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Amazon FBA

Amazon FBA: First Private Label Product – Risk vs Reward

The following are suggestions based on my personal experience:

For your first Amazon private label product, my suggestion is that you start with between 150-250 units of your product. The risks are higher than the potential reward when you start with more than 500 units of your first product.

Let’s say you launch with 1000 units of your product. Here are some of the possible outcomes:

  • your product is a success and you are selling 20+ units a day
  • your product flops and you are selling maybe 1 unit per day at best
  • your product sells well, but the PPC is $3+ per click, your acos is terrible, and hijackers are all over your listing
  • random problems – you accidentally violate a trademark, your product gets flagged by Amazon, your account gets suspended, you find out your product is patented, you get high return rates on a product, etc…, etc…, etc…

So, if your product is less than a total success, however you define success, you’ll face issues with slow sales, tied up capital, low morale, etc…  Now if your product is a success, you just need to order a lot more of that product and your sales satisfaction is just delayed a bit.  You can then spend big money on a tested and successful product!

The chance that your first product pick is going to be a total success is pretty small compared to the things that can go wrong.  If you start with a lower quantity of units, your risk is greatly reduced.  If you have picked a slow seller, you will probably be able to at least recoup your costs, at least.  Even if not, doesn’t losing $750 sound better than losing $2000?

A quantity of 150-250 units is enough to give your product a good test run.  There is really no downside to starting with less than 250 units of your product.

Now if you are 100% convinced that your product pick is going to be a phenomenal success, then I’d say go for it, buy as many units as you can afford – as long as you can take the financial hit if you have overestimated how good of product you have picked!

Many suppliers have listed minimum order quantities (MOQ) of 500 or 1000+ units.  Everything is negotiable.  You can probably get your supplier to agree to a lower MOQ for your first order – if they are inflexible, I’d find some other supplier if you can.

All in all, just seriously assess the risk versus reward when you are settling on an initial order quantity.  Some people will accept more risk financially, but it is up to you to determine how much you can lose but still recover if your product idea is a flop.

 

As always, I hope that the information that I post to my blog is useful to you.  If so, please check out my other blogs posts on the subject of Amazon selling.  Don’t miss out! Please consider subscribing to new blog post notification emails.  You will recieve an email notification when a new post is added. 

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© 2017 Philip A Covington

 

 

 

 

Amazon FBA: Template to Contact Alibaba Suppliers

Here is the template I use when contacting Alibaba suppliers.  I hope it will be helpful to you.

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Hello, I am [YOUR FULL NAME], purchasing assistant for [YOUR COMPANY NAME].  Our company director has asked me to kindly inquire quotes for quantity [XXX] of your product [PRODUCT DESCRIPTION]. We are a company that sells products related to [INSERT NICHE HERE] and we do over 1.5 million dollars in sales each year. We’re looking to expand our product range and create a profitable partnership between your company and ours. We have been researching different companies in China that manufacture [INSERT ITEM] and we think that your company could be a great supplier for it.  We have a few questions that we would like you to please answer:

    • What types of packaging do you usually use for this product?

 

    • How long does it take to manufacture once an order has been placed?

 

    • What is the product-per-unit cost including shipping via Air Express to the United States, ZIP code [INSERT YOUR ZIP CODE]?

 

    • What methods of payment do you accept for the full-order?

 

    • Is it possible to put our logo on your product or product packaging?  If so, what is the cost?

 

We would be very grateful if you would contact us with answers to the above questions as well as any additional policies that we may need to know. We would also like to discuss with you further about doing a sample order for the product. We are hopeful that we can start a mutually beneficial relationship. The email address that you can contact me at is: [OPTIONAL ] Kind Regards, [YOUR FULL NAME] Purchasing Assistant [YOUR COMPANY NAME] [YOUR CITY, {STATE}, COUNTRY]

 

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I won’t get into a detailed explanation of Chinese business culture, but it is better if you do not present yourself as the “boss” or the owner of your company.

 

As always, I hope that the information that I post to my blog is useful to you.  If so, please check out my other blogs posts on the subject of Amazon selling.  Don’t miss out! Please consider subscribing to new blog post notification emails.  You will recieve an email notification when a new post is added. 

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© 2017 Philip A Covington

 

 

How To Use 1688 to Get the Best Deal From Your Alibaba Supplier

Ever wonder if the quote from your Alibaba supplier is the best deal you can get? This is a quick tip on how to make sure you are getting the best quotes from your Alibaba suppliers.   I have used this tip to myself negotiate the best prices when dealing with Chinese suppliers, particularly on Alibaba.  There is a Chinese website, which is pretty much the equivalent to Alibaba, it is https://www.1688.com/

If you go to this website, you will see it is not in English but Chinese.  If you do not know Chinese, you might wonder what good is this to me?  Well, you can get around the language problem by using Google Translate: https://translate.google.com/  So, if the product you are interested in is an “LED Light Bulb”, for example, you would go to Google Translate and type in that search term.  You then select “Chinese (Simplified)” in Google Translate to get the Chinese translation of your search term.  Next, you right click the Chinese version and select copy.

Paste that copied Chinese search term into the search box on 1688.com.  Look for the equivalent product to the product that your Alibaba supplier is quoting you in the page results that come up.  The prices will be in Chinese Yuan.

Take the prices in Chinese Yuan and convert them to US Dollars in Google.  If the price is 33 Yuan, in a Google search just type in “33 Yuan to USD”.

So, for the example I gave, 33 Yuan is equivalent to 4.86 US dollars.  You can now compare your Alibaba supplier’s quoted price per item to the results from the 1688 search.  You often will see that the price is significantly cheaper.  This can be used as a negotiation tactic to get the best price from your supplier.  It can also be used to qualify which are decent quotes from multiple suppliers.

One product I got a quote on from an Alibaba manufacturer was about 30% higher than I found on 1688 from the SAME manufacturer.  I respectfully pointed out that their price per item was lower on 1688 and successfully used that to negotiate a lower price.  Note that some suppliers won’t necessarily like this technique, but if you are respectful in your negotiations with your supplier, they will usually come back with a better per unit price.   Make sure you get a best initial quote that includes shipping from your Alibaba supplier before trying to negotiate from the results of your 1688 research.  Otherwise, your supplier might reduce the apparent per unit price, but then jack up the shipping to where you are paying the overall same price as they originally quoted you.

I have used this technique successfully and I hope that you will have success with it too!

 

As always, I hope that the information that I post to my blog is useful to you.  If so, please check out my other blogs posts on the subject of Amazon selling.  Don’t miss out! Please consider subscribing to new blog post notification emails.  You will recieve an email notification when a new post is added. 

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© 2017 Philip A Covington

Forming your LLC, Fast, Easy, and CHEAP!

 

I see a lot of people saying that they formed their LLC with help from places like Legalzoom or Nolo, or whatever and they have paid a ridiculous price for a form that you can download for free from your State’s Secretary of State Website.  You don’t need Legalzoom or Nolo! Legalzoom says their fee starts at $149 + fees!   That means if your State charges $70 to form an LLC, you will pay Legalzoom at least $149 + $70 = $219 for something it costs $70 to do yourself in a few minutes!

For example, in the State of Ohio, you can go the the Secretary of State website and download form “533a”, complete it, and pay the State of Ohio $99 to form your LLC.  In California, it is form “LLC-1” and it costs $70.  In Texas, it is form “205” and it costs $300.  In New York, it is form “1374-f” and it costs $200.  In Pennsylvania it is form “DSCB:15-8821” and it costs $125 (in PA go to the Department of State website).

Note that the costs quoted above are in addition to what Legalzoom or Nolo will charge you for the “privilege” of using their products.  Skip those services and go directly to the Secretary of State website in your State, download the form you need,  pay your fee and be done with it.  Many States now let you fill out the form online and to pay with credit card or check!

A fast way to get to the information you need in your State is to search Google with the terms “[State] sos llc”, so for Ohio, it would be “Ohio sos llc”.  That will usually take you to the right place get the correct form and how much it will cost.

If you need help finding that information for your State, please feel free to email me at mailto: p.covington@gmail.com  I can help you find the info.

 

As always, I hope that the information that I post to my blog is useful to you.  If so, please check out my other blogs posts on the subject of Amazon selling.  Don’t miss out! Please consider subscribing to new blog post notification emails.  You will recieve an email notification when a new post is added. 

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© 2017 Philip A Covington

Amazon FBA: UPC bar code

 

Do I need to send my supplier my product’s UPC code?

Unless you intend to sell your product through retail channels outside of Amazon, you do not need to have your supplier put your UPC on your product.  You do need a UPC to create your Amazon listing, but once you use the UPC to create the listing, you no longer need it.  Amazon requires their FNSKU bar code on your products instead of the UPC.  The FNSKU is how your product is identified on Amazon.  Amazon will generate the FNSKU, which you can download as a PDF and then send to your supplier to put on your product packaging.

You can get your UPC from places like Barcodes Mania  You will need a UPC for each version of your product.  You can buy a single UPS or multiple UPCs if you know that you will have more than one product right away.

 

As always, I hope that the information that I post to my blog is useful to you.  If so, please check out my other blogs posts on the subject of Amazon selling.  Don’t miss out! Please consider subscribing to new blog post notification emails.  You will recieve an email notification when a new post is added. 

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© 2017 Philip A Covington