For many people, their foray into Amazon selling begins as a gig they do on the side. In fact “side hustle” has become a term du jour which you’ll hear thrown around on every entrepreneurial podcast, video and blog post.
It makes sense – having an income source on the side should help you to grow your wealth and spread your risk as far as income streams go. It’s also a great way for those who are new to business or who don’t want to give up the paycheck from their regular job to venture into the world of business ownership.
Clearly, from the successes many others have had with FBA, it certainly can be worth it as a side hustle, but what makes it so? What are the characteristics of a “good” side hustle? Let’s take a look:
What makes a good “side hustle?”
One of the clear advantages of a side hustle is that you get to diversify in terms of how you make your money. For most people entering FBA, an ideal scenario would be to build up to making more on the side hustle than their regular salary. It’s about creating your own security, rather than relying solely on a paycheck from an employer.
So, what makes a “good” side hustle? We’ve looked around at various gigs and found a few characteristics that stand out:
- The business owner can comfortably run the business outside of their regular job. For example, you can’t be required to be stuck on the phone or in front of a screen during work hours for your regular job.
- The money made is worth your time. There are a lot of suggestions out there for “side hustles” which sound more like drudgery (for example, averaging $6 per hour doing internet searches. You’ll usually find suggestions like this in articles entitled “75 Side Hustles” or similar…).
- You actually own the hustle. This really follows on from that last point; examples like that one don’t so much belong on lists for side hustles as for “second jobs.” You’re still relying on someone else’s business to make the cash.
- You are solving a problem or serving a genuine need that others have. Chris Guillebeau talks about this in his excellent “Side Hustle School” podcast series: “There are lots of reasons why something doesn’t take off, but a big one is that the project isn’t truly focused on someone else’s needs. You always have to think, “What’s in it for them?” and build your project around that answer.”
- The risk involved is commensurate with the appetite of the hustler. For example, you shouldn’t have to sink your entire savings into a new side hustle if you’re not comfortable doing so. The flipside is that if it’s low barrier to entry (like FBA), there tends to be a lot of competition and you need to work hard to get noticed and make a profit.
- You enjoy what you’re doing. This isn’t a “must have” for success, but it definitely makes doing what needs to be done more pleasant. There is definitely a theme of people finding success when they do something they enjoy.
This list does not claim to be exhaustive, we’re sure there are more suggestions you can add, but this is just what we’ve come up with from observation.
Is FBA worth it?
Selling through FBA can answer all of the points in the last section, although, of course not everyone who tries FBA is successful. Success comes from a combination of the right product, price, placement and promotion. Essentially, the “4 P’s” of marketing:
Product – You need a good grasp of what makes your product unique and what demand or problem it meets for customers.
Price – The price of your product always comes into the mix on a channel like Amazon which is full of competition. Price is also one of the elements which helps you win the buy box.
Placement – Where do you place your product in order to engage customers? Many successful FBA sellers will also use channels such as their own website and social media to sell their product.
Promotion – It’s unlikely your products will be found on Amazon without some promotion. Successful sellers use various promotional methods to boost their visibility. True, Amazon gives you the advantage of a pre-built large audience, but you need to carve out your niche within there and stand out from competition.
If you can meet all of these factors well, you should be able to do well on FBA, but to really determine if it’s worth it or not, you need to measure the pros, cons and your expectations of what an FBA “side hustle” should look like for you:
Here are the pros we consider for taking up FBA selling as a side hustle:
- Low barrier to entry. You can start out with a relatively small investment to get going.
- Amazon takes care of your entire fulfillment process, including shipping and returns.
- You can take advantage of Amazon’s cheaper bulk shipping rates.
- Your products are Prime eligible, attractive to the many Prime customers.
- You can use FBA to fulfill sales from other channels.
- Being Prime eligible helps to boost your chances of winning the buy box.
- You get access to Amazon’s huge platform of customers.
- You own the business and can potentially make some serious cash.
Here are some cons of FBA as a side hustle:
- You still need to organize inventory, suppliers and getting stock to Amazon.
- Sometimes, if you have the exact same product as other sellers, your product may be co-mingled in bins in the warehouse. There have been reports of lower quality or counterfeit products from other sellers being mixed in, causing complaints for legitimate sellers.
- When you have distance from your inventory, it can be easy to lose track of it, leading to stock outs or stale inventory.
- Finding the right products to sell usually takes a lot of research and work.
- Finding reliable suppliers can be hard work.
- You need to stay on top of fees. There are all sorts of fees charged by Amazon and you need to familiarize yourself with them.
- On Amazon, you’re a small fish in a big pond. You need to work to get found and even then, if you’re in a high-competition category, you may not be able to keep up as a small seller.
Whether any venture is “worth it” or not is going to come down to your own personal preferences around time spent and return made on your investment. How much work do you want to put into your side hustle? What kind of return do you expect, and how quickly?
An advantage of FBA is that it’s relatively low risk compared to some other “side hustle” options (working the stock market, for example), but the returns tend to be lower. You need to strike a balance between being competitively priced and having enough margin to make it worth your time.
The flipside of this is that it takes work! This is especially true when you are setting up or when you are scouting products to expand your current line. Many FBA sellers are burning several hours each day after work getting themselves set up, although this tends to drop right back once they have products and a system in place with FBA and for their business activities.
We asked a few FBA sellers how long they spend on their business each week. We got a range of between 10 and 35 hours for most – often anyone with more had reached a point where their FBA business was now their full-time job. Those at the low end tended to have established businesses which chugged along for them. You need to account for factors such as: setting up marketing initiatives, managing social media, dealing with your website or any other channels, researching products and suppliers, negotiating over products, testing new products, dealing with aging stock, monitoring your vital business numbers and assessing your competition.
As for money, of the successful sellers, some people make a profit in their first month while others wait a few months to see things take off, accompanied by hours of tweaking listings and trying marketing strategies.
In terms of initial investments on stock, the average amount spent fell between $500 and $2000.
What are your own, personal expectations for an FBA side hustle? What are your goals for the business? Again, whether it is worth it or not will depend upon your personal preferences – some people are happy to cruise along making an extra $2000 per month, while others have much higher expectations. This is all assuming you’ve picked the right products to give yourself that chance to succeed on FBA, of course!
Is FBA worth it as a side hustle? Well yes and no. The answer is subjective, depending on what your own expectations are for a side hustle.
FBA is definitely not an easy path to “get rich quick.” It requires commitment of time and resources to get going successfully. You also need to be savvy about the products you choose to sell and ensure you’re going for those which are in-demand, but not already facing high competition.
If your idea of a side hustle is something that takes up no more than an hour or two of your day, then this is probably not for you, not if you want good results.