It’s bully pulpit time! I had originally planned to write on another subject but a few posts from the Facebook Group caught my attention this week and I wanted to use this opportunity to respond. Rather than framing it entirely as a response to few scattered posts, let me frame it as a response to one of the questions I get asked most frequently: If you could change anything about your Amazon business when you first got started, what would it be?
It’s hard to answer a question like this because there are a lot of things I know now that I was simply ignorant of back then. I didn’t have a repricer, Inventory Lab, OAX, or Chris Wilkey’s treasure trove of free videos, all of which proved to be extremely valuable. But, if forced to give an answer, I would have to admit that the thing I wish I could change was to focus on making money not about sexy purchases.
Chris Wilkey touched on this topic a few weeks ago when he suggested that you start calculating your sourcing rate per hour. In other words, if you make $89/hr when you go to WalMart and $41/hr when you go to the Thrift Store, then you should probably spend a bit more time at WM and a bit less time at the Thrift Store.
I touched on this topic a few months ago when I gave advice on developing a systematic plan for finding replenishable items.
The key point is that everybody LOVES the feeling of going into a thrift store (or finding an Az2Az flip, or a clearance aisle) and finding an item that is selling for $3 and can be resold for $50. It’s a rush that, at times, can make this business feel more like fun that like work, which is one of the aspects that so many of us really love. Let me be clear: there is NOTHING wrong with this. In fact, for people who are just starting out and testing the waters, this is probably a really good idea.
With that said, let me point out some of the downsides. That thrift store item is a single item that is available at one location at one specific point in history. If you’re lucky, you’ll spot it again at another store in 4 months. By itself, this is not a business model — it’s a hobby model. A key component of a business model is to be able to reproduce it. To be fair, everything from wholesale to private label has this limitation. If you buy replenishables from retail outlets, their prices could change. If you buy from wholesalers, the margins might evaporate. If you private label, the market might saturate. Almost nothing lasts forever. However, this fact should not obscure the truth that given a continuum, business will be better if we’re on the side that allows us to reproduce our work many times over.
I like scanning. I like finding amazing Az2Az flips. I like capitalizing on pricing errors. To me, all of those are fun and profitable; a win-win scenario. However, the more I do this business, the more I move away from those — or at least shift my perspective with those. Now, I very rarely go to yard sales or thrift stores. It’s not that I can’t make money there (I can and I do), but I consider that to be working IN my business. If I want to work ON my business then it means that a decent chunk of my time needs to be spend sourcing items that I can reproduce many times over.
As a result of this thinking, I can tell you one unpleasant truth and two delightful truths:
1. My profit margins are smaller now than they were a year ago and smaller a year ago than they were two years ago.
2. I make more money now than I did a year ago and especially two years ago.
3. I spend less time and effort sourcing now than I did a year or two ago.
To me, that is a victory and it is a victory that started by realigning my priorities and focusing on how I could grow as a business, not how I could find the most insanely good deal of the day. Hope that gives you something to think about and forces you to ask this question: What is ONE thing I could start doing this week that will allow me to make more money with less effort.
As Always, Best Wishes
Yep, I had to give up that “3X” idea before things really started to flow.
It was hard, but it was necessary. In addition, I used to think that people who accepted less than 3X had to be working much harder than I was, but in fact that isn’t true at all (I probably owe a lot of apologies to people for stating that a time or two). You just have to develop the sources and figure what works, realizing that what works today may not work tomorrow, either 😉
Amazon is a business for smart people. I don’t necessarily mean smart people in the traditional “IQ” sense that everybody’s keen to measure, but smart people in the sense of paying attention to what is happening, and **using** that information to make positive changes.
After all, isn’t that what “smart” really is?
I completely understand and respect your opinion on this. I truly enjoy the rush of finding the deals, especially the ones that can return a huge profit. I shy away from replenishables because I’m going for a higher ROI. That being said, I’m still operating my business on a part-time basis while I juggle my responsibilities as a mom. The time that I put in is limited, so I value my time and focus my energies on the big returns. I know that this will have to change when I am ready to grow but for now, striving for 3x and looking for the thrills suits my needs:).