Editor’s Note: Donald is a member of our editorial board and I asked him to write about his biggest success and failure as an FBA seller – I love the analogy used and I hope you guys get the main ideas that is being presented – CW
For every seller, there’s a definition of success and failure. Finding an item for a dollar at a thrift store and selling it for over $160 was my first huge thrill, back in 2002 when I got started on eBay. Nowadays, I’m not looking for home runs, so much as a solid batting average.
While I don’t like to sit down for three hours and watch an entire game, I really like baseball. If I was a player, I’d try to copy Ty Cobb on the field. Ty Cobb was arguably the best hitter of his era. I read quotes about him; he wanted to get on base at every at-bat. A bunt, a double over the short-stop’s head, a dribbler down the third base line, he didn’t care.
That’s about how I feel about my FBA business. I’m not taking mighty swings in hopes of getting a home run (and striking out in the process); rather, I concentrate on the ‘short game’, getting on base as much as possible. I’d prefer to make smaller sales constantly than get a large sale periodically.
Though, of course, you can do both as you see fit. I’ll give you the bad news first, my biggest FBA failure.
While I, too, fell for the Mrs. Zhu line of toys in 2015, the amount that I invested in these items wasn’t much.
As long as you don’t go in deep, there’s nothing wrong with failing – fail at a small scale, so you keep your losses to an acceptable minimum.
So when I had to sell my Madame Zhu toys at a loss just to keep them out of Long Term Storage fee territory, I liquidated them for about half what I paid for them. I don’t consider this a failure, because I learned from it. I learned to pay attention to the Supply half of the selling equation. If I did this before I entered the Madame Zhu position, I would have noticed that the number of sellers of this particular item was in the triple digits. A product with over one hundred sellers is tough territory.
My biggest FBA failure, though, is an embarrassing one. It’s actually still going on right now. “Fool me once, shame on you… fool me twice, shame on me.” I purchased five units of a particular model of hair dryer in mid-2015. As soon as I received and listed them, the price plummeted. I stuck it out a few months with these duds, but the selling price never got above my break-even point. I liquidated these items in the fall of 2015 sometime. Fast forward to late November, when the excitement of Q4 was upon us. These same hair dryers were on sale at Target, just as before, and this time (with my better purchasing and analytical eye) they looked like a winner! And this was for Q4! I bought more! Sent them in! And then… some uber-seller sent in over nine hundred of these same units to Amazon. And this uber-seller priced their hundreds of units 30% below what I paid for mine. Again, I stuck it out… and, actually I’m still sticking it out, because I’ve still got three of these things in my inventory currently.
Why did I go back to the poisoned pond?
I chose to see the data that I wanted to see. Editor’s Note: This is the cold hard truth. Many of us see what we want to see and go from there. Thanks for flat out saying it Donald.
The Keepa graph showed solid, steady sales, and the hair dryers showed excellent Sales Rank (in the hundreds). Heck, one seller had his hair dryers priced up to $59! This would mean a twenty dollar profit per item! Except I didn’t check the Supply side: At this particular moment that the aforementioned uber-seller didn’t have the buy box. I would have seen the less-than-cost price for the seller with over 999 units to sell.
What did I learn?
Never forget to check the supply numbers of your competition. It is as important as Sales Rank. If their price is low, you’re going to have a hard time competing.
I believe I’ve had a few notable successes in my first year of FBA. First off, I had terrific success with the PC title Microsoft Flight Simulator X. I think I saw somewhere on Amazon, it was probably within a weekly “Amazon suggests these items.” The standard version of this software was (and still is) going for over $110 each. I knew that a local chain store in my area sold them still for $19.99. After making many calls I was able to track down about 18 units. March 2015, I saw about $1300 in profit thanks to this one item.
Lesson: Always look through the items that Amazon suggests. 99% of the time, they aren’t viable sourcing opportunities for me, but it doesn’t take long to analyze these free BOLOs Amazon delivers to you frequently.
I’ve also had success creating my own products, multi-packs or bundles. My first multi-pack was created a few months ago. I sell these items every day and so far, I don’t have any competition. The thought came to me, if one item sells well, then two items might sell as well, and I can profit a bit more from it. I tracked down the supplier for these imported grocery items (they are located about 40 minutes’ drive from me), used a custom UPC code, and boom. I’ve also had success with one bundled item I created recently. While not exactly ‘killing it’ in sales volume, I have zero competition, I net about $7 in profit per bundle sale, and my total cost of goods is less than $2.50. No physical or online store sells all the items that go into this particular bundle. I need at least two different suppliers to source the products for this bundle. Because of this (it takes a bit more work) I doubt I’ll have competition on this product for a while, if ever.
Lesson: Find ways to make yourself the only seller.