Home-Based EBiz: The Unvarnished Truth
A successful business owner always researches what TYPE of business model is the most profitable with the least investment in time and money, and builds a business accordingly. That’s no big revelation; it’s simple common sense.
But common sense seems to fly out the window when people decide to start a business online.
Let’s look at the UNVARNISHED TRUTH about this business, no punches pulled.
If you make the HUGE mistake of listening to the Ebiz Marketers, they’ll have you start an Amazon FBA business using retail arbitrage while also drop shipping from AliExpress and cross-listing your products on eBay, and then start a web site to draw traffic through pay per click advertising to your Amazon and eBay listings that also carries affiliate products and info while building up to private labeling products you import directly from China.
Over time, this utterly counter-productive insanity will cost you tens of thousands of dollars. But they’ll tell you it’s okay to put tens of thousands on credit cards or refinance your house because you’ll make all that money back in just a few months.
Except you won’t. You’ll NEVER make any money that way. The Marketers don’t care. THEY got paid.
Let’s break this down into what works and what doesn’t in the REAL world, and WHY.
AMAZON is a HORRIBLE business model for small business. The profit margins are miserable because you compete against wholesale companies and manufacturers. The rules change on an almost daily basis, so you never know when you’re going to get your listings blocked for reasons you don’t understand. Amazon routinely blocks entire product lines and brand names for their own reasons, and you get stuck with a ton of stuff you can’t sell. If by chance you find something that sells well, Amazon’s algorithm will notice that IMMEDIATELY, and they’ll take over the niche THEMSELVES, cutting you out of the loop.
The point is that Amazon is GREAT for BIG business, but not small business. Big business can live on miniscule profit margins all day because they live on HIGH VOLUME and LOW MARGINS. Small business lives on LOW VOLUME and HIGH MARGINS, and Amazon’s profit margins are far too small.
RETAIL ARBITRAGE is not a real thing. It was made up by junk marketers a few years ago. If you think it’s a good idea to waste all your time, gas, and energy running around to retail stores all week long looking for individual bargain products that you then have to package and ship to Amazon to hopefully get resold on FBA for an artificially jacked-up price (which is cheating your own customers) before Amazon figures you out and suspends your account, then retail arbitrage is for you. If you’re smarter than that, it isn’t.
Arbitrage is a term that refers to COMMODITIES, not retail product. Gold is a commodity. Grain, precious metals, electricity, oil, beef, and natural gas are all commodities.
An Easy Bake Oven that you have to chase all over town to find on sale and then overcharge for on Amazon is NOT a commodity.
EBiz Marketers talk about “DROP SHIPPING” like it’s some kind of unique business system. It isn’t. It’s nothing more than a product delivery method that’s useful when you start out, because you won’t have inventory costs.
However, using AliExpress or Oberlo (which is just AliExpress dressed up for Halloween) for drop shipping is a huge mistake. You’re dealing with drop shippers who CLAIM to be in China, but there’s no way to be sure of that. You’re running a serious risk that those products won’t be delivered to your customers at all, and if they are they can easily be completely different than what was described. There’s no legal recourse for you in China, so if you get screwed, you stay screwed. You’re also dealing with delivery times that can range from 3 weeks to 2 MONTHS or more. If your goal is to piss off your customers and ruin your reputation, this is a good idea. If not, it isn’t. Not ever.
Cross-listing your Amazon products on eBay is just plain silly. eBay has been encouraging wholesale companies to sell on eBay under assumed seller names since 2009, and that level of price-driven competition leaves no profit margins there either.
Starting a web site to drive traffic to Amazon and/or eBay through paid ads or otherwise is just as ridiculous as everything else we just discussed. First, search engine and social media-generated traffic doesn’t translate well to Amazon and eBay for reasons we’ll discuss later in this Workshop. Second, you should NEVER pay for advertising in this business. It’s an utter waste of money. We have a saying here: “People who pay for online advertising are people who don’t know how to market online”. Natural search engine ranking is much more powerful, and we’ll talk about that later in this Workshop as well.
Placing affiliate products on a web site will hurt that site and your business by messing up your Search Engine Optimization. Again, more on that later. Affiliate marketing is also a bad idea because you have to ALL the same work to market an Affiliate site as you would to market a site where you sell the products YOURSELF. As an affiliate, you get a small commission. As an actual product site owner, you keep ALL the profits. For exactly the same amount of work.
Small commission versus full profits. Not hard to figure out.
Private labeling is yet another Ebiz Marketer gimmick. You have to look at this as a BUSINESSPERSON. Companies spend tens of millions of dollars to create BRANDS that are recognized by consumers. Why? Because recognized brands are trusted more and sell much better. What could possibly be the point of spending all the money it takes to grab generic junk from China and slapping an unknown name on it?
That’s the OPPOSITE of branding, and again, it’s just another gimmick that sounds good but doesn’t work.
AND THEN they all talk about importing from China. REALLY? I sent several of my employees to Guangzhou Province in China a while back to explore this idea. Yes, you can get stuff for very low prices when you’re IN China. It’s getting them back to YOUR country that’s expensive.
If you’re going to do that, you have to GO to China. Then, you have to buy in HUGE quantities to get those low prices, so bring a truckload of money. You’ll have to hire an Agent in China to look after your interests. Then it’ll take two or three months to have your products made. Then you pay for ocean shipping because you have to buy in truckload quantities to get those low prices.
When it reaches your Port of Entry in the US, for example, you have to consult the US Harmonized Tariff Schedule to see how much Import Tax you’re going to pay. Then there are Customs fees. Then you have to hire a freight company to transport your stuff to whatever warehouse you’re going to pay for to KEEP your stuff in.
Importing from China sounds good when the Ebiz Marketers TALK about it, but they leave a LOT of stuff OUT of that conversation. Doing this is about as useful as tying wings to your dog. You can do that all day long, but it’ll never fly.
The only thing that DOES make sense is building your own web site, but NOT using paid ads, affiliate programs and sending traffic to the flea markets like eBay and Amazon.
Your own website, marketed properly and selling physical products directly to your customers, is and always has been the most profitable way to make money online. So that’s what we’ll be talking about here.
I COULD teach ALL of that other stuff. I DO know how to do it. But I DON’T do it, because it’s all a waste of time and money and NONE of it is good business practice. It makes money for the MARKETERS, not for YOU.
If you want to learn how this business REALLY works, check out.