published on July 27, 2024 in blog

How to Be a Successful Amazon Seller and Start E-Commerce Company

Joe Reeves has been experimenting with various side hustles over the past decade.

"I had a blog probably about six years ago. It was called Mountain Man Bun," the 28-year-old, who's in construction by trade, told Insider. "I bought a nice camera at one point and started vlogging when that was popular."

Shortly after his and his wife Meagan's son was born in December 2020, he decided to try out e-commerce to pick up additional income as their family was growing.

At the time, he was working as a project engineer for a construction company in Denver, which he describes as "more of a 6-to-6" than a 9-to–5 job. But he had about four weeks of paternity leave to think through what his online business could be, including methods like dropshipping and wholesaling.

In August 2021, Reeves started selling men's wallets on Amazon. He did $63,000 in revenue in his first two months, enough to break even after expenses, he said. In early 2022, he started turning a decent profit: about $13,000 in February, $80,000 in May, and $140,000 in June.

Over the last 12 months, Reeves has done just over $5 million in wallet sales. His biggest month to date was December 2022, in which he did over $1 million worth of sales. Once he factors in business expenses, he's consistently profiting over $100,000 per month.

Insider verified these details by looking at his net operating income and product sales on his Amazon Seller page.

Reeves quit his day job in June 2022 and has been running his wallet business, Mountain Voyage Co, full-time ever since. He also works on 330 Trading, a product-sourcing agency that he started with his business partner Tyler Walter in 2021 to help other Amazon sellers diversify their supply.

Here's how the entrepreneur turned a side hustle into a full-fledged business that brings in more per month than he used to make per year from his day job.

The first steps: Starting an LLC, opening a bank account, and brainstorming company names

Reeves likes to do things his own way — and he's willing to take on some risk.

He had a friend who'd tried dropshipping and failed. "He lost like $20,000," said Reeves, who reached out to him when he was thinking about trying e-commerce. "I asked if he thought Amazon was too oversaturated, and he was like, 'yeah, probably.'"

Reeves decided to give it a go anyways. He didn't start where most Amazon sellers would: with product research. Instead, he first started an LLC, opened a bank account, and brainstormed company names even without knowing what he would sell.

He also signed up for Helium 10, a popular software that Amazon sellers like to use to grow their online businesses, and took an online course about FBA (fulfillment by Amazon) that the site offered.

While the course teaches how to find smaller, niche markets, Reeves went in the opposite direction: "Men's wallets is a very big, competitive market, but I just bit the bullet, took the risk, and it ended up paying off."

After all, while competitive markets can be trickier to break into, "that just means there is a lot more opportunity as well," he noted. "If there's a market with a billion dollars and a market with $10 million, where is there going to be more opportunity?"

As for how Reeves came around to selecting wallets to sell, he happened to order one for himself on Amazon while taking the online course. He was at the point in the course where they were going over how to use Alibaba to find a supplier. With wallets on the mind, he started searching categories like "minimal wallets," "men's accessories," and "every day carry" on Alibaba to see what popped up.

Ultimately, "the reason I went with wallets was because that was the easiest manufacturer to communicate with," he said.

Buying 1,000 wallets on his credit card, labeling them at home, and shipping them to Amazon

Reeves found a supplier through Alibaba who could manufacture the wallet he wanted, which, at the time, was a very similar style to a competitor wallet, he said: "I just emulated their product."

For his first order, he bought 1,000 units. It cost him about $7 a wallet at the time. Plus, shipping cost another $3,000. That initial step was nerve-wracking, he added: "I was sending a random person in China $10,000."

He ordered the wallets to his home in Denver, rather than sending them from his supplier directly to Amazon's fulfillment center.

This saved him money on labeling costs, he explained: "Amazon charges like 55 cents a label to put them on each individual unit. With 10,000 units, that's $5,500 just in labels. So we would get them shipped here and Meagan and I would re-label all the units."

In the early days of the company, Reeves sent the wallets directly to his home. Courtesy of Joe Reeves

A typical night would consist of him coming home after work, eating dinner, and then clearing the kitchen table, said Reeves: "I'd line up wallets on the entire kitchen table, put Amazon labels on everything, rebox them, and ship them out to Amazon."

Setting up a seller profile on Amazon was "super simple," he recalled. You can use your customer account to start selling or you can create a new Amazon seller account with your business email. The cost depends on what type of selling plan you choose: individual (you pay $0.99 every time you sell an item) or professional (you pay $39.99 per month, no matter how many items you sell). Amazon also collects a referral fee on each sale, which is typically between 8% and 15%.

Reeves also hired a contractor on Fiverr to take professional photos of his wallets for his listing page. He spent between $50 and $100, and it was some of the best money he's spent as a business owner, he said: "People like to cut corners and save money by taking photos themselves but there are professionals out there that do this for a living. If their photos can help you convert 5% more, over time, that 5% is going to pay itself off."

The main startup cost was inventory, which you have to be strategic about ordering so that you never run out of product.

"You cannot go out of stock. It ruins your organic ranking," he said, referring to where your product lists on Amazon's site when someone searches for the item.

Reeves learned that the hard way. He had a big sales month around the holidays in December 2021, which wiped out his inventory. While he was out of stock, his ranking plummeted and he ended up losing money in January before rebounding in February.

Constantly buying inventory can get expensive, especially if you're scaling up as quickly as Reeves was.

"What I didn't realize at first is that by the time you sell half your product you need to be placing an order for the next batch," he said. He ended up spending a lot more money than he ever imagined he would in the early months. "Because I was growing so fast, I went from buying 1,000 wallets to needing to buy 2,000 wallets to needing to buy 5,000 wallets to needing to buy 10,000 wallets. While I was profitable, at one point my credit card balance was like $90,000."

He had enough inventory to cover his balance once it sold, but there's no guarantee that your product will continue to sell.

"You hear these horror stories of Amazon saying, 'Oh, you have something worded wrong in your title. We're taking down your listing.'" he said. "Then you're stuck with $100,000 worth of wallets. Those are only worth anything if you can sell them."

Scaling up from $60,000 in monthly revenue to over $1 million

Reeves' wallets sold almost immediately after he started listing them in August 2021.

"It took off quickly, but I was also spending a lot," he noted. "I did well in my first month. I probably broke even on $60,000 in revenue, which is the goal: You are trying to break even and constantly roll over that initial investment into new inventory and not spend too much on advertising — just enough to get sales and, in return, reviews."

When it comes to succeeding as an Amazon seller, "reviews are probably one of the most important things, if not the most important thing," he said. "And the only way to get reviews is to have people buy it."

About 4% of users will leave a review, he explained. That means, to get 10,000 reviews, you have to sell 250,000 wallets.

Ads will help you sell, but they cost money. At the beginning, Reeves was spending $300 to $500 a day on advertising, which felt like a ton, he said: "That can be a shock to anybody that's not used to spending money, especially in the beginning when you're not seeing much return and it seems like you're just burning that money into thin air."

As his revenue numbers grew, he was able to spend more on ads and currently spends about $10,000 per day, he said. He used to outsource all of his advertising to Trivium Group, which specializes in managing Amazon ads, but recently started his own agency, Reez.

June 2022 was a breakthrough month for his company. He profited about $140,000, he said, nearly double his annual salary, which was $85,000 at the time. That's when he felt comfortable quitting his day job to focus on building his brand full-time. It paid off: In November, he did about $600,000 in sales. In December, he did nearly $1.5 million in sales.

Reeves enjoys the flexibility that comes with working for himself, especially now that he has a kid at home.

Compared to working in the corporate world, "I love being my own boss," he said. "There are times when it is definitely a lot more stressful than just knowing that every Friday there will be $1,000 in your bank account. But the reward is that, in 2022, I made more money than I've made in my entire life combined."

When asked why he thinks customers liked his wallets so much from the beginning, his guess is that it's because they're "simple and sleek."

Especially in the beginning, when he was getting off the ground, it helped having a relatively small, lightweight product, he added: "That's important because that helps with any sort of shipping costs. I can air freight 100 wallets for less than a dollar a piece. Whereas, if I had a purse or backpack, it wouldn't be a dollar a piece."

Plus, his price point, which is around $40 per wallet, is right in the middle, he said: "I'm not selling for 100 bucks a piece but I'm not selling them for 15 bucks a piece. I do offer a lifetime warranty and I think a lot of my success has been from that. Everybody likes a good warranty on their product, especially when you're maybe buying something on Amazon and don't know how it's going to be."

If you want to sell on Amazon, go into the process knowing that "it's not going to be cheap," he advised. "The more money you're willing to spend on it, the faster it'll blow up."

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