Can you really get started with $500?

Richard Morgan
January 19, 2018

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Will comes to talk to us about can you really get started with $500 on Amazon

Will Tjernlund started selling in 2013 importing from Ali-baba following his brother’s lead from 2006. Went 1 inch deep and 1,000 miles wide. Got upto $10m / year run rate. Now runs Go-Consulting helping brands on Amazon.

Can you really get started with $500 so you can eventually replace your annual wage.

Two Roads to replace your annual income

Ali-baba route, you get higher profit margins but takes longer
You buy $500 off Ali-baba and sell as fast as possible
Then buy more stock with the money you made
Then a month later you sell again and multiply your pot
Maybe you have $12,000 by year’s end
Then using this you buy more stock with better buying power and larger orders
Buy $12k, sell for $24k pay $7k in fees and net $5k
You might do the same for another year to give yourself more security and start replacing your income

Second Road – the route Will went

Work with people on faster lead times and faster shipping times
Local businesses and local inventory
Order a week supply, flip it next week
Flip your cash 20 times a year as opposed to 6 times a year with the China Alibaba route
This is more difficult in execution to make it succeed
This is great if everything is perfect and works well and no breakages etc
Do this math and deduct 25% for roadblocks etc and costs you’ve not thought of
This is the Brock Johnson model – selling eclipse glasses – the only one selling them on Amazon as he had the only certified ones that he had done the Homework before hand – he turned over $6m
His product was like 5-20 cents per unit doing it locally

The Eclipse Glasses

Brock Johnson bought his units for cents (usually a dolar upwards for goods from China landed costs)
Will says Amazon courses take you 80% of the way there but the other 20% you need to have creativity and work out for yourself
Brock is a fine example of working this out himself
He worked out the Eclipse is coming and it was going to be a trend
He also guessed that the market would be flooded by cheap knock-offs and he so he went and got his certifications ahead of time to differentiate himself
2. This seemed like an easy niche – the price is unknown as no-one has really bought ‘eclipse glasses’ before and as Brock could buy for 3 cents a unit, he could not lose money on these
Brock connected the dots:
- This is a limited time thing
- Most people are not likely to get the right certifications for their products
- Brock could buy a lot of them for a cheap cost
- Didn’t know the retail price but figured he would get $5 – $10 for it
- On top of knowing:
  - Setup PPC
  - Knowing how to get inventory into Amazon
  - Optimise a listing correctly
  - How to take the right photos

What works today to start as Private Label

You need $10k to get it started
You can spend $6k on inventory and have money for other costs to cover it
Don’t over extend yourself and keep a little bit of a nest-egg
And not have to sell out all your inventory to re-order

If you’re turning over $100k / month on a 20% margin you have a lot of money tied-up
Brock had a good cashflow business
- Bought a lot of stock for not much money
- High profit margin
- Low % of earnings each month cost to re-stock his full inventory
As opposed to a wholesale catalogue business
- Needs lot of money to buy many items
- Low profit margin 3% per item
- High % earnings each month cost to re-stock full inventory

Embracing Vendor Central and Payment Terms

Will and his Brother did well with embracing Vendor Central
Negotiating payment terms with lots of suppliers
Being able to sell suppliers 60 days after getting the stock
And having Amazon reimburse your profits quickly
This lets you float a lot of cash without having to go to the bank to get a big loan for cashflow

Realistically you can’t get started on $500 unless…

Get going on Odesk or Upwork and post yourself on there and get side-cash
Learn how Amazon works
Learn what you like and don’t like
Run other people’s Amazon accounts on Amazon
Save up the money
You’ve been running 5 different accounts and know a LOT about Amazon
You know what you like and don’t like and have earned a load of cash to get you started

Last Final Thing

Contacting domestic suppliers they are really good with payment terms – 30/60 days
You can get paid every two weeks by Amazon
Find a supplier with a big catalogue
Prove the product on Amazon using Jungle Scout to know it sells well, like $10,000 a month
If you buy 1,000 units and sell on Amazon you’ll probably be able to sell them pretty quickly and not get burned
Do small bets like that over and over again, extending your payment terms with the supplier
Over time you can build up a war chest
If you can be more creative and hustle you can get into the game to start

Realistically – starting with $500 and replacing your income is a tall order

If you’re in high-school 16yr old and $500 bucks and have 4 years to build up your learning and war chest – this would be interesting

If you’re in your 30s-40s and looking to replace your income but need cash now to pay bills and expenses, then this is probably going to be a lot tougher