As socalnate1 mentions above this is very possible to scale up a small e-commerce operation and be profitable immediately - especially in niche products. There are several case studies for this.
For example I sell cases for mobile bluetooth speakers. Our Jambox case was profitable instantly and I paid for the first batch of inventory with revenue from a pre-launch sales discount. The first batch of inventory was paid for with sales before I had the product on hand. I packaged and shipped them out of my home office until it was a pain in the ass and now we use Amazon FBA. We use profits to purchase additional inventory at greater quantities to increase the profit margin. Rinse & repeat.
One of the keys is to start small to prove the market so you don't end up with a shit load of inventory in your garage. Or better yet do what I did and sell them before you even have them made. We started with 50 units which I was fortunate to sell almost all of using pre-launch tactics before we ordered the inventory from our manufacturer.
For example I sell cases for mobile bluetooth speakers. Our Jambox case was profitable instantly and I paid for the first batch of inventory with revenue from a pre-launch sales discount. The first batch of inventory was paid for with sales before I had the product on hand. I packaged and shipped them out of my home office until it was a pain in the ass and now we use Amazon FBA. We use profits to purchase additional inventory at greater quantities to increase the profit margin. Rinse & repeat.
Granted this isn't Amazon scale but it's working. See Dodocase for another example (they are doing way better than us). http://mixergy.com/dodocase-patrick-buckley-interview/
One of the keys is to start small to prove the market so you don't end up with a shit load of inventory in your garage. Or better yet do what I did and sell them before you even have them made. We started with 50 units which I was fortunate to sell almost all of using pre-launch tactics before we ordered the inventory from our manufacturer.