Is Amazon Wholesale the Best Ecommerce Option?

Matt reacts to several ecommerce advice videos, and this video is along the same lines. In this video, he reacts to a seller who also has several other businesses talking about how easy it is to sell on Amazon while showing off his wealth. 

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

Video Transcript: 

Business Advice Video:

So what do you do for a living? I sell brand name products on Amazon like these. We buy these products from wholesalers, liquidation, retail stores, online stores. There’s two sides of selling on Amazon. There’s Amazon FBA and Amazon FBM. If you’re doing Amazon FBA you’re sending these to Amazon. If you’re doing Amazon FBM though you’re gonna send these directly to the customers as they sell. The other things I do in real estate and other small businesses I have are have higher barriers of entry, are more complicated, and more difficult to do. But this is super easy, low barrier of entry, low risk. 

Matt’s Review:

I don’t know if that’s true. And I say that is somebody who works with over 1,000 small business ecom clients. Selling wholesale is easy in the sense that you don’t know if to establish the brand you’re selling to something people want, or that there’s a listing for, or has reviews, right? So you don’t have to market a new product or a new brand. and try to attract people from scratch. But the downside of wholesale, which is what this guy is talking about doing, buying existing branding products, is that the margins are very very small. And if you have any problems at all you can go from having a tiny profit to no profit or a loss. So it is not easy. And it is not simple. And it is not low cost, low risk to start at home. The big problem with e-commerce is you have put the money out upfront to buy the products, right? And then you sell them later. And get paid after you sold them. And you have a long wait. And it depends on how many you sell, how many get lost along the way, how many get returned, how new your account is, as to how soon, and how much you’re gonna get paid out. And if you haven’t done a good job of buying them, you very easily could lose money. And if you have done a good job and you’re selling a lot, then you need a lot more money to buy more to keep the inventory in stock. And so it’s just a really challenging logistics shipping and supply chain business, to run on very tight margins that requires a lot, a lot, a lot of capital to make it make any sense, right? So if you’re doing $5,000 a month in a consulting business, you’re probably keeping 4,500 of that. But if you’re doing $5,000 a month in an Amazon wholesaling business, you’d be lucky to be keeping $500 of that. But you might be spending 10 or 15 or 20 hours a week to do it. So when you look at your hourly rate suddenly it doesn’t make a lot of sense. We have clients doing seven figures in wholesale that are making the equivalent of a full-time job income, right? Yes, they’re running their own business but they’ve got millions of dollars tied up in inventory and things. And they’re only making the equivalent of a nice full-time salary. So even at that volume you know you got to do a lot of business. So it’s great you know “show me the Porsche” or whatever the car in your garage as proof that you’re doing it well. But he also said he’s got other businesses, other real estate, other things he’s doing. So how much is that Amazon business actually contributing to his overall net income? And how easy is it for someone else to do that? Those are not slam-dunk businesses. You can definitely do it. you can definitely do well. You can definitely make a lot of money. But it is not easy. It is not quick. And it requires a lot of capital to get started. And do it at the volume or it starts to be something equivalent to getting a job.