Tuesday, April 12, 2016

Turnover Tuesdays - Go Big or Go Home

For those who are not familiar, I started a series a while back called Turnover Tuesdays. Every Tuesday I like to highlight one item that I have resold. This will include profitable and non profitable sales. I hope that there is always something to learn.

The Item - Star Wars Lego Video Game

I live by a few mantras when it comes to reselling.  1) I love high margin deals.  2) I love items that move fast 3) I love items that I can buy a ton of.  4) I love repeatable deals.

If I find a deal that I know will sell fast and has high margins I will try to buy as many as I can within reason.  In short: Go Big or Go Home!

This deal is not an example of all of these but it's got 3/4 (you won't see me post about a repeatable deal since that wouldn't be repeatable anymore - sorry)

On January 20th, I bought 40 Star Wars Lego Movie Games (X-Box 360) for $14.88 which is $15.92 after tax.  The rank was about 300-500 or so in video games at the time.

The total was $636.82

When I first bought them the games were going for almost $40 on Amazon which was around 50% margins.

Pros and Cons of Going Big

When you buy a lot of any one item there are some very important things to consider:


1)  There is far less work reselling two of one item compared to 1 of 2 items.  You only have to add one item to your cart, list one item, adjust pricing on one item, monitor one item, tracking etc.  The more you buy of one item, the less work there is per item.

Many times I have avoided buying something because I can only buy 1 or 2 and I will earn $.50 or $1 per item.  Not worth my time. However, if the margins are good and I can buy 100 of them, then it might be worth it.

2)  If it is a good deal, you make more money.  This is obvious.  If I'm making $4 per item and I buy 100 of them, I made $400 instead of $4

3)  You can influence pricing.  When I'm pricing I check to see how much people have in inventory.  If there is only one seller ahead of me and I have 3 of something and they have 200, you better believe I'm undercutting them if the price is not significantly lower.  I'm not going to wait weeks/months to sell.

If there are only 2 sellers and I have 100 and they have 2.  I will usually price higher and allow the other seller to sell and the price will come to me.  Sometimes, I might want to spook the other seller into thinking they won't sell unless they undercut and intentionally drive down the price.  I might have to sacrifice some inventory to do it and I would only be willing to do it if I have a ton.

4) Risk of returns is spread out among more units.


1)  Amazon selling is really made for selling a few of more SKUs.  If I only have one item, I can sneak in a sale rather quickly at the current price by matching or undercutting the competition slightly.  All I need is a couple of sales. If I have a lot of inventory, I can't sneak sales in.  I might have to consistently lower my price to get sales.  What started as a very profitable deal could soon turn into a race to the bottom.

This is especially true if there is a deal that occurred recently.  If you buy 3 of something from a Best Buy flash sale and get them in really fast, you might be able to sell all of them before the price drops (It will drop fast and hard!).  If you bought 25 pairs of headphones that don't sell super fast, you just don't have enough time to sell all of them before the price drops and you are actually better off buying fewer of them

2) More capital outlay/more risk in one item.  If the deal goes south, you just tied up a lot more capital that could be making you money.

3) Storage fees - Amazon starts charging storage fees at 30 days. If you buy more of one item you are more likely to not have sold all of them within the first 30 days.

4) The longer you hold onto something, the greater the chance that Amazon comes in stock and ruins life.

What Happened with my Deal?

I'll let Inventory Lab do the talking:

You can see that I started selling them for about 50% profit in December.  I hoped to continue to sell at that price but prices kept dropping and I didn't adjust until late January and my profit went down to 36%.  I sold quite a few at that range until I had to drop to about 25% profit.

Somehow I found 4 of them for $10 and my profit margin went way up for those 4.

If you look at the current prices it is even lower now.  My profits were great and I would do it again but it didn't pan out quite like I had imagined.

That being said, I still say "Go Big or Go Home!"