Is there anyone who makes money using FBA?


#1

Hello everyone,

I would like to share my pain with y’all. 2018 was my first full year of selling on Amazon. At the end of 2017 just month after I started my venture on Amazon I went FBA. I sell both private label and non-private label products. Anyway, today I created an annual account activity report and I’m still in shock… I’ve been following the figures on a monthly basis but somehow it wasn’t so obvious how I’m loosing so much money on various fees. The bottom line is… Only 20% of my total sales ended up on my bank account and most of the money that was generated went to Amazon’s pocket to pay all the fees. This is the breakdown (highest to lowest)

  1. Cost of advertising (Amazon PPC) - since I’m a fairly new seller I don’t mind paying for it
  2. FBA transaction fees (ridiculously high)
  3. FBA selling fees
  4. Service fees
  5. FBA inventory and inbound services fees
  • all the non-Amazon expenses, like shipping the products from China to FBA, packaging etc.

Now my question is, how on Earth can anyone make money here with all these ridiculously high Amazon expenses?

Maybe I’m doing something wrong… But the numbers don’t lie.

I would like to know if anyone has a profitable FBA schemed business here.

Thank you!


Need guidance to run business on Amazon.com
#2

You need to sell items that have a higher profit margin if you are not happy with what you have now.
Not everything is suited for FBA especially items that have a low profit margin.
With that said FBA does cost considerably more than FBM but this is what happens when you hire someone else to do your work for you.
Think of FBA as an employee.


#3

There are hundreds of thousands of Sellers using FBA, they are profitable through FBA because they knew when they converted their items to FBA, Amazons fees were going to be higher than the FBM fees so they factored those FBA fees into their selling price so they can have a decent profit margin. When you sell through FBA, you almost always have to raise your selling prices to factor in offset those new expenses.


#4

They Don’t…:rofl: :sob:

Try Over-Pricing Your Inventory and See If you Sell MORE…! :grin:

Buy American…:anguished:


#5

So did you have a 20% net profit after paying fees, or did you still have to pay fees after that?


#6

It sounds like there was 20% of the full sale price into his account, which means if he is selling at a 500% mark-up, he broke even…otherwise, he lost money…So he would need a 600% mark-up to clear around 20% of the sale price as profit…

Paul.


#7

20% net margin is probably what a lot of FBA sellers make.

Have you included your cost of goods in that 20% you say is left over?

The main thing about FBA is it allows you to scale up your volume without adding much additional overhead.

In order for that to make sense you have to be able to do large volume. Unfortunately that is the reality for Amazon sellers today, the model for most is high volume/lower margins.


#8

Im doing 80k per month in revenue and running a 20% profit margin so yes I am making great money and living a dream life. I sell a combination of arbitrage and wholesale. Amazon makes me nearly 200k a year in profit at this point so IDK what else to say. Good luck to you.


#9

Good point. I’m thinking that’s the case otherwise he wouldn’t be worried so much. If that 20% was NET that’s not bad. Sure FBA is expensive, but so is leasing/owning your own warehouse staffing a shipping, picking team, and covering all logistics and fulfillment yourself.

I’ve always found FBA a good route for sellers who don’t have their own warehouse, staff, or don’t want to do a 3PL.

MS


#10

Yes, Amazon takes a large percentage of Sales but you can make a profit. I have only been FBA selling for 7 months but have made about 30% of my Sales as profit. My rough rule of thumb is 33% of Sales goes to Amazon in fees, 33% is cost of the good I’m selling and 33% is profit. I don’t purchase an item to sell on FBA unless I think I can sell it for 3 times or more of what I pay for it. I also don’t like to sell items for less than $15 through FBA. I hope this helps you start turning a profit.


#11

Nope nobody makes a profit, theres only a handful of people I know doing 7 figures but they do it for fun and make nothing. The luxury cars are all rentals and the houses are all rentals as well. Nope not possible to make money here.


#12

We do make profit using FBA, but like others are saying, we are very selective about what we sell via FBA. Typically, higher profit margin (i.e. at least 40%) and fast moving items that are time consuming and costly for staff to pack and ship. The main reason FBA works so well for us though is the cost of shipping. It’s shockingly cheap to ship to Amazon because of their bulk discounts. We’re in the middle of nowhere SW Colorado so shipping is expensive. Something to consider


#13

I have found that in many cases FBA is the same or even more cost effective than shipping items ourselves. We do about 50/50 FBA vs FBM. But I think a lot of times you really don’t realize the true cost of warehousing, packing, and shipping orders yourself.


#14

I am selling since 2016 and all the time only FBA. My profit after all fees usually is about 15-20%. I have tried a lot of different strategy but on long term always the same. Way to high competition. Only one way worked for me it`s increasing my inventory. 1 000 000 gross sales gives me 150 000 profit. Not really good but at still something


#15

invent products that don’t exist on amazon is the best way to make money.


#16

Did you calculate all of your costs before even buying the product you intended to sell?

If you didn’t, you need to start doing that or you’ll forever be surprised. Let me give you an example of how I calculate this for one of my own products:

Selling Price: $11.99

Product Cost: $3
Amazon 15% Fee: $1.80
Amazon FBA Fee: $3.19
Cost of shipping this item to Amazon: $0.15
Cost of my own storage for this item: $0
Labor cost for processing this item: $0.10
Total Costs (sum of all above): $8.24

Profit = Revenue - Cost = $3.75 per item.

You need to do something similar to this for every item you sell. In my case, FBA is amazing because I can charge $2-3 more per item than I could in FBM, and the FBA fee above is actually cheaper than what I would pay to ship this item to the customer myself. FBA is a great fit for my business for these reasons, but I know it’s not the same for everyone.


#17

IM not sure there are that many making money. Ive been watching some of these youtubers that are selling shoes, they say they make a lot of money, they do spend a lot on products from stores, but was just watching for fun to see what they really made. And most shoes are gated, but they said they paid 20 dollars for these shoes, the selling price was 60, and he actually said he was going to make a profit of 40 dollars.

So he didnt even factor in cost of shipping shoes to fba, cost if the shoes dont sell for a couple months, amazon fees, seems even if he did sell the shoe pretty quick theres only about 10 dollars left for profit at most. And thats with no returns.

But he was clearly stating he was making 40 profit off that shoe.


#18

Not when Amazon low balls the price and dominates the Buy Box.


#19

Did you hear that on YouTube?


#20

I have been using FBA for over 3 years and very happy. Much more sales than FBM. Yes fees are high but we sell high dollar items with good profit margins.