Tuesday, January 24, 2017

Turnover Tuesdays - January is Part of Q4

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.

I am currently outside the US on vacation so this will be an abbreviated Turnover Tuesdays.

January is Not Fun

I don't like January.  Last year, January was by far my worst month of the year for profits.  In terms of gross sales, it was actually right in the middle.  I had 6 months with higher sales and 5 months with lower sales so it wasn't the lack of sales that caused it.  

Last year it was the returns.  I had almost 2x more returns last year in January than any other month.  The only month that has ever come close to January of 2016 was December of 2015.

My profit for January was 2.77% of my profit for the whole year.  That's not good.  If every month was like that I would probably quit.  Compare that to 30.9% for the month of December.  Obviously, December is more fun than January.  

January 2016 is Even Less Fun Than 2015

Amazon managed to make 2016 even worse.  As you should be aware of, Amazon massively increased storage fees during November and December of 2016.  The fees are charged for what you stored in November and December but the fees only show up in December and January, the following months.  That means that the massive December 2016 storage fee doesn't hit your account until January 2017.

My storage fee in January 2016 was $205 (Man, I miss those days!).  My storage fees for January 2017 was $2,089, that's both because of the fee increase but that only accounts for about 4.5x so it is also because of increased overall inventory relative to 2016.  

So this January I have to overcome an extra $1,800 of storage fees as compared to 2016.  That's even less fun.

Thankfully, I've started a campaign to lower my returns.  I am on track for about 25% less in returns this January relative to last year and it's only that high because I became a shady Amazon seller and got a lot of returns due to a mistake.

In addition, I am paying my largest monthly prep fees in January since it gets charged after the month is over for the previous month and I do the most business in November/December.  Again, another reason fees are pretty high for me in January without the increased sales numbers.

Either way, when you combine increased returns and storage fees with a pedestrian sales figure January is a cursed month.  (Thankfully for January all hope is not lost, February has long term storage fees so it has the potential to be even worse than January!)

January is Part of Q4

It's important to have a good perspective on January.  Yes, January is Returnuary.  Yes, December storage fees are excessive.  That all is annoying but in order to avoid all that you would have to not sell much in November and December and not have much inventory either.  Granted, you can maximize better than I did (I hope to do a much better job of it this year) but the point is still true.  The only way to fully avoid these fees is to have nothing at Amazon fulfillment centers in November and December and that's just not going to work.

Therefore, I think of January as a part of Q4. You can't think of how much you made in November and December only and how much little you made in January.  They are dependent on each other.  The question is whether you had a successful 3 months of November, December and January.  When you average your monthly profit for those 3 months, is that better than your monthly average for the rest of the year.  If the answer is yes, you had a successful Q4.  If the answer is no, you didn't have a successful Q4 even if your average for November and December surpasses the rest of the year.  That's not helpful if January brings the 3 month average below the rest of the year.

Did I have a successful Q4?  Yes, I did.  Even before January started my profit for just November and December averaged out over 3 months was 14% of my profit for the year. (1 month average is 8.33% for everyone = 1/12).  Even if I made no money at all in January I would have had a successful Q4.  

Thankfully, despite the returns and the fees I will still turn a small profit in January so that the average monthly profit for November-January should be about 15-16% of the whole year.

Sign me up again for that next year, though hopefully I can do even better!

October 2017 Can Be Included in Q4

In 2017, Amazon gave us an extra bonus.  We get the same increased storage fees in October as in November and December.  You can either include October into your Q4 calculations or you can keep things the same since you won't see those storage fees until November anyways.  Either way, make sure you are ready with less Q4 inventory in October.  All of that should wait until mid to late November.  

Was your Q4 successful?  Are you preparing any differently for 2017 as compared to 2016?

Week 1 - First attempt at reselling
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
Week 78 - Q4 for Accelerated Inventory Turnover
Week 79 - How it is Going Outside of Amazon
Week 80 - 2017 Goals
Week 81 - I've Violated All of My Rules
Week 82 - When You Are That Shady Seller