Hey guys, Adam Hudson here, and welcome to today’s training. What we’re going to be talking about today, is return on investment, and why I believe Amazon is something that everybody should be looking at, at least as a part of their investment strategy. Now, some of you might be thinking, “Hang on a second, Amazon is not an investment. It’s a business.” Actually, I beg to differ. The reason I beg to differ, is because Amazon is one of those rare businesses that actually acts and behaves more like a property, or a kind of investment. In most cases, businesses require offices, staff, payroll, infrastructure, and all the things that make it a full-time gig. Whereas, Amazon, once you understand what you’re doing, find a few products, and get them manufactured—it’s basically making sure you don’t run out of inventory.
Most people would class a piece of real estate as an investment, not as a business. But, when you really think about it, there’s work involved, right? You have to research the areas, talk to agents, inspect the properties, get a tenant, repair the place when needed, and all those things. The longer you own the property, the easier it gets to manage, but it still takes some involvement. I’d actually stake that Amazon is less work once it’s established, compared to a piece of real estate. Therefore, I see Amazon as an investment.
So, a lot of people have been asking me, “Adam, I’ve only got a few thousand dollars. I’m still working in a regular job. What I’m trying to do, is get out of said job, and basically change how I make my money. I’d like a bit more time, and I’d like to, eventually, get to the point where I don’t have to go to work, if I don’t want to. I’d like to stay home more with my family.”
Here’s a practical example for you, even if you’ve only got a little bit of capital right now. Let’s say, five thousand dollars. I want to run through the options for those five thousand dollars, in the normal sense of things, and then, what you could do with the same five thousand dollars if you want to look at something like Amazon.
As we know, the banks are paying almost nothing now for termed deposits. Around two percent interest. If you put your five thousand dollars into a termed deposit with a bank, that’d pay you about a hundred dollars a year. A hundred dollars a year aren’t going to change anyone’s life. In fact, that’s not even keeping up with inflation.
If you were to take the same five thousand dollars and put them into the stock market, even a Blue chip stock, or something that’s nice and safe … Warren Buffett says that the average long-term return that an investor should expect from the stock market is about eight percent. So, eight percent of five thousand dollars is going to give you four hundred dollars a year in returns, which isn’t too bad. Of course, the risk is very different. The risk of you losing your money in a termed deposit is very low, while the risk of you losing your money in the stock market isn’t slim. stock markets go up, and they go down. So, what I’d like you to think about is: What if you put those five thousand dollars into an Amazon product, or a series of products?
If I’m going to put money into the Amazon bank, my expectation for the return is around a hundred percent. I want to be getting a one hundred percent return on my capital, each year, or I don’t want to launch that product. Now, that might sound like a crazy high return, but in terms of business, it really isn’t.
Before I go into detail about the returns, I want to quickly talk about the risk, because this is a different type of risk. When you’re educated, the risk is actually quite mitigated. It’s not like you don’t get anything for your five thousand dollars. You get an inventory, and that inventory’s worth five thousand dollars in wholesale costs, usually from of China.
In my course, I teach people that we should be selling products for three to five times our retail cost. In other words, if you invest five thousand into an inventory, you should be retailing anywhere from fifteen to twenty-five thousand dollars on Amazon. So, by the time you take all the cost and everything out, you want to be seeing a one hundred percent return on your investment.
Even if it was a terrible buy, you can discount the inventory to very close to what you actually paid for it, and get most of your money back—assuming you didn’t choose an absolute failure for a product, which education helps you around.
If you’re looking to make five thousand dollars a year, here are the numbers: Basically, there are fifty two weeks in a year, right? Each week, we should be making around ninety-six dollars, or, put another way, thirteen dollars and seventy cents per day. So, to get your little Amazon business selling five thousand dollars’ worth of inventory, all you need to do is get your thirteen dollars and seventy cents a day, for twelve months. That’s going to give you a hundred percent return on your inventory. Now, to give you another little example of scaling that slightly, my brother and I just launched a brand on Amazon together. We invested fifteen thousand dollars into kicking this little brand off. And with the fifteen thousand dollar inventory we purchased, we’re launching six products simultaneously.
So, to get our fifteen thousand dollars back, which is the absolute worst-case scenario, we need to make around forty-one dollars per day in profits. If you break that down across six products, it means each product has to make six dollars and eighty-four cents a day. Think about that. Six dollars and eighty-four cents a day, per product. Now, this range of products is going to sell for thirty-five dollars per product, and on that margin, that’s thirty percent. We’re going to make ten dollars and fifty cents from each product, clean profit. We don’t even have to sell one product a day. Not even one product a day. Usually, of each of those products, it’s almost one every second day in order to get a hundred percent return on the capital. Now, my average on Amazon is much more than a hundred percent return. I do two or three times what I actually put in. But, I’m just saying, as a worse-case scenario, you’ll get at least a hundred percent return on your money.
Now, of course, I’m in the wealth creation education system here. I can’t set that standard. But, when you do the math, putting your money into the Amazon environment as opposed to putting it into the bank, or stock market, in my opinion, is a really smart move.
Hopefully, you’ve enjoyed this, and maybe even thought of some ways to actually grow what little capital you may have. If you have more capital, great. If not, start off with a small amount of money. Once you know how it works, get a second product. After that, get a third product. Once you’ve gotten a bit of success, you know how everything works, and you’ve done it time and time again—the sky is the limit. You can scale this up really solidly. With a hundred percent growth per year, your money will grow very, very quickly.
Thank you for watching, and have an awesome day. Bye for now.