What is Amazon FBA - See Why Young Families Are Turning To Amazon for Passive Income in 2021
What if I told you there was a pie with $300,000,000,000 and you could have as many pieces as you wanted? Most likely you would do anything you could to get to that pie right?
That is why we want to talk about Amazon FBA! If you haven’t heard of it, FBA stands for Fulfilled By Amazon. Hands down this has become our family’s favorite passive income stream in 2020.
There has been a lot of talk about FBAs floating around lately so we’re here to explain what exactly an FBA is, how it works, starting your investment, and how you can get a piece of the pie for yourself.
How do FBAs Work?
We always assumed when we bought something from Amazon and it came in an Amazon box, that it was, in fact, from Amazon. The more we dug into it we found that more than half of items on Amazon are from small businesses and families letting Amazon do all the hard work.
The quick version of Amazon FBAs looks like this:
You find what sells well on Amazon and then find a way to get those items
Drop them off (or have them shipped) to the nearest Amazon Warehouse.
Amazon markets them and does the rest. Selling, shipping, customer service, everything, making this a truly passive income.
Think of Amazon as a giant grocery store with thousands of shelves, but there is empty shelf space. FBA lets you fill that space with your product and the best thing is you don’t even have to work at the store. You ship them what they need, they place it on the shelf, thousands of customers walk by it and see it every single day, they check it out, mail it out, and handle all of the customer service for you.
The Power of Amazon
If you are a numbers person like me, this part is going to blow your mind.
Amazon is the most trusted e-commerce business, so it might be easy to think that Amazon's market is oversaturated. It’s actually easier to break into than you might think. So let’s break it down.
Currently 2,500,000 active sellers
4,000 items are being sold per minute
$5,760,000 per day
Amazon’s Quarter 1 sales in 2020 were 75 billion dollars! That was just Quarter 1. After that, we all know that Covid hit hard and people began to stay home, and ordering online skyrocketed across the board. So in fairness we are going to just use the Q1 sales as our (very) conservative baseline for the rest of the numbers.
Q1 - $75,000,000,000 x4 (for all four quarters of the year) = $300,000,000,000. (!!)
Take that $300 billion and divide it by 365 (days of the year) = (conservatively) $821,917,808.27 per day
$34,246,575.34 per hour
$570,776 per minute
$9,512 per second
Almost $10,000 per second! That is crazy! With $10,000 being sold every second surely there is room for you to reach in and grab a piece of that pie.
So let's break this down into just one more number:
2,500,000 (active sellers) divided by $821,917,808.27 (amount sold per day) = $328.77(on average) per day.
That $300 per day seems to be the same average as our Rainmaker community.
How do I get a piece of that pie?
If you are going to do e-commerce you need to be on Amazon. Amazon FBA is one of the greatest entrepreneurial opportunities of our lifetime. Selling on Etsy, Shopify, or Ebay you could be making sales absolutely, but that sale and market is like a small rock compared to the mountain that is Amazon.
Even the most niche items are making amazing turnover, and using the helium10 tool you can see exactly how those products are doing. For example, looking up an “RV hose” like we needed for the new camper we bought. That same hose that I bought is making $24,000 a month. We even looked up sliding discs (used for exercise) and even in that niche, were people making $200-$20,000 a month.
So how do I get in on this? Find that hot item that you want to sell and start small. We spent $500 on our first item investment, and then went up to spending $1,000 on the next and kind of scaled up as we started earning more and our popularity grew.
Again, more than half of the sellers on Amazon are small businesses or even families, so sometimes that “brand” name that you see is just a name that someone came up with for their product shop.
The key here to running a successful FBA is to F.O.C.U.S.
- Until Successful
Keep trying until you find the right niche or the right item for you. Don’t quit just because you didn’t make $300 your first day. Keep trying until you find success.
Why do an FBA?
When our main business was wedding photography, gigs could ebb and flow based on the season. In the summer we would have tons of jobs come up, but in the winter things slow down and that could be kind of scary to look in the bank account. Doing an FBA changed that for us by giving us a sigh of relief when we would check our phones at the end of the day and see that there was $200 or sometimes $500 in sales that happened while we were doing a shoot, or just hanging out with the family. This took the pressure off of us trying to book as many weddings as we could, or feeling the need to be gone every weekend trying to make ends meet. It truly is a passive income that helps us cover those times that wedding season is slow.
FBAs (Fulfilled by Amazon) are a passive income that actually is passive and doesn’t require a lot of time or work on your end. You choose the product, send it off to Amazon and they do the rest. This is something we really started getting into in 2020 so we have a lot more coming about FBAs and how to help you start one, rock one, and make it rain! Click the links below to see what tips we have so far and be ready for more to come here in 2021.
What are Amazon FBAs?
Amazon FBA Launch Strategies - 2021
You can join our next challenge or grab the replays of the last one here: https://therainmakerchallenge.com
My favorite software that helps us run our for Amazon FBA business: