Tuesday, July 26, 2016

Turnover Tuesdays - Dealing with Amazon Restrictions

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.

Every once in a while Amazon sends out a notice that a certain item or brand will be restricted from selling without permission from the manufacturer.  Recently it's happened a few times with Apple products but it's happened with some other brands as well.  Here is my story.

There was a sale on May 13th for Beats Pill Speakers.  They were $80 and with sales tax, I paid $85.58.

At the time they were going for close to $160 on Amazon so I went a little bigger than usual.  I bought 20 for a total price of $1,711.60.  

I knew there would be a race to the bottom so I was trying to get them in as fast as possible to get a few sales before prices started dropping, unfortunately prices had already started dropping before they got there.

I sent them in and I got my first two sales on May 31st for $135.76.  Not including shipping that was a profit of a little over $35 or about 40% return.  I'll take it!

The next day I sold another 3 for the same price.  They were selling for good prices and quickly too.  Great!

At that point, prices started dropping to the high $120s.  I was willing to wait it out for some higher prices so I didn't sell anything for about 2 weeks.  After 2 weeks I sold another 5 over 3 days for about $135.  Slightly lower price but still a great return.

The sale wasn't happening anymore and they were selling quite fast so I decided to raise my prices and wait for the price to come to me.  I raised to about $150, knowing that it is likely to get there based on sales velocity as long as no new deals came.

On July 7th,  I got the following email from Amazon restricting the future sale of Pills from July 21st and on

Well, that was a kick in the gut.  I had two weeks to sell all of them and everyone else on the listing also only has two weeks.  Fire sales are coming!

Take a look at the Keepa Chart and look at July 7th, you will see the number of sellers falling off precipitously at that point and it bottoms out after the 21st.. (As usual, you see a huge increase in sellers once a deal goes out on the internet - doesn't mean you can't make money!)

I decided to go a little risky and play it cool.  I lowered my price but not like crazy.  At first I lowered to $134.99 and got one sale.  I then raised to $138.99 and hoped for the best.  Thankfully, I was able to sell the rest of mine over the next couple of days for $138.99.

Had I not known how quickly it sells, I probably would have participated in the fire sale as well but I thought the price might increase very quickly once people started dropping.  It did take a few days to get back up to $139.  Overall, it was a gain of close to $725 including the one return which lost me $7 of return fees but was still sellable.  That's probably right around 40% when factoring shipping fees which were minimal.

I'll take that all day.  That being said, I wish it wouldn't have been restricted, I would have waited longer and likely received a higher price.

The way I handle a newly restricted product is directly related to how quickly it will sell.  If it is a slow seller I will be the first person dropping my price and I will continue to drop my price to get the most value since I know the race to the bottom will be severe.  However, in a scenario like this where I know at least 5-10 are being sold every day and no one else is sending in more, I am happy to wait a few days or even a week to see the market develop.

It worked out in my favor this time but it is risky and it obviously won't always work out like that.