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Are Amazon Investments Profitable? 5 Things to Look for Before Investing

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According to Investopedia, owning investments from different asset classes can reduce the overall volatility, making Amazon investments accomplish something similar. This article covers a safe, new, innovative way to make your money work for you rather than the other way around. 

Imagine Amazon investments as buying a stake in a bunch of different physical retail stores. However, the decisive advantage this kind of investment holds over putting your money in physical stores is that the e-commerce stores you are investing in only have to assume a tiny sliver of the costs.

The revolutionary difference between investing in e-commerce with Amazon and investing in setting up a brick-and-mortar is that you, the investor, do not have to buy any inventory until a customer confirms a purchase. This fluidity also means that owners of Amazon stores do not owe rent for storage space.

It might sound easy, but there are several factors that you must keep in mind. Keep reading to uncover a few of the most important things you must look for when you are starting into the world of Amazon investments.

1. Check testimonials and reviews

Whether you hire an Amazon automation service to make your Amazon investment a source of passive income or decide to plan and administer the enterprise yourself, it would behoove novice merchants to be cautious about who they choose as a partner.

If you are doing everything yourself:

You will want to vet your suppliers thoroughly. Make sure both they and their products are reliable. When you get on calls with them, they will expect you, the buyer, to know certain things about negotiating and conducting business. Don’t let this intimidate you, but there are things you will want to avoid doing to prevent getting ripped off.

  • Be respectful, but project strength.
  • Don’t negotiate over sample prices.
  • Negotiate for customization and things other than just price and volume.

If you are using a team of pros to manage and maintain your store:

An automated Amazon store that an experienced management company runs is one of the best ways to generate a passive income stream. The business utilizes the dropshipping model to automate the process, and the management company does all the heavy lifting while the store owner enjoys the store’s success. 

Many companies tout themselves as Amazon automation services but offer no substance to back this up. If you are looking for an Amazon automation service with a good reputation, NextGen Strategic Investments might be an excellent fit to spearhead this part of your portfolio. 

We manage over 230 seller accounts and have made our clients over $87 million in gross revenue. Find out more by scheduling a complimentary consultation with us.

  • Set up a consultation with your Amazon automation partners.
  • Complete the onboarding process.
  • See your Amazon store become a success.

2. How experienced is the team?

If you decide to automate your store with an Amazon automation service, it is crucial to hire a trustworthy team. 

Your store will not automatically start as a top search result for a popular keyword among your target market. Getting from zero to that involves research and expertise. 

These essential marketing decisions have the power to either propel your store to the top or sink you to the bottom. If you want to learn how to start an Amazon store, the first step is to settle on keywords. 

At NextGen, we have a full team of analysts, marketers, brand creators, sales consultants, as well as operations and customer service associates to help build and manage your store initially and on an ongoing basis. 

We carefully research and analyze the products that become listed in your store, so you can be confident that your dropshipping Amazon store will have continual success.

3. How long will it take to recover the initial investment?

At NextGen, the profit margins range between 2-5K per month on average (on average beginning at the start of the fourth month), and it scales to 5-10K+ by the month 12 on average. However, exact numbers are highly dependent on the amount in a client’s credit line or cash flow for inventory purchase.

Although recovering your investment may take less time depending on your ability to expand, you should see earnings climb after a few months of activating your store. 

4. What is the risk?

Like many other investment strategies, Amazon investments feature an inverse relationship between risk and investment duration. This relationship can be explained by the low variable costs you will incur by investing in a dropshipping business model. 

Fixed costs are the costs involved in running a business that must get paid regardless of how many products you sell. These costs include the rent paid for your company’s office space or warehouse and payroll.

Variable costs are the costs that fluctuate based on how much you sell. As your sales increase, so do variable costs. As your sales decrease, variable costs do as well. These costs include things like storage fees, packaging supplies, and listing fees.

What is the difference between variable cost and fixed cost?

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The worst loss a drop shipper can suffer is steep overspending on an ad budget that generates negligible sales, which is pretty much the only variable cost you can expect to assume. When this happens, it is often a consequence of poor product choice or an ineffective product page. 

5. What do you want to sell?

Firsthand product knowledge is a significant benefit of choosing to sell items in categories you’re familiar with. If you know what red flags to look for, dealing with fraud and cheating suppliers is simpler. Never forget that the success of Amazon investments revolves around the choice of market and product. 

The problem is that the best products are way outside of your personal shopping preferences a lot of the time, which can be due to seasonal changes, trends, or events. It takes a whole team researching for hours every day to develop the best products and the best ways to market them. That is why the service provided by NextGen is so valuable.

What are the first steps?

A businessperson researching their industry.

Photo via Shutterstock

If you feel confident navigating the world of Amazon marketing and sales on your own, the first step for setting up Amazon investments would be to get your legal and commercial accounts together. 

It’s important to remember that Amazon stores not only require constant upkeep; Amazon’s regulations are also continually evolving. If you don’t stay on top of the latest updates and guidelines, this could hurt your store. If you don’t have experience managing an Amazon store, this can get incredibly time consuming and stressful.

Many business owners and entrepreneurs choose to hire an Amazon management service to set up and maintain their dropshipping Amazon store. The management service includes setting up the store and listings on Amazon, product research, product analysis, order processing, repricing, authorizing returns, chargebacks, and handling the customer service.

If you want to ensure your Amazon store’s profitability and make your money back with as little risk as possible, schedule a complimentary consultation today.

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