You might hear “$120k/m on Amazon” and think

“Dude has to be working 80+ hours a week”. Nope it’s barely 10% of that

“That’s a LOT of money.” It’s pretty solid. About $16k/m net

That’s the two most common responses I get when I talk about Amazon Arbitrage with regular people and even other business owners

So we’ll be taking a pretty deep dive into what a strong 7 figure Amazon operation really looks like

It’s not very “hustle” centric and it’s not all Lambos & Rolexes. It’s just regular ol’ business

Before we can talk operations let’s run the numbers (Always gotta run the numbers)

$120k/m Math Breakdown

Here’s what it looks like to generate 6 figure monthly using an Online Arbitrage model (OA meaning I buy inventory from online retail stores such as Walmart and Kohl’s websites)

Revenue: $120k
​Profit: $18k - $24k
​Investment Cost: $60k - $70k

These are rough estimates. For example, those are gross profit numbers before expenses such as packing material, software, and employees but after expenses such as inventory, shipping and Amazon fees

It’ll take around $60k - $70k invested into inventory to sell $120k monthly. This means you need to buy $70k of inventory every month to guarantee you hit minimum $120k every month. It takes about 45 - 60 days to get your initial investment back and ready to reinvest. In reality, you’d need $140k of available capital to hit these numbers. $70k for month 1. Another $70k for month 2. Month 1’s capital + profits will be ready to invest in month 3 and so on

Spending $70k monthly sounds insane and it is if you try to do it all in one day. That’s why we break it down into daily and weekly targets. $70k monthly is $17.5k weekly and that’s $3.5k daily Monday through Friday. If I find ten $100 products that I buy 4 units of each, I’ve hit my spend target for the day. Focusing on the daily goal makes it a lot simpler and manageable. If we’re short Monday, we might need to go harder Tuesday or pick up an overtime shift Saturday. If we’re over Wednesday we know we can chill Friday if we hit targets Thursday. Gotta make the game a lifestyle and it ain’t too rough

Now that we understand the numbers behind the business, let’s talk about the actual operation

$120k/m Operations Breakdown

I don’t care what anyone says. The main goal here is time freedom

Of course you could hustle your way to $120k/m but… why would you do that?

I’ve been there. I’ve done it. It’s not fun. It’s just work. Really really hard work

Business isn’t meant to be a solo operation. If you do everything yourself, all you’ve done is create a high salary 9 to 5 for yourself. And I didn’t drop out of college and quit my 9 to 5 just to build another 9 to 5 and call it a business

There’s nothing wrong with starting out in the hustle phase. You’re the most profitable when you do everything yourself but if the goal is time freedom (which it should be) there’s no reason to stay there. To eventually achieve this freedom, we hire, partner, and automate as many operations within the business as we can

The 3 main resource pools to do this are

1. Virtual Assistants
2. 3rd Party Prep Centers
3. Automatic Repricing Software

Let’s cover each in detail

Virtual Assistants

First thing first. I only hire VAs from the Philippines. They’re the most honest and the quality of their skill pool is out of this world

VAs as a concept work extremely well with the Online Arbitrage system

OA as a business model is mostly online

The inventory is acquired online

The business is managed online

The orders are sold online

Besides the physical aspect (which is taken care of by prep centers. More on that later), everything can be managed online meaning it can be managed from anywhere in the world

I know Amazon sellers doing 7 figures in the US marketplace without have a US visa. They haven’t even stepped foot on US soil yet they monetize the shit of America’s biggest online retail store daily.

If I can run my Amazon OA business overseas then I can hire individuals from overseas to manage it as well

With proper training and SOPs, VAs can manage your

• Sourcing (Finding profitable opportunities)
• Purchasing (Buying profitable opportunities)
• Day to day admin tasks (Customer service, etc)

Basically anything and everything that needs to be managed

This doesn’t mean you get to sit on beachfronts and sip pina coladas all day.

A business is a constant battlefront. Even if you’re not the soldier on the frontlines or the general in the trenches, you still don’t get to sleep peacefully into the night. It’s your job to stop the operation from getting wiped out. You put out the fires. You catch bombs at 00:01 seconds right before it explodes and destroys everything you built. More importantly, you write out the plans to win.

Outsourcing doesn’t mean you get to be lazy. It means you get to focus your time on the bigger picture while safely navigating an ocean filled with sink shipping hazards. That’s the blessing of building an outsourced Amazon operation :D

When it comes to virtual assistants I believe in quality over quantity, I know sellers with 20+ VAs just to sell $200k/m at 7% margins. This in my opinion is ridiculous. You would make more money doing less work with less expenses if you just tightened things up

I have 3 virtual assistants. 2 of them run the day to day admin work and source in their down time. The other only sources and purchases inventory. The goal is to get this team to $30k in consistent weekly spend without any additional employees. Once we get there, then I’ll begin adding more employees and opportunities to reach the next milestone

The US dollar is much stronger than the Philippines peso. This is the most powerful (and often abused) ability of the VA system, currency arbitrage. This means you’re able to hire quality work from overseas much cheaper than you could in the US. The starting wage for most Filipino virtual assistants is $3 per hour. This mean you don’t need a lot of money to begin building an Amazon empire. The problem is most sellers use this low cost barrier to outsource before they’re ready and get complacent afterward. Putting inexperienced VAs in the driver's seat of a business is the easiest way to destroy your Amazon operation with haste

3rd Party Prep Centers

A prep center receives your incoming purchased inventory and fulfills it to one of two places

1. Amazon Fulfillment Centers (FBA shipping)
2. Direct to Amazon customers (FBM shipping)

By partnering with a prep center, you gain location freedom. They usually charge a very small fee per unit shipped. While the fee may be small, it limits a specific category of items from your potential Amazon catalog which is low ticket products

Prep fees tend to be around $1.50 - $2.50 per unit. This is very cheap but let’s say a product costs $10. It sells for $21. After all fees you’re left with a $3 profit and 30% return. This makes perfect sense if you ship it yourself. Now let’s factor in prep fees at $2.50. You’re now left with a $0.50 profit and 5% return. Now it's not worth the hassle

Using a prep center usually means you have to focus on higher ticket products

This works out magically well when you work with only prep centers in sales tax free states

In the US, there is sales tax. A specific percentage different to every state that has to be paid on the sale of goods. But there’s a loophole. If I ship inventory to a state that doesn’t charge sales tax then I’ll instantly earn back 8.25% (sales tax rate in Texas) on every inventory purchase I make. Technically you're never supposed to pay sales tax on inventory you plan to sell for profit since you'll be taxed via income tax and double taxation is illegal (at least morally illegal) but that's a different email for a different day

So let’s run back the math factoring in no sales tax. Let’s say I buy only items that cost $200 plus. Usually I’d have to pay an additional $16.5 (8.25% x $200) for that item in for the form of sales tax. But if I ship it to a prep center in a sales tax free state, I’ll pay the $2.50 prep fee but avoid the $16.50 tax. I’m basically being paid to have someone else pack my inventory for me. You can’t beat that

Automatic Repricing Software

Repricing is the process of staying competitively priced on inventory listed on Amazon for sale

Without getting into too many complicated concepts, Amazon has pretty much set up a mini direct market within each ASIN. They did this by putting all sellers who carry an item on the same listing with a king of the hill concept to win sales. The seller with the fastest shipping + cheapest price technically will always be the king of the hill and win 90% of the sales. This is called the Buy Box

What happens in a situation like this is Seller A sells an item for $100

Seller B comes in and wants to win the Buy Box so he prices it for $99

Seller A loses the Buy Box to Seller B so he prices at $98

Seller C, D, E all jump on the listing with the same intentions

This is how Amazon optimizes to make sure customers always get the best price when supply in the market is dense enough. By pitting sellers in direct competition with each other, we’re always fighting to lower price (often called a race to the bottom)

The opposite of this is true as well. As sellers reprice to win sales, they actually win sales and eventually sell out.

The lowest price wins Buy Box and eventually sells out. If new supply doesn’t constantly rush into the market, prices will eventually go up because the only sellers left are the ones who have the higher prices. So if you know what you’re doing there’s almost never a need to sell for the lowest price

An Amazon listing’s price can change by the minute. It becomes almost impossible to track manually once you have over a decent amount of listings. I currently have 611 active listings. It literally would take 3 days to fully reprice all my listings just once

That’s where repricing software comes in. You set specific floor and ceiling limits and the repricing software will automatically adjust your price based on preset rules. This is the only way you can keep up with by the minute repricing

Repricers are pretty common in this age of Amazon Arbitrage. If you aren’t using one, you’ll never be able to keep up with sellers who do use one

Conclusion

When the systems are set up right

When the right people are in the right places

It’s pretty simple to run up $120k monthly working 8 hours weekly

Funny enough, I had to work 50 hours weekly for twice as long just to get here

So don’t think you can build a fully outsourced Amazon business by Day 14. You’ll never make it on that timeline

Stretch that timeline to 2 - 3 years and you’ll be just fine

Peace

-7FSK

P.S.

I’m dropping my Black Friday deals early

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That’s the time where you want to already be in the Black Friday deals sourcing and purchasing S tier inventory to sell in December

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