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Merchandise Reselling Lessons
I have been reselling merchandise on the internet for many many years. For a long time I would just opportunistically resell. For example, when the Google Chromecast was announced and went on sale the same day, I purchased a ton of them from Amazon. When they sold out later in the day, I sold them for twice what I paid and of course kept a couple for myself.
Perhaps I saw the writing on the wall for Serve or am just psychic, but I decided to start reselling in a much bigger way at the end of the year. Reselling on a small scale is so much different than doing it in a bigger way. Since scaling up I have learned quite a few lessons about these differences. Since I know a lot of you are considering reselling, I thought I would share some of my lessons learned.
It’s All About the Float
If you are going to resell in any meaningful way then prepare to float A LOT of money. With traditional MS I would float money for days and even sometimes weeks, but that was really because I was lazy. I could liquidate at any moment. With reselling, the cycle is much longer.
You are out the money the minute you purchase the merchandise and don’t get the money until weeks after Amazon sells it. (If you are using Amazon FBA.) Even if you get the merchandise right away and ship it to Amazon right away, it can take about a week for it to reach them and then another week or so for them to process it into inventory. Then of course it may not sell right away.
The way I see it you can approach the issue of float in two ways. Set aside an amount of money for buying and reselling and then keep your purchases in line with that. The other way is just go crazy and intermingle your personal funds with the business money. I ended up having to do this in December, but wouldn’t recommend it. In my case it was worth it because of the amount of deals I was finding, but it was a bit stressful.
Organization is Key & It Sucks
If you are going to resell in any meaningful way then organization is key. Not only do you need to track what you bought and for how much, you need to notate any portals, discounted gift cards, etc. Then you also need to reconcile your sales at the end with what you receive from Amazon. Don’t forget to account for shipping costs and supplies. Oh and then there are returns. Oy vey!
You can of course use spreadsheets to track much of this, but there is one tool I actually am paying for now that helps tremendously. It is called Inventory Lab. Inventory Lab interfaces with Fulfillment by Amazon and tracks much of what I mentioned above for you. You can enter in your cost of the item as you create the shipment and then Inventory Lab will track it through the process of being sold and tell you what you made.
While Inventory Lab doesn’t do 100% of the tracking for me, it does enough that I am willing to pay the $490 annual fee to use it. Thankfully there is a 30 day trial and I highly suggest giving it a try to see if it works for you. I’m so glad they gave me a free trial because I was hesitant to pay that much money for anything, but I quickly learned the time saved justifies the cost.
Note: If you sign-up for Inventory Lab with the links above then I receive $5. You can still get the 30 day trial by going directly to their website as well.
Perhaps if you sell one or two things now then you might do it for little to no profit just so you can earn miles/points. Once you begin to do it on any large scale then you’ll quickly realize that there is so much time invested that you better be making a profit! This whole thing simply takes a lot of time.
You will spend time sourcing deals and then more time actually buying them. Of course then there is the time it takes to create a shipment and to research prices so you know what to sell your product for. Packing up everything and shipping it to Amazon is also a time suck. Then there is the record keeping too. You will of course get better and more efficient, but you simply will be investing too much of yourself for a simple breakeven proposition.
Don’t Be In a Rush to Sell
The mindset of the occasional seller (especially one who only cares about miles/points) is to sell for the lowest price to get the item out the door and the money in the bank. While I admit I still struggle with this, sometimes waiting for a price to rebound is worth it. There have been several times recently where I lost out on money because I sold myself short by lowering the price too quickly.
Amazon price tracking services like CamelCamelCamel and Keepa are a good way to see where the price has been and make an educated guess about where it will go, but they don’t track third party Amazon Prime prices so they aren’t perfect. Of course much of this comes down to skill and you get better as you go. Remember the goal should be a profit and not just to earn miles/points. Of course holding on to an item too long isn’t good either, so it is important to strike a balance.
Points (Rewards) Add Up Quickly
If you are reselling to make a profit, then you’ll notice that the miles/points (and store rewards) are a fantastic side effect. You will earn tons of points form portals and from the credit card rewards. Then there are new sign-up offers as well. If you are reselling enough then you won’t have to worry about meeting the minimum spend requirements on new cards. You will not only be spending a ton of money, but it is all legitimate. No manufacturing involved.
I actually learned much more than what I have listed and will share more insight with you as time goes on. For me, the transition to reselling a lot more has been fairly smooth given my background and overall experience, but there have been bumps. If you are considering reselling, keep in mind you can do as much or as little as you want. You can start slow and stay within your comfort zone. Just remember, that it can get involved and isn’t for everyone, but it can be quite lucrative.
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