fulfilled by Amazon Amazon FBA it's one of those things it's like super popular
right now but I'm not interested in FBA and I know quite a few other people
aren't either in this video we talked about why maybe you shouldn't get into
FBA if you're an affiliate marketer I talked with my friend Rob Adkinson who
is a successful niche site entrepreneur and I am as well and actually we know
quite a few people who don't have any interest in selling their own physical
products we go into the pros and cons in this video so let's get to it right now
hey what's up Doug Huntington here I'm sitting with Rob how's it going today
I'm doing awesome today we're gonna talk about why you
shouldn't do FBA that's fulfilled by Amazon or drop shipping now all right
here's the deal it could be a decent option for some people but Rob and I are
gonna tell you why we haven't gotten into it before we go any further I'm
gonna define FBA and drop shipping so drop shipping this definition by the way
is from Shopify one of the sort of leading drop shipping and ecommerce
platforms out there so drop shipping is a retail fulfillment method where a
store doesn't keep the products it sells in stock instead when a store sells a
product it purchases the item from a third party and the third party ships it
directly to the customer and as a result the merchant never sees or handles the
product the biggest difference between drop shipping in the standard retail
model is that the selling merchant doesn't stock or own inventory instead
the merchant purchases it from the third party usually a wholesale or
manufacturer and then it fulfills the orders so they end up not having to
invest so much capital into the product now FBA is sort of like a particular
flavor of drop shipping where you actually you know you do buy the
products but then you ship it to Amazon to do the fulfillment fulfilled by
Amazon FBA S will refer to it here and that's what you'll you know see across
the web that's sort of the idea and in general you know one of the pros of this
sort of model FBA or drop shipping / affiliate marketing is a monetary one so
you end up with higher margins because you know you're getting actual margins
from like reselling a product is getting a commission like an
affiliate would it's an interesting model it's very popular right now
dropshipping got a huge mention in the 4-hour workweek which we talk about all
the time and then FBA has been covered over and over again over the last say
four years or so now Rob some people ask you about like moving from like
affiliate marketing and then selling your own products usually through FBA so
can you kind of like explain the couple steps involved in that and just you know
what it would look like from a business model perspective yeah so let's say you
started an affiliate website so your content site reviewing I'm just gonna
make a ballpoint pen so you've got all these ballpoint pens you're getting
traffic to your blog and the way you're monetizing right now is you're sending
people the places like Amazon for five or six percent commission you never
touch the product or anything but that's how you make your money so you're
getting all this traffic and people tell you okay well now that's where you would
like go source it from like China or something you have it shipped to the US
you know stored in Amazon's inventory and then it would be like a
branded pin with your name on it and then people would come to your affiliate
site and instead of just directly selling other people's product now you
have something to promote that's your own and with that being more in control
not just being affiliate in that chain you would get a higher cut of the
profits cool so and yeah like that is the big question right so you can get a
higher margin so why would people like you and I who will primarily focus on
affiliate marketing why don't we start sourcing our own products and get higher
margins so it seems like a no-brainer we have sites we have traffic on those
sites we know what the people are searching for and we know what's selling
so Rob you don't do any FBA at this point in time right I have not
and I've seriously considered it so I've had sites with quite a lot of traffic
that had products that would be seemingly perfect to do exactly what you
say and at the end of the day I think it comes down to like where you spend your
time where you're kind of an all-star where you have leverage in your business
and for me doubling down on creating more sites or increasing my rankings to
improve my affiliate sales and drive up that that lever
for me was like so much easier to push to increase then to take time out not do
that learn how to do you know F be a source the probably I have to learn all
this other stuff it's more capital-intensive there's
possibly some form of customer support so it's just learning all these new
things versus doubling down on something you already know how to scale and you
basically took you know most of my answers to I mean the fact is it's a
completely different skill set right so I have friends that have gotten into FBA
so a couple of the pitfalls that they had so because so many people got
involved in FBA because the barrier to entry was on the low end right you have
to have capital upfront but once you have like a small amount of capital to
start with say fifteen hundred dollars something like that you can you know
start listing products and what happened was a lot of people got into it and the
people ended up competing with like bigger companies that could sort of
undercut the prices right so then you're stuck with inventory you're not selling
much because your prices are too high because you have a bigger competitor who
literally can like charge less and still make money and then price you out of
business essentially so that that was one big aspect the other big issue that
I observed with some of my friends was the supply chain so let's say they
figured it out they have a premium product the price isn't the main
competitive aspect so the issue there is like sourcing the product again usually
from China not always but when you're sourcing from China is cheaper so you
make higher margins the the problem is managing the supply chain because if you
you know say you get air shipping it's way more expensive than if you get the
ship with a freight liner like going across the ocean that takes a while so
what would happen is these you know FBA businesses would run out of stock and it
would take them like a month or two to replenish the stock because you're just
managing the supply chain and inventory it's work to do so Rob do you know any
friends that had you know FBA businesses where they were running into trouble
like that yeah definitely can relate to they're just focused on the FBA portion
they were trying to get traffic from actually doing Amazon searches but yes
they ran into the same thing they started getting some sales and
they needed inventory and they were behind and all sorts of just new
problems that I don't think the affiliate SEO model has and you get paid
less like we get paid less as affiliates but I like it better
yeah me too and you know the other part is like the passive portion of it so yes
you know for FBA you could hire a business manager to take care of the
supply chain stuff but generally you have to understand operating procedures
yourself before you can hire someone and train them to do it not always you know
sometimes you could find a business manager to do that sort of stuff an
Operations Manager but it's not necessarily easy to do so you'd want to
hire someone who is competent and in that way you either have to train them
well and/or pay a lot of money for them with the affiliate model typically it
takes a little while it takes a lot of work to you know get a site ranking
earning but once it's there usually it's fairly like secure so it takes longer to
get there but once you're up there it's harder for other people to displace you
as well so just in general like it sounds like you and I are just not
interested in the business model too much so yeah I want to tie it back to
our thousand day principle conversation I'll link up if you haven't seen that
discussion is super interesting but part of the thousand days I think is like
learning the the skills and the craft and and learning the pitfalls and stuff
and I think like if we were to switch Rob if we were to look at you know drop
shipping or FBA to integrate into our affiliate model we
would have to start over at you know day zero and learn from scratch so like do
you agree with that a hundred percent yeah so you're okay maybe we gain a
couple hundred days because we know some internet marketing and stuff like that
but essentially you have to start from zero and that was kind of what I was
getting at at that first point is I just rather just ramp up where I am with my
SEO business so I kind of made like I have some notes here about this model I
made up so relates perfectly to the thousand days if you're better than like
95 percent of people say in affiliate marketing
you can probably expect to make comfortable money right so at that point
maybe you decide I want to go FBA but you have to start again and then go up
to 95% if you go from like 95% master of SEO to like 99 then you're gonna make
great money if you go from 99 to ninety-nine point nine that's where
things get really really crazy and if money is your driver and that kind of
thing that's great go for it you want to do FBA interest you now we're having a
whole different discussion that was a great point by the way really well said
in the same thing happens with like different skills right like if you can
stack the affiliate SEO model with FBA and you enjoy both like that's a great
set of skills to be ninety-five percent proficient in like me project management
and some consulting background and now I have affiliate SEO really interesting
combination very rare and like it brings me new opportunities I never would have
thought of but you know I probably wouldn't have you know have like ten
years project management experience like just to get the certification you have
to have like multi thousand number of hours to even like qualify for it so
like to put it all together like I literally had to start SEO at zero I
knew nothing but I put in the thousand days or whatever if you have the time
you could be doing something interesting but I think the way you mentioned it Rob
just you have skills in this area and you're gonna refine those skills you're
interested in it you're already good at it and why not like double down on the
areas where you can like really excel right and maybe maybe I'm not saying
this is the right thing but you find a partner who is the 99.9% of FBA combine
them with your affiliate that could explode now partnerships are a whole
different thing but you know specialization brick coming together
huge yes good point good point okay so I think for me at this point I'm still not
interested in FBA it still it sounds like a very crowded area how about you
Rob still there's now just keep doing my SEO thing it's boring but it works yeah
like you get creative when there's a boring stuff happening so alright cool
we want to know what you think about FBA let us know in the comments if you've
combined like an affiliate model with FBA and how it turned out additionally
like if you're just focusing on an FBA interested to hear about that I think
you know obviously it's a viable business model and people are doing
great at it just curious like if you're just getting started like where are you
at with your FBA business and let us know love to hear
about it thanks for I appreciate it thanks for having me it's so wide this
is such a big angle it makes my head look big or my body looks small I'm not
sure but if it's your first time on the channel check out some of the other
videos I talked primarily about Amazon affiliate marketing and some project
management throwing some productivity too so if you like what you see please
consider subscribing thanks
you
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