wants to sign up
for the waitlist on that one.
I'll probably be offering
some kind of incentive or bonus for people
who sign up in the first week.
And if you wanna get started sooner,
there's tons of free content on YouTube
that you can watch.
My channel has hundreds of Amazon FBA videos,
so I recommend checking those out as well.
However, if you do have an Amazon automation business
that you're looking at taking,
or you actually run one yourself
and you want me to take a look at it,
I'm more than happy to.
I've just yet to find one that isn't structured
the way that I talked about in this video,
and I don't really see too much upside to 'em,
and I've yet to recommend one to a friend or family member.
So if you guys do like videos on how to make money online,
be sure to like and subscribe,
new content coming out every single week.
Thanks for watching,
and I'll see you next time.