How I Failed Miserably with my Amazon FBA Business - Cash Flow Diaries (2024)

Thirteen months ago I embarked on an entrepreneurialjourney to start a private label Amazon FBA Business. A business in which I would purchase bulk items manufactured in China and sell them on Amazon using the fulfillment channel they offer. The idea behind my little side hustle was to earnextra income tohelp me purchasemore rental properties. You see I have a dream to be financially free one day and am confident I can achieve this goal by building a portfolio of rental properties. The passive income derived from these rentals will allow my wife and I to have financial freedom. My real estate investment portfolio is actually performing great right now by the way. You can read all mylatest updates in my monthly net worth postsif interested however that is not the reason I am writing this today. Today I want to let the world know how I failed miserably with my Amazon FBA Business. As of last week, I sold my last unit and am now coming to a close on my Private Label Amazon Experiment.

If you are ever planning or are even remotely interested in starting to sell products on Amazon, the story of my journey will help you and even inspire to you to achieve where I went wrong. I know exactly where I went wrong and will share all the nitty-gritty details with you so you can learn from my mistakes. I will show you all the actual numbers and timeline of how I began this business all the way up to selling my final item and revealing if there was any income even made from this.

Early Stages – The Excitement of Starting an Amazon FBA Business

You will undoubtedly become very eager and excited at starting an Amazon selling business. There is a lot of good info out there that can help you start it, help you pick a product and even guide you through any pitfalls you may encounter. But the biggest excitement is when you find out how much money some others are making out there doing this same business. The potential is limitless and having access to millions and millions of amazon buyers is mind-blowing!

When I first started, I wrote about how I would accomplish my new side hustlewith thisdetailed plan of the steps needed to start an amazon FBA business. I spent countless hours researching and reading all about how to be successful at this. I was ready and felt very confident in the product I chose and the numbers I had calculated.

One of the most important pieces of this puzzle is to pick the right product. A product that will be better than all the others currently for sale on amazon. I used a software program called Jungle Scoutto help me pick my product and used the knowledge from all my researching to try to enhance the product. It took me 3 months of testing samples and communicating with the Chinese manufacturers before I even placed my first order.

Patience is a Virtue – The Waiting Game

Once I chose my private label product and placed my order, I waited 3 whole months for the items to be produced. I ordered 1000 items in total and spent a lot of money doing so. You will see a complete break down of the costs involved below so just keep reading. I then had to wait an additional 3 months after that before my product was even in the United States. Overall, it literally took 9 months before my chosen product was first listed for sale on Amazon and from when I embarked on this journey.

For a complete timeline break down (month to month) on the steps I took and went though you can check my Amazon FBA Business Update I wrote awhile back. It was no easy feat to finally have a private label product selling on Amazon Prime.

Let the Sales Begin!! (9 months later)

The joy and excitement you will get from selling your first product is amazing. It feels really good knowing all your hard work put in finally leads to an organic sale. I began by giving away about 20 products in exchange for honest reviews. This at the time was the recommended way to launch your product and get some feedback/rates/stars so that your listing can get some traction. This led to my first few sales and it was very satisfying seeing positive reviews being left for my product. Sales started off very slow and I was only averaging a few sales per day but it slowly picked up in the coming months. Lucky for me, I began selling in September and was only a few months away from the holiday rush which I had read so much about.

I revealedmy sales data and income for my first 2 monthsof sales if you want to look back to see how I did. It was very promising and I was very excited. At this point I was averaging about 5 sales per day and had mostly good reviews.

Now after moving into November and early December, sales really picked up. At one point I was selling over 20 units a day but this is also when everything began falling apart for me.

Let The Troubles Begin – One Bad Thing After Another

About 3 months in when sales really started taking off is when bad things started happening. As mentioned above, at this point, I was selling anywhere from 20 to 25 units a day which is amazing! This was in late November and early December and the beginning of the holiday rush. Here are the troubles I started experiencing from Amazon.

1) My Good Reviews From My Product Launch Give Away Were Deleted.

I had a bunch of good reviews to start when I launched but it was about this time that Amazon deleted all those from the free giveaway I did. So now I was working with only actual real reviews good and bad and it wasn’t very many reviews in my opinion.

2) Bad Organic Reviews Began Coming In

Now that my product was selling like hot cakes, I started getting an influx in bad reviews. The bad reviews came from just a few issues. A piece of the item which I will call (bowl) was arriving broken and another item which I will call (brush) was not lasting very long and the piece was dissembling after a month of use. Now granted, this particular issue only happened on a small percentage of all my items but thebad reviews were not helping my cause.

3) I Started Seeing Many Returns On Sold Items

Due to the issues I had with some of the items noted just above, I started seeing many returns to amazon. The customers were getting refunded and I was losing money because of this! Not good! I had not ever anticipated this many returns. You will see the complete costs of the refunds as you keep reading.

3) My Product Was Temporarily Suspendedby Amazon for being Fraudulent

This was the dagger amazon put in me. In early December, amazon sent me an email indicating my listing was being temporarily suspended for concerns about the authenticity of the items. I have no idea how or why this ever happened but I was selling a private label product that no one else had and from what I can tell, there were no copyright or infringement type laws I was breaking. It was a nightmare dealing with this. I was never able to actually speak to anyone from Amazon and had to go back and forth in emails with multiple amazon support reps. At the end of the day, they wanted to see my manufacturing invoices of my items with all the important info like quantity, manufacturer, etc…. After submitting my actual invoices multiple times and being rejected over and over again for no apparent reason, I had to modifyinvoices to give them what they need. To this day I still don’t really understand why they accepted my final invoices I modifiedand sent to them. They basically had the exact same info that my original ones did. It literally made no sense to me at all. All this took about 5 weeks to resolve. A total nightmare! So I missed the prime time slot during the holidays. I was suspended in super early December and was not actively listed again until about mid January.

4) Competitor Price Drops

Now that my product was listed again in January after going through that HELL! The sales were horrendous. My product did not have very much competition because I bundled 3 items into 1 package however the very little competition I did have seemed to all have lowered their prices during the holidays. My sales ranking tanked, I had some recent bad reviews and I was back to selling like one or two per day which was very worrisome.

5) I Had To Lower The Price On My Product

I had no choice but to lower my price on my product because my sales were stagnant. From the original price of $38 and after multiple price drops, my product finally started selling again in good quantity when I dropped the price all the way down to $24.99. This was a big blow and would pretty much eat most of my potential income to be made. Also by this time, I was worried I would be stuck with inventory and really just wanted to sell out.

6) I Greatly Underestimated The Cost of PPC Advertising

During the course of my product being listed, even from Day 1, I had always been running PPC campaigns through amazon which are basically sponsored ads. My ad would show up when somebody looked at a similar item or it would show at the top of the list when doing searches on certain keywords. I could never really gauge exactly how much I would be spending on this but never thought it be would for the amount I did end up spending on it. As you will find below in my income statement, I ended up spending almost $5,000 just in these ppc costs. That is a ton of money and really ate into my profits.

It was a combination of all these things that eventually led to my product failure in my opinion. Now some may argue that based on the numbers that you will see below in my income statement, that this business venture wasn’t a miserable failure as I think it is. I will touch base below my income statement on why I feel I was a big fat failure in my amazon business experiment.

What Could I Have Done Differently To Succeed

In hindsight, I could have prevented some of these issue and have been more prepared but I just didn’t know what to do and how to thoroughly get everything to be perfect. If I would have changed the items below, this probably would have been a HUGE Winner!

1. Product Packaging – I would have had thicker product packaging I could have prevented the one fragile item (the bowl) in my product that was arriving broken. This would have prevented many bad reviews and really helped sell more at a higher cost.
2. More Testing Of Product – If I would have tested the item which I am calling “Brush” back when I was sampling these things, maybe I would have seen the brush fall apart and had this problem prevented. This also would have prevented many bad reviews and really helped sell more at a higher cost.

Everything else in my opinion was pretty much out of my control. You are at Amazon’s mercy when it comes to a lot of this stuff.

My Product is Completed Sold Out – I Am Out Of Stock

My Final Business Income Statement – Actual Numbers From Beginning to End

So as you can see in my income statement, I actually did make $1000 which at the end of the day is good consideringbut as far as I am concerned, I failed miserably because I did not even come close to the profit and returns I had initially calculated. In my initial amazon FBA private label assessment, I had originally calculated that I would profit over $9k with over 50% returns! All the time and energy I put into this only to walk away with a measly one thousand dollars is hurtful to me. Now granted, I did learn a lot about e-commerce and other facets of online retail which may or may not help me in the future so that is another plus side of this experiment. What do you think? How bad was this failure?

And now for the moment many of you have been waiting for!!!! PRODUCT REVEAL!!!!

Many of you have been curious and have even sent me personal messages asking me to reveal my product. In this amazon selling business, it is crucial that you NEVER reveal your product because it’s a cutthroat dog eat dog world out there in the Amazon jungle! Pun intended 🙂 So because now I am officially done with this business and will no longer be selling this item, I am willing to reveal it to you once and for all.

Here is my product: Enjoy!