I have a small factory in Arizona, and we sell products on Amazon as well as through multiple other distribution channels. A few thoughts came to mind while reading this:
1. China isn't the only place to get stuff made. Look locally. We manufacture our products, as well as products for two other companies who also sell partially on Amazon. You probably have local contract manufacturers like us who would appreciate a chance to compete with China. We use lots of automation, and we are cheaper than China on heavier metal goods (over 20 lbs). We are also cheaper in small runs, or MOQ is typically 1; in China it is often 1000. You probably have someone near you that can do the same.
2. Getting a hit product isn't easy. Mostly it seems to be luck. Manufacturing is like software development; sometimes you have to iterate for a while before it all clicks with the customer. Once it clicks, its off like a rocket. One basic path to a hit product is to create a product that is a combination of others. I have a friend who makes a kit out of a bunch of specialty tools for EMT. His is the only kit on the market and is a great seller for him. Another friend had great success with an automotive accessory this Christmas season on Amazon. He sold up to 50 units a day, that season he sold 3000+ units. He was #1 on the “top seller” list. Don’t forget that he had to have 3000 units in stock before this; that is a huge gamble if you are just starting out.
3. Having a hit product isn't easy to manage. Once you get a hit product it goes 0-1,000 real quick. I had to manage 50-100% growth per month in the first year of manufacturing. Per month. With a product made out of steel. If your hit product is coming from China, I hope it is lightweight because you will end up air freighting it constantly. I once air shipped a 1000 10 mm bolts with a special head from China and it cost me $1000 in fees, $1 in shipping per $0.13 bolt. If you ever run out of stock, you will fall of the "top seller" list and your volume will plummet. China can take 3-6 months for a restock order to get made, shipped, through customs and onto Amazon warehouse. How do you keep stock for 3-6 months on hand? My friend who sold 3000 units before Christmas, he had to ship those units to Amazon FBA well before then and pay storage the whole time. The storage is sold by the cubic foot, and he had thousands of cubic feet to pay for at elevated Christmas rates.
4. Single Point of Failure. If Amazon suddenly decides that they don’t like you, sales can go from 100-0 instantly - and now you have money tied up in product, fees in storage, and no cash flow. Even if you have multiple channels, Amazon will be a BIG customer. They are about 10% of our business, and if they disappeared tomorrow it would hurt. If they are over 30% of your business, getting shut off could mean bankruptcy for you.
5. Building a brand is hard, and a different skill set than manufacturing. The article is correct that there are thousands of manufacturers wanting to build stuff for you. How well could you build a brand in a foreign country? Especially if you are a manufacturer (focused on efficiency) and not a marketer (focused on A/b, Social, advertising)? This is why the Chinese manufacturers are happy to let a marketer take on the risk of developing a brand, seeking out a customer base. As a USA based manufacturer I am happy to make whatever you want too! We take Visa, Mastercard, Paypal, Bitcoin …..
The article is fairly complete though, I believe the author has actually done this stuff.