Stay Small or Go Big with Amazon. Not In-Between.

Jae Jun on

Looking at my accounting financials over the years, I realized something.

To be “successful” on Amazon, there are 2 ways to do it.

  1. Operate at a small scale
  2. Scale quickly and break through the break even point

In between 1 or 2 is death valley.

Let me explain.

I quit my 6 figure, very easy going job in 2014 with my wife’s blessing. At that time we had grown the Amazon business to $8k a month. Not bad considering we didn’t know a thing, and there wasn’t as much information available back then.

Things were good because our overhead was low and we packed and fulfilled our products.

Oh the days when my office rent was $600/mo with no employees or operations to worry about.

We knew we could take out money when needed and keep it going as a lifestyle business to suit our needs.

Fast forward a couple of years and we are in the high 6 figures at this point.

Operating expenses have ballooned, we are moving from one office to another as we try to grow without increasing expenses too quickly. Our cash flow is draining. Growth on Amazon hurts due to their high fees.

Growing pains.

It’s why we price our products based on operating margins and not gross margins.

You may think you have a profitable product with 30% gross margins, but if you don’t know your operating expenses or you are growing quickly, you’ll lose money selling a 30% gross margin product.

It’s either stay small or go big.

Mostly all the “courses” tell you that it’s easy to make money on Amazon, but what they don’t tell you, in order to sell you their course, are the details and ins and outs required to be profitable.

If you are already doing 7 figures, have your system down and have brought your operating expenses down to at least 20% of sales, you are in the elite group of sellers for sure.

If you are small and profitable with very little expenses, you too are doing great.

For those in-between, you’ll realize when you have to decide which way you want to go. Your financials will tell you when it’s time.

Stay small and enjoy the stress-free lifestyle.

Or go big and take on the many challenges that will come your way, with the potential reward that follows.

But rarely will you have both in this biz.

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