The Amazon FBA Recession.... [How to Prepare]

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If you are looking for an Amazon FBA video that talks about Amazon FBA being dead. The 100% answer is no. Amazon and Amazon FBA sellers are going to be experiencing a recession but once we get out of 2022 and 2023, there is still going to be growth for every Amazon FBA seller.

But I did mention a recession and in this video I want to talk about what I’m doing in my business to best prepare me for the “WORST CASE” scenario because the truth of the matter is that there is so much uncertainty.

Amazon, Google, and Facebook have announced major layoffs. eCommerce is experiencing it’s first decline in demand and it feels like every Youtube video is taking about how much of a disaster the economy is starting to become.

With so much fear all over the place it’s easy to just do nothing stay paralyzed and wait to see what ends up happening.

But that’s not the approach I’m taking and it’s not the approach I want any of my viewers to take. We are currently in the eye of the storm. How do I know this?

I see so many people saying this is the perfect time to hoard cash
But what else is happening?

1. Valuations for businesses have fallen off a cliff. In 2021 Amazon FBA sellers were getting around a 5-6x multiple for there business. This year? You’re lucky to get a 3x multiple. And that’s coming from someone that is actually buying Amazon FBA businesses (check out this video)
2. On top of that, 2021 experienced a biggest cost for freight where a 40 foot container was over $20,000. What is it today? Back to 2020 pricing of $6,000
3. And I just re-ordered inventory from my supplier and they gave me a 5-10% off because of the US currency being so high that is driving way more purchasing power.
You see, I don’t think this is a time to hoard cash, I think this is a time to buy undervalued business and spend money strategically and efficiently.


So what am I doing in my Amazon FBA business today?
1. I’m stopping any advertising spend that is not on Amazon
- In 2021 and 2022 I got stuck in the mindset of growing my brand outside of Amazon.
- I partnered with influencers, I spent 1000s of dollars on a Shopify store, growing a team for advertising, doing Facebooks Ads
- I feel into the trap of saying “It’s okay that I am losing out on money right now because in the long run, it’s going to pay off”. But all I ended up doing was wasting money.

The truth of the matter is, when we are in a bull market and everyone has disposable income, great, focus on marketing off of Amazon. But in times like this, Amazon owns it’s own data. Meaning we don’t have to worry about Apple changing their privacy settings and putting us out of business.
Amazon will always be the low hanging fruit and you need to focus all marketing dollars on Amazon PPC instead of anything else.

2. Next, launch new products but do not focus on expensive or bulky products.
- The latest buzz word for Amazon FBA sellers was to focus on expensive products because the typical Amazon FBA sellers don’t have the funds to compete and order in volume.
- It makes sense in theory but when you have to spend more money on advertising, more money on storage, more money on fulfillment cost, it’s going to be tougher and tougher to reorder in bulk.
- I feel like 2023 is going to be a time where customers will NOT shop for the most premium item, they will focus on price, reviews, and branding.
- Instead of trying to be the most expensive, focus on branding to your target market.

3. Cater to your ideal customers
- Why did you create your product? That is going to be the key questions for all Amazon FBA sellers.
- You need to focus on who is buying your product. I had someone message me the other day stating why I show my product unlike the other YouTubers
- I the response was simple, there are so many people to market to
- In the space of shoe cleaners: I can have competition that are catering to moms looking for the cheapest alternative to keep their shoes clean or focus on construction workers with a boot cleaner. I focused on people that collect limited edition sneakers. You see, we might all be selling the same product but we are still not direct competitors. I continue to come out with unique product or bundle that make sense to my customers but might not make sense for other.

4. Find different avenues to make money
- I’m not blind to the fact that 2023 might be a tough year for a lot of us (regardless if you are selling on Amazon or not).
- Focus on finding different ways to make money. Sell on Walmart, Sell on Amazon UK or Europe
- Figure out how to start up wholesale and sell into retail


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