Tuesday, July 19, 2016

Turnover Tuesdays - When a Good Deal Goes Bad

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.

Sometimes you think you have a great deal and everything is going great.  You are selling a few day, and that continues for days, weeks, months, sometimes even years.  At some point someone else will likely find your product.  They may not find where you source from exactly but as long as they can make money, they can erode your margins in a hurry.

This case isn't an extreme case, but I want to show you what happens sometimes when you "Go Big or Go Home"

I bought this item back on January 3rd of 2016 for $26.99 (still available) which is $28.88 with tax.  I bought 10 of them.

Almost immediately I started selling them.  At first I was selling them for $49.99 and then I changed the price to $59.99 and they were still selling well.  At $49.99 it was ok, about 20% profit after shipping fees.  At $59.99 it was great, right around 50% profit after all fees.

So I went bigger.  The next time I bought 30.  If 50% profit on $289 is good, 50% profit on $867 is 3x better, right? Right!  Except that I didn't get 3x profit :(

Amazon came in stock.

Sometimes Amazon comes in stock and undercuts you but you can either still make a profit even if it isn't huge or breakeven.  They didn't want to do that here.   They didn't want to make a profit and they hit me where it hurts.  Amazon dropped the price to $23.99!  That's cheaper than I bought it for, forget about FBA fees.  No beauno!

To make matters worse, I tried to see how many Amazon has in stock.  More than 999.  I mean come on, seriously!?  So I waited, and I waited.  Hoping, hoping they would run out.

Magically, they did!  So on July 6th, I was able to sell one unit for $38.99.  Only losing 10%, uch.  These are oversized items and have large FBA fees.

That same day Amazon came back in stock.  I was done.  Time to liquidate.  I need that money for float in quarter 4 and to stop paying storage fees.  The prospect of paying long term storage fees for something I have no idea when it will sell was obviously not ideal.  It probably would have been about $3.60 a unit for LTSFs.

Sometimes you just need to sell.  Uch.

Over the next week or so I liquidated the rest at $23.99.  A loss of almost $16 a unit.  Impressive considering I bought them for $26.99.  Not my best flip!

So, what's that called?  A lesson learned and a tax write-off!