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New Digital Shelf Report

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December 28, 2020

Episode 14: FBA Private Label or Dropshipping?

Amazon FBA Private Label or Dropshipping? Which is best when you are finding your side hustle.

In This Episode

Our awesome MW team member, Morgan is starting a side hustle business. She sits down with Tommy to weigh the pros and the cons of Dropshipping versus Amazon FBA Private Label. Which one will she choose!?

TRANSCRIPT

Tommy Beringer:

What's up you data-hungry Amazon sellers. This is your host Tommy Beringer of the Sell. Rank. Win. Podcast from MerchantWords and in this podcast we give you the answers to your most burning questions, actionable insights that you can take away and implement into your business today. So let's go ahead and dive right into today's episode. What do you say? Let's go. What's going on everybody. Welcome to the Sell. Rank. Win. Podcast. And as always, we always have a lot of value that we are going to bring in. In this podcast, we have Morgan [Ladona 00:00:33] Ciani from MerchantWords. She is our Head of HR. And now we are not going to talking about HR here, Human Resource because that might be a little bit boring. But we're obviously going to keep it to selling e-commerce, especially Amazon stuff.

Tommy Beringer:

So what's sparked this podcast was that we're on a call one day and she just asked me questions. She said, "Hey, Tommy, what do you think about dropshipping?" So we just started to have a conversation about it. And then she was like, "I think this would be perfect for a podcast." So I was like, "You know what? That's perfect. Let's do it. Let's do a podcast on this." So here we are, doing the podcast, making it happen and we have Morgan on the podcast with us today. Very happy to have you on, Morgan. How're you doing today?

Morgan Ciani:

Thanks Tommy. Thank you so much for having me. I'm super excited to be there. I mean, it's actually because I'm part of the company. So I've seen it be built from the ground up. So to actually be on it right now is very exciting and I'm doing good. It's September. I'm in New Jersey and it's still very, very hot. We're looking at 88 degrees today, I think. So it's not too bad. But yeah, thank you for that awesome intro. Like you said, I am obviously, I'm the Head of HR and I don't do a lot of hands on when it comes to the actual business. I really don't know that much about Amazon and selling and all that because I'm in the admin side of everything. I'm doing the tax stuff and I'm doing the payroll stuff and I'm doing all that fun stuff, like you said, would make for a very boring podcast. But-

Tommy Beringer:

But you make the company run. If we didn't have you, I don't know what we would do and I don't know... I think George wouldn't know what to do either.

Morgan Ciani:

Ooh. Well, thank you so much. I appreciate that.

Tommy Beringer:

Thank you for all you do definitely.

Morgan Ciani:

Of course.

Tommy Beringer:

Yeah, so and you were mentioning kind of a side... You wanted to do a side hustle or something like that. So I was like, let's just talk about it on the podcast and just kind of shooting from the hip. Speak organically about this. So it's kind of like, I have no idea what Morgan is going to ask me today.

Morgan Ciani:

Yeah.

Tommy Beringer:

So I'm kind of on the hot seat, but I'll do my best to answer these questions. So I mean, Morgan, if you wanted to just jump in, let's go ahead and try and get some of your questions answered.

Morgan Ciani:

Yeah, definitely. So just to give everybody listening a little background. I have this very awesome boyfriend. We've been together for a very long. We own our own house together that we bought about three years ago and it's a total fixer upper. And being that the three-year anniversary is coming up, we kind of just looked around and weren't too thrilled that we haven't made as much progress as we wanted. And he's in school, he's working full time. He went back to college. So he's in school also. Obviously, I work for MerchantWords full time. I had been doing some mending on the side and unfortunately with COVID obviously, that came to a halt. So by already side hustle that I had going just stopped altogether. And we kind of just looked at each other and I was like, we got to do something. We have to do a little something to bring in that extra money because he's got another year of school left.

Morgan Ciani:

We don't really know when we're gonna start really saving and be able to work on the house. And obviously, working where I work and dealing with you every day and stuff like that, we kind of were just like, you know what? E-commerce seems like it's a great choice, especially right now, especially in the climate that we're in with COVID and everything like that. I can do everything from home. I don't have to go anywhere. And that's kind of where it started. And so we haven't done that much research. We literally... I'm talking, this is a week ago. Literally one week ago, we were like, you know what? We're doing it. Let's start the research. Let's start going. And that's why I came to you because now we're at this point where we're trying to figure out whether or not dropshipping is right for us or to go for Amazon FBA private label.

Tommy Beringer:

Right.

Morgan Ciani:

And that's why I came to you for your advice. And so yeah, right off the bat, what do you think between the two?

Tommy Beringer:

Well, I appreciate you coming to me and asking me these questions. It makes me feel like I'm going to be helpful to you guys and I always love being helpful to anybody that has any questions about this. So when I started out, I crossed the dropshipping a little bit. I looked into it. I looked into Amazon FBA. I looked into a few other things that didn't even really have to do with e-commerce like flipping cars and fixing them up and sell them. Lots of other stuff like that. Just when I wanted to... When I was kind of on the same path that you are on now with the side hustle.

Morgan Ciani:

Right.

Tommy Beringer:

So I was like, what else can I do? What else can I do here? So I had... It was kind of a godsend, I guess, in a sense, as I was thinking about what do I want to do for a side hustle is at that time I was recording music. I was producing, writing, recording music and I had one of my clients come in and he was like... I asked him, what else did he do? He said, "Well, I sell on Amazon FBA." I was like pfft. I was like, "Okay. Well, if you teach me everything you know, I'll give you all of your sessions for free."

Tommy Beringer:

So that's kind of one thing I kind of took as an omen a bit as I was looking for the side hustle trying to fill that side hustle void and that side hustle bug. So and I looked into it more and it wasn't just because of the omen, but I looked into it more and I was just like, okay. I was weighing the options between looking into dropshipping and retail arbitrage and selling private label Amazon FBA. So I mean, there's some good things about dropshipping. So one very attractive thing about dropshipping is that you don't have to hold any inventory.

Morgan Ciani:

Right.

Tommy Beringer:

So you basically don't have to buy thousands of units or hundreds of units and then ship them into Amazon. You can just, as someone comes into your Shopify site, they just press buy. And then the people, whoever you're shipping the product from, whether it be in China, India or wherever, we'll just go ahead, they get the order and then send it now. So that's very attractive. That was something that was attracted to me as well. And then also the scalability of it. So for example, if all of a sudden, something started getting hot right now, I don't know, obviously, mask right now and COVID related stuff. So you can just add those to your site. If it's not in a certain type of niche site obviously, you can just kind of just add on things. Or whatever's popular in that niche, you can just put a picture up and say you sell it and then connect that to whatever manufacturer is going to go ahead and dropship that.

Morgan Ciani:

Right.

Tommy Beringer:

So that's another attractive thing. And then of course also the freedom of. You can do it from anywhere what you were talking about as well. But just some of the things, some of the drawbacks regarding dropshipping is product consistency. So they can send you a sample of what they have, but then you don't know what they're going to send to your customer after that.

Tommy Beringer:

You cannot really do an inspection like you can do when you're getting your own products that you're in contact with the manufacturer for and you cannot really check on that product because they can send a much less quality product to your customers, which are going to complain. And then that's going to turn into refunds and then it's going to also be hard to replace that product. So unless you really have some on hand, but that's up to you if you want to order that stock. And then if you do have something on hand, if someone just wants a replacement, you could send it out to them. But then all those customer complaints, you have no control over that. That's something that I did not like one bit about that.

Tommy Beringer:

And also the profit margins are super low compared to private labeling, Amazon FBA private label model, which I do. So just for those three things, all those customer complaints, product consistency and then the profit margins was kind of deterred me from going into dropshipping because it seems more can go wrong than go good. But again, I'm not trying to deter anybody from dropshipping or yourself. I've just... And I have not done dropshipping myself. So I just know from what I've seen other people from what they're doing and just kind of the benefits, the good and the bad from the dropshipping model.

Morgan Ciani:

Yeah, so you brought up a couple good points. And the first thing I want to touch upon is the fact that it doesn't require a large upfront investment. I think that's what kind of is pushing us more towards dropshipping because our main thing is, especially right now is fixing up our house. And I think part of us is you don't really need a lot to get started. You don't need a lot of money to get started on dropshipping whereas with the Amazon FBA, you're generally looking at probably dropping at minimum $1,500, right?

Tommy Beringer:

Right.

Morgan Ciani:

I mean, from what I've seen, they recommend you, once you find your product and blah, blah, blah, blah, blah, they recommend that you order about 500 units to have on hand. And again, that's what I saw. Who knows that could be incorrect. But still you're looking at a good startup cost. And I think there's this part of me that's like, oh, the reason that we're doing this is to fix up our house, put aside money, get that other future going. And of course, they always say like, you need to invest some money to make money. But there's still that part of me that's just like, oh, I can't. It doesn't feel right taking $1,500 and putting towards something that I don't know will for sure work out when I have a bathroom that literally the tiles are falling off the wall. So I think that alone is something that's very lucrative for dropshipping. Very low startup costs. But then again, there's that other side of it, like you said, you're getting a lot lower profit margin. You just got to see what happens there.

Tommy Beringer:

Yeah, no, absolutely and you bring up a great point, Morgan, and you are correct. You have heard right that... I mean, I tell people at least a minimum of three grand.

Morgan Ciani:

Yeah.

Tommy Beringer:

Three to five grand starting out because you got to think about just more than the cost of goods. You got to think about the cost of goods, the shipping and then the packaging. Well, that could be thrown into the cost of goods. But then also, you need to have money to run those ads, to run ads to your product. So all in all, I think five grand is a good amount to start with Amazon FBA. And I put it in perspective like this. If you were to go ahead and open up a brick-and-mortar pizza shop or I don't know, nail salon or whatever, you're going to put in a lot of money for the startup cost for that business. And you're going to have to pay that rent. You're gonna have to pay that overhead.

Tommy Beringer:

And now with any type of e-commerce business, whether it be dropshipping or Amazon FBA or something like that, you're working from home and you don't have as much overhead as a brick-and-mortar would have. So that's always a way to put it in perspective. If you're like, 1500 bucks is a lot, but at least I don't have to open up a whole store and do all this. But if you want it to start out lean, meaning starting out with not a lot of money, you could test the waters of dropshipping because it is a very minimal startup costs. And that's where you're going to have to just kind of test that out and see if it's gonna work for you guys-

Morgan Ciani:

Yeah.

Tommy Beringer:

With that.

Morgan Ciani:

For sure.

Tommy Beringer:

Yeah.

Morgan Ciani:

And then the other thing that you mentioned, which was actually one thing I really wanted to ask you was when it comes to testing the products, I obviously know for Amazon that that's what obviously, 100% a thing because you were buying that inventory in bulk. You obviously want to get it, you want to test it. But I haven't seen anything about that mentioned when it comes to dropshipping. But you just said it. So I assume that that is a thing. I'm going to want to find the product that I am interested in, reach out and have them send me a tester. I literally have no idea.

Tommy Beringer:

Yeah, so I mean, you would go to AliExpress. Like I said, I do not by any means call myself an expert in dropshipping. So I know if there's some comments in this podcast, hey, that's not true. So I apologize and you guys could teach me on that. So [crosstalk 00:13:16].

Morgan Ciani:

Please comment and let us know.

Tommy Beringer:

Yeah. Right, so what I do know is that one of the sites is AliExpress that lends itself to dropshippers. There's other new ones, newer ones out there. And basically, you can just re reach out to them. You can do on Alibaba or a 1688 or any other of those websites that you can find manufacturers or trading companies and say, "Hey, I'm thinking about dropshipping your product. Can you send me a product so I can look at it. I need a sample so I can feel it and touch it and make sure it's going to be good for my customers." So you can do that. And then testing the market will be easy with dropshipping. You can just put it on your website and if people don't buy it, then just take it down from your website, right?

Morgan Ciani:

Yeah.

Tommy Beringer:

So you're not buying hundreds of units to test out, which I do on Amazon FBA. I'll buy 100 to 200 units, maybe 50 sometimes and send them into the warehouse. And then if they don't do well, then I just have to pay Amazon to get rid of them for me or just put them on a liquidation or something like that.

Morgan Ciani:

Okay.

Tommy Beringer:

But the thing is, so they can send you a really high quality sample. But then I've heard some dropshippers with this story. They got the best quality stuff the first run for maybe, I don't know, the first few 100 units, were great quality to their customers and then all of a sudden, the quality just dropped off. And that's what I'm talking about. Product consistency, it is just messed up when you're dealing with dropshipping because you don't know what your customers are getting. You really can't do... I mean, you can do an inspection on the place, but as the orders are coming in, they're going to send the customers whatever they have on hand.

Morgan Ciani:

Yeah, and then-

Tommy Beringer:

So that's just the issue. Yeah.

Morgan Ciani:

And again, that goes into another big difference between the two. And I think you mentioned it earlier that the customer service from dropshipping, you're totally in charge. Obviously, we want to set up separate emails if we go that route and the customer is going to be directly reaching out to you and it's not necessarily your problem. Not to saying that it's your problem, but like you said, oh, what I got was perfect. But now the vendor is selling them directly. Something that's not that good. So now I have to play middleman and I have to try to coordinate between the seller and the vendor and find out what went wrong. And you want to try to keep everybody happy because that's how you get repeat customers or word of mouth and everything that goes like that. Whereas for FBA, once your product's posted pretty much and it's sold, it's out of your hands. Amazon handles everything for you.

Tommy Beringer:

Right.

Morgan Ciani:

That's definitely a big difference between the two. And I guess it comes down to personal preference. Do you mind being hands-on? Are you the kind of person that can be friendly and email back and forth with customers or is that not... You do not want to waste your time because if that's the case then dropshipping is probably not for you.

Tommy Beringer:

I mean, if you get to a certain point with the dropshipping, I mean, and you're doing fairly well, you could probably get to the point where you can hire a VA too to take care of the customer service, which you probably would have to do. But I mean, that's what I would think you would have to do, especially if you start getting some traction on your site.

Morgan Ciani:

Yeah, definitely. And then again, now other big difference between the two, which is going to take a lot of your time, which you and I spoke about when we first talked about this is the marketing. You don't have to really market for Amazon. Amazon has its own name. Amazon basically does its own marketing just by being Amazon. Whereas from what you told me and from what I'm seeing a lot in my research as well, dropshipping like that can actually really make or break your store. I mean, did I say drop shipping, marketing, marketing. So it really could make or break your store.

Tommy Beringer:

Yeah.

Morgan Ciani:

You actually have to build a brand. You need to build a brand for yourself. And I think you mentioned Facebook advertisements a lot.

Tommy Beringer:

Yeah. Yeah.

Morgan Ciani:

You have some experience with that there?

Tommy Beringer:

I mean, yeah, you would have to drive Facebook ads to your Shopify store or Google Ads. And that's another thing that you have to be on top of. I mean, I have some experience in Facebook Ads. I'm by now... I'm a novice with Facebook Ads. And I like to keep everything on Amazon as much as I can to survive within the ecosystem. So that my strategy is just find something that is a super duper niche product that no one has really ever heard about and just try to bundle with something that is selling really well in that market and then drive traffic from Amazon. And usually that works because one, I'm not getting a lot of competition. So there's not a lot of black hat tactics in that market such as if I'm in a dog, pet space or nutraceuticals, vitamin, supplements, something like that. And usually it pans out. I have not... I had one major failure and I was selling the squishy toys. We all know what those squishy toys are.

Morgan Ciani:

Yeah.

Tommy Beringer:

And in the beginning, this was before even anybody knew what they were. And so I was making a killing on them. But then all of a sudden, I started having people coming in, complaining. People doing a black hat tactics, the competitors coming in, giving me bad reviews and then trying to take me down because a copyright infringement, all this stuff. And then all of a sudden, other people started getting bigger. My eight costs started going up like crazy. And it was just too much to keep up with. And I was like, "Oh man." I was like, "I cannot deal with this super competitive space." So I just... And at that moment, I just had an order in for 5,000 units of it.

Morgan Ciani:

Wow.

Tommy Beringer:

And I basically had to... I mean, they sold slowly after that. But we decided how to make a decision just to have Amazon Burnham at a certain point because we had a long-term storage fees adding up on us and it was just crazy. So yeah, it was just... That's why I like... That's my strategy that I will preach to anybody and that it does work is if you find the right product, it's always about picking the right product. And I know it's more money upfront then dropshipping because you have to put money into physical products. And then you have to send them. You have to pay for shipping, the shipping cost. So the upfront cost is more. But in the long run, in the long-term, it's always a calculated risk. But I think that if you just stay the course and pick the right product, you should be okay. Just make sure you're maintaining the bids inside of Amazon, inside of your PPC and making sure that your copy is up to date and all those little things there.

Morgan Ciani:

Yeah.

Tommy Beringer:

It's been going good for me. So I don't know. It's easy for me to say to someone who's just coming in. But just that's where it's at right now. Unless you really know what you're doing within Shopify dropshipping model. But sorry to go off on a tangent there.

Morgan Ciani:

No, that's what this is... Is that what podcasts are for?

Tommy Beringer:

Yeah. Right, I guess so. So I don't even know where that stem from. But I mean, my advice to you, Morgan, straight away would be to, I mean, you have to look at your goals. So you think 1500 is a lot to come up with, to start out with. So if you can't come up with it, then maybe doing the physical products for FBA isn't right for the moment. But maybe you can kind of... One of your building blocks could be the dropshipping model. So maybe build up, I don't know, a few thousand dollars from dropshipping and then look into FBA. Don't put all your eggs in one basket, I should say. You still have the dropshipping. If the dropshipping is going good for you, keep it going and then invest some money into the Amazon FBA private label model, which I do. And of course, I'm here to help you with whatever you need to kind of take you through that journey. So I mean, not just because I work at MerchantWords, but I have found all my super niche products by the star search or the asterisk search in our classic search tool. So basically, I found everything there just using that and just found all of those niche products there, two of them that are selling really well right now on Amazon.

Morgan Ciani:

Yeah, that's funny because the other day when we were talking about emerging trends and stuff like that and those weird little things, I noticed that this is the whole reason I was in the emerging trends was, I mean, of course doing work, always seeing what's going on. Is there anything I can create a social post out of or anything like that? But my main goal was, okay, this is something that we've been talking about. And we actually did already create an LLC and stuff like that. So we've got that set up and now really our next step would be to create the storefront, depending on which way you want to go in, but also kind of get an idea of what we want to sell.

Morgan Ciani:

And that actually leads into my other big question I had for you is do you... I see a lot of opposing things that say, you can have a store, whether it's dropshipping or Amazon, you can have a store that sells tons of miscellaneous different products. But I'm also seeing a lot of things that say that maybe you should stick to one particular thing, whether it be all baby stuff or all mountain climbing stuff or these are literally just random things that are popping into my head. But what are your thoughts there? I feel like you sell pretty random stuff for the most part. They're not always connected.

Tommy Beringer:

Yeah, so I mean, as far as the Shopify model, I've seen people just niche to survival store or they're just selling sort of knives and I don't know, whatever else you need to survive, a zombie gun. I don't know. Whatever it is. And then... Toilet paper in bulk or whatever. Anyways, but that's always good. And then some people have that big box kind of strategy.

Morgan Ciani:

Right.

Tommy Beringer:

They sell everything under the sun. Just things that are popular. And I mean, for me, I started out in the beginning trying to just focus on a certain niche. Just the niche that I was trying to focus on, it kind of was hard for itself to lend products to it. So I was just like, you know what? Screw it. I'm just going to pick a product that has meets my criteria as a good product to sell on Amazon and I'm just going to sell it. So I sell in home and kitchen. I sell in sports. I sell in education. So and I'm not going to limit myself while I'm doing my product research to just, oh, this is a great product, but I can't sell it because it's not in my niche. I did that in the beginning and I think there's a lot of products that I missed out on that I should have sold. So now if I see a product that meets my criteria, then I just go for it.

Tommy Beringer:

And if I really, really think it's going to do something, or I'll write it down and if I really, really think it's going to do well, then I'll contact my manufacturer and just have them make about 50 to 100 so I could just send Amazon to my FBA warehouse and then test it from there. But to answer your initial question, it's good. If you want to have... If you're thinking about selling your Amazon store down the line, there's companies that do that like Empire Flippers and there's a few others out there that people will actually come to you and want to buy your Amazon store from you. So sometimes they'll look at what type of store is it. Of course, the branding. There's a lot of different metrics they look at. But a lot of people like to see in just one category. But if it's making money and if it's doing well, some people just don't care. But that's one attractive thing is people... This is thinking way far down the road. But I'm just-

Morgan Ciani:

Yeah.

Tommy Beringer:

But just some people want to see maybe just one type of product being sold like I don't know, sewing stuff, arts and crafts, a hobby lobby or a Dick's Sporting Goods type of store or whatever. You know what I mean? So it depends. And that's if you want to go ahead and sell your store down the line too, which is always smart to do because people are actually right now paying top dollar for some Amazon stores, some.

Morgan Ciani:

Right, no, I think I definitely agree with you. I wouldn't... That's what I've been leaning towards. I just, I like a lot of different stuff. I'm a pretty organized person. I just got these awesome drawer organizers off of Amazon. I love that.

Tommy Beringer:

Nice.

Morgan Ciani:

But I'm so all over the place and especially right now, again, with everything that's going on. There's not a ton of different... I can't think of a ton of different examples right off the top of my head. But to me, if you corner yourself to a particular market, let's say, travel for example right now, maybe you sell the little clips for your suitcase so you can know that it's yours from far away or the little hangie tags or maybe a passport, folder type of thing. If you corner yourself into a market like that and then we're now in a situation like this, your store is probably not going to be doing that great. Well, right now where no one's traveling.

Morgan Ciani:

My main thought was we actually got really big into indoor rock climbing right before all this happened. And we had literally just bought, no joke, probably used it one time. We each got our own pair of shoes and a chalk bag to share. And I literally have used it once. That's it and that was it because then we immediately shut down, indoor climbing shut down. And so that's something that I also thought of was like, I don't want to corner myself because God forbid something like this ever happens again. I don't want it to be like, oh, now I'm screwed. I need to start a whole different store. That does a whole different thing. I liked the idea of just selling what I think is interesting and what I think other people would enjoy and going off of the emerging trends and stuff like that. So I think we're definitely in the same boat there.

Tommy Beringer:

Yeah, I definitely agree with you to do that. I mean, that's what I would do. That's what I'm doing, I should say. And then when Morgan says emerging trends, that's one of our tools on MerchantWords.

Morgan Ciani:

Yeah.

Tommy Beringer:

So if you're not a subscriber to MerchantWords, no worries. There's lots of free things you can do on our site. Emerging trends being one of them. You can also download a digital shelf report. I mean, what else can you do on there for free? Product targeting tool, which is going to be a launch soon. There's tons of free stuff on merchantwords.com that you can go ahead and check out. You can even just type in a star into the classic search and see the Top 250 Amazon Searches right there. So that's pretty cool to see for free.

Morgan Ciani:

Definitely.

Tommy Beringer:

But yeah, now that's a smart way to do it as well, Morgan is I'm always surfing those emerging trends to seeing what's popular and what's coming in on MerchantWords. And I flip between that for my product research into the star to the asterisk search on our classic tool. And I mean, basically what I do is I've done some videos on this, but I'll talk about it again, is I'll just type in the star, the asterisk into our search bar or into your classic search tool. And then what this does, it brings up every single keyword that we have pulled data for that month from Amazon. So just last month, I think it was just over 108 million. I think we're almost up to 300 million just in the US alone. It's crazy how fast Amazon is growing right now-

Morgan Ciani:

I've been seeing.

Tommy Beringer:

Especially getting closer to fourth quarter. Yeah, I know. So basically now you have a haystack and I'm just talking about... You can do this in any marketplace that we have data for, UK, Germany, Italy, Canada and so on. So I usually do, I start in the US because that's mainly where I sell and also sell in Canada and Mexico. And then what I do is just I'll start refining down. So I'll look, are there... We have filters that you can filter by search volume and I filter between 1000 and 30,000 searches per month for search volume. And then what that's going to do is refine down this big haystack of a hundred million keywords and then kind of refine it down to just a little bit, I don't know what it refines down to, but less than a hundred million.

Tommy Beringer:

So now what I'm doing is anything above 1000 is going to have enough traction for me, enough demand for me to want to get into it and anything... I want it to be below 30,000 because if you start getting into the a hundred thousand, I mean, you guys could go up to 50,000 if you want, 60,000, but once you start getting towards a hundred thousand, you're going to get into the competitive range, the competitive spaces, which I don't like to venture into because a lot of black hat tactics lend itself to competitive spaces. So I like to keep it small and I like to keep it weird. And when I say weird is I'll start scrolling down, go through the pages of keywords, scrolling down, scrolling down and just using my human brain and just taking notes, just adding those keywords into my collections tools. So if you like a keyword or a product that you think might be useful, something that you might want to sell, just add it to your list and collections. It's another tool of ours is a collections tool. You can just add a list of keywords.

Tommy Beringer:

And then from what I do is I like to look for a weird keyword or something that I've never heard about or I didn't realize that was being sold on Amazon. And then from there, that's where I'm getting my ideas. And then my next part of the process is I'll reach out to my manufacturer and I have her on WeChat. I have a few of them on WeChat and I just I'll say, "Hey, what is the price per unit on 500 of these?" And then just start getting the ball rolling there, writing down the prices, seeing if it's going to be feasible for me to make some money on that and then just keep it going from there. And if I really, if the numbers work out for me, then I'll go ahead and order 100, 200 units from my manufacturer from there. That's my process in a nutshell.

Morgan Ciani:

Okay, and now you brought up another thing that I wanted to ask you about. One of the downsides to FBA that I keep seeing as well is the startup time. I didn't know this and the maybe again, I'm just going off of what I read online. So it's cooler to talk to you who has actual personal experience. But I've been seeing a lot of stuff that says that once you get your product, you test it and then you place your order, it could take up to two months for your order to get to your FBA facility, wherever it's going for Amazon, who's going to store it and send it out for you. Is that what you've experienced?

Tommy Beringer:

Yes.

Morgan Ciani:

We're obviously, of course, on the other side dropshipping, you're not doing that because you're not buying it in bulk.

Tommy Beringer:

Right.

Morgan Ciani:

It's a lot quicker.

Tommy Beringer:

You can get it... With drop shipping, that is true. You can get started a lot quicker with FBA. It's going to take a little while. After you placed the order, you give the manufacturer usually 30% and then the rest after the run is done or after the inspection is complete. And then from there, the lead time usually could be anywhere between 14 days to 30 days. Usually, the manufacturers that I deal with, I get everything done within, depending on the demand, I can get stuff done within two weeks. And then from there, say I have 200 units. I will have them ship by air to get it there in seven days like 50 units or 25 units, whatever makes sense monetarily.

Tommy Beringer:

And then I'll ship the rest by sea, sea freight and sea freight could take 30 to 45 days. But at least when you ship it by air, you're getting things going. You're getting things moving. And then maybe by the time that sea shipment gets there, excuse me, yeah, the sea shipment, the other products that you have in, will either still be there or be out of stock, at least you have some more stuff coming in. And now it is a little bit harder to test during the COVID-19 days because Amazon is taking a lot longer to check in products from what I've experienced. So it is a little bit tougher to do some testing quickly and right away. But those are the drawbacks. It is going to take a lot longer to get started for the FBA private label model to answer your question.

Morgan Ciani:

Right, but could be more money be made there. Also-

Tommy Beringer:

Yes, but the margins are a lot better.

Morgan Ciani:

Yeah. Yeah.

Tommy Beringer:

Margins are a lot better in private labeling.

Morgan Ciani:

Exactly, also related to shipping, one thing that I was curious about is how, when it comes to FBA, how do you get Prime status? Is that something that you have to earn or is that something you pay into? Like that's part of whatever account you choose if they have a pro account or a platinum account or how does that work?

Tommy Beringer:

Great question. So if you... Just to get the Prime logo to be Prime eligible is you just have to send your product into an FBA warehouse. You turn on the FBA, it's just one click of a button.

Morgan Ciani:

Oh, wow.

Tommy Beringer:

Do I want to be, yeah, do I want to be fulfilled by Amazon or do I want a Merchant Fulfill? And then even Merchant Fulfilling. I know there's something going on with Seller Fulfilled Prime right now. Seller Fulfilled Prime, SFP is allowing merchants who ship and fulfill pick and pack from their own warehouse, allowing them to get the Prime status. But I think they're going to be shutting that down soon. I don't know. I've been reading into that lately. But I'm just looking into that. But just to answer your question and not go too much into the weeds, you get the Prime logo, the Prime shipping eligibility by shipping in your products into Amazon and becoming FBA.

Morgan Ciani:

Okay, awesome.

Tommy Beringer:

Yeah.

Morgan Ciani:

So that's what I thought. I knew... See, I don't know all the terms. So even when I'm doing my research, I feel I'm definitely missing out on some stuff. And that one big thing I knew I was missing out on was I was pretty positive that, like you said that I could have the option to rather than pay to have everything sent to Amazon and have them take care of it, I can ship everything to myself and be charge of packing and shipping it myself. That's an option.

Tommy Beringer:

Yeah, you could ship everything to yourself and fulfill it from your garage or from your own warehouse or whatever you want to do. Which I actually did in the very beginning. What was it? There was some reason I couldn't ship into Amazon when I first started out. I'm trying to think of why. I don't know, I forgot why. But anyways, I had to fulfill the product for myself for the first... Maybe it was because I started in the fourth quarter and they weren't allowing new shipments in I think maybe or something like that. But anyways, I had to fulfill my product from my garage. I mean, it was a pain in the ass. I mean, it was exciting seeing sales come in, but I'm like, oh crap. I have to get the shipping label, put it in a packaging, bring it to the post office. But some people like doing that. And if you are doing very, very well that way, you're going to have to hire someone just to do that during the day.

Morgan Ciani:

Yeah.

Tommy Beringer:

Trust me.

Morgan Ciani:

Yeah.

Tommy Beringer:

Yeah.

Morgan Ciani:

I definitely don't think it's a route for us. I had mentioned, Paul is back in school. Paul's my boyfriend. I didn't say his name earlier. Paul's my boyfriend and he is back in school. So I just know it's very intensive and he's also has a full-time job. And I just know that if everything did go really well, a lot of it would fall on to me and I also have a full-time job. I don't think that that route is for us. But I knew that that was an option. And like I said, you don't always know what to Google and what to type in. And all of a sudden, you're in your research and all of sudden you're like, wait, what the hell is even that? What is that?

Tommy Beringer:

Yeah, I mean, the-

Morgan Ciani:

And then you have to do a whole different route.

Tommy Beringer:

Look, Morgan, this is... I mean, starting out, just get the ball rolling somehow some way to get your feet wet, whether it be anything in e-commerce doing the dropshipping, doing Amazon, FBA, whatever you want to do and just get the ball rolling. You can even start out doing retail arbitrage if you want to just see what Amazon's like. Just start selling stuff that's from your garage or something or go to target, buy something that's on clearance and then you'll be able to sell it for higher in another market. So that's one way to just get started, I always say.

Morgan Ciani:

Yeah, no, that's definitely a good idea. There's just, like you said, there's just so much to think about and so much more than I ever knew. And I feel very lucky. I know I'm very lucky to have MerchantWords and have you at my fingertips. We're not all lucky enough to have a Tommy. So I feel very blessed to have you.

Tommy Beringer:

Thank you.

Morgan Ciani:

And I think kind of to bring it back to what you said earlier, for me, I feel like that was my omen. When we were talking about it, what kind of side hustle can we do? It's like, well, I've got MerchantWords at my fingertips and I've got Tommy at my fingertips. He does really well. I think that we could do this and for me, that was my omen.

Tommy Beringer:

Yeah.

Morgan Ciani:

It was just like, this is what I have available to me, which not many people do. So let's go with it and that's where I am.

Tommy Beringer:

Yeah, and I mean, of course, you have to, whatever constraints you're working with, you have to work with them. You said 50, $100 is a lot right now to... I mean, for anybody, 50, $100 is a lot of money to start a business with.

Morgan Ciani:

Yeah.

Tommy Beringer:

And if you want to just start out with dropshipping and you can try to do that. So you're not paying up front money for shipping cost. I mean, you're paying for the shipping costs in a different way, but not all upfront or a physical product. So I mean, I see how that's more attractive to you.

Morgan Ciani:

Right.

Tommy Beringer:

So I mean, just whatever route you take, I'm here to support you on and whatever you need of course, especially anything that has to do with the private label FBA model because that's what I know, that's what I live and breathe. So anything there I can absolutely help you on and anything else that you have questions about with dropshipping or wholesaling or arbitrage or whatever, anything like that, then I'll do my best to answer those questions as well.

Morgan Ciani:

Which I always appreciate and 100% FBA is end game. Like duh, duh, duh FBA's end game. Everybody knows. Amazon is 100% where it's at. But you said it. I think that for right now, dropshipping makes sense for us because of that money aspect of it and to me, that's how I picture it going. Let's see what happens with dropshipping. Let's test the waters. Do we like it? Is it working? Is it profitable? Have we saved up some money? Yeah. Cool. All right, it's time to dive into FBA. That's what my envision is right now and I think that's where we're going to take it.

Tommy Beringer:

What I can do is I'll connect you with my... I'll loop you up on email with my suppliers and my sourcing agents. And if they can help you with some type of dropshipping from their side in China, then I would go with them. I've been doing this for years and they have given me the best prices around. So instead of you going into AliExpress or Alibaba or 1688 or any other site like that, which is always good to kind of learn if you want to do that. But I can also give you the people who I have vetted and I've been doing business with for years. So if you want that connection, I can give it to you and then you can try to see if they can lend themselves to your dropshipping business or if they can put you in the direction of someone who can help you out from their side. And their quality has always been good with me. So there's that-

Morgan Ciani:

Yeah, I would definitely love that. That would be so awesome because that's really that's our next step I think and that as well as starting to think about the marketing side of it. Which I think I'll be good with. That and the customer service, I think I'll be good with. I have so many exclamation points I use in all my messaging. I'm going to be super friendly. So I think I'll do pretty good there. But my biggest thing was definitely... My biggest concern was what you said about not always having that consistently good product and to have your connections and know that you've continually gotten awesome stuff from these people then-

Tommy Beringer:

Right.

Morgan Ciani:

Yeah, if you're willing to share, I am totally willing to accept.

Tommy Beringer:

Absolutely, and for everybody else listening, I actually give out my connections for my shipping agents and my sourcing agents on the previous podcast. I believe it's either episode 12 or 11. Sorry, I can't remember. But one of those episodes has... I give you guys the emails and the websites to all the people I deal with regarding sourcing for products and for my shipping. So you guys, I have vetted these people for years. I've been using them for years. So if you guys want to try them out for your journey, go for it and I'm going to give all that information to Morgan too after we get off this podcast here.

Morgan Ciani:

All right. Well, thank you so much, Tommy.

Tommy Beringer:

Yeah. Absolutely, do you have any other questions for me?

Morgan Ciani:

No, I think that pretty much nails it. I mean, obviously, there's still a ton of other stuff that I know I have to look up. One of the big things was just the different guidelines between the two. But I know that dropped... Obviously, Amazon's got a little bit tougher. People say you have a little bit more freedom when it comes to the guidelines and everything that you have to follow when it comes to dropshipping, but there is an aspect of there's a lot of different intricacies to Shopify dropshipping and it's not just Shopify's guidelines. There's a bunch of other things you need to look into. But I haven't even had the chance to dive into that yet. And I know your dropshipping knowledge is a little bit limited. So we don't need to get into that. But for the most part, we really nailed everything.

Tommy Beringer:

Good.

Morgan Ciani:

It's always awesome talking to you. We always have great conversations. So I loved it and I appreciate it.

Tommy Beringer:

Absolutely, and I wish I could lend more info and knowledge on the dropshipping stuff, but I just told you what I know. And like I said, I have not done it. So I'm not knocking it at all. I just saw that FBA private label was a much better route for me to take and I took it and it's working well for me.

Morgan Ciani:

Yeah.

Tommy Beringer:

So and I know it's working well for a lot of other people. So like I said, I'm going to help you with whatever you need, Morgan.

Morgan Ciani:

Thank you.

Tommy Beringer:

Just let me know.

Morgan Ciani:

Of course.

Tommy Beringer:

Yeah, and I'd love to hear, if you're going to go with the dropshipping, I want to hear your journey. I'm going to get you back on the podcast again if you're willing-

Morgan Ciani:

Definitely.

Tommy Beringer:

And we can talk about your dropshipping experience, whether it be good or bad. Maybe you come back and you're a multimillionaire. You quit MerchantWords. You know what I mean? I don't know. But I don't know what we would do without you.

Morgan Ciani:

I'm calling you from my yacht, I hope.

Tommy Beringer:

Yeah. Right, so but don't quit. I don't know what we would do without you.

Morgan Ciani:

Oh, no, don't worry. I'm not going anywhere anytime soon. But no, definitely, I was thinking of the same exact thing. Maybe in a few months, I can come back on and I can teach you a ton of stuff.

Tommy Beringer:

Great.

Morgan Ciani:

And that would be awesome to be able to give that back to you.

Tommy Beringer:

I would love it. I would love it. I'm all game. I love learning. I don't say that I know everything. If you think you know everything, you don't.

Morgan Ciani:

You don't.

Tommy Beringer:

You don't know nothing. I'll tell you that because-

Morgan Ciani:

You are so naive.

Tommy Beringer:

You need to keep learning. Always still keep learning all the time. Keep learning all the time guys.

Morgan Ciani:

100%.

Tommy Beringer:

Yes.

Morgan Ciani:

I couldn't agree with you more.

Tommy Beringer:

Perfect. Well, Morgan, thank you so much for coming on the Sell. Rank. Win. Podcast. It was a pleasure speaking to you and I'd love to have you on again once you become millionaire from dropshipping.

Morgan Ciani:

Thank you so much, Tommy. It's always a pleasure and I can't wait to be back.

Tommy Beringer:

All right, Morgan. It sounds good. Thanks.

Morgan Ciani:

Thanks, Tommy.

Tommy Beringer:

All right, bye. All right, thank you guys so much for listening. And if you got any value out of this podcast at all, please let us know at the place that you listened to it at, whether it be iTunes, Stitcher, whatever it is, give us some love. Give us an awesome review and let us know maybe some things you want us to talk about on the next podcast. Till next time guys. Stay awesome and be awesome.

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