Transcription
This is Dan, a top 1% Amazon reseller who did $12 million in sales last year and is on track to double that this year. It all started with a YouTube video.
A little bored of my job, looking for other ways to make money, so I just typed in "Hustle ideas" into YouTube. And now, 6 years later, Dan has gone from being a normal real estate agent to a multi-millionaire. But did he just get lucky?
"Pandemic happened. Me and my friend, we each, you know, we each netted probably $100 to $150,000 a month those 3 or 4 months in a row."
This video, I'm going to find out this secret behind his multi-million dollar Amazon business. "Uh, last year we did about 12 to 13 million in sales, and this year, um, we're on pace to exceed $20 million in sales."
So, how does this business actually work? "Great question. So, it's very simple. So, we're buying wholesale from brands directly or distributors of those brands. We're buying at wholesale or distribution tier pricing. In essence, it's buying low, selling high. We're listing on Amazon. Amazon takes their cut, then we make the difference, which is our profit."
"So, this is like the main auction area, basically. I have an overall warehouse manager, and then I have probably five, six, seven warehouse associates. What they'll do typically is unbox the stuff, label the stuff, rebox it, re-palletize it, and then the stuff goes out the door. We will then, uh, wrap the pallets with this pallet wrapper machine."
"How much did this cost? I'm curious." "Uh, that was $17,000 or so." "Wow." "The real savings is time. So, like, if every pallet we make saves a few minutes of time, um, that time starts adding up, and I think the ROI on something like this will be like 1 to 2 years."
"So, here's the outbound section. So, all this stuff is waiting for, um, our freight carriers to come pick up and then bring to Amazon, um, warehouses."
"How many, how many packages outbound today on average?" "I would say we're probably producing like 6 to 8 pallets of stuff on average. These are like, only, I don't know, 100 products per pallet. But okay, other times the product is like really small, and it's 10,000 units on a pallet."
"So, so you said you, you reinvest everything back into the business. Do you pay yourself at all?" "I do pay myself a salary. I just started that 2 or 3 years ago, and, uh, that's pretty much what I used to live on. Like, I just pay myself enough to take care of all my monthly bills. But, um, everything else, I'm just leaving in the business and not taking it out."
"Yeah, so in terms of what I pay myself, you have to come up with a reasonable number for the IRS. As there are ways to manipulate that, pay yourself not enough or pay yourself too much. So, I just chose like a nice, healthy number, $100K a year. Like, felt, felt right. I get a payday and a paycheck just like everyone else that works here, which is, is nice. Um, but then that's immediately taken out for, uh, my mortgage and, and credit card bills and all that stuff. I really don't use much of my money for clothing or luxury goods at all. Um, I don't see any Gucci or, yeah, yeah. I, I, uh, I shop sales. I get really excited by a clearance sale. Um, which I guess makes me a good Amazon seller. I love a good deal on anything. So, these shoes, I think I bought them for like $30 or $40 bucks. You know, the whole get-up is, uh, $100 bucks, probably. So, um, but it's nice to know I could buy some designer stuff if I want to."
"This is where those shipments come in and out of. We have two loading docks. So, throughout the day, trucks are backing in, unloading products, and then other trucks come in to pick up our finished products. So, and then over here, we have, this is kind of like the inbound queue of products. So, it comes in, it, it sits in this holding area, um, ready to get processed when the time comes."
"How quick are checking times?" "It's particularly busy right now, so this stuff might be backed up a week before it actually hits, like, the production tables. But typically, it's just a day or two, or even same day."
"A lot of the stuff we buy, we don't send it all to Amazon immediately. We will store some of it. Sometimes, to get the best pricing on products, we have to buy like 6 months or a year of stuff. In those cases, we'll hold most of it here and then feed it in, like, a month at a time of stock."
So, with this one Amazon business, Dan was able to fund his other businesses and investments. "I have kind of a related Amazon business. Uh, I have a prep center. So, I actually prep other, uh, Amazon sellers' products. So, they'll send me stuff to my other warehouse. I will label and prep the items to Amazon standards, um, charge a per-unit fee for that, and then forward it onto Amazon for them. So."
"And how much revenue did that business generate?" "So, last year was our first year of operation. I think we did about $3 or $400,000 of revenue, and then profit was, um, I don't know, maybe 20% of that."
"On top of that, I, uh, had some real estate investments. I, I bought most of the properties with Amazon money. Actually, my warehouse, um, I bought for $1.575 million, and, um, I'm actually about to lease that out for a really nice number. I'm probably going to net $10,000 a month, um, passively, which is pretty awesome. Then they have an option to purchase it at 2.3. So, I'm going to have a nice gain on that, and then I'm going to take that money and parlay it into an even bigger property and just keep that train rolling. Um, then I've got, you know, my primary residence I live in, I've got an investment condo I used to live in, and I have a five-family property in New Jersey."
"You want to introduce us to the team? Kind of what's going on in the office?" "Yeah, this is my front office team. So, I've got Tyler here. Tyler is a buyer for me. He will restock the products that need restocking from my existing suppliers. Will also be forming new relationships with new suppliers, um, contacting those, trying to get wholesale accounts with distributors and brands. And then he's also monitoring the stock levels we have in our warehouse. If we're running low on our Amazon stock, he will create a shipment to replenish stuff we have here to feed into Amazon to, to remain in stock. So."
"Uh, Nick has the same role. He is a buyer as well. Nick is, uh, still in college. He's going to be going into his senior year. So, he started in my warehouse, just packing products, and told me he was, um, kind of bored of that and thinks he could do more. So, I gave him a shot, um, reaching out to some suppliers, and, um, yeah, he's done amazingly well. So, that goes to show you, you know, age definitely shouldn't, um, be a roadblock for anyone trying to do this. He's making like, you know, adult money in college still. So, you know."
"And then we've got Noah. Um, Noah runs basically everything off Amazon. A lot of the products I sell, they can sell on other channels too. So, brands will ask, 'Where do you sell?' And we say, 'Amazon,' but we also have the ability to say, 'eBay and Walmart.' We also sell in Amazon Canada, Shopify, even. And, um, that helps us win more accounts."
"How much are you spending to run an operation like this?" "So, the overhead at this point is pretty real, as you can imagine. We've got this, um, office/warehouse hybrid. This is about $15,000 a month, and my total payroll cost is about $50 to $60,000 a month. So, we're looking at almost a million just for rent and payroll. You know, I've got insurance for this warehouse, I've got utilities, I've got software. There's, there's a whole slew of things, but I'd say overall, my overheads probably about a million a year."
"So, there was definitely a leap I had to make in terms of being able to support that mentally, not being stressed about it all the time. You get accustomed to anything, so you just keep going up one step at a time, and then your comfort zone expands, and then you just take that next leap. And then, yeah."
"So, you're going to do $20 million, right around in sales this year. Obviously, that didn't happen overnight. Can you walk me through the whole Amazon journey?"
"I started in 2018. I was basically arbitraging from stores like Target or Modell Sporting Goods, like stuff like that. And then I moved to online arbitrage, which I thought was way easier than just hunting stuff in stores. I was shopping sales online. Part of the products I was, was selling were, were sneakers. I'd go on websites looking for discounts and then applying discount codes and cashback and stuff like that. Um, so I was buying and reselling shoes on, on Amazon, um, and even StockX as well. Yeah."
"Then the next year, I, I transitioned to wholesale. And then, uh, the pandemic happened. And, uh, there's one really game-changing stage, explosive growth, where I went from $1 million in sales to $4 million in sales, and really, like, grew up into, like, a more legit wholesale business."
"So, this product early in the pandemic just went absolutely insane. So, um, and, and this is another example why I don't believe in competition in this business. So, so a good friend of mine, he sells alongside me. We were sharing a lot of the same product leads, selling a lot of the same products. And he noticed one day on the computer, he stumbled upon this product and he said, 'Dan, I think this is a mistake.' But like, the Keepa chart, which is a software to show, you know, how fast something's selling. He's like, 'This is the number one product in the entire category.' He's like, 'It's probably a glitch.' We investigated further, connected the dots, and determined, like, yeah, maybe these are selling out everywhere and like people want these as like an emergency supply due to the early stages of the pandemic when no one knew what the heck was going on."
"You know, we were looking all over the place where we could get this stuff, and we found like a local restaurant depot, and fortunately, they had like a whole pallet of the stuff. And there were a few different, you know, variations of this product that were all just going crazy. So, we decided to buy a pallet just to test out. Whole pallet of like 2,000 units across all the SKUs sold out within like 30 minutes to an hour."
"K." "Yeah." "It was." "You're kidding." "2,000 units in 30 minutes?" "Yeah, yeah." "So, the margin on it was insane. We were buying this product for between $2 and $3, I think about $2.50 on average, and we were selling it for $20 to $30."
"Jeez." "Each." "Yeah." "And, uh, yeah, so we were making like $10 to $15 a unit, and we just could not sell it fast enough. We couldn't get our hands on enough of it. So, the next logical step, we looked at every Restaurant Depot in the entire, like, Northeast region, like New York City area, all the way up to Massachusetts. We took my Jeep and we filled it up, like, store after store after store, and tried to get it. There was actually a bakery across the street, and we partnered with this crazy old guy, um, that was really tough to deal with and do business with, but he's like, 'Yeah, I can get you, uh, I can get you pallets of this stuff. He's like, 'I want cash only, though.' So, we were going to the bank, withdrawing cash, we'd have like $20, $30,000 in cash, handing it to the guy, and then we'd be dragging pallets of yeast across, like, the road into our warehouse. And we sold, um, probably like 10 to 20,000 per month of those, for like three or four months. Um, and we could have sold, you know, 20 times the amount we sold. We, we were just limited how much we can get. But we, we got creative as possible, like every possible avenue to get as much of this as we could."
"Me and my friend, we each, you know, we each netted probably $100 to $150,000 a month those three or four months in a row. And that took us from making, you know, $10 to $20,000 doing like a pretty nice business in arbitrage to really skyrocketing. And that was the moment for me where I was like, this is truly insane, and I saw the power of a, of a fast-selling product like that. This was phase two. We call it like the yeast rush, um, cuz it really did feel like a gold rush. You know?"
"Yeast rush. Funny." "Yeah. And those were actually, like, the funnest memories I have of this whole journey. Like, you know, we were, we were just blasting music in the warehouse, laying out like thousands of these bricks of yeast, and like almost dancing, labeling. Like, it was, it was crazy."
However, Dan's journey wasn't always this smooth. In 2021, a tragedy almost ended his entire business. "I was probably about a year into selling, picking up some momentum, and I had a few of these intellectual property complaints. And I didn't even know what they were. And as a new seller, I didn't really understand the importance of addressing any, you know, account health violations. So, I just let two or three of them pile up. And, uh, what that is, is a brand is saying that you're violating their trademark or selling counterfeit products. You aren't really, but that's their, their tool to kick you off the listing if they don't want you selling it. Uh, next thing you know, my, my entire account goes down, my funds are frozen. And then I start the appeal process. And I, I hired three or four different consultants at a cost of nearly $10,000 to try and get the account back. I used one after the other after the other. My account was down for 3 or 4 months, and, uh, it was a very stressful time, um, for me, as you can imagine. And, um, not only did I not get the account back in 3 months, they, they sent me all of my inventory that I had at Amazon back to my warehouse, because if you don't resolve it within, um, 30 days, they'll send you the, your own inventory back. And, so I had a very small warehouse at the time, but it was piled up to the ceiling with boxes of all my stuff. And Amazon had broken half the stuff, cuz they're putting a bunch of glass or, you know, fragile stuff, packing it very haphazardly. So, I took a loss there in terms of like my own inventory. Um, you have to pay removal order fees to Amazon just for, for them to send your own stuff back. This was when I had, you know, a much smaller amount of capital, and I was even worried about, you know, paying, paying my, my bills and like, what am I going to do here? So, um, that was a hard lesson learned for me. And, uh, I think at the time, it was like $30 to $40,000, um, that was frozen, and then I had probably another $40 to $50,000 in inventory that wasn't selling, it was sitting there, and like I said, it was sent back to me. So, uh, oh yeah, it was just waiting day after day after day. And you would finally see a response in your email and click it and like, just like be praying that it, it was good news. And I think I went four or five times of waiting, you know, almost two weeks for them to say, 'We don't have enough information to reactivate your account at this time.' And I would just be pulling my hair out, looking up at the sky. Why?"
"I still remember when I finally got the email. I was actually on a trip in, in Mexico with a couple friends, and we were just on a hike, and then at the end, I, I got this email as when I got reception. And it said my account had been reactivated. And I, like, dropped to my knees. I'm, I'm pretty sure I cried. Yeah, I definitely cried. Like, it was, it was that emotional. So, um, when I got back, my Amazon account, I vowed to never be in that position again and really vigilantly address account health issues. And, uh, that's something, you know, uh, I'll stress for everyone and, and be able to teach how to, um, manage all that stuff and, and be on top of it. But, um, that is a real risk. Um, you're relying on one platform to sell all your products, and Amazon ultimately has control at the end of the day. There are other branded products, they're not your own brands, and it's a, and it's a selling channel that's not your own selling channel. So, um, with that comes some additional risk, but I, I believe the reward, uh, greatly outweighs the risk. There's nothing I can think of with better risk-adjusted returns on your money. If you view your investment in inventory as like an investment and compare that with the stock market or real estate, you know, you just simply can't get returns with this low risk, um, this consistently, um, anywhere else."
"To go into more detail about, um, you know, how exactly I put that newfound yeast money to work. So, it's like drug money. So, it gave me a lot more buying power and a lot more leverage with a larger bankroll. We started pushing towards larger suppliers where we either had the accounts but we couldn't afford, like, the top price tier. So, we started entering that game. We can buy a whole truckload of product, or, or, or we can buy 10,000 units of the SKU. What's the best price you can give me? And often that price is lower than we were able to do before. So, so was wielding that money like, like a weapon. You know?"
"The cool thing is, once you get into, like, another level of income, that money compounds, and then it's, it's kind of just go like exponential. Um, I guess I'll give you, like, an anecdote about that. Like, going from 0 to 1 million, like the ROI on your $0 is essentially infinite. Like, you need, you, you almost need to, like, work for your first million. But then going from one to 2 million, you could invest that million and get 100% ROI, and then you have two. But now go from 2 to 3 million, you invest that two, you only need a 50% return on your money to get to 3 million. Then you invest that 3 million, you only need a 33% return on your money to get four. And that percentage goes down and down and down and down and down. So, like, that's why truly, it is the first million is the hardest. And then getting from 10 million to 11 is very easy. It's very easy to make a million dollars when you already have 10, because you just need a 10% return on your money. There's a million ways to do that. Imagine you have $100 million to make a million is a joke at that point. Um, so it's kind of the same with inventory. It's like you're stacking inventory, um, and then you need a lower and lower amount of return on that, on that, on your bankroll to make substantial amounts of money, or, or you can keep those numbers high and really make multi-millions a year, which is, you know, what I'm trying to do."
"Ask the question. So, for someone who wants to get into wholesale, what do they need? Could anyone just get started, or what are the requirements?"
"Yeah, pretty much anyone can get started. Need an Amazon Professional Selling Account, $40 a month. And then you need, well, you don't even need to form an LLC, actually. You could just do it under your personal name to start. But if you want to do it properly and see yourself doing this as a real business, form an LLC, get a business bank account. And once you have your LLC and your selling account, you're off to the races. Uh, there are, there are a few softwares you'd be in for a few hundred bucks a month that the whole software stack you need. And then the last piece of it is just, you know, your own money, or even borrowed money from friends or family. Um, I'd say at a minimum, a few thousand. That will get you in the door for some smaller brands and wholesalers to put in your first purchase order and start selling products on Amazon. And yeah, you, you can certainly start with more. That's, that's always going to help."
"I want to be realistic here because, um, there are a lot of people that aren't. That say, you know, with $100, you can, you know, replace your job. And it's, it's just simply not true. So, on average, um, you're going to make, you know, anywhere from 10 to 20% margin on the products you sell. So, as an example, let's say you start with $5,000. You buy everything for $5, sell it for $10. So, let's say you have $10,000 of sales. On that $5,000, of that $10,000 of sales, you're looking at $1 to $2,000 in profit. And it's probably going to take you about 60 to 90 days for everything to sell through your first time. So, with a bankroll of $5,000, $1 to $2,000 of profit every few months. The fastest way to create a significant income is to take every penny of that profit that you can reinvest it into more inventory. So, let's say your $5,000 turns into $7,000. Then you do a bigger order with your $7,000, and then that seven becomes 10. So, I'd say anything below like $50 to $100, your goal is ramping up as fast as possible, or, or taking money from your job or, or another side hustle and like shoveling whatever you make from that into, like, just growing your bankroll as fast as possible."
"If you made it this far in the video, first of all, thank you. I got something for you though. We've partnered up with Dan and are having him open up five spots for people to work one-on-one with him and learn all of the secrets behind his $15 million business. So, if you think you'd be a good fit, you're interested in hearing more, what I've done is I've dropped a link in the description of this video for you to schedule a time with our team, totally free, just to see if it's a good fit. So, again, go into the description, click the first link, and pick a time that works well for you, and I'll see you on there. Thanks again for watching. I'll talk to you."