The Empty Promises of Amazon

Hard Lessons From A Failed Entrepreneur

I’m ashamed to admit it.

I watched one of those YouTube videos for just a fraction of second too long. You know the ones. They promise you can make an untold fortune selling on Amazon using their FBA (Fulfillment By Amazon) service.

Now, I don’t consider myself a gullible person generally so maybe I had just had a bad day at work. Maybe I was tired. Maybe it was a moment of emotional vulnerability. I’m not really sure, but I swallowed the click bait. The next thing I know, I had signed up for some online course to become an Amazon mogul.

That night I dreamed of all the things I would do when the money started pouring in.

Over the next few months, I poured over the course material, following each of the steps outlined therein, to the letter. I did not deviate from the script. I did everything right. I spent hours doing product research. I found a niche with high sales and low competition. It looked like a winner. I found a supplier in China and got them to send me samples. I liked the product. I created a private label that looked hip and cool. I got professional photos of my product. I created a killer listing using all of my new-found knowledge of keywords and SEO. I followed all the advice on launching my product, painstakingly, step-by-step.

Then finally the day arrived. My privately labeled product was sitting in Amazon warehouses across the USA ready to go live. And with one click of my mouse, my destiny was sealed. I went to bed that night wondering if I had purchased enough inventory to handle the demand for my hot new product and, of course, dreaming again of the money that I would inevitably earn so effortlessly while I slept.

You can probably guess where this is going, right?

After two months of costly sponsored ad campaigns on Amazon, Google and Facebook, I had sold only a handful of my whiz-bang product. It left me wondering where I went wrong. Some honest reflection was in order. So, I sat down with a few friends who are more experienced and successful in business than me, and shared the story and asked for their honest, brutal feedback.Here are the hard lessons I have learned from my failed trip up the Amazon creek:

My Product Didn’t Solve A Problem

“Do you know what the problem with your product is?” My friend asked.

“No idea,” I replied.

“It doesn’t solve a problem.” He replied.

“Oh…”

Don’t get me wrong. My product is cool. It’s good quality. It’s also useless. It turns out, the ability to solve someone’s problem is what makes a product great, not how cool it is, or the features it offers. As Theodore Levitt, an American economist and professor at Harvard Business School, once said: “People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”

My Product Is The Kind of Thing People Would Only Buy Once

When I told one of other my friends, a successful businessman, what I was selling, he asked me a question that smacked me between the eyes. “Why would anyone buy that more than once?”

He was right.

My product was for an occasion that is only likely to be needed once. Big mistake. I can’t believe I didn’t see it. There will be no repeat customers with my product — no brand loyalty.

It turns out, you want a product that people will both need and want to buy again and again. Why didn’t I think of that?

I Got Caught In The Race To The Bottom

When my product didn’t sell like hotcakes, I panicked and did something stupid. I lowered the price. This might seem like a sensible idea. After all, a product is only worth what people are willing to pay for it. However, whenever you lower your price, someone else lowers theirs. It is a race to the bottom and every time you do it, you only reduce your profit margins. All I learnt by lowering my price is that it is possible to liquidate my stock for next to nothing, and walk away with the same.

It Was Hard To Differentiate My Product From Similar Products

A far better approach that lowering my price, is to find a way to differentiate by product so that it stands out from the competition. Perhaps I’m just not an innovator, but the product I chose really seemed light on opportunities to differentiate. Don’t get me wrong, I did add things and change things to make my product better, or so I thought, but no one seemed to notice anyway.

I Missed The Boat

When we first identified our niche, the competition was low. In the three months it took to find a manufacturer, create a private label, and get it all shipped from China to Amazon, competition in our niche had quadrupled.

That’s the hard reality.

I feel like today it is much harder to find an untapped niche on Amazon and if you do, it won’t be a few short weeks before you are inundated with competition which will force you to move on to the next product. For this reason, I have come to the painful conclusion that private labels on Amazon are basically dead and are definitely not viable as a long-term business plan.

I Fell for Amazon’s ‘Helpful’ Marketing Advice

A helpful person from Amazon contacted me and offered to assist me with optimizing my listing. I thought to myself, “Isn’t it nice that Amazon is trying to help me.” I forked out some money to run their recommended ad campaign and, much to my delight, we did see a spike in sales. Only after I checked how much the ad campaign cost me did I realize that for every $10 I was making through sales, I was spending $16 in advertising to achieve the sale. The harsh reality is that Amazon is a money-making machine and they are not the slightly bit interesting in helping the little guy… that’s you and me, by the way. Everything they do is about lining their pockets, not yours.

I am sure that there are people who have made their fortune selling on Amazon and so this post is not meant to demonize Amazon per se but to warn good, honest, hardworking people of the dangers they must be aware of when selling on Amazon. Maybe you can avoid some of the mistake I made.

As for me, I think I am done with Amazon.

However, I am not done with entrepreneurship. I am determined to salvage what I can from my Amazon wreck, pick myself up, dust myself off and try again to start a successful business, armed with all the wonderful lessons I have garnered from my Amazon train wreck. Next time, I will be better!