I mentioned on Facebook earlier in the week that I had been Merchant Fulfilling quite a few products lately. Some of those were WalMart Replen items that I found using the Storefront Stalker extension. However, most of them came from a product that John Cyscon III found and pointed me toward. John and I have shared products back and forth for awhile. Sometimes he’ll want a second opinion about a product and send me a message. But, if he says to buy something, I’ll buy it sight-unseen because I know it is good. I’ve spent many pages worth of blogs trying to convince you of the value of networking and if I haven’t been persuasive so far, then it’s unlikely that I’ll start now. So, I won’t devote much space to that. Instead, I want to look at the deal that he found and tell you how I tried to improve upon it.
M&M ran a national promotion where they introduced 3 new flavors and let the consumer decide on which one they liked best. The winning selection would ultimately be rolled out as the new flavor. John correctly figured out that when you have a temporary/promotional item like this, people will ultimately pay inflated prices. He found a listing that was selling 3pack bundles for $23-29.
This product was ranked anywhere from 3000-8000 in grocery on any given day. Better yet, there were only about 5 sellers anywhere near the buy box, so turning over inventory would be fast. But, I discovered that there were actually two nearly-identical listings. The secondary listing was selling for about $1 cheaper, on average, but also had a rank of 3-8k. When you’re selling items at $10+ profit (we’ll get to that in a moment), especially when those prices are way above retail, it’s often better to sacrifice $1 in order to take the $9 as quickly as possible. So, I listed on the second listing as well:
As I said above, we got as high as $29 on some of these, but let’s use the current selling price of $25 to figure out some numbers. The fee for a Merchand Fulfilled item is 15% ($3.75) and I was paying $5.60 for Priority flat rate envelopes (when people bought multiples, I used padded flat rate envelopes which made me even more money). So, that means my payout would be $25-3.75-5.60= $15.65.
Sourcing the product was a bit of an evolution. Originally John found them at Walgreens where each bag was $3-$3.50 ($9-10.50 per bundle). This would net $5.15-$6.65 (49%-74% ROI). Some people don’t like to buy anything that returns less than $100 ROI, but when I’m going to make $50-$100 per day from one product that is selling like hotcakes, I’m happy to take it. Next, I found some at Walmart for $2.88 per bag ($8.64 per bundle). Unfortunately, most WMs didn’t have them, but I was about to get about 20 bundles here. This is $7.01 profit on an $8.64 COG for 81% ROI. Doing better.
Next, we discovered that Walgreens’ sale of the week was going to have 2 Bags for $5 (or $2.50 each) PLUS 1000 Walgreens Reward points. If you’re unfamiliar with Walgreens, for every 40,000 points you get, they give you $50. So, for this product, every $200 I spent, they were giving me $50 for free (ie. I get $250 worth of product for $200, which is a 20% discount). So, our $2.50 bags really only cost $2 each. But, whenever you find a good deal, look for ways to make it a better deal. I headed over to Raise and saw that Walgreens in-store gift cards were selling at a $12.5% discount (down to 11.1 at the moment).
Now, remember, the 12.5% discount was actually on the $2.50 price (because this was the amount I was paying in the register, and then getting the cash back after the fact), so that’s 31 cents per bag that I’m saving. So let’s put this all together:
$5 for 2 bags: $2.50 per bag.
12.5 Raise discount card: -$.31
20% effective discount after cash back: -$.50
New price per bag: $1.69 per bag.
Bundle price: $5.07
Payout of $15.65-$5.07 COG = $10.58 profit = 209% ROI.
I won’t do all of the math for you, but when people bought 2pks (which was fairly common) I was making $25.96 profit on a $10.14 COG (256% ROI).
And, remember, I’m doing the calculations on a $25 sale price, but without doing all of the math at the various price points, I would bet that my average sale price was $26, so we are using a low estimate here. This is on two listings that were approximately 5k rank, which means that between the two listings I was selling a dozen or so a day. On a day where I sold 10 single bundles and 2 double bundles (fairly average), I would make $105.80 + $51.92 = $157.72 profit from one product. Now, to be fair, it did take me a bit more time than products normally do because I had to MF them, but I suspect that if most people were given the option to add $150/day profit to their totals from less than an hour’s work, most would jump at it. But, why did this deal work?
1. I had a connection in John that tipped me off to something I would not have found on my own (most likely). Do you want to improve your business today? Go find some people and just start giving them awesome products. I know that it sounds counter-intuitive, but I’ll bet you that more often than not it pays you back rich dividends.
2. I went the extra mile to make the deal a lot better. Not that making $5 on $10 cost of goods would be terrible here, because I’d still have $50+ profit per day, but I did a few steps that most people wouldn’t do. I had the Walgreens rewards set up. I found the discount cards. I went from Walgreens to Walgreens to buy out hundreds of packs of candy. I found the secondary listing. Etc.
3. I was willing to merchant fulfill. I’m a huge proponent of FBA, but there are times when you will have to MF if you want the money. In this case, there was a very limited window. I could have sent these to ONT 8 and let them get redistributed across the country and then let them show up in a warehouse just in time to be deemed ineligible because they are Meltable (April 30 is last day to FBA chocolate). But, I decided that a better course of action was just to MF these as soon as I got them. I probably sold 20 bundles before my UPS guy even arrived to pick up other stuff. Who knows how much money I would have missed out on waiting for these items to show up at a warehouse or waiting for them to be returned to me when meltable rules started.
But wait, there’s more. Whenever you find a good deal, ask yourself how to make it a bigger deal. I started noticing that when I bought items, it semed to me that finding Coffee Nut was more difficult than the other flavors. I checked the Mars Candy press kit and saw this:
The three new flavors were winners during testing. Coffee, America’s #1 flavored beverage,3 had the highest overall purchase intent in quantitative testing; 4 chili, the “sweet heat” top-five flavor trend in 2015,5 was a leading flavor concept in focus groups;6 and honey was the most frequently requested flavor in focus groups.6
One of the things I learned in business classes way back when was that you never trust a customer who tells you what they want to buy, trust customers who attempt to buy. Why? Often people don’t know what they want to buy or they will tell you what they think you want to hear, etc. (There’s some hidden advice here: If you ever have a business idea that you bounce off of people to decide if it is really a good idea, don’t listen to people. Try to pitch it to them. If they want to invest, then they think you have a good idea.) As it relates to this, I wasn’t particularly concerned with what focus groups claimed that they wanted (it’s been famously said that a focus group would have wanted a faster horse, not an automobile) or with what a flavor trend was, but I was really interested in what the purchase-intent qualitative testing suggested. Given the option, people were trying to spend their money on this Coffee Nut product, which confirmed my anecdotal evidence in the stores. When people people are saying, “Shut up and take my money,” it tends to be a good idea to listen to them:
I was selling these at $12.88. Buy cost $1.69, referral cost $1.93, and shipping cost $3.40. Profit $5.86 on a $1.69 buy cost (347% ROI) on a product ranked 2-3k in grocery. When people bought 2 I was making $13.02 profit on $3.38 buy cost (385% ROI).
Eventually, I ran out of Walgreens. I have about 15 that are within 30 minutes or so and I’ve been to all of them. Unfortunately, these are a promotional item so the stores don’t get restocked on them and the sale is over.
So, please, do yourself some favors: Network, do the extra work to turn good deals into great deals, and look for opportunities that other people will pass up. Until next week…
As Always, Best Wishes
This is an excellent example of how when you have two or more people who live in different geographical area’s of the country are able to share idea’s and BOLO’s to help one another. After reading this article about the discounts used to purchase the M&M’s and be able to MERCHANT FULFILL rather than send as an FBA seller.
I am prompted to take another look at utilizing MF for certain products. My personal opinion is that I was a full time EBAY Seller since 2007 and took a mental and physical break (burn out) from prepping and shipping out to individual buyers.
I kind of hate MF as it can lead to burn out from annoying prep, as you mentioned. I’d say 98% of my sales are FBA, but limited time offers like this, some items that AZ wrongly believes are HazMat, and a few items at Christmas are just too profitable for me to pass up. These M&Ms alone made me the same amount per day as when I was 22 working 8 hour days.
Great information and insight. I just discovered your website and videos today. I am relatively new to selling on AZ. I just had a terrible experience with selling a $45 item Merchant Fullfilled. A buyer scammed me and claimed they didn’t receive the package. They never contacted me but instead immediately opened an A-Z claim and simply said “Where is my item?” Based on those 4 little words, AZ forced a full refund. I tried to defend myself with tracking info (I had shipped it USPS with tracking through the AZ website) but that didn’t matter because I didn’t have signature confirmation. The buyer never contacted me at all and just opened the A-Z claim. Now I have an order defect strike. I’ve only ever MF maybe 10 items and have already run into this. I’m now scared to death of MF unless it’s worth doing a signature confirmation (which buyers hate). I know that things like that are cost of doing business but what about racking up order defects? Seems that buyer fraud is rising. I’m afraid that AZ will suspend my account (heard some pretty bad horror stories). I’m pretty low volume so far so an order defect hurts my metrics. What are your thoughts on buyer fraud and how to avoid it?
That’s a hard one because there is no easy way to protect yourself. I can say that out of many thousands of orders, I’ve only had cases where I was pretty sure it was fraud in two of them. For me, it’s just an unfortunate cost of doing business. If the item is 45 dollars and you’re shipping priority, you get free insurance of $50 or less, so that is one way you can negate the financial risk of fraud. If it was a really expensive item, I’d probably do signature confirmation, but never for a product that was $45.
I would say this, though, I’ve had several times where online tracking says a product has been delivered to me and it wasn’t. Either the carrier messed up, delivered to the wrong address, theft, etc. So, try not to assume that everyone who doesn’t receive a package is trying to steal from you. Sometimes you’re just the unfortunate recipient of bad luck. Best of luck going forward!