Merchandise Reselling Pitfalls – An Example of Why Reselling Isn’t for Everyone

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merchandise reselling pitfalls
Photo by Nick Saltmarsh.

Reselling Isn’t For Everyone

I have talked about reselling briefly on Miles to Memories before, but not in great detail. That is because I am not a huge fan, but I am not a novice either. Anyone who gets into the deals space has to resell at some point in time I think. Why?

The LG G Watch Deal

merchandise reselling pitfalls

Some deals are just too good to pass up. One such deal hit my radar about three months ago. AT&T was selling the LG G Watch for $50. Considering the watch sells for about $120, that was a great deal. I then went on to purchase 2 orders of 4 each. (The limit.)

For some reason, AT&T decided to cancel all of the orders for non-AT&T wireless customers. This meant that I suddenly was not going to get the watches. That was fine I guess, so I moved on. Then one day a box with four shiny brand new LG watches showed up. Somehow AT&T had shipped one of my orders.

I also looked and my portal cashback had gone through for 10% as well. So for $48.65 including tax, I had a product that I could resell for a 100% profit. Wow! Of course, I found this deal because I wanted the watch myself, so I kept one and shipped three off to Amazon to sell.

Amazon Sold Them Fast

When Amazon received the watches, the price was holding steady at $119.99. Within a day someone had bought the first wach and shortly later a buyer purchased the other two. Basically within 24 hours Amazon had helped me double my money. Or did they?

A few days ago I logged into my Amazon seller account and found a chargeback for 2 LG G watches. The person who purchased two of them decided to return them. But instead of just returning them, she “claimed” they were defective. Most likely she did this since Amazon doesn’t charge you return shipping on defective merchandise.

merchandise reselling pitfalls
The customer received all of her money back including shipping. What are the odds that two brand new watches are “defective”.

So my watches were returned to Amazon, but guess what? Now that they are “defective”, Amazon won’t sell them. This means that I have to have them shipped back to me (at my expense) and then will have to resell them as used now. Thankfully my profit margin was big, but this is definitely a hassle.

The Float & Calculations

Thankfully in this situation my float is actually quite low. But what if I was selling something much more expensive? Not only would I be floating the money I used to buy the merchandise, but I would be taking a huge hit in value since it can’t be sold as new anymore. It could be a big loss.

What if I purchased those watches for $100 and resold them for $120? After all fees I might have made a $5 profit at that price, but the returns would have killed it. After I get the watches back, I’ll be lucky to sell them for $80 used. You need to account for returns in some way.

To Resell or Not to Resell

I’m not saying that people should resell or shouldn’t resell. I have resold enough over the years to know it is worth it when I get a great deal. I’m not sure the time and effort (and hassle) is worth it for me as a full time thing. With that said, it works perfectly for many and that is great. I just want newcomers to be aware of some of the pitfalls.

As I mentioned a couple of weeks ago, I am in the process of selling about $5,000 worth of merchandise in order to work towards my minimum spend on the American Express Business Platinum card. Based on current prices, I should do a little better than breaking even, but to be honest, I think the gift card game is more my style.

Conclusion

Dealing with returns, customers claiming packages aren’t delivered and more issues is all part of the reselling game. It is important to account for these issues when reselling in any volume, since things will happen and you will eventually run into a problem.

Do you resell? What is the worst issue you have come across? Let me know in the comments!


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19 COMMENTS

  1. Any reason you didn’t try to sell them through eBay first? I don’t resell, but I’ve been reading on some of the other blogs that being able to choose “no returns” can make it easier in certain instances.

    • eBay is a hassle in other ways. Often people will purchase and then not pay. I have sold the majority of things through eBay before, but there are hassles involved there as well. In this case I am trying to get familiar with Amazon for reselling.

      With that said, the no returns option on eBay is nice, but I find that quite a few people buy and then never pay which is a hassle.

      • Even on EBay, if a buyer claims an items is either 1) Defective, or 2) “Not as described” they can return the item at the SELLER’s expense with no repercussions or questions by EBay. However, if a buyer has a ‘pattern of similar actions or behaviors’ they can be penalized by EBay, but that would not help out the sellers along the way who were a part of any such pattern.

        • I got burned recently on a “Defective” claim on eBay. It was an older high-end THX home theater receiver that I sold for only $200 but at 70+ lbs the shipping was over $75. Although I charged that to the buyer, eBay takes a cut of shipping too! In the end, the buyer claimed it did not work so eBay billed me for the return shipping at another $75. I was out $150 in R/T shipping but at least it was actually in working condition. I sold it for $100 locally for a $50 loss. If I could do it over, I would have just donated it and taken a tax deduction.

    • As far as Im aware, even if you specify no returns on eBay, because of eBays money back guarantee you always have to take returns

  2. This year I’ve done $2.5k in reselling (of about $20k in MS) with about a 7-10% true profit margin. When you add eBay Bucks & Cashback it increases. I’ve also started stacking the Gyft Points and doing my eBay purchases with Gyft cards. I do mostly used iPads, there’s a pretty high demand for them at reasonable prices. I check eBay every day, and compare with any new postings on my local Craigslist.

    So far my worst float is a Macbook I purchased (at a great value) and have only gotten 2 lowball offers from CL and 2 SCAM offers asking for my Paypal address so they can “send me money ASAP”. So right now I’m debating taking a small hit $25 on $500, just to get it off my hands. I had estimated a $100 minimum profit on this…

    I actually keep an iPad posting live on Craigslist AFTER I’ve sold the 1 or 2 and just tell the prospective buyer I’ll be able to sell it to them later or this weekend (luckily I travel most weeks for work so I have that ‘excuse’ to fall back on). Then jump on eBay and evaluate the Buy It Now options .. even if it’s for less profit. This keeps the float at a minimum and reduces the stress.

  3. I recently put my old iPhone 4S up for auction on eBay. The high bidder made a pretty decent bid for it, and as soon as I received payment from her, I shipped it, using USPS, with tracking. About three days later, she messaged me, stating that she hadn’t received the item and wanted a refund. I encouraged her to wait a couple more days. Two days later, tracking showed that the package had been delivered to her.

    She STILL opened a case with eBay, claiming that the watch was never delivered. Luckily, eBay refunded her money, then told me I didn’t have to reimburse them. That was fine, but I’ve a feeling this woman really did receive the phone, then gamed the system to get a free phone.

  4. you have to use “immediate payment” option, auction is not doing well on ebay, gotta go with buy it now.
    i have no problem selling on ebay, it’s actually easier than Amazon for sure.

  5. “Dealing with returns, customers claiming packages aren’t delivered”

    For those reasons I decided not to delve into merchandise reselling. It just seems like too much hassle

  6. Don’t mess with electronics, not worth it. I sold 6 Third Eye Blind tickets today for $45 profit each (even after fees). Last week I sold 43 Rolling Stone Magazines (Rush the Band cover, first time ever) on Ebay. Rush fanatics showed up and got me $1.95 profit (after fees) for teach of those. Sometime quantity is more important than profit on ebay, you got to keep that top seller status to get reduced fees and reduced shipping costs. I also sell a ton of car parts for at a minumum of 100% profit. Some tiny little plastic trim pieces that are obsolete can go for $45 each, I paid $3 at the junk yard.

  7. I sold a brand new tablet on Ebay. After it was delivered, the buyer emailed me and said the tablet didn’t power up. My first feeling was the buyer was lying . I asked the buyer to send me a video to show the problem of the tablet. You know what? The tablet did have problem. I got the tablet back, refunded the money and paid the return shipping even the buyer didn’t ask for it. The buyer never said one mean thing and wrote a note to send me another one if I had it. I felt bad as I jumped the gun and assumed that the buyer was not honest. After that, I didn’t sell any electronics.

  8. Yes, returns are the bane of reselling especially with Amazon who will take basically anything back. Most items you sell as new if returned will then need to be sold as “Used – Like New” and you will take a 10-20% hit on electronics. Luckily that’s only a small fraction of sales on most items, but is definitely a cost of doing business. I still prefer Amazon as I hate dealing with customers and payments, but for items you can’t sell as new on Amazon (like Apple products) Ebay is often better. People should understand the risks for reselling and take it slow until they are comfortable with it.

  9. I have been selling gently used clothes and shoes on EBay for 4 years, about $50,000 gross per year. Our returns are less than 1% and we have 99.8% positive feedback as top rated sellers so good discounts on fees and shipping
    This has become a great avenue for MS even though it didn’t start that way
    My question is How to use a credit card that generates miles to pay eBay and PayPal fees which are usually about $450 per month. Paying out of PayPal balances right now

      • This is not entirely correct. eBay fees can be paid by credit card automatically or at your discretion (prior to due date.) PayPal fees will come out of sale proceeds. But PayPal fees are the smaller of the two fees you far.

    • If it’s worth the trouble, empty your PayPal balance and pay the eBay fees before they are due. Use the card you want as backup funding or buy mycash cards to load the account (not all retailers let you use credit cards). PayPal fees are going to come out of the proceeds, no way to cover those.

  10. Hey,
    I have a couple of LG G Watches to sell but i haven’t sold anything thru Amazon FBA before.
    Would you recommend that I sell them thru Amazon FBA?
    If so, should I use the FBA label system or the stickerless inventory? Did you wrap the box for the G Watch because it could come apart? (I read thru Big Habitat’s Selling on Amazon posts and it has great information but these things weren’t mentioned). I thought since you have already sold the same product that I am planning on selling, you would have some good insight. Any other advice on selling these watches?

    Thanks for your help,
    Billy

    • The only problem with FBA is returns. I think these watches are high return items. I had two of mine returned and the buyer said they were defective. This meant that I had to pay to have Amazon ship them back to me since they wouldn’t sell them. When I got them back I found they were untouched, meaning the buyer just said they were defective to save on return shipping. I think high return items like that may be better on eBay.

      I didn’t wrap the boxes and just sent them in as they were.

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