This video is a guide for people who want to get into Amazon business as an investor. Not as an entrepreneur trying to build an FBA business but rather purely as an investor with capital only. And how do I differentiate Pakistani Real Estate vs Amazon Real Estate
1. First of all we need to understand, in FBA we have 3 stages. Seed, Plant & Tree. Every FBA entrepreneur is busy trying to grow a seed into a small plant (Immature list with few reviews + few organic daily orders) and later mature it and make it a big tree (A mature list with 100+ reviews and plenty of organic daily orders)
2. As an investor you should always invest into a plant. Don’t invest in seed and don’t invest in tree. Investing in seed is always risky because when you trying to build an FBA business there are hundreds of variables in the middle. You may succeed depending on too many variables and you may fail too. Don’t invest in Tree because tree is expensive. You have to pay 30x multiple to buy a mature Amazon establish list. Whereas plants (immature listings) are your best bet as an investor because you can buy them for 10x multiple.
3. As an investor I prefer buying equity /Partnership instead of buying the whole plant. This way you let your partner work hard and continue growing this business to next level and grow this plant into a tree and sell the tree later.
4. For example I can invest $50,000 into buying 50% stake of 10 plants (immature listings) making $1k per month profit each. If I own 50% stake of 10 such listings then my share is $5k a month with ROI within 1 year and in 2 years these small plants become big trees worth $500k for my share. What business in the world can give you this kind of return? Investing in Plant is always less risky and always come with higher chance of growth. Even if I make it a 2 year goal, it’s not a bad strategy. I would rather pay higher to get 50% stake of 10 such listings instead of investing in unstable property market.
5. Instead of buying 100% ownership of 10 lists, I would rather invest on 10 entrepreneurs and give them this cash and let them become CEO and grow the business to next level and work hard for it.
Is it bad?