Amazon Automation – Latest Online Scam
Every so often a new scam comes down the pipe that sounds so good, that so many good people want to believe in that the inevitable happens. Innocent people get hurt. Amazon automation is as close to a perfect scam anyone could hope to invent. It subverts a couple of outstanding business models, namely Amazon FBA and Wholesale Distribution.
Now, if you’ve been thinking of starting a business as an Amazon seller, the chances are very, very good that you’ve heard of Amazon Automation. My name is Todd Snively, a professional Amazon FBA seller for over ten years. I want to be very clear that I am not shining the shame light on any one individual or any specific company. I am here to tell you that based upon my 37 years of business experience, my 10+ years as an Amazon millionaire seller, and almost 58 years of plain old common sense, Amazon automation stinks to high heaven.
What’s the Offer?
The people out there trying to part you from your money are offering something that sounds really, really good. They will build you a business on Amazon, selling name brand products, without you having to do anything. Well, other than putting up all the money, amongst some other things.
The pitch goes something like this:
- You pay somewhere around $35,000 upfront as a fee. It could be $20,000, it could be $50,000. The first hallmark is a huge upfront fee.
- You will then agree to pay a monthly “administration” fee of anywhere from a few hundred to a thousand dollars, just for “overhead” and stuff like that.
- You will agree to give up any where from 25-50% of the “profits” from the enterprise.
- “They” will agree to build you a business on Amazon by finding, purchasing and getting these name brand products to your FBA account, using your credit card of course. You will have authorized in advance a certain amount of money these people can spend on products, wholesale products to sell on Amazon that you have no say about because, well, it’s Amazon Automation.
First of all, I am an eight figure Amazon seller. That means I sell in excess of $10,000,000 on Amazon and the fact of the matter, that number is well North of $50,000,000. I have a good friend, whose name I will protect for right now, that does that much more, every year. North of $60,000,000. Why is this important? Because of the very first reason the Amazon Automation folks will give you to justify the existence of the opportunity.
Amazon Only Allows One Store
In most promotional material, they will tell you that Amazon only allows a seller to have one account, and therefore, the only way they can really grow their Amazon FBA business is to help others setup accounts and build that business for them, for a cut.
First of all, it’s not just a cut. It’s a cut after $35,000 upfront.
I just got done telling you how a single Amazon seller, with one account, can make tens of millions of dollars a year.
So, let’s take a quick look at that claim. It’s nonsense.
Not only will Amazon allow a seller to have more than one store (there are restrictions), even if you only had one store, there’s no limit to the number of products you can sell, or the amount of money you can earn. None. Nada. Zilch.
This premise they put forward is crazy. They don’t need you to setup an Amazon account, just so they can make more money. No, sorry, it’s just not true. Matter of fact, even if you did believe that was true, there’s more important reasons why what they are saying rings false.
Wholesale Distribution – Now, That’s a Real Thing Unlike Amazon Automation
What Amazon Automation does is pervert a real business model that actually works. It’s called Wholesale Distribution. Wholesale Distribution is where an Amazon FBA seller will purchase name brand products from authorized sources and then sell them on Amazon, and elsewhere. That’s a real business, and if what I find particularly hilarious is that if you either do it yourself, or hire an EXCLUSIVE team, you’ll probably do very, very well.
The Amazon automation folks tread on the credibility of the wholesale distribution model to make you take the leap to thinking Amazon automation is legitimate.
Why Amazon Automation Can’t Work
Notice I am saying “can’t work”, not might not work, not maybe won’t work. I am saying it can’t work. There are several reasons, but one of the biggest is because the Amazon automation folks really are not able to deliver on their promises. The reason for that is simple. Greed.
It’s not from whatever profit split they negotiate with you.
These people do not make their money by creating a successful Amazon business for you,
So, how do they make their money? They make their money by taking $35,000 up front from you. It’s that simple.
What Happens After They Get Your Money?
Part of the reason these Amazon Automation henchmen are not in prison yet is because of the intrinsic fact that it’s going to take a long time before you are realize you’ve been conned. Why is that? The entire sales process and legal agreements you’ll sign will condition you to be patient. You must wait. This is a marathon, not a sprint. These things take time, etc.
Your expectation when you fork over your money isn’t overnight success. They’ve explained to you, quite convincingly, that it could take months to begin seeing serious profits. Then, the months go by and you’re reminded that you were told that under certain circumstances, it could take a year or more.
Their entire business plan is to drag you out until you simply give up and go away.
It’s a Numbers Game
Another reason why there’s no way for Amazon automation to even have a chance is this thing called numbers and math. First, it’s not a Ponzi or pyramid scheme. It is, however, an impossible scenario, especially in light of some very specific promises that make to entice folks to sign up. Things like, “You won’t be selling the same products as our other members”. Let’s take a look at that promise.
One of the premises they float in front of you is that they have between 3-4,000 wholesale distribution accounts. Now, don’t get me wrong, we too work with 3-4,000 wholesale distributors. The problem is that they try to get you to believe that all 3-4,000 are created equal. The fact of the matter is that maybe 500 of those accounts will provide 80% of all the products that make sense to sell. So, right off the bat the math starts to crumble.
Amazon Automation and Competitive Sellers
You also need to understand that even though a single product will support multiple sellers on Amazon (these are called “competitive sellers”), there’s a limit to how many sellers make sense. It’s based on the monthly sales volume of that product. Not every product for sale on Amazon sells thousand and thousand of units per month. Those are what I call “sexy” products. Let me tell you a little secret – there’s no profit left once a product becomes “sexy”. The word is out and too many sellers descend on that product, stomping all the profits out until there’s nothing left. Many refer to this as the race to zero, and I could talk about that for hours.
The sales of Amazon FBA products are split up amongst the competitive sellers. The competitive sellers are usually selling at the same (lowest Amazon FBA) price. So, even if there are twenty sellers on the same product, only the competitive sellers will share the sales. An Amazon automation operation has no choice but to load up a single product with as many of their clients as they can, because they simply do not have enough profitable product to deliver on their promise to all their clients.
By the way, the last Amazon automation manger I spoke with told me they had signed up over 1,800 members at $35,000 each. That’s a gross income of $63,000,000. First of all, it’s a sad state of affairs when 1,800 people can be conned out of that kind of money, but, there it is. Now, understand that the Amazon automation company doesn’t get to keep all of that $63,000,000 – no, they have to share it. With who? Their sales team.
The sales people are very, very, very well paid. I mean, you can hardly be blamed for handing over $35,000 so easily. They do make it sound irresistible. What’s so crazy is that if a person who wants an Amazon automation business simply learned the wholesale distribution model, they would be able to eventually hire and train their own “automation” team. This is very important. It’s not so much that what these automation folks are saying about the wholesale distribution model is false, because it’s not, it’s the fact that no one company can deliver on the promise for everyone at the scale they are promising.
While there is a considerable number of name brand products, currently selling on Amazon profitably, that could support a few additional, competitive sellers, the fact of the matter is that in order to fulfill the promises of just ONE of these Amazon automation companies, which is the promise of a $100,000 monthly Amazon business, usually within six months (some promise within two to three months), would require a significant number of competitive seller slots.
The minimum margin I work with is 20%. That means I won’t buy a product to resell unless I can make 20% margin. While this is “loose” math, just work with me here, assume that means you sell $100,000 a month in gross revenue, and assuming the average profit is $4 per sale, that means you need 25,000 sales, per month. That’s just you.
So, using the conservative number of 1,800 brand new sellers, from just ONE of these Amazon automation companies, that equates to 45,000,000 transactions per month. Amazon does around 26,000,000 transactions per day. So, one Amazon automation service would have to create enough sales to account for almost TWO DAYS of all the sales on Amazon, every month. It’s just not possible.
Amazon Automation – What’s the Reality?
Realistically, here’s what’s going to happen to you if you give someone $35,000+ to build you an Amazon store. Worst case, nothing – they take your money and disappear. No, I am sorry, that’s not the worst case. That might be the best case. The worst case is they run your credit card up to its limit with unprofitable products. You see, in many cases the con man works with misdirection. They want you to see all the work they are putting in to make your Amazon account successful. In reality they are misdirecting you.
I have read many, many stories on the internet about people who have lost a lot of money due to this Amazon automation scam. The research I’ve done has been extensive, but I am not going to offer it up here. Why? Because it would require naming names, and I am not willing to do that. I will say this much. I have an audio recording of myself talking to a sales associate for probably the largest, most aggressively advertising Amazon automation scam. It was our discovery call, or, the high ticket close call.
On my recorded phone call I was able to get the sales associate to admit:
- The testimonials were all fake. All the screenshots were taken from “dropshipping” accounts, not Amazon FBA wholesale accounts.
- They had never managed a wholesale FBA account before, never.
- Over 1,800 people were sold into the program and they were going to continue selling until they had 5,000.
- They have no idea of how they are going to be able to find enough products for that many people.
- Many customers will end up on the same products, which will be the kiss of death for that product
And, much, much more.
Amazon FBA – Is It Still an Opportunity?
Yes, yes, yes. Matter of fact, when done correctly, you can do very, very well as an Amazon seller. Like with most things, there’s a right way and a wrong way. Amazon automation is the wrong way. Wholesale Distribution is selling on Amazon the Right Way.
For a fraction of what the Amazon automation people want, you can learn how to do this model the right way. We have suppliers with over 8,000,000 wholesale products, software to find the most profitable products, and lists of warehouses to receive, inspect and ship to your FBA account. We can train you to setup your own team and get this business 100% outsourced. We never take a percentage of your sales.
For more information please check out Wholesale Product Mastery.