hi my name is Eric stopper I'm one of the partners here at profitable Automation and I'm going to be taking you through our model today please watch the entire video if you're here it's because you are an investor or an aspiring investor or you're an employee looking to escape the rat race you want to become financially free and this is one of the best ways that you can do it uh if you want to watch the video on 2x speed go down to the settings and select the time icon and you can put it at 1. 5 or 2 x speed I promise I won't be offended I'm going to share my screen I'm going to go through the details of our model so the first thing we're going to address is what are we actually doing what is this automated Amazon store that we're building well there's two ways that you can sell on Amazon the first is you start a brand so you start oric vacuums and you list this product you come up with the design you come up with the brand you come up with the pictures the title the bullet points all of that is yours you own it it's your business and you're responsible for all the customer service the manufacturing of the product all of it that's called private label and most of the time it is a major hassle what many people don't understand is that when you list a product on Amazon you do not necessarily have to be the brand owner so if you have a new orc vacuum and you have a receipt for it no matter where you bought it from you can list it on amazon. com it is an open third-party Marketplace and so about 50% of the time whenever you go over here to the the buy box and hit buy now or add to cart you are not buying it from oric you are buying it from one of orc's Distributors over here this company called Max shop centers you'll notice that Max shop centers sent it into an Amazon fulfillment center so that it's fulfilled shipped by Amazon and it gets that Prime badge which is really important and so we can go into this distributor's little storefront here and we can see their ratings we can see all of the information about their business here's this guy David in North Providence Rhode Island and then we can see all of the products that this particular reseller chooses to sell on amazon.
com and you'll notice there's a huge variety a lot of these Brands you might recognize some of them you might not but the common denominator between all of them is that they are already selling like look here's one that's $999 it has 295 reviews they' uh there's 50 purchases of this of this listing every single month you'll see underneath it how much volume these these you know piggy paints are doing and these popsockets and so if you can buy these products from these manufacturers you can list them on Amazon and you can buy low sell high that is the whole game that we are playing we've been doing this for over eight years we have an incredible track record it is a it is a simple business model that is only made possible by platforms like amazon. com will allow you to sell these products Now setting up the business is not necessarily an easy easy thing and that's where a lot of people go wrong is they don't set up distributor relationships with great Brands like Apollo twin or you know the lc1 uh audio control brand products or popsockets even right like getting these Niche high volume moving products and listing them on Amazon that is the way that you make this happen and so we as a company have thousands of products in our catalog from Distributors that we have relationships with we make over $3 million in inventory purchases every single month for our customers and the whole idea is that we're buying let's go back to that vacuum right we're buying these orc vacuums for $50 $60 $7 directly from oric or directly from one of their Distributors because oric is in Walmart and and Home Depot and Lowe's and they have to stock all these retail locations which is still a huge part of the economy so they don't necessarily mind if third party Distributors are selling their product on Amazon and most of them encourage it and Amazon allows it so long as you have a paper trail of buying the products now a lot of people ask me if I list a product how are people going to buy my product above somebody else's and that is the only question that you really need to be asking about how this model Works Amazon is what we call a first inline auction and the line the beginning of the line right is right here in this buy box so the person at the front of the line is the one that gets the sale so you're doing your search you find the orc vacuum you land on this listing you look at all the stats you look at all the pictures and you decide yeah this is one that I want to buy and you have no idea right who you're buying it from you're just going to hit buy now or add to cart and it's going to go to the person at the front of the line and the and the front of the line is determined by the three PS of Amazon number one is price two is prime status and three is your performance score so if you go into this store you can see 100% positive that box is checked that listing is prime so they're going to move to the front of the line their price is $134. 99 you'll notice that there are a few other resellers on here that are selling for 117 and so this offer is going to move to the front of the line You'll also see that there are some cheaper products that are shipped directly from the warehouse rather than shipping from Amazon and so a lot of sellers they play this game where they're okay discounting the price or they're okay shipping it on their own because they know that the inventory is going to move they know this already has a hundred of these that are at least a hundred of these that are being bought in the past month and so it's a good bet to stock this listing with some inventory you know that you're going to make sales and so we're happy to wait in line we're okay with that and you do not need to know how to do any of this we do all of this for you you don't need to pick the products we let mathematics do that you don't need to handle the logistics we have an entire team that takes care of that for you we're going to move you to the front of the line when it makes sense to move you to the front of the line we would rather sell a product at a higher margin and stay a few steps back in the line and wait for that sale then sell it for cheaper and make less money and so we're constantly playing this game you don't have to worry about it we do it for you the best part about this is once we have the business set up for you this can run completely on autopilot so if you're looking for something that is handsfree that can make you money while you sleep this is the best opportunity of which I am aware if you can find a better one please direct message me on LinkedIn or Instagram so I'm going to jump into our financial model for those who are wanting to understand how the numbers work here's our financial model and before you get overwhelmed and turn off the video I'm going to break it down piece by piece for you so you know exactly what we're talking about and that starts over on the key assumptions so the way that this business works is in month one you are going to put up a minimum of $5,000 in inventory working capital so we go to oric and we buy you know a hundred oric vacuums for $50 a piece and we know that we can sell those for $134 after shipping and Amazon fees you know we could probably make somewhere between $60 and $7 in in total profit but you start with $5,000 that gets you one two maybe three products if you start with more you'll be able to make more money and I'll explain why the average revenue that we get from each dollar spent is defined by this multiple 1.
75 and this comes from our p&l data if you want to look at any of these tabs in here you can see what the multiples are but for every dollar that we spend in inventory we know that we can make 1. 75 in revenue and in the case of like the oric vacuums for instance if we buy it for $50 and we sell it for 134 well then we just made 3x on our money and so we have this in here as a very conservative very economical average so that we can keep the numbers as conservative as possible average profit margins at the end of the day 15% I'll explain this profit share and the profits reinvested Amazon fees average around 25% this covers shipping returns customer service all of the things that you would expect from dealing with somebody like Amazon it's a it's a good chunk but they make this all possible so we're happy to pay them and then this piece down here is very important not all of your inventory is going to sell in the first 30 days that you have it live and we don't necessarily want it to we could discount the prices and I'll explain what that looks like here in just a second now a 75% 30-day sell through is pretty good we keep this consistently at 50% but we model out what it looks like at higher percentages because 50% is very conservative we're only buying 50 to maybe 200 units of inventory at a time for any given product and we obviously want those units to move but we anticipate that it's going to take some time because people are going to move in front of us in line and that line is constantly shifting and so we're okay if it takes us 60 days to sell inventory the average is about 45 days we would call this a base hit a home run would be if we clear all of it in 30 days and you'll see what impact that has on the financial model but to keep it conservative we're going to assume that 50% of the inventory is going to move in the first 30 days so now we can go back over to the financial model keep your eyes over on the left don't get distracted by all the numbers on the right yet we'll get to that phase you'll notice first that there are different phases associated with this model and you can see that the first two months of this is all infrastructure set up we're just setting up the business we're not moving any inventory the first inventory order as we talked about is $5,000 that's the minimum some people can put in 10 um you can play with these numbers and if you put in $10,000 of inventory then the numbers start to get really really big so let's just stick with five to keep it simple but when you put in $5,000 we know that we're going to move half of that inventory at a 1. 75x ratio in the first 30 days so we're going to make 4375 in Revenue Amazon's going to charge us their 25% fees this is the amount of money that actually gets deposited into the bank account after Amazon takes out their fees $2,500 of of course of that right 50% is cost of goods sold leaving our profit at $781 we take this money right that's in the bank account and we are ordering more inventory and so that inventory comes up here as a reinvestment we still have the inventory from the previous month that we're carrying over so that brings our total inventory that's available to 5781 multiply half of that by 1.
75 Amazon fees net proceeds to your bank account this is the cost of good sold of the units that were sold right and then you have your profit you take all of that reinvest it 50% total inventory order multiply by 1.
