We'll be starting with our EVC Co-President, Steffan Bankier MBA '19, but if you would like to be features in future spotlights, please email bankier@umich.edu with the following:
Courtney Dunn
3rd Party Seller on Amazon
How I became an entrepreneur
I consider myself an “accidental entrepreneur” because I did not plan it. My ultimate weakness is retail therapy and bargain hunting, and I tried my stint at “couponing” for a few years. I investigated various ways to sell my excess products. The original way was through eBay, but I wasn’t selling enough products that way. The newer option was to sell through Amazon, but there were more barriers to entry.
I reached out to a few people that I knew sold products on Amazon and decided to jump in feet first. For the first year, I sold strictly through “Retail Arbitrage” where I purchased items at retail stores and sold them at a higher price on Amazon. After the first year, I included purchasing products wholesale. My husband (then boyfriend) Jonathan thought I was crazy until he saw the checks from Amazon rolling in. We dated apart (between Houston and Pittsburgh) for two years and utilized the business to see each other twice per month.
5 Most Impactful Learnings
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Decide what kind of logistics/shipping method you want to do between FBA or MFN. “FBA” is Fulfillment by Amazon, where your products sit within Amazon warehouses (for a fee) and Amazon will ship your products to customers (for a fee). “MFN” is Merchant Fulfilled Network where you input the number of products you have of an item on the site, but you ship the item directly to the customer (and Amazon gets a lower fee). Storage of the product and shipping are on you instead of Amazon. You can also do both.
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Understands sales tax rules around the US (or hire a good CPA to do it). If you choose to sell products through Fulfillment by Amazon (FBA), you will be selling products in various states with different rules on nexus. Check out a site called “TaxJar” which does automated sales tax reporting and filing.
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Decide on whether you want to be a low margin high volume business, or a high margin, low volume business. Do you want to make $1 per item for 1000 items, or do you want to make $10 per item for 100 items? The revenue may appear to be the same, but there are a lot of logistical moving parts depending on the product.
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The Amazon approval process is complicated and everchanging. Before you sell one product on Amazon, you must be approved in the category (toys, food, health and beauty, shoes, clothing, home goods, automotive, books, etc). There were so many moving parts to get approved that I almost quit before I sold one product. I made friendships with other 3rd party sellers on Amazon during this time to make a united effort, but we found that just because one of us got approved didn’t mean the others would. This area takes a lot of patience.
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Get ready for product restrictions, potential complaints from customers and Amazon rules to change. I was extremely hesitant to invest in purchasing thousands of one product in one month because of potential product restrictions. If an item gets extremely low rankings or complaints from customers, Amazon can ban a seller from selling an item, which can also get a seller eventually banned from selling items. This goes in line with their “customer obsession”. Because of this, I ensured that I broadened the types of products I sold.
Reach out to me if you’re interested in… retail, ecommerce, or considering launching an Amazon business (it is rewarding)!