Swiftie Tay: Strategies for Slow Moving Inventory

Swiftie Tay
Swiftie Tay

Have you ever purchased a great deal for resale, gotten it all prepped and shipped, only to have it hit an FBA warehouse and just sit?  No sales; no nothing?  That was the predicament that one of my buddies on FBA Master group was facing.  After an initial consult, we developed a plan that took this dud and turned it into a sold-out-success within a couple weeks.  This is a concern that a lot of people face, so I figured the best plan was to use my buddy’s example (and let’s call ’em Swiftie Tay) as a case study.

 

 

A few months agjelly bellyo I found a deal of 48 packs of these Jelly Bellies for $10.99 and noticed that 8-packs were selling for at least that much!  A perfect unbundling deal (I discuss this strategy in my post How to Buy and Sell on Amazon).  Swiftie Tay recognized the opportunity and scooped them up.  In a weird mix-up with Amazon Swiftie Tay only ended up with 14 eight packs, and paid a total of 21.98. Next, Swiftie did what most people would do and price-matched the next seller at 15.99 and waited.

 

 

jelly2

And waited.  And waited some more.  The rank started rising.  30k, then 90k, then 190k.  It was getting bleak.  In a few weeks time, only one sale had been registered.  These were items with an expiration date and Swiftie Tay didn’t have 6 months to hopefully unload this inventory.  After being contacted, I looked at the listing.  The other seller had a longer track record, good feedback, etc., and I was pretty confident that he was getting the buy box more than his fair share (Pro Tip: To check how often you get the buy box, go into seller central and go to Reports > Business Reports > Detail Page Sales and Traffic to check for the buy box percentage on each ASIN you sell).
There was an added problem.  Even though Swiftie wasn’t getting the buy box that often, it might have been fine if it was a fast-turning product that sold many units per day. Unfortunately, this was not one of those products.  By the time it was getting toward a 200k rank, it might be selling a unit or two maximum per week, and the other seller was getting the majority of those sales (Pro Tip: Add your competitors’ inventory to your cart and change the quantity to 999.  You will see how many units they have.  Come back tomorrow, or in a week, and see how many have been sold).

 

I asked Swiftie to participate in a three-pronged experiment with me:

  1. Be willing to leave some profit on the table in order to turn this product and avoid expiration date problems.
  2. Make sure that we get the Buy Box more often.
  3. Generate more sales when we have the Buy Box.

 

Point 1 is mostly self-explanatory, but a point of emphasis is that you have to be willing to take what the market is offering you, not what you’ve decided you want.  You might want to make 15.99, but if the market is not willing to pay that price, you need to be willing to reevaluate.  On some long tail items like books, you can sometimes hold out for that one person who is willing to pay the higher price point.  However, when you’re dealing with 112 bags of Jelly Bellies with expiration dates, you might not have that luxury.

Point 2 means that we need to better compete for the buy box.  There weren’t any account issues or metric issues with Swiftie Tay’s account.  Swiftie was just at a disadvantage competing with an experienced seller.  Well, we were going to have to consider the only option left to take the buy box: price.

Point 3  means that we needed to capitalize on the times when we had the buy box.  One of the ways I suggested that we do this was by running an advertisement via Amazon.  The ad would only run while Swifite held the buy box, so we didn’t need to worry about spending money to generate sales for somebody else!

Swiftly Selling
Swiftly Selling

Rather than immediately start a price war, I suggested that we run our ad for 1 week at the 15.99 price and see how we did.  This is an important point.  Accepting less profit should not be your only or immediate solution.  There are often a variety of methods that can be tried, and I’m a fan of doing all of the options that WON’T start a price war first.

After a week, my initial hunch was confirmed: Swiftie had nearly 65,000 impressions, 124 clicks, but only 5 sales.  That’s not a good conversion rate and it only means one thing: People are interested in the product, but not at the current price point.  People are willing to pay higher than retail on Amazon for a variety of reasons, but it still needs to feel reasonable to them.  I had suspected that 15.99 was a bit high for most people and figured we’d need to ultimately get down to the $10 point.  No need to jump there immediately, though.

I suggested we first test out $12.99 then $10.99 and see how we were doing.  $12.99 was looking a little better, but our conversion rates still weren’t good.  Finally, $10.99 was the magic number.  In just a few days, Swiftie was able to sell out of the remaining inventory.

 

Lets take stock of everything:

4 x $15.99 = 63.96

2 x $12.99 = 25.98

8 x $10.99 = 87.92

Total Sales:  $173.83

Total Fees (including shipping): $67.76

Total COGS: $21.98

Total Advertising Expenses: $31

 

 

Total Profit: $53.09

Total ROI: 242%

 

Some key takeaways:

  1. Make your money on the front end.  This strategy was able to be successful because Swiftie found a killer deal.  John talks about this in his blog post Buy Low; Sell Low.
  2. Diagnose your problems before you employ solutions.  We didn’t immediately jump to price slashing.  We used the tools we had available (other seller’s inventory, our buy box percentage, conversion rate of advertisement) to diagnose our problem.
  3. Decide what is most important.  For Swiftie, it wasn’t worth letting this product sit around for 6 months and worry about expiration date issues to try to make a few extra bucks.  Swiftie Tay wanted money back to reinvest and make more money.  We designed a solution with that goal in mind.  Different goals have different plans of action.
  4. Utilize the tools Amazon provides.  I don’t think you need to run advertisements on all of your products, but I do think it is a very helpful tool on items that might be slower moving, but with large profit potential. This product matched that description exactly, so we decide to go this route.

 

Thanks to Tay
Thanks to Tay

Hopefully my mini-coaching session with Swiftie Tay helps illuminate my thought processes as I worked toward transforming a dud into a hit.
Special thanks for Swiftie Tay for allowing me to use this product and experience to help others.

 

As Always, Best Wishes
Mike

 

5 thoughts on “Swiftie Tay: Strategies for Slow Moving Inventory

  • August 7, 2015 at 9:57 am
    Permalink

    I like the way you think. Good post!

    Reply
  • August 7, 2015 at 10:50 am
    Permalink

    Great article. I really appreciate that you took the time to show the thought process. The advertising interested me, as I have zero experience with advertising on Amazon. Can you recommend good articles / resources for getting your feet wet? especially how it was so cheap to target specific times and items. Thank you again!

    Reply
    • August 7, 2015 at 11:03 am
      Permalink

      Hey David,
      I’m making a shipment right now and I don’t have a good link for you off of the top of my head. Maybe someone else will chime in, or I’ll look something up for you later. If I can’t find anything good, I’ll just have to write my own article! I will say, however, that it is very intuitive. If you go play around in it, you’ll get the idea. It even tells you the average bids for various categories, so there isn’t too much knowledge that goes into it.

      Reply
  • August 13, 2015 at 7:22 pm
    Permalink

    Thanks for the article! But…
    1. What other tools except price war and advertising you can utilize?
    2. How can you use ads just when you have a buy box?

    Reply
  • September 1, 2015 at 7:01 pm
    Permalink

    With this approach, the benefit is that you’ll be able to offload a large chunk of slow moving inventory all at once, but at a reduced price. Of course, rather than having to worry about getting rid of slow moving inventory, the best solution is to never have to deal with it. Much easier said than done, though.

    Reply

Leave a Reply