Tuesday, December 20, 2016

Turnover Tuesdays - Using Q4 for An Accelerated Shake Up

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 previous posts in the series can be found at the bottom of this post.

Inventory Shakeup

I've mentioned a few times recently that I'm in the process of trying to change over my inventory.  Instead of being mostly electronics, I'm moving over into Groceries, Beauty, Health and personal care, some toys after Q4 (plenty during Q4), some kitchen stuff, office supplies and the like.

I'm interested in high profit and few returns instead of a high volume of sales.

There are a few ways of accomplishing that.  You can push the clearance button and sell out relatively quickly (even possibly with an autopricer), hold out for more profit which is a much slower process or wait for Q4 or some combination of that.

I've decided to unload a lot of sagging inventory but I've deliberately kept a lot more even though some of them aren't going anywhere for a while.

The best time to dump is usually at some point during Q4.  For many items, prices are the highest all year so if it hasn't hit your price, it might not ever.  In addition, you can sell a lot of units very quickly without lowering much since the demand is so high.  It might make your profit numbers go down and skew your metrics but sometimes it's just time.

My Algorithm 

Here are my important criteria for unloading:

Is it a Q4 item?  Almost everything sells better in Q4 but not everything.  If you have Halloween or swimming equipment, it might not be the best time to sell. People are buying them for vacation but it isn't the biggest demand of the season.

Will I pay Long Term Storage Fees?  Long term storage fees.are assessed twice a year.  Once on February 15th and once on August 15th.  Fees are massive.  $11.25 per cubic foot for anything that has been there for 6-12 months and $22.50 for anything that has been there for 12 months or longer.  Make a calculation on your fees.  Is your expected selling price significantly higher than the fees?  Might be worth it keep it around.  If the fee will eat your profit, time to sell.

How large is it?  Long term storage fees are expensive but monthly storage fees can build up too.  Anything that is large it is time to take a look and see if you should be selling.  I will be buying fewer large items going forward.  They are a big drain on profit if they don't sell quickly.

How many units do you have?  If you have 100 of something and you've had 100 for a long time, it might be time to trim the fat.  Not necessarily to sell all of it but lower your risk and storage fees.

Did other Sellers just kill it?  Sometimes a listing was hot and gets overwhelmed by sellers.  Q4 can be a time when sellers get cleared out, leaving you a path for profits soon after Q4.  Other times, Amazon comes back in stock and you are messed up.  Oh well.

My Decision

Based off these criteria I have been selling almost everything large I have and many items that have Long Term Storage Fees but not everything.  I have tons of video games that I'm holding out on.  Even if I have to pay a 6 month and a 12 month LTSF for a video game, that is typically about $.35 a unit.  Add on a few cents for storage throughout the year and you are at less than $.50 a unit for an entire year of storage.  I have had numerous games this year that I bought last year at clearance prices.  Some went down to $10 or less and I'm selling them now for $30-$50.  Even if you can sell for $3 extra, you will make back your fees and more.  It doesn't always work it but your risk is low on small items like video games.

I've also been selling off tons of electronics that I don't want anymore and it's already affected my return numbers as most of the larger returns are from electronics including one previously returned Apple Watch (AKA - the gift that keeps on giving).

That means I have had massive numbers this year in terms of units.  I have more than 2x as many unit sales in December this year as I had last year by the end of the month, thought my gross sales are actually still lower than last year.  Not nearly as many expensive electronics as last year.

Take a look at the categories and you will see that I am still selling plenty of electronics but those are old inventory for the most part.  At least I get the tax benefit of the loss :(

It can be fun to look at your seller app and see this:

but when you remember that many of these sales are not profitable it kind of tempers your excitement.

Even though I have many non profitable or minimally profitable sales, I'm excited to hopefully see storage fees go down, refunds go down (in a few months), the number of SKUs to monitor to go down (still way too high).  All of these are good changes even if I lost some money short term (don't feel so bad for me - still a great month in spite of it).

Bottom line is that my inventory needed a shake up and Q4 was the best time to accelerate that process.

Week 64 - The Buy Box
Week 65 - Amazon Restrictions and the Future of Selling on Amazon
Week 66 - Fun with Inventory Reimbursements
Week 67 - Q4 Storage Fees
Week 68 - Start Your Own Listings
Week 69 - A Long Tail Sale and Calculating Storage Fees
Week 70  - Prices Always Come Back Except When They Don't
Week 71 - Past Performance is No Guarantee of Future Results
Week 72 - Automation Beyond Amazon
Week 73 - Some Quick Holiday Tips
Week 74 - Update on Miles vs. Cashback Opportunity Costs
Week 75 - Pricing for the 4th Quarter Madness
Week 76 - Returns, Returns, Returns
Week 77 - Reimbursement