Feb 8, 2025
The expensive journey of launching products on Amazon
E-COMMERCE
This is the story of how I spent $16,000 launching a product on Amazon and how selling on Amazon sucks.
The idea
After helping launch and manage the Amazon e-commerece site for one of my past clients that sold cosmetics, I was inspired to want to launch a brand of my own. We didn't know what the product would be, so we looked online for a mastermind course that taught how to use various tools to identify a market.
Market research
Amazon is a complex marketplace and picking out a product to launch takes an enormous amount of time. The product had to have:
Number of competitors under a certian amount
Number of reviews under a certain amount
Products had to be safe
Products had to be at least over 10% margin profitable after Amazon fees
Product testing and validation
After finding a variety of products that met the criteria, it was time to reach out to the suppliers on Amazon. One of the products was a kids toy and another was succulent plastic plants. Once we received the kids toy, we immediatly saw that it was prone to breaking so we settled on the succulents instead. (less risk)
Supplier selection
Using Alibaba's massive supplier list, I reached out and acquired lots and lots of samples from 5 different suppliers. Then I picked the perfect combination of products to be sold as part of the package. Some suppliers had poor quality samples, some had good and others were more pricey. It was about picking the best of all. Also in the meantime, I asked for a sample box template which I would use for my design.
Package design
I knew that packaging design was key to our product. This is where I really had a lot of fun. Various different designs later I came up with something that was unique, a box that looked like a box crate that could also be served for decoration. Using Fiverr is great. I used this platform before for past projects so I knew that I would likely get a good design. I found a few guys and ultimately handed off the desgin and the dimension of the box and then the design was done.
Establish Amazon Seller Account
Before you sell anything, you need to establish an Amazon seller FBA account. You get to setup your business and go through a process of item creation, SKU and starting to tell Amazon you will be sending items to them. You will print labels and have to stick them on every box.
Supplier Order
Time to secure a contract with the supplier! We placed our initial order for 1,000 at $4.50 per unit not including shipping.
Production begins. It took about 2 weeks for the supplier to package the products and load them on a pallet. Then they were loaded on a ship and were on our way to California. We waited around 2-3 weeks for shipping, this was during COVID so the shipping was longer than usual.
Now the products arrived to our garage. Our entire garage was full of boxes and we had nowhere to park our car. We needed to move the boxes to UPS as they all went to randomized Amazon warehouses where they sat.
Send products to Amazon
It took about 2 weeks until all products arrived to Amazon's random warehouses and the the inventory showed up on our account. This meant it was time to sell!
Product Marketing
While we were awaiting our product to arrive to Amazon, we already prepared our listing page and started to optimize the ad campaigns using long key words.
Product Launch
Once the listing is live, it doesnt mean you will sell automatically. We had to do a lot of marketing and ad campaign work on Amazon to get the word out.
First we had to give away 500 units to a free promo site where people get the items for free in hopes that they will review the product on Amazon for you.
You have to create ad campaigns on Amazon for key words, this is a very expensive process!
You must followup with any buyers to prompt them to leave a review. People dont really leave the reviews that much so chasing your buyers for reviews was a long shot.
Our product came with a promotional flyer in a box, its just one way to get user engagement and reviews! These were necessary to include, but it was difficult to tell how successful they were.
Finally some orders
We finally saw some orders slowly come in! This was fun! Reading comments and reveiws from people was so rewarding.
The bad news
We eventually sold over 1,000 units within first 3 months and ran out of inventory but the ad campaigns were so high, our margin was so low after Amazon fees and by that time there were many more competitors that entered this market that it was clear this was a race not worth racing! We decided to not renew the order from our supplier and we closed the business.
WHAT DID I LEARN?
Timing is everything. At that moment the data showed that while this was a niche worth getting into, shipping delays caused a problem and more competitors started to pop up.
Competition was ridiculous. Most of the sellers were the manufacturers themselves so we were competing against the same people we were buying from. It was difficult to product differentiate and at that point everyone was reducing the price so you were operating in the negative. You also had to give away a lot of inventory for free and pay for the shipping yourself to promotional websites.
Selling on Amazon is really expensive. Amazon's FBA fees are so high that your margin is eaten away super fast when you factor in everything, costs and advertising. Unless you were a super high volume buyer of goods from China with heavy discounts you were barely breaking even. You should also be ready to spend thousands ($10,000) easily just on free promotion to get advertising and review traction and that can be short lived with not a high return on your investment.
In conclusion, this was a very fun adventure, both me and my wife were heads down for a while during this journey as an Amazon seller. Being an Amazon seller is not for everyone especially if your selling a product everyone else can make! The key is you SHOULD definetally have something unique and be first to market but honestly I wouldnt sell on Amazon again.