July 2016: $12,168 in Physical Product Sales on Amazon
Last month was the first full month of selling after I launched my second main product on Amazon. The first product I started selling was gaining more and more competition so I decided to launch a different product that is a little more difficult to replicate. I had a custom design made and worked with a factory to produce a pretty large order.
It’s been 1 year since I started selling on Amazon and I’ve sold just over $125,000 in total. Most of the money I’ve made has been reinvested back into launching new products and expanding my offerings since the highest ROI I can find anywhere right now is in my own business. So here are the numbers for July 2016.
Total Sales: $12,168 (I’m using InventoryLab.com to track sales and it’s showing a $1k discrepancy from Amazon, not sure why)
Cost of goods sold: $(2,622)
Amazon Fees: $(4,847)
Advertising + Software: $(756)
Net Profit: $3,943
July was one of my best months this year, mostly helped out by the launch of my new product. A lot of people who sell stuff online like to tout their top line number of total sales because it sounds much more impressive to say I had an income of $12k last month. The reality is you pay so much to Amazon for fulfillment and you still have to pay for your inventory. Then on top of that, I have to pay a 25% tax rate and a 15% self employment tax, so 40% of that $4k is going to the government.
Reinvesting the Profit
That leaves me with about $2,500 leftover in my pocket at the end of the month that I need to reinvest somewhere. So what do I do to grow that money? I can invest in the stock market which offers ~7% long term returns, or I can use it to launch new products on Amazon that offer much healthier returns, usually around 30-40% which is exactly what I intend to do.
I’ve got 2 different products in the pipeline. One of them I am ordering right now after reviewing the samples and finalizing the design with my supplier. The other product is much more difficult to manufacture and after talking with several factories I’m waiting on samples to review and modify before placing my first order. For both of these products I have not done my typical Amazon product research. I know these are good products and I know they will sell, maybe even off Amazon to reduce some of the fees I’m paying.
Going forward I’m going to attempt to report my other income sources; options trading and website income, but those are both in their infancy and haven’t generated much of interest so far. Once the returns start to increase I’ll add those to the monthly reports.
Leave a comment below if you have any questions on selling on Amazon!