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Case Study: $75,762.35 Generated in my First Month Selling Private Label Products on Amazon & How I did It – EP11

In this episode, Manny Coats shares his success in the Amazon Private Label business.

How did Manny Coats started out in the Amazon Private Label business?

How do I choose my first products to sell in Amazon?

How much work is needed to launch a product in Amazon?

What problems should I expect from initially launching my product in Amazon?

What things should I prepare for when selling in Amazon?

To watch the video version of this episode of the AM/PM Podcast, check out our YouTube channel below:

Below is the transcript of this episode:

I recently started selling private label products on Amazon and I’m totally stoked with the results I’ve been able to achieve. During the month of December (my first full month selling on Amazon) I generated a total of $75,762.35. This number far exceeded my initial goal of generating $25,000 in my first 90 days. I am not writing this to boast or brag, the reason I am publishing my results is to encourage you to take action, get started and model what I’m doing so you can start generating the levels of income you deserve.

Private Label Product Sales December

I feel transparency is very important, and although the $83,988 I mentioned in the Podcast sounds really good, it’s not all profit. Out of that number we must deduct the $26,955 Amazon deducts for Discounts and Fees, so my check comes down to $57,033. (That’s still pretty darn cool, if I may say so myself).

One of the factors that limited my earnings was the fact that this was my first full month of selling on Amazon, so I wasn’t sure exactly how much product I was going to be able to sell; this resulted in us running out of stock two of our best selling products. Had we not run out of stock, these numbers would likely be much bigger. All in all, we sold close to 2,300 units in the month of December.

You’re probably wondering what types of products I sold to generate these levels of income. Although I rather not reveal the actual items (I’ve spent a lot of resources researching and creating them), I can tell you that we did this with only 10 SKUs. 6 of those SKUs were in the Toys categories. It’s really one product ‘family’ with a total of 6 variations. We also have 2 SKUs in the Arts & Crafts category, again 1 product, 2 variations. And last, but not least, we have 2 SKUs in the Home & Kitchen category.

If you’re starting out, I DO NOT recommend you start out with 10 SKUs. Even though my results were great, this was a very stressful ordeal for me and I can’t recommend that to anyone.

Not every product we put out was successful; in fact, the first product I pulled the trigger on was for all intents and purposes, a mistake.   I had done the research and I based my calculations based on the numbers I saw on the product listings of my would-be competitors. I didn’t realize that the rankings for that product were inflated because of a promotion, so the sales volume was much lower than I had anticipated. By the time I got my first product from my supplier, not only had the sales volume decreased significantly, but also other competitors had jumped on the market and had started a race to the bottom with their pricing.

Our second and third products did much better. We were selling these above the price of our nearest competitors and we actually sold out of these well before Christmas. We’ve already reordered these products, but our supplier is running behind. In order to get some products to the Amazon warehouse, we decided to order one fourth of the total stock to be delivered via Express Shipping; the rest will be delivered by boat. We’re also waiting on our next product line to arrive! These will be 4 additional SKUs of a parent/child variation. I don’t expect these to sell fast, but the margins should make up for the volume.

You might be asking yourself, how did I go about choosing my products?

I was so focused on learning the business I wanted to make sure I have at least a few perspectives. I wanted to make sure I had at least one toy product, with Christmas being around the corner, and I wanted something in the Home & Kitchen category.

Sales price was a big deal for me. I knew I didn’t have a long time to capitalize on the holidays, so I wanted to make sure I was making a nice profit per transaction. We decided to go with products that could retail for at least $30 and where we could keep our hard costs (inventory cost, labeling, packaging, etc…) as low as possible. We also wanted to try a product were the cost was a little bit higher so to limit the number of competitors that could afford to compete with us. This strategy paid off!

While it sounds like this was easy, it truly took a lot of time and effort. I worked seven days per week 12 to 16 hours per day to get this business started at the same time that I was creating the website for the Podcast, having my programmers developing tools for us to use such as SCRIBBLES, and managing my mobile app business.

When our products hit Amazon, we started promoting them aggressively. There were days our Pay Per Click costs exceeded $500.

Not everything during our pre-launch and launch process was smooth sailing. In fact, I felt like I had enrolled to the Winter Mini-Term of the School of Hard Knocks. There were problems aplenty, but a few deserve an honorable mention:

  • No stickers to close box. Our manufacturer shipped one of our products in boxes that could easily open and were not taped. We conducted the 3-foot drop test and it failed catastrophically. My brother and I had to spend several hours taping boxes before they could be shipped to Amazon.
  • Bank account was closed. Yeah! I chose one of my businesses bank accounts for Amazon to send my payments to. I hadn’t used this company account in a while and I never realized the bank closed the account for inactivity.
  • Amazon lost an entire shipment of mine. My supplier sent the shipment directly to Amazon’s warehouse, and the entire shipment went MIA. Amazon was later able to find two out of the three boxes, but they reimbursed me for the contents of the third. Here’s the kicker… since I had been selling these products at a deep discount to get reviews, Amazon paid me at the heavily discounted rate too.

So there you have it. My first full month selling private label products on Amazon was a success, but it wasn’t glamorous. We made mistakes, we had problems, we lost products and worked our asses off to get it done. We even found products we thought viable and just ran out of time to pull the trigger on. If you’d like to find out what these products are, be sure to listen to the Podcast, and subscribe to be notified of upcoming episodes.

Not a member of our Facebook community yet? What are you waiting on? We’ve put together a fantastic community of like-minded sellers so we can all share tips and tricks of what’s working on this crazy private label product business. Can’t wait to see you there!