Replenishables – Why I Hate Them

I did a little poll in the FBA Master Facebook group and asked what everyone would like to receive as a freebie. The option that received the most votes was:

Replenishables

Everyone wants that magical list of items that they can walk into a store and purchase every time they shop. It is what people think will make them stacks on stacks on stacks of money.

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Here’s the problem:

Replenishables aren’t glamourous. They aren’t the beautiful stage hand that you see on the stage. They are the items that you don’t want to purchase. They don’t make you 100%+ ROI (most of the time) and they tend to take a little bit of work to find.


Now you all wanted to learn about replenshiable items, so that is exactly what I am going to do.

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Let’s get down to the cold hard facts.

  1. Replens typically have a return that falls between 30%-60% of your investment. Typically, you aren’t going to find replens (that last past the time frame laid out in fact 3) that are yielding over 60%.
  2. Replens are normally in gated categories. This sucks if you are not ungated in categories such as Health, Beauty, and Grocery. The reason they fall into these categories is that these items tend to be purchased time and time again. If I go and buy a set of pots and pans, I don’t plan on buying another set for 10 years. If I buy a bag of chips, I expect that I will need to buy another bag the next time I’m at the store. It’s really about the nature of the product. It has to be consumable. If it can be consumed on a regular basis (or used), then I might be a possible replen.
  3. The average lifecycle of a replen is around 3-6 months. That’s right. Just because you have an awesome list of replens right now, doesn’t mean you are set for the rest of your Amazon selling life.
  4. Amazon is an information powerhouse. If there is money to be made on an item they can purchase from a wholesaler, you can bet they are going to be trying to get it. I have seen Amazon come onto a listing multiple times after I have found a fantastic replen.
  5. Replens tend to be items that have a low cost of goods associated with them. That means that you tend to find replens that fall under the $10 mark.

Now do you see why I hate replenishables?

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Now I have to admit, that there are things in life that I hate with a firey passion. Even though I hate these things (such as Comcast), they have a place in my life that I have to accept. I wouldn’t be able to write this blog post without the Internet that I purchase through Comcast. Although I hate the company, I still have to use it because it is used for a greater purpose.

The same is true about replens. Although I hate the way replens are designed by nature, they are an extremely important part of my Amazon portfolio. And honestly. They should be an important part of your portfolio as well.

At this point, I assume all of you think I have lost my mind. You all assume I am crazy and that you are thinking that my cat Karl might be the real brains behind the operation.

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Before you lock me up in the loony bin, I want you to follow me down this rabbit hole a bit further.

If you haven’t read John’s post about replens, I want you to take a few minutes and read it right now.

Now that you have a little bit of a background on the types of replens, it’s time for me to explain why you MUST have them as part of your portfolio.

  1. Replens sell year round. People don’t stop using toilet paper at the end of Q4. They continue to buy it every month of the year. If you want to have a sustainable Amazon business, you will need to have a group of products that will continue to sell no matter what.
  2. Replens hedge your risk. If you only purchased high risk items with high return possibilities, you are setting yourself up for a major win (or a major loss). By having a steady stream of sales from replens, you can hedge that risk and balance your portfolio.
  3. Replens help you maintain your cash flow. Any seller knows that the worst thing that can happen is you run out of funds to invest. This tends to happen when you have your money tied up in inventory. If you have a constant stream of sales from replens, you can make sure that you have money coming in each pay period.
  4. Replens can be purchased during almost any shopping trip. If you have a great list of replens, no sourcing trip will be a complete bust. You might not find the hidden treasure in the clearance aisle each time, but you will be sure that you can turn a profit during each shopping trip.
  5. Replens are great fillers for shipments. If you are trying to get the most bang for your buck with the whole dimension weight issue, replens are perfect for adding to a shipment that you are already sending into a warehouse. I would rather pack my boxes with profit instead of packing material.

Now that I have shown you why you need to have them, it is only fair that I teach you how to find them.

The easiest way to learn is to take my dad’s course (you can read Mike’s full review here).

For those of your that don’t want to spend the $97, here are some tips that I have for you.

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  1. Think outside of the box
    • Start looking at items that you don’t typically sell. You would be amazed at the types of products that sell on Amazon each day. I would challenge you to look at a brand new category the next time you walk into a big box store. If you are looking for items that fall in health, beauty, or grocery, I want you to go look at pet, home improvement, and office supplies. If you fall into the other side of things, try doing that in reverse. You never know what you will find when you are walking up and down an aisle.
  2. Create a new listing.
    • This one is overlooked by almost everyone. Have you ever been in an store and scanned something that said: Item is not currently listed on Amazon. Most of you act like John and just put it back on the shelf. What you should really be doing is buying one unit and creating the listing yourself (if you don’t know how to do it, make sure to sign up for the email list below). This will give you a competitive advantage as the only seller of an item for a given period of time.
  3. Multipack and bundle.
    • Let’s face it. It is no fun to purchase an item for $2 and get $0.80 back (grant it, it is 40% return, but it is still no fun). In order to combat this, you will see a lot of people that put together multipacks or bundles. This increases the purchase amount and requires that less items get sold to reach your given profit level. It also helps with those who are not Prime members as it allows them to get closer to that magic $35 free shipping total.
  4. Coupons and cash back.
    • There are two ways to increase your ROI – Increasing your prices or reducing your cost of goods. Coupons and cash back (sites and credit cards) are a fantastic resource to help you reduce your cost of inventory. It might not seem that exciting that you are getting 3% cash back, but it does add up over the entire year. I love seeing my cash back statements each month. Don’t forget coupons as well. I have found some great deals because I am willing to take advantage of the coupons.
  5. Go big and bulky.
    • One of my favorite tips to give those looking for replens is to go big and bulky. This goes against all of the advice I typically give, but that is the reason it is powerful. Most people walk right by the bulk food aisle because they are afraid of shipping costs. As you will see below, I was able to find a great replen that was hidden in plain site in the bulk sized aisle.

And what is an awesome blog post without a few examples?

Example 1: Ortega Taco Seasoning

Here was one of my favorite replens.

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Now if you hop onto Amazon right now, you will see this.

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But – I’m telling you, I used to make bank on this item. When I first started selling it, here was what the orders looked like:

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I mean. It was a $4 item that I was picking up in stores. It was a piece of cake.

Fast forward around 6 months and this was the order I received:

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Look at that drop (note the shipping, but still). That was what happened in a 6 month period. Now if you look above, you can tell you can barely make decent return on the item (it actually falls within my range for a replen, but I am still bitter).

Price erosion happens. Some of you call this the “Race to the Bottom.”

The race to the bottom is nothing more than economics at work. Sellers and buyers make decisions based upon their own self-interest and it brings the market to equilibrium.

Instead of complaining and getting mad, I kept buying this product and making my decreasing returns. After all, I was still making money.

Don’t worry about what it used to sell for, only worry about the money that can be made right now.

Example 2: Mentadent

This is another example that I think has an important lesson. This was another item that I regularly purchased each time I went into a Walmart.

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Now back in the day, this was selling up around the $13 – $20 mark. Now we can see that it isn’t happening, but I made money along the way.

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Now here is what was interesting. I actually stopped selling this around September of last year. I was sharing a few old replens with John and I passed this one along to him. He went and rescanned the item and actually sold it as a replen for a few months. It was incredible. I had given up on the item and John was making money on it. That taught me the following lesson.

Keep a list of lost replen items and re-check them each month.


Now I could keep going forever about tips, tricks, and examples, but it is time for me to let you go.

If you want to learn more about creating your own product listings, make sure to sign up for the list below.

Until next time,

CW

 

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