Hi everyone! I’m happy to announce that I finally made my first monthly profit! My profit is a small amount but it shows that I’m moving forward with Amazon. Before I show you my numbers, I have a quick story to tell.
Recently I told someone that I was selling on Amazon and his first question was how much I’m making. I told him my numbers and then he asked me, “Why are you working so hard to make so little money?” I didn’t say much to him, but I thought to myself, “why not?”
When you see my numbers, you may be asking the same question. Well, first of all, what should I be doing with my extra time? I bet no one would say a word if I came home from work every night and then watched a movie or worked on a craft. It seems no one questions my husband for going fishing on his day off. It just seems weird that I have to justify my Amazon FBA activity. My husband doesn’t make any money from fishing or from watching TV at night.
Maybe it’s because Amazon FBA is more of a “working” activity than a “relaxing” activity. Actually, I view it as a real business. Amazon is my boss as I have to follow Amazon’s rules. I have real customers buying my products. There’s pricing, sales tax and bookkeeping involved. I spend much of my spare time on FBA, but to be honest, it doesn’t feel like work because I’m not punching a time clock and I’m working at my own pace. I’m doing this because I enjoy the challenge and there is the potential of making lots of money. If I can make a side income doing something that I enjoy, then why not continue with FBA?
Story Over…Now the Numbers
Before I get to my numbers, please keep in mind that I do this part-time. I don’t track my time, but I estimate it to be between 4 and 10 hours per week. I work 50 hours a week at my regular job so I’m unable to spend hours a day on FBA. Also, I have no prior experience with selling online and I am doing this on my own without any help from family members or hired assistants.
Finally, let’s get to my Profit and Loss Report that I created in QuickBooks Online Simple Start:
I included May, June and July as well because I believe that by doing so, you’ll see a better picture of my progress. However, I’ll limit most of my comments to August as I already discussed the earlier months in this post.
Now to go over some of the numbers:
- Sales, COGS and Amazon Fees: All are up over the prior months. A general rule is that your Amazon fees calculate to 1/3 of your sales price. Therefore, if you want to double your investment, you should sell your products at 3X your cost. This is known as the 3X Rule. I’m doing better than that as I am selling my goods at over 3X my cost. So, this tells me that I’m good at “buying low and selling high”. However, what I’m not so good at is finding enough of those items to sell. I need more inventory.
- Inbound Shipping: In May, June and July, I was shipping to Amazon every week. In August, I switched that to every other week. The other change was that I used the Inventory Placement Service on both of my August shipments. So, instead of having two or three boxes per shipment, I just had one each time. You can see that my August inbound shipping costs went way down.
- Bookkeeping: This was high because I paid $25.00 for the Amazon Cut and Paste Spreadsheet, $10.83 for one month of GoDaddy Bookkeeping and $11.23 for one month of QuickBooks Online. In August, I was very focused on getting my books in order so I spent many nights setting up both GoDaddy and QuickBooks to decide on which one is better for me. I went with QuickBooks and from here on out, my bookkeeping expense will be $11.23. At a later time, I may purchase the desktop version to eliminate the monthly fee.
- Education and Shipping Supplies: ZERO. Since they ate up a big chunk of my sales income for the first few months, I decided to not buy anything new in August.
- Business License: This is a $2.00 refund from the State of Arizona for overpaying them when I registered to collect sales tax with them.
- Sales Tax Expense: This is $0.76 that I owed in uncollected sales tax to the State of Arizona. I didn’t register with them until the middle of July, so when I filed my report, I had to report the sales that I had prior to registering. If you are new to FBA, I recommend registering in the states that you have nexus in early so that you don’t end up owing a large amount of unpaid sales taxes later.
- Scanning App: When I first started FBA, I bought the Profit Bandit app for $14.95 but lost that after they went to a monthly plan. So, I started using the free Amazon app, but quickly noticed that compared to Profit Bandit, it is very slow at scanning in barcodes. In mid-August, I subscribed to a month of Profit Bandit since it’s quicker. As a side note, I am in the middle of a free trial period of ScanPower. Most likely though, I will continue with Profit Bandit as ScanPower is much more expensive.
- Subscriptions: My subscriptions are TaxJar ($9.95), ListLabelShip ($5.00) and ScannerMonkey ($9.99). I signed up for ScannerMonkey to possibly benefit from their BOLOs and to get an extended trial period of ScanPower. I also used their coupon code to sign up for an extended trial period of Repriceit and will use their 15% off coupon code to purchase supplies from BubbleFAST later this month.
- Website Sales and Expenses: I cancelled my subscription with Aweber to cut costs. However, I did have 23 Amazon Affiliate sales in August that haven’t paid out yet. Rather than taking the time to accrue a few dollars worth of commissions each month, I will include my affiliate income when I get paid. I don’t know who you are, but if you made a purchase by using one of my links, I want to say thank you! It means a lot to me.
As I mentioned earlier, I need to find more inventory to sell. I don’t have a lot of time or energy to shop for long periods after work so I am working on becoming more efficient. My future plans are to:
- Online Source – to be able to shop at home
- Bundle Products – to get higher returns
- Get Approved for Restricted Categories – to have a wider range of products to choose from
I will be taking a trip to Las Vegas this weekend (which will be fun), but I will lose out on one of my sourcing Sundays. However, I won’t be ignoring FBA completely because I’ll have a lot of airport and airplane time to watch training videos and to read The Reseller’s Guide to Board Games that I just bought. I bought it because it’s on sale this week and because my local thrift stores are full of board games. If you haven’t read it yet, please check out my post about selling a used Operation game.
Thank you for visiting and if you have any questions or comments, please use the comment form below.
p.s. To get more information on some of the services and products that I mentioned in this post, please visit my Amazon FBA Resources page.