How I Started A $10K/Month Amazon FBA Business Selling Pencil Holders

$10,000
revenue/mo
1
Founders
1
Employees
product
Fernaco
from Los Angeles
started June 2018
$10,000
revenue/mo
1
Founders
1
Employees

Hello! Who are you and what business did you start?

Hi everyone, my name is Ricardo Fernandez and I am the founder of Fernaco, an Amazon FBA private-label brand that focuses on selling top-quality office accessories.

Currently, our flagship products are a line of Grade A flexible, silicone pen/pencil holders that come in a variety of attractive colors. The thought process behind this product was to create an improved, stylish and highly durable version of the standard wire-mesh pencil holder you see on office desks every day. The Fernaco version of this is not only Grade A silicone but is highly durable and extremely easy to clean. The product is also extremely versatile because it can be used for other purposes such as a makeup brush or other holder.

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

Our top customers are large businesses, who often purchase bulk orders of 40+ holders at a time. We also have several recurring customers who love the product so much they come back to buy the product as new colors are introduced. Since the company’s inception in 2017, we have grown our revenue to consistently bring in between 9 to 11 thousand dollars per month. We are reinvesting all profits back into the business and plan on expanding into other office-supply categories within the next year.

What's your backstory and how did you come up with the idea?

Honestly, I’ve always had a strange affinity for office products and writing instruments. I would go to Walmart and Target when I was younger and spend a lot of time in office accessory aisle checking out the high-quality pens, trying to choose which one I’d want to buy for school for that week. My dad used to get agitated, but ultimately he was glad I was asking for something school-related and not something like video games (a pen was much cheaper and I think he appreciated that).

I truly believe that perseverance and patience are the only distinguishing qualities between myself and anyone else.

As I got a bit older, I seemed to have developed the entrepreneurial bug and in high school, I was making income from repairing iPhones and computers. I was always interested in computers and today, I work as an engineer at a tech start-up in addition to developing my Amazon business.

During college, I started my own services that dealt with social media and concert promotion; neither of which allowed me to do it full time and stop working. I knew I needed to figure out what else I could be doing that might allow me to have my own business full-time.

It wasn’t until I discovered Amazon FBA two years ago and saw some of the success of those “Amazon Gurus” you see on Youtube that I decided to start a business through Amazon might be a path I’d like to explore. I thought that if they could do it then I could, especially since it was so heavily reliant on working online and with computers – my background. I began by downloading an Amazon course and started studying how to become an Amazon seller.

Take us through the process of designing, prototyping, and manufacturing your first product.

The first thing I really focused on when choosing/designing my product was doing research on potential high converting keywords. The process involves searching random product words until the data makes sense to pursue. I ended up stumbling upon ‘pencil holder’ and thinking I could improve on the current listing of products that were ranking. I contacted wholesale suppliers, Alibaba and decided to begin messaging suppliers for test samples.

It was a long process, for about two months I was receiving all types of different holders in an attempt to hone in on the perfect one. I realized that just because something looks simple, doesn’t mean it is. There are lots of facets to what makes a good pencil or pen holder including material, shape, size, and texture. Heck, even color means a lot when it comes to the office supply niche… a lesson I had to learn the hard way - of which I will get into later.

Describe the process of launching the business.

When I was ordering the samples, the supplier sent me the colors they had on hand. It never occurred to me to look into which colors would sell better than others when it was finally time to put my product up for sale. I figured having a quality product would be enough. After I settled on a set of colors, I decided to move forward with 500 units as my initial order and told the supplier to package them together. See below:

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

I worked with a photographer to have professional photos taken of the product, to help give the listing more of a sophisticated look but also to help the buyer envision the product in their home or office. I contacted Fiverr to execute my keyword research for me and to write my product description. This way, I had professionals making sure my listing was the best it could be and was highly likely to pop up when someone searched for this type of product. When it was all said and done, I set my listing live and waited to see how it would do.

Immediately, I noticed my listing wasn’t doing well. Week after week, I was losing money on my Amazon Advertising because my sessions and conversions were so low. I knew something had to change so I decided to dig in and find out why it wasn’t selling. It turns out, it was obvious the entire time.

Since launch, what has worked to attract and retain customers?

After I launched my product, I leaned on my family and friends to purchase the product and let me know directly what they thought of it. In my opinion, the first source of truth about a product you’ve newly launched should always be your close friends and family as they’re likely, to be honest with you about your product. I leaned on those around me for suggestions and feedback. Secondarily, lean on the product reviews from actual buyers. I ended up getting a few reviews coming in on my initial listing and couldn’t help but notice that people were requesting more ‘mature’ colors. I also started noticing how unattractive a bright pink and green holder on my work desk was looking…

Taking this feedback to heart, I started looking within the office supply niche and realized that 90% of the listings like mine were black. There’s a reason for this, black is a safe color in the professional workplace. I thought I was being different by choosing these random colors, but upon further research, I realized I might’ve made a mistake. I decided to try selling my product in black.

So I started over.

I ordered various black samples, ordered 300 more units, and found a different photographer to take photos of my new matte black color.

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

Once I set this product live, I immediately started getting sales. At first, it was only 4 units a day but this was way better than the 4 units a week I was previously getting with the pink and green holders. At this point, I knew I had something, so I started optimizing and I started with Amazon Advertising. I ran a few automatic campaigns until I found them to be profitable.

After my sales increased, so did my ranking. I consistently hit the first page on Amazon for all of the keywords that I was targeting. Organically, I started getting more and more sales. Not to mention, my conversion rate doubled. Success.

Once the new color Black was almost sold out I decided to double down and try another safe color. I ordered 250 units of White and 150 units of Gray, both of which sold pretty consistently.

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

How are you doing today and what does the future look like?

Today, I am very happy with how my business has grown. I still have a ways to go but I am proud of how far its come from where I started.

I became cash-flow positive as soon as my listing went live with the black color option. You can see what I mean below - April 2019 was the first month I made any profit:

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

I’m consistently seeing an increase of about 30% in revenue month over month, with my margin hovering around 20-30% depending on the variation.

My operations involve me checking my sales and email every morning. I respond to any supplier questions or customer support emails right away. I look at my current traffic and listings to make sure there are no issues; and when all is said and done, I will probably only spend an hour a day on the business itself.

how-i-started-a-10k-month-amazon-fba-business-selling-pencil-holders

In terms of expansion, I plan on moving into other products within the office supply niche. I’m currently ordering samples from multiple suppliers to begin research on other high-quality office products. I plan on taking my time to make sure it meets the standards of quality I am looking for and is something I can see myself using personally.

Through starting the business, have you learned anything particularly helpful or advantageous?

There’s a reason why black is the most popular color so I would say my biggest mistake was not realizing that during my initial product order. Seriously, I bet everything on the black product variation and if it didn’t succeed I would have burned through my entire savings. I tried so hard to make the strange pairing of colors work but one of the toughest things to realize is when to pull the plug on a product that just isn’t working.

Secondly, my first photographer overcharged me for subpar photos. I realized that eCommerce is a huge industry and there are services that specialize in every aspect of it. By the time my new colorway arrived, I had found a local server in Los Angeles that takes photos specifically for Amazon sellers.

At the end of the day, I think what I’ve learned is to pay attention to all facets of your product to determine if this is something that will do well and that involves researching absolutely everything from colors to size to texture, etc. And to utilize all of the resources available to ensure your listing is as strong as it can be.

What platform/tools do you use for your business?

SellerLegend - This is a 3rd Party seller and analytics tool. I use this to determine my sales velocity and to track my accounting trends. I check this every day.

Amazon Seller Central - This is the default portal for Amazon sellers. It’s okay, I really think there could be a lot of improvement here.

Gmail - This is my default mail app that allows my customer to email me directly with my own domain.

Fiverr - I use this from time to time to do research on keywords or to write descriptions.

Youtube - My goto resource for learning more about the process. There’s a lot of great sellers out there who give real advice.

What have been the most influential books, podcasts, or other resources?

7 Habits of Highly Effective People

This book was given to me by a COO at a company I was working for when I was 19 and it changed my life. It made me realize that no matter the situation, I have the power to change things for myself. I was born into a poor family and we struggled financially my entire life, so when I was old enough to make the decision to get a good education and a good-paying job, I did what I needed to do to make this happen. And today, I am in a positive place financially that I never thought I’d be in, and I believe reading this book had a hand in that.

Covey, the author, believes the way we see the world is entirely based on our own perceptions. In order to change a given situation, we must change ourselves, and in order to change ourselves, we must be able to change our perceptions.

Summary here.

Effective Executive

This book I found much later in my career from the recommendation of Tim Ferris, a well-known author, and investor I follow. It allows one to learn the ins and outs of a c-suite level executive and breaks it down in an easily discernible fashion.

The ability to be effective is really just the use of efficient practices. Consistent use of these practices become habits, and these habits lead to effectiveness.

That means there’s no massive undertaking you must complete in order to be effective, just small, daily practices that when added up over time equal being effective. “You are what you repeatedly do…”

Summary here.

Advice for other entrepreneurs who want to get started or are just starting out?

Going through the emotions of starting your own business is a roller coaster in itself. You’re going to have your highs and you’re going to have extreme lows.

I had a lot of sleepless nights thinking about the worst-case scenario. But honestly, the best decision I made was deciding not to give up. I truly believe that perseverance and patience are the only distinguishing qualities between myself and anyone else.

There’s a video that I like to reference that mentions this exact point by the late Nipsey Hussle, may he rest in peace:

Are you looking to hire for certain positions right now?

I would love to eventually hire virtual assistants to begin building out my personal Shopify store as well as to handle my Ad Operations. As the business grows, the bookkeeping and accounting grow as well. I would eventually need someone to handle that side of the business which would really save me time.

Overall, I do best in choosing the product and photography. All of the other stuff can be outsourced such as copywriting and shipping plans. I’m okay with doing this myself now but I do see myself getting into dozens of products. I will need help eventually.

Where can we go to learn more?

If you have any questions or comments, drop them below!

-  
Ricardo Fernandez,   Founder of Fernaco

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