Merch by Amazon – New Passive Income Source
My main side hustle I’ve talked about several times before is selling physical products through Amazon FBA. The great thing about this side hustle is that I don’t have to really do much since Amazon handles all of the fulfillment. The downside is that it is very capital intensive. I need to keep several months of inventory in stock on every item so it ties up a lot of money.
I took out some loans from Amazon to buy my inventory and once I got up to about 20k in loans I started to fill a little uneasy with my debt level.
So to bring it back down to a more comfortable level I’ve stopped launching new products and I’ve just focused on getting that loan paid off. This means my time is freed up to work on some other side hustles and the newest one I’m focusing on is called Merch by Amazon.
What is Merch by Amazon?
Merch by Amazon is similar to FBA (fulfillment by Amazon) in that Amazon will fulfill all of your orders so you don’t have to do any of the day to day work.
On top of that, they will even create the product for you which is a t-shirt. All you have to do is provide the design. Here’s Amazon’s description of how it works:
But I Suck at Design
Merch by Amazon requires you to apply and join a waitlist before you can start selling t-shirts. It took me about 8 months of waiting to get through the backlog and get access. Since I got access to it I have created 0 new designs because I had no idea what to do. I tried creating my own design and it flopped since, to be honest, it sucked.
I stumbled on a post a few weeks ago on reddit where someone had created a new service where you could pay a flat fee each month and you would get ‘unlimited’ designs. There’s a built in turnaround time depending on which tier you choose so you are effectively limited to one new design every couple days and it comes out to about $30-$40 per design.
If you sell a shirt on Merch by Amazon you get to choose your price point. Amazon charges a flat fee per shirt sold so the higher your price point, the more money you’ll make. I’m expecting to price my shirts around $16.99 which means I’ll make about $3 per shirt.
In the traditional business world this margin is pretty shitty. But the beautiful thing is that you are not on the hook for buying any inventory or investing anything beyond the cost of the design. This allows you to throw stuff at the wall and see what sticks which is exactly what my plan is.
The name of the service I’m trying out is Design4Merch. I signed up for the plan that costs $158 per month and will get me about 4-5 shirt designs. I’m going to test this service out for a few months and if I’m profitable, I’ll upgrade to a higher plan and scale up my offerings.
Amazon limits your account to tiers depending on your sales history. When you’re brand new you can only have 10 t shirt designs up at one time. Once you’ve started to sell some shirts they move you up to 25, 100 and finally 500 available designs. In the beginning you want to price your shirts low to encourage sales. It’s less important to make money on 10 designs than it is to unlock the 100 shirt tier so you can really open up your sales channel. Even if you only get 1 sale per day per shirt, that’s 100 sales per day and with a margin of $2-$3 per shirt you’re looking at $200-$300 per day which is $6,000-$9,000 per month. Not too shabby.
Of course it’s easier said than done. There is a TON of competition out there and it’s incredibly easy for people to rip you off. People constantly scroll through the best sellers list on Amazon, find shirt designs that are doing well, and send them to their designer in another country to copy. If you do it this way you can actually get designs for as little as $4 each. These guys just throw everything at the wall and if it doesn’t stick, they get rid of it. After all, it only cost $4 so it’s not a big deal if something flops. Rinse and repeat until you find out what sells the best.
My Goals for Merch by Amazon
Since I’m paying $158 per month I want to set some clear goals to make sure this isn’t a waste of money and it turns into something profitable and passive. I don’t know what to expect from this so I’m going to start out with some pretty conservative goals.
- Launch 5 designs by the end of November.
- Launch 10 designs by the end of December.
- Unlock the 50 shirt tier by the end of December.
If I can do this and make a profit by the end of the year then I’ll be pleasantly surprised but I’m not expecting to make money that quickly. With only having 10 openings for shirt designs and being restricted to only 5 new designs per month it’s going to be a slow ramp up. If I see some success with this I’ll go all in and start cranking out designs. After that I’ll start focusing more on the profit and maximizing this as a new source of passive income.
If you have any suggestions for shirt designs or questions about Merch by Amazon leave them below!