Author’s Note: It’s technically Thanksgiving as I write this in the overnight between Wednesday and Thursday. By the time you read it, it will be past Thanksgiving. I wanted to thank all of you for your contributions to FBAMaster as a community. We’re over 7000 people strong and I could probably cite 100 people by name who have contributed to my business in positive ways. So, Thank You!
Author’s Note II: Normally we try to have a guest post for you Thursday and on the weekend. Because of the holiday, we do not have that this week, but I wanted to draw your attention to a Sales Tax series we’ve been posting on Sunday. A final post will show up next week, but if you haven’t checked it out yet, have a look at their Intro to Sales Tax, their Free Webinar on Sales Tax, and a Q&A Session with a Sales Tax professional.
I had a lot of positive feedback last week when I wrote my Case Study on a product I made about $1000 on for 30 minutes worth of work that 3000 other people had access to. I wanted to follow that post up with a completely different type of case study. On Wednesday I needed to get a shipment out before 12:30 (approximately the time my UPS Driver shows up). I had already packed 4 boxes when I realized a product I had wasn’t double sealed (which means it needs to be poly-bagged). Since my business/life model hinges on me trying to do as little work as possible, this did not make me very happy. So, I put on the series finale to the most popular sitcom of my generation: Friends (“I got off the plane”). Not this show in particular, but this is definitely a tactic I use frequently. Not only does it make it seem like I’m not actually working, but I find it nice to block batches of work in 22 minute increments. A lot of tasks I do break down into 22 minute tasks (peeling stickers from about 50 products, poly bagging 24 units, stickering a couple hundred items, etc.).
So, I bagged up my units, finished up my shipment, and got all of the boxes out for the UPS guy just in time! Next, I needed to do some admin-related stuff for FBAMaster. As usual with things on Facebook, this took longer than I anticipated. By about 3pm I knew I needed to go out and do some sourcing, but wasn’t really in the mood. Even still, I had a $10 coupon to Big Lots and decided to try to make it fun by doing an experiment. My goal was to spend 90 minutes total, hit up the 3 closest Big Lots, make enough money to justify my time, and also to have something to write about.
In order to try to be the biggest slacker possible, I knew I could only spend 20 minutes per store (leaving 30 minutes driving time from home to 3 stores and back home). Checking out when you do Sales Tax exemption isn’t always smooth and the lines aren’t always speedy when there is a coupon, so I figured this gave me about 10 minutes to look at each store. My plan was to find just a single new item per store, buy enough quantity to use the coupon ($50), and get out. I could have stayed in each store longer, and bought more than the coupon covered and still profited, but I get enough coupons at BL that I try to never pay full price unless I have to.
3:15pm (Left House to BL#1)
3:25pm (Arrive at BL #1)
This is my nearest BL and I had recently bought all of my standard buys in this store, so I didn’t even walk to the Health/Beauty aisles and decided to check out the home/kitchen section. This aisle holds nostalgic value to me, because it is how I learned that the FBA business model could actually work. I still remember finding this Black Rubbermaid Filtration Bottle. It’s now up to 19.99 with 85k rank in Kitchen, but back then it was $15 and about a 20k Kitchen rank, selling at Big Lots for $5 ($4 on their 20% off days). In the early days of FBA, back when I couldn’t sell in half the categories, I learned Rubbermaid products very well. One of my suggestions for newer sellers is to pick a category and learn it well. By learning this category well, it allowed me to walk into stores and within 30 seconds be able to tell if anything was profitable without ever even scanning an item.
Today, though, I scanned a couple items in this section. Early on, I found a type of storage bag. They only had 5 units, but it worked for the coupon:
Big Lots Price $12 x 5 units = $60 – $10 Coupon = $50 = $10/unit.
Rank 35k in Home which is fantastic. Zero Prep required.
AZ Selling price $25.75
Profit after all fees $7.72 x 5 units = $38.60
Found my 1 item and used full value of coupon. I’m out of here.
3:35 (left BL#1 to BL2) — Making good time so far.
3:50 (Arrive at BL#2) — Unexpected Traffic triples commute time!
Annoyed by traffic and still trying to hit my 90 minute home-to-home goal, I cheated a little bit here. I had just sent in a case of a replen that morning, so I knew I needed more, so I didn’t buy a new item here. I just went to find the item I knew I needed. They had 44 units. The coupon was only good for $10 on $50, though, not the preferable 20% off deal. Normally, in a situation like this, I would just go find the manager and ask for a discount, but I didn’t want to go that route on Wednesday afternoon before Black Friday. I still wanted a deal, but didn’t want to ask an employee to go find/call the manager, so what I decided to do was to put 8 units in my cart and walk to a cashier I knew was brand new. Before even scanning the item, I said, “Hi, I have sales tax exemption, any chance you know how to do that?” Even experienced cashiers rarely do, so I knew she wouldn’t Normally I’d just help her through it, but being new, she was quick to call a manager for assistance. Out walked Beatriz, a manager I know:
Beatriz: Oh Hey there! How are you today!
Mike: Great Thanks, you?
Beatriz: I’m good. *looks at cart* that’s it for today? No more Olay?
Mike: Not today. You guys are out of the kind I need. But these, you have like 40+ of them. If you give me 20% off, I’ll go take ’em all for you.
Beatriz: You got it; go grab them.
Mike: I know you have at least 40. Just ring me up for 40 and I’ll grab them after.
Beatriz: Sure (enters quantity + discount). And you have the sales tax thing, right?
Mike: Yep. But you can go back to what you’re doing and I help her through it.
Beatriz: Sounds good to me. *To employee* He’s faster with it than I am. *To Me* Thanks for coming in today. Have a Happy Thanksgiving!
Mike: Thanks Beatriz, Happy Thanksgiving to you too. Do you want me to find you to count the units on my way out?
Beatriz: Nope you’re fine. Have a good one!
Mike: Thanks. Bye!
Big Lots Price After Discount: $5.44
15k rank in Health and Personal Care
Az Price: $15.25
Profit after all fees $2.98 x 40 units = $119.20
4:15 (Leave BL#2 for BL#3)
4:25 (Arrive at BL#3) I’m quite behind and will really have to rush to try to make the 90 minute goal
I head straight for feminine hygiene. Not always a guarantee, but with a coupon, I’m pretty confident I can make less than 10 scans and find something worth buying. Sure enough 4th scan is good enough. It isn’t fantastic, but they are $3 and have over 17 units (the amount I need to trigger the coupon) and I have no time, so I just grab and go.
BL $3 x 17 units = $51 – $10 Coupon = $41/17 = 2.42 each.
70k rank Health and Personal Care. This isn’t a bad rank in HPC and I happen to be pretty good at knowing which feminine hygiene products will sell and I’m confident that I can sell 17 in 2-3 weeks.
AZ Price = $8.50
Profit after all fees $1.99×17 = $33.83
But … there’s a problem. I checkout and I’m told the coupon is no good (Usually when BL labels coupons as good per one customer visit, they can be used at multiple stores, but only once per store). Manager is standing near register and employee checks with the manager and he says I can’t use it.
Mike: Are you sure? Usually when it’s worded like this I can use it at multiple stores.
Manager: Nope, it won’t let us do it.
Mike: That’s weird; I’ve never had a problem before. What should we do? (I like questions like this. I usually like to let them come up with the solutions, if possible).
Manager: I’m sorry but we can’t take the coupon. (Okay. So clearly not going to get much help from him, and paying an extra 61cents per item is going to kill my margin).
Mike: Hey, could I show you something? *Grabs a unit from cart and walks toward manager. Swipes finger across top of packaging*. Do you see this? It’s dust. You can look at the rest of my cart. All of the ones on the top are dusty. We both know it’s because these have been sitting in that corner for months. I’m willing to take them all off of your hands and let you use that space for something that actually sells, but I can’t make the math work at $3 each. Can you override the price and let me take them off of your hands, or should I leave them?
Manager: Uh…. ummm…. Alright, but just this one time.
Mike: Ok great!
4:40 (Leave BL#3 for home). I’m about 7 minutes from home, but I really want to make my 90 minute goal, meaning I have 5 minutes to traverse the distance! I make up some time and come VERY close to making it, but a light turns yellow and there is a cop sitting perpendicular to me at the intersection and I decide not to run it. I end up getting home at 4:48, for a total of 93 minutes!
93 minutes. Home to BL1 to BL2 to BL3 to Home
Projected Profit: $38.60 + $119.20 + 33.83 = $191.63.
Now, just under $200 for 90 minutes isn’t terrible, but it certainly isn’t amazing. However, a few things should be said:
1. It was part of a challenge. I could have made more if I just spent 90 mins in 1 store finding everything that was good, but I wanted to try to make it fun and give me something to write about. Plus, I wanted to use it to test out some new items.
2. In hitting 3 stores, I also got to walk through their aisles and glance at their inventory. I don’t really have a system for tracking inventory of my replens, but I have a pretty good memory and keep a mental log at various stores. When I’m low on certain products, I know which stores to go to in order to restrock.
3. One of the benefits of FBA is that the business can be whatever you want it to be. If I wanted to work hard and actually put in some time, I don’t have even a tiny bit of a doubt that I could have found $500+ in profit. But, sometimes you just feel like being a slacker. Today was one of those days for me. One thing I love about working for myself is that the business is exactly what I make of it.
4. 2 of the 3 items were new and 1 definitely has replen opportunities. So, I might not make a ton today, but adding it to my product mix will ultimately pay off more than today’s profits reflect.
One potentially useful thing about this write up is that I guarantee 95% of people wouldn’t have found deal 2 or 3. Deal 2 required me establishing a relationship with the manager where she knew I was a reseller AND asking her for a discount. Many people are so self-conscious that they scan items by pretending to text with their phone! If I’m in Kohls, I could see this, but no way am I doing this at WalMart or BigLots or Tuesday Mornings, etc. Beyond that, most people are so terrified of asking for a discount that they would have either passed on the item or taken a ROI that is literally cut in half. Deal 3 is only 1.99 profit per unit, which would have turned off most people, and also required dealing with a manager who showed resistance. Finally, a lot of these deals lose even more value if I had to pay Sales Tax. Some people haven’t jumped through the hoops in their state to get a reseller’s license and are consistently paying 5-10% more per item than I am. Using deal 2 as an example, the difference between paying 6.80 + tax ($7.36) and 5.44 (my price after asking for discount and not paying tax) ends up being $77 down the drain.
The last point I want to make is to point out that it would have been easy for me to make $200 less. It would have been very easy for me to say, “I’ve already packed a couple shipments today, tomorrow’s a holiday, I’ll be making a lot on Black Friday anyway, I’m not going to go out.” Especially with low motivation, it would have been very easy to think like this. But, I really think that this can be damaging. I would venture to guess that most people think that this business is all about finding the super-duper-slam-dunk finds and profiting a couple thousand off of a sweet buy. Those are wonderful, sure, but they don’t make a business. A business is much more about 1000 little victories than 1 gigantic victory.
As Always, Best Wishes