Amazon FBA, is it still a good opportunity? Yes, but not now 😰. In this video, I will share my thought on EXACTLY what you should do with your money if you don’t invest in Amazon FBA.
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Full Transcript:
Hello, everyone. Welcome back to the GoodLife Warrior channel. I hope you’re doing well.
Today’s video is for those of you who have little money, whether it is 10,000 or $20,000, you want to start your business so that you have the freedom and the money to do whatever you want with your life. However, given what’s going on around the world, and the risk and uncertainties everywhere, you are not sure if this is a good time to start your business such as the Amazon FBA. But on the other hand, you wonder if I wait, what do I do with my time, with my money? Am I missing the opportunity? Am I making the wrong decision? So in this video, I’m going to share my thought. Hopefully, it will help you make the decision so you can move forward.
First thing first, if we never met, my name’s Yuping Wang. I’m here to share everything I know about business, sourcing, and the power of human encouragement. If you want to learn more about me and what I can do to help you, feel free to visit sourcingwarrior.com. There are plenty of free resources for you to take home.
Now, back to our question. Should I invest my 10,000 or $20,000 to an Amazon FBA business now? There is so many ways to wishy-washy answer and give it to you, you never know what’s the answer. My straight-up, honest answer is no. And here is why.
Most of you already know Amazon business is an inventory game. If you don’t have a product, you don’t have sales. If you’re constantly running out of stock, it’s impossible to build your product listing and rank the page and grow your sales. This is not new. If you ask any Amazon seller, they will tell you most of their cash is in the inventory.
What is new is what’s going on around the world. The lead time for you to get the product has significantly increased. Let’s just say in the past, most Amazon sellers only need to carry three months’ worth of inventory because they only need to wait for three months for the new shipment to come in before they run out of stock.
What’s going on now is the lead time. If you have to order from an Alibaba supplier, how long do you have to wait to get your shipment? With all the COVID cases and the city shutdowns and shipping delays, I would say you need to wait an average of five to six months. What this means to someone who wants to start the Amazon FBA business is you need to put the money down to carry at least five to six months’ worth of the inventory, otherwise, you will be out of stock.
Let’s use a specific example so you fully understand the cash needed to start your Amazon FBA business. Let’s just say you’re buying a product. The cost is $5 and you’re going to sell 10 a day. So basically, 300 units per month. $5 time 300 is $1,500 worth of the inventory. In order to keep this business going, you cannot just buy one month. You have to buy the entire quantity during the lead time. This could be five months or six months.
Let’s just say, you’re going, “Oh yeah, six months of inventory, $1,500 times six is $9,000. This is your first order in order to keep this item in stock before the next shipment comes in. This is what’s going to make it worse. When you get your first shipment in received into Amazon, you already spent $9,000. Immediately, almost immediately, you have to put your second order in, in order to prevent a stock-out situation. That means you’re going to put another $9,000 into your second order.
This is what I mean: inventory is a function of lead time. If your lead time doubled, that means the cash required to get into this business doubled. Given the long lead time that we’re dealing with, given the supply chain delays and all the uncertainties with the COVID situation, that’s why I’m saying this is not a good time, a good environment for the entrepreneur who has $10,000 or $20,000 to start the Amazon FBA business.
Now, if you do have the money and the time, and the passion to start and own your business, what are you going to do during this time? Here are my recommendations.
Not investing into Amazon FBA business right now doesn’t mean you don’t do anything. In fact, you will be busy. The number one thing I recommend, my friend, is to cut your spending. The savings from cutting the spending is going to offset the rising inflation. This is going to help you preserve the cash you had prepared for business investment. If you don’t preserve this cash, the rising inflation is going to force you to spend more. By the time you are ready, your cash is no longer there. That’s the first thing.
The second thing I recommend is you can try to find a job where you can work from home. For two reasons. Number one is, if you work from home, you’re going to cut your commute time. This can be dedicated to your entrepreneurial ideas. Second is working from home, psychologically speaking, is not for everyone. If you’re an entrepreneur, you have to have the mental and psychological capacity to be self-disciplined and be very dedicated to focusing on something and getting something done.
So this testing environment of working from home while you get paid is going to be your testing environment, whether you can or cannot work as an entrepreneur because working as an entrepreneur is somewhat a lonely journey. You have to be able to plan, think and work alone. So working from home creates an environment to test your mental capacity to prepare you to be a successful entrepreneur.
And the third thing is to invest in human capital, which is yourself. It doesn’t matter how much money you have, it doesn’t matter where you work. You need yourself, your own skills in order to own a business, to earn the freedom and the money you need to do whatever you want with your life.
I’m not going to talk about general things you need to be a successful businessman. This is what I recommend, specific things you can do to make yourself better, to better prepare yourself. Number one is to keep your eyes on the price. What is the price? Price is a product idea. Always have your eyes on the new product ideas. Where can you find those new product ideas? It could be Pinterest. It could be Azi or Wish.com. Wherever the website, you see new product ideas, keep a log on those ideas. One of them could be your Amazon FBA product ideas.
The second thing is don’t let these ideas stay on the paper. Test them, contact the suppliers on Alibaba and get a quote just to get a feeling. As you test more, you will get a better feel for every single product. If you contact the supplier, you’ll get a feeling on the cost. Then you will know how much cash is needed to capitalize on this product idea.
So I would suggest you give yourself a goal. In the next six months, test six products, and six new product ideas. Contact at least three suppliers for each product, so you will gather 18 quotes for these products. So you will get a good feel if I want to select this product, how much cash is going to be needed. So if you need help in getting the quotes, I highly, highly recommend getting the quote master that I prepared for you. There are so many different templates for you to follow. It will make it so easy for you to get a quote.
My point for you not to invest in Amazon FBA right now means that you have to prepare yourself. Number one, simplify your life, save money to preserve the cash. Number two, try to find a job to work from home so you have the flexibility and the time to dedicate to your entrepreneurial ideas. And number three is to keep your eyes on the product ideas and keep testing those ideas until there is a time you will feel comfortable investing in Amazon FBA business.
This journey is going to be so rewarding. I promise you, this is the best thing you can do for your life. I hope my video helps you in making the decision now and in the future. If you love this video, like the video and subscribe. I hope to talk to you soon. Thank you.
Video Version:
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