427 – Stay away from Fulfillment by Amazon: Tom talks Amazon FBA

Episode 427 – Amazon FBA
[00:00:08] Welcome to Screw the Commute. The entrepreneurial podcast dedicated to getting you out of the car and into the money, with your host, lifelong entrepreneur and multimillionaire, Tom Antion.

[00:00:24] Hey everybody it's Tom here with Episode four hundred twenty seven of Screw the Commute podcast. Hey, 427. That was a great Chevy engine and I had a 327 365 in my Corvette back in the mid 70s. I actually put that on Instagram. Some pictures for Flashback Friday. Anyway, today's episode, you know, I normally talk about something that's either made me or saved me a ton of money. I guess technically this would have saved me a ton of money because I only did a little tiny bit of the safe way to do what I'm going to talk about today. And I never did the other because I saw too much trouble with it. Too much risk, too much hassle. Of course, you can do it if you're flush with cash and willing to risk a lot of it. But we're talking about Amazon FBA that's fulfilled by Amazon. And so you'll learn today why I'm pretty much totally against it. Unless you have very specific little thin circumstances, then I'll go along with it. And doesn't mean I don't love Amazon. I love Amazon Kindle, I love buying off Amazon. But it's my job to keep you in the money and not losing your shirt. So that's why this episode is going to tell you why I'm pretty much totally against Amazon.

[00:01:50] Feel Fulfilled by Amazon FBA. All right. Hope you didn't miss Episode four twenty six, that was Jeff Hawkins. Now, if you know anyone with Type two diabetes. You absolutely must forward this episode to them, I mean, it could really change their lives. He's got the only patented diabetes reversal method that works in conjunction with your own doctor. So this isn't any kind of off the wall crazy stuff. So check that out episode for 26. And of course, to get to a back episode, you always go to screwthecommute.com slash and then the episode number. His was 426. Make sure you grab a copy of our automation ebook, we sell it for 27 bucks, but it's all the tips and tricks I use not only with my cell phone, but on my computer, my desktop, my laptop tablets that can really automate your business. So it knocks your work that load down like crazy and allows you to handle more customers faster, which allows you to steal business from people that are too slow to get back to them. So check that out at screwthecommute.com/automatefree. And while you're at it, pick up a copy of our podcast app at screwthecommute.com/app. You know, we have videos and screen captures to show you how to use it so you can take us with you on the road.

[00:03:24] Now, before I get into the main event, I want to talk to you about the pandemic a little bit in that it's really hurt a lot of people because they didn't have the skills that we teach in my school and my mentor program to sell at home. Not going to beat you to death with this today, this is going to be a pretty quick episode, but you got to check it out. IMTCVA.org. Get your young people and your life involved in it. Get him a scholarship to it. You can get a scholarship if you're in my mentor program, which I'll tell you about later. It's IMTCVA.org. We got people making money before long before they even graduate. In a couple months you can start making money legitimately. It's all the skills that every business on earth needs. So there's a high demand for this. So check it out. IMTCVA.org.

[00:04:18] Let's get to the main event. Amazon FBA. Well what is it? Well it's called Fulfilled by Amazon. This is where you have a physical product. You ship it to Amazon. When someone buys the product, Amazon ships it to them, collects the money, takes out their fees and sends you whatever money is left. And there's lots of courses and lots of people bragging how much they sold by doing this. Now, you got to excuse me for being skeptical. I've been around a long time and I've seen so many fake things and and so many things that are they bend the truth a little bit here. So give you an example that. And by the way, remember this Amazon fulfilled by Amazon is not e-books, 97 percent profit. OK, I'm OK with the Kindle part of Amazon. Go crazy with that. I teach a mastermind about it and I love that. But these physical products are not 97 percent profit. So when you hear somebody bragging about how much money they made, they're talking about how much they brought in usually. And you have to immediately discount it by 50 to 80 percent or even more for the cost of goods sold, the shipping and the Amazon fees. So let's say they brag that they made a million dollars. Well, maybe to the bottom line, that's only one hundred and fifty to two hundred thousand, which that sounds like a lot. People be happy with that, right? Well, what they they may not tell you is that they may have tried 10 different products that all lost money eating up that two hundred thousand dollars or a hundred and fifty thousand. And they maybe even lost money overall. And what they figure they'll do is make it up by telling you how great it is to do products on Amazon. And selling their course to you will make up for what they lost by selling products on Amazon.

[00:06:29] So that's a very common thing online is people do stuff and it seems like it's pretty cool and they can brag about certain things, but certain things aren't really real. When you look into it deeper, they're not they're lying by omission, put it that way. They're not lying that they brought a million dollars in. They can probably show you that. But where the money went and how much they made is where it gets a little fuzzy very quickly. Now, are some people making money? Yeah, lots of people are actually making money, but the percentage that start from scratch, like from these courses are encouraging you to do is very small. Most people lose from a little to a lot of money. Now, if you have a product like I had my physical wake them up book that sold on Amazon for a while and and that was OK. This is the little sliver. That's OK. See, I had control of the product. I shipped a couple cases of books to Amazon directly. Nobody was going to knock off my low volume book on public speaking. So there wasn't much problem, it was a good thing to have it on Amazon, great. The problem comes with sourcing a physical item out of the millions to choose from. So you have to, first of all, pick something that you think is going to sell, then you have to buy it or have it manufactured probably in China.

[00:08:03] And that can be a complete nightmare by itself alone. The learning curve in dealing in overseas transactions and manufacturers, that's not an easy thing. I mean, I just interviewed a guy on this podcast and then he had a vendor he sent 10000 dollars to and they didn't even ship the product. They just stole his money and disappeared. Probably opened up under a different name for 10000 bucks. Now, I'm going to go several things that can happen to you. You can get banned and getting banned. When you got all this inventory to sell, you lose your shirt basically, and you can get banned on a whim. I mean, there are companies that can be hired by a competitor to give you a bunch of negative feedback and get you kicked off or banned. And you say, well, so what? Well, so what is where are you going to sell that inventory? And there's a number of ways you can get banned. That's just one of them. Even even if you're the proverbial perfect vendor, I mean perfect seller with a perfect product, the Amazon is well known for being extremely customer centric. In other words, saying the customer is always right is the understatement of the century for Amazon. So let's say someone buys something that doesn't qualify for free returns and they don't want it or they didn't like it for whatever reason, but it didn't get free returns.

[00:09:39] Well, all the user has to do is claim the product was defective or not as described. So then they get their free return shipping with absolutely no consequences for lying about your product. You, the vendor, get an accusation that you can't defend. It just goes as a big black mark on your account, get enough of those, boom, you're gone. Now, the guy I interviewed on the podcast kept getting another thing, kept getting shut down for false claims in his ad, he finally had to put up. The product with no description of the product to get it approved again. Well, who's going to buy it without a description? And each appealed to Amazon, took many weeks in between. All the while, he had money tied up in inventory in those sales. You have things like the time of delivery, which is largely out of your control. I mean, I've had Amazon say our product is you know, it's supposed to be two day shipping with Prime. Well, then it's they say, well, you know, sorry, it's not going to be two days. It's going to be four days. I mean, so that's out of your control. But you'll still get the bad marks. Now, you got the defect rate in your product, which is somewhat in your control on who you buy from and make sure they're a good quality manufacturer, you know, but it is not totally in your control.

[00:11:16] They could give you samples that are great and then make a cheaper version that you never see. It gets shipped directly to Amazon and you start getting these complaints again. So you get you get or shut down. If people cancel your orders quite a bit and there's lots of other factors that can get you banned, I'm just trying to let you know you got a lot at risk here with this. Now it's bad enough to get banned and stuck with inventory. All right. But Amazon has been known to withhold large amounts of money that they do owe you for many months, especially if you get banned because they're waiting for other complaints and refunds and they got plenty of excuses to hold your money. And when you hear this, I just told you, you could get banned for false negative reviews, right. All right. How about this? You can get banned for false positive reviews. A competitor, let's say, gets his friends or hires someone off a fiver to flood your comment review section with outrageously great reviews. And they didn't even buy the product. Well, this makes it look to Amazon that you are buying fake reviews and then they ban you. There's nothing you can do about this. And that's why, you know, if you had everything under your control, it'd be different. But you can't do anything about that. So it makes it to me way too risky to do this, especially compared to the digital products I can teach you to make online courses, membership sites, ebooks, all those things are extremely low risk.

[00:13:03] I'm going to give you a couple more dirty tricks that can get get your pulled banned in a minute, but right now I want to remind you that your inventory and up front money, well, they're pretty much a guessing game. Let's say you might conservatively order, let's say, a thousand dollars worth of a product to resell. And it starts going good so soon you're going to run out of product and Amazon will put an out of stock notice on your listing, which will kill sales, obviously, and also kill any momentum you've gained with the product, you don't want that to happen. So you put an order in to the vendor for 10000, ten thousand dollars worth of the same product. Now, after the order is in to the vendor and your ten thousand dollars is out the door and now at risk. Then sales stop or go down considerably. Well, why would this happen? Well, maybe Amazon featured your products in places you weren't even aware of. That's very common. And you get a burst of sales. Then when the feature was over, sales decreased or quit. Now and another thing, maybe another vendor started selling the exact same product at a cheaper price or threw in some extras that you didn't have. So everyone started to buy from the other seller and you're stuck with all that inventory on its way and you got no way to sell it.

[00:14:37] Very. And it's a big guessing game. And cross your fingers that these things don't happen to you. Now, pricing what used to be that in Amazon's terms of service, you could not price your product higher than it could be found on any online store. And believe me, Amazon has bots checking everything all the time. They will know or find out very shortly if you are pricing your product higher than they think it should be. However, the antitrust people started getting on Amazon's butt about this and they so they took off this. This restriction sounds good, right? Yeah, right. Well, no one can prove what I'm going to say next, and Amazon is certainly going not to admit it, but rumor has it that if you do price the product too high in Amazon's eyes, you will quietly get shadow banned so no one sees your product. Also, if you reduce your price, let's say, for some kind of sale, Amazon may not let you raise it back up to normal. I heard a guy on a podcast say he he was forced the prices product where he could only break even, which meant all his hard work was for nothing. There's tons of horror stories about Amazon, strong arming people on pricing. I'm going to put a link in the show notes to an article that talks about what they did to a phone accessory company will have its order, or it's an article over on Vox.com, but I'll have the long link to it in the show notes.

[00:16:18] All right, let's talk about rip offs now. Another thing that can happen is that employees in China and India, they were actually caught stealing your vendor data in order to give it or sell it to their buddies to compete and undercut you. And you have people simply ripping off all your product descriptions and knocking off your products with cheaper versions. I mean, even the vendors you are buying your products from can't be trusted. Let's let's say you start ordering a larger and larger amounts of a product from them. This pretty much tells them you've got a winner of a product. Now, how would you know if when you ordered 10000 of these products, that they go ahead and make twenty thousand of the products? The profit they made from you ordering 10000 pretty much paid for the 10000 they made for themselves, in essence, they got their ten thousand for free, which they give to some partner in crime to sell on Amazon. And since they got theirs for free. And what I really mean is you paid them to screw you over so they can undercut your price. Now, you can't sell your ten thousand and they just took over the product. You did all the research for them, proving it was a good product.

[00:17:45] They win all the way around because they didn't have to suffer the trial and error and losses. You probably had to to find a profitable product. They crush you out of that product and laugh all the way to the bank. There's a couple other things that can happen to you from evil competitors, they could have their partners in crime by a bunch of your products and then return them all with all kinds of negative feedback for poor quality or not as described, you know, whatever. A variation of this is a sneaky competitor buys a ton of your products to run you out of stock. So when you're out of stock, Amazon takes the buy box off of your listing and they and either gives it to them or they have one of their own, so they sell the product as you're spending money to replace your stock and thinking you are getting rich from selling all these. They again, return all the products, you look bad to Amazon and you have a bunch of money tied up to buy more products and you have a bunch of returns to deal with, this can really be devastating, especially if they do it during Christmas season. So there's tons of ways you can get ripped off selling on Amazon. Now I'm going to link to an article all about it. Now, again, I'm not against it.

[00:19:12] If you have your own products under your control that are less chance that you're going to get knocked off, like I said, with my physical wake them up book. And chances are no one's going to go to the trouble to print that book up. But when you're ordering products from China and India and all these other places, so can anyone else. So God help you if you didn't pay attention to this podcast. So hopefully you can see why I think it's crazy risky compared to doing digital products like I Teach and my mentor program and my various mastermind's in my school. Your risk is as near to zero as possible, and you're not dependent on Amazon cutting you off for no fault of your own. So I'm saying forget the darn Amazon FBA, ignore the ads you get bombarded with and get something that's that serious. High profit, low risk, good training like I gave you, I mean, check out my mentor program at greatInternetmarketingtraining.com, it's the longest running ever, most successful, most unique program. You also get a scholarship to my school I was telling you about, which you can give to somebody else to help them get a career and keep them from coming back and living with you. Or it'd be a great legacy gift for your grandchildren, nephews, nieces and so forth.

[00:20:40] So check it all out and I will catch you on the next episode. See ya later.

Join my distance learning school: https://www.IMTCVA.org
Or join the mentor program PLUS get a FREE Scholarship to the School: https://www.GreatInternetMarketingTraining.com