For many people, gathering the initial capital for making a stock purchase is the biggest obstacle when trying to start an Amazon FBA business as, let’s be honest, an Amazon business is a CASH-FLOW business, and the more money you can invest in your stock/product portfolio, the quicker you will see results.
Some people have money they could invest, but they don’t want to take the risk. What if the product doesn’t sell? What if the competition is too great? So, with that in mind, is there a way to test a product on Amazon WITHOUT placing bulk orders with suppliers in China? Let’s find out!
The standard approach to starting an Amazon FBA business is:
- You do market research using Jungle Scout (or a similar tool) and identify a product with good potential that is suitable for your buying power (budget).
- You source that product in bulk from manufacturers in China using Alibaba.com, usually in starting quantities of 500 to 1000 units.
- You create an amazing listing, then start to advertise your product using PPC ads to build up sales velocity, rankings and organic sales.
That’s a simplified version of what an Amazon FBA business is all about, and that’s the process many of us are already using every single day. The problem for many people is that they’re afraid to take the leap and buy those first 500 or 1000 units of the product. In fact, they are looking for ways to avoid it. But is there any way to so?
There is no problem with purchasing smaller quantities of the product you’re interested in. You can go to AliExpress and find the exact same products you would find on Alibaba and buy them in small quantities instead. Buying just one unit wouldn’t make sense, though, as then you’re out of stock as soon as the first sale comes in. A much more sensible approach would be to buy 50 to 100 units of the product, as this will also somewhat lower the shipping cost per unit.
However, the problem with this approach is:
- You will pay a premium price, especially because the shipping costs will be very high. With such small quantities, you will have to use courier delivery, which will be expensive. Most likely, you will pay more for shipping than the actual products themselves (if small/cheap products are involved).
- You will not be competitive on pricing. Your landed cost of goods will simply not be low enough to compete with other sellers buying in higher quantities and getting a better deal. This means that, taking into account the initial PPC costs, you will actually LOSE money selling these items.
- You won’t be able to brand your products or packaging. This will negatively affect your CTR in the search results, as well as your conversion rates. Obviously, you won’t be able to apply for Amazon’s Brand Registry either, which means no use of A+ Content, Sponsored Brands ads or other exclusive features.
Taking this all into consideration, I really don’t think it’s a good idea to order small quantities of products from AliExpress. Even if you get the costs right and your price is competitive, due to the lack of branding, your conversion rates won’t be as good as they could be, which essentially makes a “test order” like this pointless.
Also, speaking of conversion rates, it’s not just about the sales you make. Conversion rates are a CRUCIAL part of Amazon’s algorithm.
If your conversion rates are low, you simply won’t be able to rank the listing organically, no matter how much money you throw at the PPC ads.
Basically, even if the product you have selected has good potential on Amazon, with such a badly executed test order, you will ruin your chances of making it successful.
You won’t achieve anything by doing this, apart from maybe proving that the demand is there for it. But you will already know that from the market research process using Jungle Scout!
It will clearly show the monthly sales for these items, so there shouldn’t be any major surprises about the sales level of a product if you do it in the right way using proper branding, good pricing, presentation and everything else.
The only time small quantities of goods could work is if:
- You can source them at a profitable price from AliExpress. For example, it could be that you can source the product for $2 (landed) from AliExpress, while sourcing directly from Alibaba would give you a cost of $1.50. If you sell the product at a decent margin, this small difference in cost price won’t have too much of an impact.
- You can brand products on your own. Some products can be branded cheaply in the UK or even by doing it on your own. For example, you can apply branding to the product by using screen printing or even by applying labels. Sometimes, you can use custom boxes that you’ve sourced locally in low quantities.
It could be that your product doesn’t require much branding at all. Maybe all you need is a printed insert card in blister packaging or a label applied over a plastic bag. In cases like these, ordering small quantities of unbranded products can work, but only if the price you source goods at is reasonable and close to bulk purchase costs.
So yes, in theory, this can work. But these scenarios are the exception rather than the rule. If you absolutely must go down this route, look for products that are super cheap and small, that can be shipped inexpensively from China using courier services, and that you can easily brand on your own or do the branding locally for a reasonable price.
This doesn’t mean that you can do this all for £100 or £200—far from it! You will still need to get a professional logo design done (£50 to £100), do professional product photography (£100 to £200), write descriptions (free, if DIY), and have an initial budget set aside for PPC advertising. Together with the product costs, you’re looking at absolute minimum of £500 to invest, and that’s when your selected products are super cheap.
For most people thinking of starting an Amazon FBA business but who don’t have money yet to invest in their first product, my advice is to be patient and save up for it!
Most people with day jobs can save at least a few hundred pounds a month, especially if they cut out unnecessary spending and really concentrate on the goal of saving that money. In six months or so, you will have £1k+, which is enough to start selling on Amazon.
Yes, with that kind of budget, you will have to pick a small and cheap product, but it’s a START! You will be able to get going, learn how everything works, and you’ll be making progress every single day. Even if your first product isn’t a massive seller or doesn’t bring tons of profit, it’s worth starting the process as soon as possible for the sake of gaining experience. As with any skill in life, the more you do, the better you become at it.
Lastly, for people who do have money but are unwilling to take the risk and invest it into a bulk purchase of goods, you have to realise that an Amazon FBA business is no different to any other business. As a business owner, you HAVE to be ready to take those risks. Business is all about taking risks, and if you’re not ready or comfortable with investing money into your first product, maybe you shouldn’t do this at all? Think about it.
I have taken so many risks in my life with various business ideas and product ideas. Not everything has worked out as I expected. But, personally, I don’t see those failures as failures, especially if I only risked my own money.
I have never borrowed money for a business idea. I have always used my savings/profits from previous business ventures. That way, if the idea doesn’t work, in my eyes, it’s just money lost. No one likes losing money, but most people would spend that money on something irrelevant anyways, like a new phone, gadget or a seven-day trip to Malaga.
So, to sum it all up:
- There’s no real way to test a product on Amazon without doing a proper bulk purchase, UNLESS you’re doing something creative, like a really out-of-the-box type of product/business.
- If you want to be in business, you have to take the risk. There’s simply no way around it.
- If you are not comfortable with taking the risk, maybe you shouldn’t start this business at all.
For people who don’t have the starting capital but who are willing to go into debt to cover their first product’s cost: DON’T DO IT! Seriously, don’t!
The extra pressure will make you incredibly vulnerable. You will inevitably make bad decisions based on the fact that you’re in debt and need to pay the money back. You will not take a long-term view of the business or consider the tasks/goals that will help grow the business over time. Just be patient and save up the money to get started—don’t borrow it! Get a second job or sell some things around the house if that helps you to get closer to your goal.
Alright, that’s about it. If you have any further questions about the topic, please leave your comments below the post and I will personally reply to all of them.
Also, if you are ready to start selling on Amazon but need guidance and my personal support, make sure to check out my Amazon Sharks course!
With 20+ hours of step-by-step video training, you will learn exactly how to properly do market research, import from China, brand your product, create professional listings and advertise on Amazon to have the highest chance of success! More than 750 people have already gone through this intensive Amazon FBA business training, and you can see many success stories on the Amazon Sharks website.