I found a great niche several years back that led me into a partnership with four others and a great retail opportunity. I became an Amazon FBA seller, selling low-end computers. Well, I picked computers and Staples based on several key factors:
1. 5X Ultimate Rewards points on purchases at Staples.
2. Constant $$$ off coupons from Staples because I had such a big volume of buying gift cards. They must have thought I was a big shooter or something. It was nothing to get more than two or three coupons a week.
3. At the time, Staples sale prices combined with the $$$ off coupons I was getting and the 7.5% at 1.5 cents per Ultimate Rewards point value gave me a clear market advantage over Amazon prices on low-end computers.
How I got started with Amazon FBA
My first step was to hook up with my local private post office owner as a partner. I could buy from Staples, have the computers shipped to the Postal Center and they would immediately turn them around and out the Amazon Warehouse where we were involved with Fulfillment by Amazon (FBA).
Basically, Amazon warehouses your inventory, ships it to your customer and collects the money. They then deduct a membership fee, storage fee, provide really cheap outgoing shipping and handle customer returns as well.
Most of the coupons I got and sale items offered by Staples were max of two or three per customer, so I needed partners to up the volume. My wife became a partner, a guy from my time in Michigan and the owners of the Postal Center all joined in for a percentage of the profits.
My process
I’d find the deals and send emails to my partners to buy using my Chase Ink Bold card. The guy in Michigan would order the max, my wife would order the max and the postal center would order the max as well.
All got shipped to the postal center which turned the product around to Amazon and we were in business.
My FBA profit margins
The margin in the first year netted at about 20% or $60,000 on $300,000 of sales. I’d love to be able to tell you we grew it with more products, increased the inventory and it became a multi-million dollar deal. NO SO.
The paperwork got frustrating. At the time Amazon had a 30-day “no questions asked” return policy. It would have been fine if they stuck to that timeline, but we got chargebacks up to 90 days after a sale.
In one instance a guy returned a used old battered computer back to Amazon and they sent it on to us, assuming this is what we were trying to sell. Not so.
Fulfillment by Amazon stores your inventory with other sellers in some instances. Our stuff was all brand new in the original box. Some guy just pulled a fast one on us.
Why I stopped Amazon FBA
At the end of year 1 with Amazon FBA, others were catching on, I think as our margins started to shrink and Amazon became more lenient with their return policy.
It was good while it lasted but when the margins dried up, there was not much sense in continuing with the sour taste we had based on the lax interpretation of 30-day return.
I took my percentage of profits as Ultimate Rewards points that we valued in the deal at a penny each. The others got theirs in cash.
Amazon FBA reselling opportunities
I have not tried reselling merchandise again. To be successful I think it takes well-priced procurement, efficient shipping, great bookkeeping and a market niche that is underserved.
Just for grins, I just did a search for low-priced laptops on Staples. When the page loaded, I was offered a coupon worth $20 off $75. But most of the low-end laptops (under $200) were either out of stock or refurbished, which we never dealt in.
The niche seems to have been filled but that’s not to say you can’t explore, find and take advantage of another product. Here is a pretty good article on FBA Pros and Cons. Have fun exploring. I’m glad I tried it.
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