How much can you earn from selling on Amazon with 10 million? These hidden costs cannot be ignored!

At the beginning of the new year, many people start thinking about their new way out.

Domestic e-commerce has reached its ceiling, and the cross-border e-commerce sector has been eyed by more and more big players, from Pinduoduo to Vipshop, all want to carve out a niche overseas. At the same time, many outsiders are also planning to start their own cross-border e-commerce business, or some experienced and capable operators are also planning to start their own business like Amazon.

However, starting a business is difficult, and starting an Amazon e-commerce company does not seem to be as easy as everyone imagines.

I'll give you 10 million to start your own business on Amazon.

Would you be willing?

It is difficult for people to make money beyond their own cognition. This sentence seems to be applicable to everyone in cross-border business. A seller started a topic on Weibo: If you were given 10 million to start an Amazon business (50% of the shares), would you be willing?

Image source: Weibo

"Amazon is the most profitable method I know of, so there is only one option for me." In response to this question, a seller said: "Don't even mention 10 million, I'll do it even if it's 1,000!"

In fact, in the eyes of most people, being on Amazon means a comeback. This was indeed true a few years ago. For example, UGREEN Technology, which successfully fought back from the grassroots by going overseas with just a data cable, now has an annual sales of 4 billion, which seems to have added another highlight to the legend of the cross-border e-commerce industry.

However, this legendary color ended in the era of wild growth. The cross-border e-commerce landscape has gradually become clearer, and more cultivators want to gain something, and what they pay is no longer just a meager cost. Therefore, in response to the topic in the previous article, many sellers believe that if they have 10 million, they will definitely not do Amazon, but choose other ways out.

Seller A: I spent 10 million to buy Gree Electric Appliances' stocks, with a dividend of 10%. I can make 1 million a year without doing anything. Isn't this better?

Seller B: 10 million is not enough for selling on Amazon. The profit is not that high and the risk is high.

Seller C: Why would I work on Amazon if I have 10 million?

Let's take an analogy. If you have 10 million, but can only sell on Amazon, how much can you earn? Perhaps many sellers will still have doubts in their hearts. After all, Amazon is no longer the era of picking up money everywhere. In the future, to sell on Amazon, we need more refined operations, more powerful supply chain integration, and more professional product development.

Amazon FBA has seen rounds of fee increases, especially the hot topics of "bidding for storage capacity" and "paid capacity expansion" since the beginning of the year, which have brought considerable cost pressure to sellers. Some sellers recently discovered that Amazon has gone back on its word and changed the FBA announcement again and again. The notice given last year has changed this year. " The Chinese display for large sizes over 3 pounds is 0.16 per pound, and when it is switched to English, it is 0.16 per half pound. " The seller complained: "Playing word games with us?

Image source: Amazon

In response to this, many sellers were very angry and said helplessly: "Next time we check, it will become 0.16 per ounce, and then Amazon will close down."

The global economy is still in a downward cycle. Amazon is frequently raising prices while carrying out drastic layoffs, all of which hint at its purpose of reducing costs and increasing efficiency. Similarly, for sellers, reducing costs and increasing efficiency is also a top priority in 2023.

It’s not easy to be a cross-border boss.

What are the costs that employees cannot see?

As mentioned above, Amazon has entered the era of heavy assets, and it is difficult for sellers to continue on this path without some strength. Especially for company owners who need to support their teams, they not only need to consider the cost of stocking and advertising, but also the operating costs of a company.

The boss of a cross-border e-commerce company said that the hidden costs of running a company, that is, the costs that employees cannot see or pay attention to, are actually very high. According to him, through the bookkeeping summary of the past five years, he found that the costs that employees cannot see accounted for about 40% of the total costs, and the salary costs that employees can see accounted for 60% . Among them, there are as many as 17 costs that employees cannot see, that is, hidden costs , as follows: 1) Social insurance and provident fund partially borne by the company 2) Rent, water, electricity, property management fees, broadband fees (the more broadband, the more fees) 3) Company financial agency fees (the more stores, the more agency fees) 4) European VAT, EO, packaging law, garbage recycling fees, etc. 5) Office supplies consumption (computer replacement, maintenance fees, notebooks, etc.) 6) Office snacks, drinks, water fees, company dinner fees, etc. 7) Employee red envelopes for Chinese and foreign holidays ranging from 200-500 8) Alibaba Cloud, Zi Niao and other store server fees (the more stores, the higher the fee) 9) Trademark, appearance, patent registration fees, renewal fees (the more trademarks, the more fees) 10) Product certification fees, CPC children's certificate fees, etc. (between 1k-8w at a time) 11) Amazon store insurance premiums, dead stores, dead links, and service provider complaint fees (the more stores, the more fees) 12) Inventory disposal fees for dead stores and dead links 13) Overseas warehouse relocation and relabeling fees after a dead store 14) Product UPC purchase, label stickers, packing tape and other consumables costs 15) Operation, product selection tools, image tools, office software tools, ERP fees, etc. (paid once a year) 16) Outsourcing fees for product images, video shooting, etc. 17) Increased labor costs due to rework caused by incorrect labeling during packaging

This content is compiled from Weibo @土豆跨跨日记

The above dozen expenses are already a lot of money, so after deducting the company's expenses in a year, the money that actually remains in the boss's hands as a regular deposit is much less than the expenses. Many bosses have a deep understanding of this. One seller said: " The more people in the team, the bigger the plate, and the greater these hidden costs. "

Moreover, the more the business spends, the less money can be saved. No wonder some sellers find that it is a wise choice to be a small team instead of a large one. "It is better to be a small team of three like us, with annual sales of 20 million yuan and profits of more than 3 million yuan, and each person can get 100 million yuan ." A seller said frankly.

The operating costs of a business are not low, especially in the cross-border e-commerce industry. It is not easy to start a business without funds. This is also the reason why many people dare not quit their jobs easily and choose to start their own business.

How hard is it to start from scratch?

Sellers are crying as the number of orders per day is in the single digits!

However, some sellers are more stubborn and still want to start their own business even though they know they have no supply chain and little capital.

Starting from scratch without funds and resources is really difficult. Some sellers want to stop this stubborn choice, and they think:

"In today's environment, those who dare to start a business are not warriors, but immortals, really! In 2015, everyone was shouting slogans to start a business, but now it's a mess! At that time, all conditions were very good and the environment was good, but it was a mess, not to mention now. Now, if you have a grudge against someone and encourage him to start a business , he will be doomed. And you are a three-no, a pure sheep, you have not experienced the dangers of the business world..."

Some sellers also used their real experiences to describe the difficulty of starting from scratch, which was really sad and made people cry:

Seller A: I have a friend who started from scratch 20 years ago. He started his own business while working. His company does not have the concept of off-duty. He often has to adjust the company's advertising slots at night after work. He finishes his work every day and then does his own work. Except for 7 hours of sleep, he sits in front of the computer the rest of the time. He got hemorrhoids from sitting so hard and often has temporary blindness in his right eye . He endured for more than two years before he succeeded. He said that this kind of endurance is only a prerequisite for starting an Amazon business . He succeeded. If you have paid so much but failed, do you think you can accept it?

Seller B: I also started working alone in early 2022, but someone guided me. I started with 100,000 yuan of capital. The source of goods was recommended to me by others who had cooperated with me before, but the transaction method was on 1688. I selected 10 products, and prepared for about half a year for drawing, product selection, and production. Only one of the 10 products was relatively successful, and the others were all half-dead. I added 5 more products later. After the peak season, I barely made back my investment. I can only say that I was lucky. If all 10 products died suddenly, I would be finished. I have to complain that the daily order volume after the peak season is in the single digits , and I burst into tears every day when I open the backend...

“We have funds, a team, technology, and a supply chain. We lost almost two million in the early stage . It’s pure white hat (one off-site sale per week plus flash sales), and you have nothing. I suggest you give me the money directly. I can help you learn a lesson.” A seller who once started from scratch joked.

Reading thousands of books is not as good as traveling thousands of miles, and traveling thousands of miles is not as good as meeting countless people. If you really want to start a business, you might as well calm down and think about what you can lose and what you have the ability to gain. In 2023, we firmly believe that the cross-border e-commerce industry will develop better, but we must not fight unprepared battles. Otherwise, it is unknown whether we will fall into the abyss.