“Gig Busting” is a series about the potential to level up a particular gig to full-time self-employment. Since I have extensive personal experience with this one, I broke it into two parts to keep your eyes from glazing over. Here we go with Part 2…
SOURCING: I like shopping online for deals but don’t actually have a particularly materialistic streak. So you could say that the deal-hunting part was a sort of hobby, something I did for fun in the background during commercial breaks while watching TV, that sort of thing. I started out setting alerts over at Slickdeals for a few stores with generous rewards and rebates programs I understood and liked to work – Kohl’s, Staples, Office Depot, Best Buy. I got a feel for sales patterns. I learned to go for the items that were hugely popular and had limits, because they’d turn over fast and I could reuse the money faster. If you don’t enjoy shopping online for bargains, this side hustle sucks big time. Don’t even consider it. But if you enjoy the thrill of the hunt, it’s fun! Anyway, call it 3 lazy hours a week, or 150 hours a year.
SHIPPING: UPS and FedEx are going to be at your house almost every day. You will know the drivers’ names, and you might end up hiring one of them to move you 2100 miles across the country in a rented U-Haul because a flirtation happened…*looks around innocently*. Ahem, anyway, you will have trouble keeping track of what you ordered and if everything arrived that was supposed to, especially in the infamous cluster-f of Q4, aka the Christmas rush. From 2014-2019, I had a house with a large front living room that I never used, which I semi-jokingly referred to as “the warehouse”. I received, unpacked, labelled, prepped, repacked and shipped from there. My mother retired and mastered the labelling, prepping and repacking. I “paid” her with lots of steak dinners and trips covered by the miles/points earned from all of her work. Fair, right? We both thought so! Depending on the time of year, this took me anywhere from 3 hours a week to 3 hours a day. Let’s call it 300 hours a year, those done by my Warehouse Supervisor, aka Mom.
CASH FLOW: Expect at least a month to pass between spending the money on the product and getting it back from the Amazon sale, a week or two longer if your FBA account isn’t a professional seller account (Amazon holds the money longer), which has a fee that hits the break even point when you sell 40 items a month. So while you might be able to float a large chunk of your cashflow on a credit card and get the proceeds from the sale back in time, you can’t count on it. And those interest rates will hit your profit margins more than you realize at this point. I feel a math lesson coming on…meh, I’ll spare you that one. It’ll make your head hurt. More interesting numbers are coming as it is!
PROFIT: At the the height of my selling, my gross profits from doing this part-time ran $13-16K a year, and that does not include travel points and cash back and credit card rewards earned. That was only about a 12-13% profit margin, which isn’t great. Bear in mind Amazon takes a straight-up 15% on most categories, plus their fulfillment fees, so they were always making more than me. Anyway I was happy enough because of all those travel perks that I was really doing it for, which were worth the same again. So for about 4 years, this was an AWESOME side gig!
AVERAGE EARNINGS 2015-2017:
$16,000 / (150 hours shopping + 300 hours shipping) = $30-35 / hour
These numbers are net of product cost, but gross with regards to tax deductions like mileage, home office, etc.
All of these things happened over time and built up to the profits being squeezed so tight that I decided that the way I did business on Amazon, was no longer worth it. Some are more relevant to the hobby side of why I got involved in FBA selling, but if you’re small potatoes like me, points/cash back is very relevant. Still, for a quite a while, it was was a very part-time gig that took a few spare hours a week and made great money and travel points. So here’s what happened:
2019 EARNING: $4800 / (50 hours shopping + 300 hours shipping) = $14/hour
I don’t miss it at all, the way it is now. Amazon was a great company to deal with as a seller 2013-2016, but when they silently changed their policies behind the scenes on how to
screw over deal with third-party sellers – the whole reason they became the marketplace where you could find anything and everything – they became a company whose stock I’d rather hold in my IRA than whose warehouses I’d want to keep stock in. I stuck it out for the awesome miles and points until I started hemorrhaging money in “damages” that used to be protected. It ceased to be fun, and it ceased to be an income. I’d never consider scaling up to Gig Boss level with Amazon FBA regardless of how or what I sold simply because their underhanded ways of managing their policies with third-party sellers are too unpredictable for my tastes.
Having said all that, I haven’t deactivated my seller’s account – I downgraded to the free non-professional one. I have a Kindle Direct Publishing (KDP) account and a minimally used Merch by Amazon account (MBA) – one of those requires me to have a seller’s account. I’d keep it anyway because Amazon is a pretty cutting-edge company, and you never know what opportunities may arise that require a seller’s account. And getting an account in the future might not be so easy because, well…Amazon.