RMRB 35: Over $10k/month Selling Toys

Jake Davis

April 2, 2019

Jake spoke with Ryan about his Amazon FBA business in the toys & games niche. The business was created in created in January 2018 and is making $12k/month in net profit. The toys make perfect gifts for kids or even adults and the business requires minimal work from Ryan to maintain.

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Speaker 1:           What if you could cut through the noise in the online business world, and learn from someone who has built a real business? We verified the numbers, and combed through the PNL. This is not only a real business, but a real asset that people want to buy.

                                We’re going to pull the curtain back, and give you the insights this entrepreneur has discovered, that you can use to level up your knowledge, whether you’re looking to buy a business, or looking for inspiration to take your current business to the next level.

                                Hey, listeners. Welcome back to the Real Money Real Business podcast. This week, I spoke with Ryan about his Amazon FBA business, in the toys and games niche. The business sells three skews, and is making $12,000 every single month in net profit.

                                Ryan, thank you for coming on here today. How are you doing?

Ryan:                    I’m doing good. How about you?

Speaker 1:           I’m doing fantastic. There’s that storm that was blowing through here in the northeast US, and it turned out to be a no-big-deal, so I’m pretty happy about that.

Ryan:                    I’m in Chicago, so we’ve seen the snow.

Speaker 1:           Yeah.

Ryan:                    It’s cold, too.

Speaker 1:           Yeah, we did get about a foot the other day, but it wasn’t three feet, like we were predicted, so …

Ryan:                    Oh, yeah. That’s good.

Speaker 1:           Well, I’m very happy and very excited to discuss this business with you, but before we dive into the questions that I have for you, I want to go ahead and run through a little quick summary of this business. Again, it was built in January of 2018, has a monthly revenue of $35,614.00, expenses of $23,133.00 to make for a net profit of $12,481.00, which is generated on a 10-month average.

                                Included in the sale of this business are three skews, Facebook page, and the trademark, which has been filed, and should be finalized in early 2019. Please note that an inventory is not normally included in the list price. Further details can be provided to active depositors.

                                Ryan, can you tell us a little bit about your background and building, and running online businesses?

Ryan:                    Yeah, so I’ve actually been what they call like a lifestyle entrepreneur, where I’m constantly learning, constantly just watching videos, taking courses, spending big money to try to get the information that the big guys have, the guys who are talking about all the money that they make. And buying course, after course, after course.

                                So I happen to follow up an Amazon FBA course with private label, so I ended up taking the course, and continued the process of watching video after video. And so, I initially had a product that I was working with, made a huge mistake that cost me a lot of money. But, learned from that mistake, learned what I did wrong, and launched my next product; which is honestly in a niche that just can expand beyond your imagination.

                                I ended up following up on this product, and started adding more variations to it, because I’d seen so much success on this product. So, I guess my background in running an online business is not necessarily too in-depth, but I will say that everything that I have done, I have done to the best of my ability, with this particular asin, and all the other asins that I have, as well.

Speaker 1:           Yeah. And you’ve clearly done well with this business, like you said, to the best of your ability, and things are going well, and … You look at the graph, you look at the numbers for this business, and things have really skirocketed in quarter four of 2018. Can you talk about what led to your success here?

Ryan:                    What I really think was the main point of my success is I took two niches that were very, very popular. I wouldn’t necessarily call them like “trendy,” like they’re going to fall off the face of the earth. I really to believe that both of these niches that I combined are going to be here for a long time.

                                But just combining these two niches, I realize that I have two times as many opportunities to be searched on Amazon for any particular keyword, which essentially gives me just about double the amount of traffic that a normal, more generic product can get.

                                So that’s basically one of the reasons why, and also, I feel like it’s a product that’s very, very, very like … It’s something that little girls, and even little boys want. They want a product like this, because it’s so fun to play with. And it’s a toy, you know? Quarter four toys fly off the shelves.

                                I actually ran out of stock, I think three, four times in Q4, because right as I was getting my items in to Amazon, they were being sold, so they were basically in like a pending state where they weren’t even listed as in stock, but people were still able to buy them.

                                So they were buying them, and if I would have had more initial money to be able to send more inventory, I would have never stocked down. Probably would have sold at least another … I’d say $40,000 to $60,000 worth of inventory pretty easily; because the days that I did run out of stock, not only did I lose sales on those days, but the days following after that you know …

                                Anybody who knows Amazon FBA, they understand that when you run out of stock your rankings drop, and everything so I wasn’t able to maintain rankings because of that. But I really feel the main point is the fact that I took two really, really solid niches, and I combined them into one product.

Speaker 1:           So you’ve been successful with that, so why have you decided to sell the business today?

Ryan:                    The reason why I’ve decided to sell this business, is because I actually had a couple of other projects that I’ve been working on before this, during this, and going forward that I want to go into afterwards. So there are other … different types of business, I guess you can say, that I want to get into, personally.

                                And then, I just had a bunch of medical bills that I had to pay off. I’d been out of work for six months. I got injured at work, actually, so the bills for that are piling up, and I just … I hate to let this go, I really do. But I guess the way I’m looking at it is because of all the experience and knowledge I’ve gained in my short time selling on Amazon, I truly believe that I can take the knowledge I have and the capital that I didn’t have initially, and launch new products.

                                And essentially, kind of repeat what I’ve done. Obviously, in a different niche completely. But, I really feel the knowledge I’ve gained, I can utilize the capital more than I can an item that’s already successfully selling.

Speaker 1:           I know you have this pending trademark that should be getting approved shortly. But are you registered with Amazon’s Brand Registry 1.0 in the meantime?

Ryan:                    Actually, I have not really looked into that. Maybe I should have. However, from what I understood, is you had to have a trademark to get registered. Correct me if I’m wrong, but I’m not really 100% sure how that works. I was under the assumption that you need a trademark to do brand registry, but like I said, I could be wrong.

Speaker 1:           The trademark is required for the Registry 2.0 program, which is-

Ryan:                    Okay.

Speaker 1:           Offers more protection for your brand. A lot of sellers have Registry 1.0 in the meantime, which is their old program, and now they’ve required a trademark for the new ones. But not a problem, not a big deal, and I know the trade work is pending, and then you plan to register with Brand Registry 2.0 when that comes.

Ryan:                    Correct.

Speaker 1:           So can you talk about how you have been found, and how you’ve grown this business? Are you running Amazon PPC ads, or is it all organic?

Ryan:                    My expertise is actually not really in PPC. Initially, when I was getting started with this, I had run PPC ads to increase sales to the point where I was actually … I was willing to take an initial loss, and that’s why you can see my initial few months the amount that I made was a lot lower than my current sales, because I knew that it took that momentum, and that push to get my sales volume up.

                                So like I said, I was willing to take that loss, but I never found a successful formula with PCC. But, I’m no expert, so I feel like somebody who is an expert can definitely utilize their knowledge and get this going, but personally, for me, I’ve never been able to break through with that.

                                A majority of my sales are organic now. Like I said, I feel like I have a product that’s pretty solid. One of my main keywords … It’s hard to tell because a lot of different keyword tools, they either overestimate, or underestimate, but I have a one-word keyword that is basically … It’s my product, but it’s like the most generic dummy-downed keyword possible, that you could possibly find my product for.

                                And I just checked yesterday. I was number three on page one for that keyword, and a lot of tools have told that there’s you know, million searches a month. But I find it hard to go by that, but I feel like most of my sales do come from the organic side.

                                And, I have in the past run some Facebook ads. Haven’t really found too much success with that, but you know, I’m willing to continue to try to experiment, to learn different ways. So I have not really even dove into the whole Facebook thing, too much.

                                I do have a small Facebook page, but I have not even really utilized it at all for any sort of advertising.

Speaker 1:           Do you have any other presence outside of Amazon? Do you have a website for the brand?

Ryan:                    I actually do not have a website. With the Amazon FBA business model, it’s more or less like you build it, and you kind of just let Amazon take all of that marketing side of it, and I didn’t really think it was beneficial to me. I mean, I could be wrong, but for me, personally, I just felt like the extra effort, for me, wasn’t worth it.

                                So I have not actually built a website for this particular brand, or any … And any outside like brand-building stuff, like Facebook. I mean, I do have a Facebook page, but that’s about it.

Speaker 1:           Can you walk me through your day-to-day for this business? How many hours per week are you putting in?

Ryan:                    Well, since I just launched six new products on this particular listing, initially there was the one asin that caused me to have a great amount of success. And so I figured I’d piggyback on that, having so many reviews … Over 300 reviews now.

                                I figured I would piggyback on that, and just throw a couple extra variations on it, you know, in different categories and stuff. Obviously, it’s the same product, but I figured I could just continue to rinse and repeat. So that is lately taking a little bit of time.

                                But on a normal day-to-day basis, if I weren’t doing any of that extra stuff, and trying to make the brand bigger, I would say maybe an hour or two a week, if that. Contacting my supplier, and … If somebody had more capital than me, honestly, they could probably spend three hours a month, and contact the supplier once, place a big order, send it all by boat, and just not even really have to worry about it.

                                You don’t necessarily even have to check your sales every day. And I don’t know if that should be included in the time spent, because it’s more like a hobby kind of thing, you know, checking your sales. I know every Amazon seller does it, at least when they initially start. They’re constantly checking their sales.

                                You get that exciting feeling every time you see more sales. But, as far as that, all I really do is contact my supplier now, place orders, and check my sales. I don’t really have too many issues. And a couple emails here and there, so I don’t really send out too many emails.

Speaker 1:           Hey, listeners. Do you want to find a business that is just right for you? Head on over to Empire Flippers and have a look at our marketplace, where you can see real businesses making real money, just like the one we’re looking at today.

                                In fact, don’t miss out. Head over now, share your email address, and we’ll send you hot, fresh, new listings of successful businesses every week to your inbox.

                                Now back to the interview.

                                What are some of the major opportunities for growth that you see for this business? What would you focus on if you were to keep it?

Ryan:                    Yeah, this actually something I’ve been thinking about a lot lately because my main issue is funding. I would say, if I had a lot of funding, I probably wouldn’t even be considering selling this, because I have a lot of other ideas I would like to go with this business.

                                But because I could really use the money right now … I’m kind of having to let that dream die, I guess you could say, or at least live through somebody else. But, what I would say is my particular item that has all these variations, currently there’s three that are listed on the listing, and six new ones that I just sent to Amazon.

                                A couple of those new ones that I already sent are actually already selling, and there are other products in my particular niche that I want to launch. But, again, like I said, it’s a capital thing, and I don’t have enough capital to launch them; because some of them are a little bit more expensive to launch.

                                But doing my research on Amazon, the keywords and everything. I know that these items will sell very well, and I actually have a couple of 3D drawings for some new items that I want to launch, that I’m willing to negotiate with a potential purchaser on.

                                But, honestly, like I have a ton of different ideas that I feel like I’ve cornered the market, at least in my particular niche, that I can utilize my email list to re-advertise. I believe there are 25,000 different emails that I can utilize to re-advertise a new product to potential buyers when I launch a new product.

                                So I definitely see a ton of availability for growth, but for me it’s just a capital thing right now.

Speaker 1:           Obviously, not having enough capital to purchase inventory, and stay in stock is a potential risk of doing Amazon FBA. Do you feel like there are any other potential risks associated with this business that a new owner should be aware of?

Ryan:                    Yeah. It’s funny when you mention that, because I believe I’ve jumped over a couple of those hurdles that somebody buying this business wouldn’t have to jump over. One of them being … I believe it was in March or April, my product actually got pulled off the shelves … Not pulled off the shelves, but my product got removed from being searched on Amazon because of the fact that my product had the word “adult” in it, because my product technically can be used by adults, and kids, and everybody, of any age.

                                But because I had the word “adult” in it, they took it away from being able to be searched, because they considered it an adult toy. And they don’t want people … They don’t want children searching Amazon for my product, and finding adult toys, and because their system automatically flagged it, and it wasn’t a manual take-down, they didn’t know any better, so then I had to contact them.

                                That was one hurdle that I did face that hopefully will not have to be faced again. And a couple other just basic hurdles. There’s always a potential … Amazon pulling any item, not just my item in particular, but any item for like a Hazmat review.

                                And mine actually literally just got pulled for a Hazmat review like two, three days ago. And within 24 hours I sent them the paperwork they asked for, and my listing was back live again. So just stuff like that, little hurdles that I guess an inexperienced seller may have bigger difficulties with than somebody experienced.

                                I’m willing to help out in the future if any issues arise, because I do have a lot of experience with these issues. But other than that, once Brand Registry 2.0 kicks in with the trademark, which should come around March-April, we’re hoping.

                                But, once you have that, you shouldn’t really have to worry too much about people jumping on the listing. And I really haven’t had much issues with that recently, at all. So, that’s a good thing. But honestly I just feel like the creativity to keep going, and keep pushing, and for me, it was the outside marketing that I struggled with.

                                So if somebody knows how to market, has enough money to kind of pay someone to do it for them, then I feel like that’s a huge advantage that they would have that for me was … a hurdle, I guess you could say.

Speaker 1:           What advice would you have for someone who wanted to get started with their own Amazon FBA business, given that you’ve done so well yourself?

Ryan:                    All I can say, honestly, I think my biggest piece of advice would be what I tell my own students of my own, because I actually created a course myself, where I teach how to sell on Amazon. So one of the biggest pieces of advice I give is to not jump into something too soon, and to combine two niches, just like I did.

                                I took two very popular niches, and I combined them into one product, and I doubled the amount of keywords that I had the ability to be searched for. So I think, honestly, that alone was … Besides the fact that I did have a graphic designer make me an awesome logo.

                                He did an awesome job. It was very eye-catching. He definitely targeted it towards my particular age group that would be using my product, so I feel like that’s also something very important. So combine two popular niches in your product. Don’t get so caught up with what everyone else is doing.

                                I think a lot of people struggle with this. Is they look at … Everyone else is finding particular keywords that are being searched for, and I know the motto is, “Find what someone else is doing, and do it better,” which there’s nothing wrong with.

                                But, I find that a lot of my success came from kind of thinking outside the box, and … You know. And I do believe that even if there’s not necessarily search volume for a particular keyword, if somebody’s good at marketing, you can kind of create search volume by doing your marketing well.

Speaker 1:           Yeah, absolutely. And like you were saying, you’ve kind of combined two niches and keywords here, and you’ve been able to dominate the space. I mean, really defining yourself is something that can help to set you apart from a lot of the other Amazon FBA sellers.

Ryan:                    Oh, absolutely.

Speaker 1:           Ryan, would you commit to a non-compete?

Ryan:                    I would be willing to commit to a non-compete. I would like to know exactly what particular details … because I am in two separate niches, like two very, very broad niches, obviously depends on how deep the non-compete goes. So yeah, definitely would be interested in talking about that.

                                Not 100% sure where I’m going forward with my Amazon business, but at the same time just to be up front. That would be something that, when I talk to a serious potential buyer about the exacts on that particular non-compete.

Speaker 1:           But you’re open to having that conversation, and agreeing to something.

Ryan:                    Oh, absolutely. I honestly feel that from the amount of capital I can gain from this sale, I have absolutely no problem going into another niche. But at the same time, like I said, because I am in two very broad niches, I would really like to kind of go over more specifics.

                                But I’m definitely open to conversation about it.

Speaker 1:           How much support are you willing to offer a new owner during the transition period?

Ryan:                    I guess question’s kind of hard to ask … because I really feel like if I’m giving so much of what I’ve … See, I feel like this isn’t just a business to me. It is something that I kind of started on my own, and just because I’m passing it off to somebody doesn’t necessarily mean like I don’t care about it anymore.

                                So even though I might say … for example I would be comfortable with like a 30-day … whether it be Skype of Facebook Chat, or you know, if they knew my phone number. However it is, I’d be comfortable with a 30-day opportunity for them to ask any questions, get them started, get them going. Show them what I’ve done, get them in contact with my supplier, my graphic designer.

                                Show them where I wanted the brand to go, and kind of give them a little bit of advice in all that, on how they can go about getting the brand to that level. But, you know, I’m not saying three months down the road if there’s a question it’s going to be like, “Oh, the deal’s done. Go somewhere else.”

                                I’m a people person. I love people, and I’m definitely willing to kind of leave it as an open-end thing after that. But as far as your specific question of … I guess an exact number on the support I’d be definitely comfortable giving 30 days of direct support of the business itself.

                                But, always being available, I guess you can say. I may not necessarily be as responsive after the 30 days, but I will definitely be available.

Speaker 1:           Are you open to negotiating on something like an earn-put?

Ryan:                    Yeah, absolutely. I’d be willing to discuss that with the buyer. Do whatever I can to make myself, the buyer, and everybody involved happy, and we can come to an agreement that works for everyone.

Speaker 1:           Awesome. Ryan, thank you very much for taking the time with me today. Before I let you go, I have one final question for you. Given all that you know about online business, and Amazon FBA, and this particular business, if you were looking at it from the perspective of a buyer, why do you feel like this is a business worth buying?

Ryan:                    I guess if you’re coming at it from someone without experience, they may not necessarily see the gold that I see. But for me, it’s the fact that I know what I have done so far has worked, and I know where I want this brand to go. And I’m not in any arrogant way trying to say like I know I’ll get it there, but what I’m trying to say is that I see all the pieces of the puzzle that I want to fit together with this particular brand.

                                And so far I’ve done a pretty good job getting everything to thus far put together, and my vision for this is way bigger than I have it right now. So I guess if I were to talk to somebody looking to buy this listing, my piece of advice for you would be to get in contact with me, and let me explain my vision; because I do have a really big vision for this brand.

                                And like I said earlier, I’m willing to go beyond just the 30 days of direct help in … explain to you where I want this to be, and it’s not just a brand that I’m … I just want to get rid of. It’s a brand that I want to see grow in the future.

                                I’d love to see it on the shelves in a store. I’d love to see it … to be bigger than I was personally capable of getting it to with my limits on different areas of expertise, you know, in e-commerce. I’m kind of limited to a specific skillset, even though I learn all the time, I am kind of limited in my skillset, but that’s not to say that you can’t get a team of people together to really explode this brand.

Speaker 1:           Ryan, thank you very much for taking the time with me today. I really appreciate it.

Ryan:                    All right. Thank you. I appreciate your time, as well.

Speaker 1:           You just learned how this business works, and I want to give you the opportunity to learn more about what you can do to buy real online businesses just like this one.

                                If you want to find out more about businesses making real money, head over to empireflippers.com, and sign up for our mailing list. There’s an entire world of people quietly investing their money into online businesses, and seeing great returns.

                                Now, we want to help you do the same thing.

 


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