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FBA Retail Arbitrage to fund bigger things

A detailed account of a Fastlane process...

MHP368

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So, Decided I needed another level of accountability and probably just somewhere to get this written down and out of my head. Outside eyes on things would be great too.

Real quick explanation of where I'm coming from and how I landed on this model, I work 4 days on 3 off then 3 on 4 off, 12 hour shifts, half an hour to forty five minute drive. @ kids 3 and 6, wife works same job same place same hours.

So every week I have roughly half the week to work on this, work days I have enough down time to answer customer emails / supplier queries from my cell phone but not much else.

My job has nothing to do with business as such (healthcare), the only business related skill I have is a novice level of sales experience (I did door to door vacuum sales and was doing pretty darn well all things considered [the product is bs being the main barrier to sale], ended up managing the office of a competitor, also did some car sales years back)

I've had 2 failed businesses prior to this.

Ok so, the end goal short term is about 5k to manufacture my own doodad. I have nothing specific in mind but I think private label is a dead end , because this company and others in its orbit is kind of crushing lots of niches. My thought is skip that and actually modify / build something that adds value and "pulls" instead of just slapping a logo on some widget and having to sink huge swathes of money into advertising.

So I could just do overtime for the money but the wife wont have it and frankly I agree, I want to be financially independent but not at the cost of my family (it took us 3 years to get on the same schedule) , i've weighed what i'm willing to sacrifice and that isn't it.

I tried the ebay / craigslist / letgo / offerup flipping model and its jsut not happening, I managed to get my money back out of my initial investments in junk from estate sales and actually profited 400 dollars (it only took a year and a half) and got some nice crap to hand out for birthdays and such but...not happening. The population of my local town is just shy of 30k and the closest town to that a whopping 21k , 30-45 minute drive to an actual metro. Essentially it was 90% flake buyers or people expecting me to drive an hour to drop off some 15 dollar knick knack for me to make 9 bucks, no thanks.

Got an llc and amazon account setup in september, retail arbitrage as the chosen model.

I got a broad amazon course (I had gotten walter hays import book and its a course his book is affiliated with) , So for year end 2018 my P/L just based on items sold and the pick and pack fees and such from amazon looked fine, 386 dollars profit. Total however? I lost 1138.58 , (without considering my time of course) That was starting with 500 dollars for inventory and putting in an extra 200 a month september , october, november and december so 1300 dollars into the company just for buying inventory. Not a great start. I'd been lackadaisical on the basics, just "knowing the numbers" , I found out for instance that I had assumed i'd made some money on an item that actually cost me money every time it sold and had re ordered it once!

So this year every sunday the first thing i'm doing is a weekly P/L spreadsheet, I'm in the red a little more than a dollar as of yesterday.

I have some wholesale contacts but no solid products or lines worth the time to engage with right now.

Going forward I have a few things to attend to,

1.)
I spent about 230 dollars attempting some amazon merch plays, might as well have burned the money.

2.)
One of my better sellers and something I was reordering from a wholesaler was very low margin in terms of actual dollars (150% ROI technically), well making 3 bucks from a 2 dollar investment is fine, until the inevitable race to the bottom price war because i'm not actually adding value , you can eat up 3 dollars pretty quickly when a bunch of automated repricer algorithms are knocking off a penny every 15 minutes vying for the buybox [so the headline here is, flip higher value stuff] .

3.)
bundles , if I have a 2 dollar item a 5 dollar item and an 8 dollar item I can sell that for 40 bucks , people see multiple items and just don't do the math, if they like what they see they'll click buy , it also takes longer for copycats to grab hold of the listing and start a price war. I haven't decided what portion of working capital should be solely devoted to creating these types of listings but I think between 20-40%. lastly

4.)
I'm going to wait until I have a larger chunks of money before sourcing anything , last year (well q4 that I was active) I had this mindset that I needed to be sending goods in every week no matter what, ended up with wholesale shipments where shipping costs just to get the items to me were adding 21% to my COGS , I was just sort of back of the envelope estimating that such and such would kinda maybe sort of still make me money. I don't think anyones ever "ho-hummed" their way into millions. I would also sometimes take multiple trips to individual stores for sourcing, 2 hours of driving to spend 2 hours in one store on monday, 3 hours of driving to look at 3 stores over a 4 hour period tuesday, doesn't make any sense. This year I'm going to consolidate the RA trip days and bring enough capital to really take advantage of opportunities I find.

My current YTD P/L is still based on inventory from last year (first shipment of 2019 is just barely checked in to FBA warehouse)

So thats where I stand, I'll keep my little journal updated and hopefully have some win to show for all this hurly-burly.
 
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Walter Hay

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A lot of hard work hasn't got you far yet, but don't give up.

It appears that you bought the Proven Amazon Course, so I suggest you look at the PPI course within PAC. It is a brilliant hack that enables you to list a well known branded product in such a way that you will almost always be the only seller with your keywords. Result - no competition!

Retail arbitrage as taught by Jim Cockrum can certainly achieve good results, but in your location it adds a lot in travel costs and time.

Brandless is a very clever marketing system, but it is a copy of what some supermarket chains do, most notably Aldi. Aldi products are generally top quality at low prices. Brandless certainly don't have the game sewn up. There is clearly a limit to the product range unless they have an endless supply of capital. I would totally disregard them.

"Slapping a logo on some widget" is private labeling as taught by private labeling gurus, but there is a better way. First your product must be obviously superior, and if possible unique, if you are to avoid the race to the bottom.

Even if you have no intention of private labeling, you can get some ideas from the contents list for my labeling book here: PUBLISHING - Forum Members and Their Books!? but if you click on the link in that post you will find more ideas by going to my site.

I look forward to reading about your progress. Best wishes.

Walter
 

minivanman

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If you are going to stay in this type of business, don't forget about WalMart. My friend in Kansas City and I were talking about the company, Deliverr about 9pm tonight and then I looked on MSN about 9:30 and there was an article about WalMart and Deliverr. So, the Amazon world might be changing in the not so distant future. I'm not a part of it so I don't know the ins & outs, just what the article said.... and you know how these writers are nowadays. Maybe someone here has some answers about WalMart .com if you are interested.
 

James Klymus

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So, Decided I needed another level of accountability and probably just somewhere to get this written down and out of my head. Outside eyes on things would be great too.

Real quick explanation of where I'm coming from and how I landed on this model, I work 4 days on 3 off then 3 on 4 off, 12 hour shifts, half an hour to forty five minute drive. @ kids 3 and 6, wife works same job same place same hours.

So every week I have roughly half the week to work on this, work days I have enough down time to answer customer emails / supplier queries from my cell phone but not much else.

My job has nothing to do with business as such (healthcare), the only business related skill I have is a novice level of sales experience (I did door to door vacuum sales and was doing pretty darn well all things considered [the product is bs being the main barrier to sale], ended up managing the office of a competitor, also did some car sales years back)

I've had 2 failed businesses prior to this.

Ok so, the end goal short term is about 5k to manufacture my own doodad. I have nothing specific in mind but I think private label is a dead end , because this company and others in its orbit is kind of crushing lots of niches. My thought is skip that and actually modify / build something that adds value and "pulls" instead of just slapping a logo on some widget and having to sink huge swathes of money into advertising.

So I could just do overtime for the money but the wife wont have it and frankly I agree, I want to be financially independent but not at the cost of my family (it took us 3 years to get on the same schedule) , i've weighed what i'm willing to sacrifice and that isn't it.

I tried the ebay / craigslist / letgo / offerup flipping model and its jsut not happening, I managed to get my money back out of my initial investments in junk from estate sales and actually profited 400 dollars (it only took a year and a half) and got some nice crap to hand out for birthdays and such but...not happening. The population of my local town is just shy of 30k and the closest town to that a whopping 21k , 30-45 minute drive to an actual metro. Essentially it was 90% flake buyers or people expecting me to drive an hour to drop off some 15 dollar knick knack for me to make 9 bucks, no thanks.

Got an llc and amazon account setup in september, retail arbitrage as the chosen model.

I got a broad amazon course (I had gotten walter hays import book and its a course his book is affiliated with) , So for year end 2018 my P/L just based on items sold and the pick and pack fees and such from amazon looked fine, 386 dollars profit. Total however? I lost 1138.58 , (without considering my time of course) That was starting with 500 dollars for inventory and putting in an extra 200 a month september , october, november and december so 1300 dollars into the company just for buying inventory. Not a great start. I'd been lackadaisical on the basics, just "knowing the numbers" , I found out for instance that I had assumed i'd made some money on an item that actually cost me money every time it sold and had re ordered it once!

So this year every sunday the first thing i'm doing is a weekly P/L spreadsheet, I'm in the red a little more than a dollar as of yesterday.

I have some wholesale contacts but no solid products or lines worth the time to engage with right now.

Going forward I have a few things to attend to,

1.)
I spent about 230 dollars attempting some amazon merch plays, might as well have burned the money.

2.)
One of my better sellers and something I was reordering from a wholesaler was very low margin in terms of actual dollars (150% ROI technically), well making 3 bucks from a 2 dollar investment is fine, until the inevitable race to the bottom price war because i'm not actually adding value , you can eat up 3 dollars pretty quickly when a bunch of automated repricer algorithms are knocking off a penny every 15 minutes vying for the buybox [so the headline here is, flip higher value stuff] .

3.)
bundles , if I have a 2 dollar item a 5 dollar item and an 8 dollar item I can sell that for 40 bucks , people see multiple items and just don't do the math, if they like what they see they'll click buy , it also takes longer for copycats to grab hold of the listing and start a price war. I haven't decided what portion of working capital should be solely devoted to creating these types of listings but I think between 20-40%. lastly

4.)
I'm going to wait until I have a larger chunks of money before sourcing anything , last year (well q4 that I was active) I had this mindset that I needed to be sending goods in every week no matter what, ended up with wholesale shipments where shipping costs just to get the items to me were adding 21% to my COGS , I was just sort of back of the envelope estimating that such and such would kinda maybe sort of still make me money. I don't think anyones ever "ho-hummed" their way into millions. I would also sometimes take multiple trips to individual stores for sourcing, 2 hours of driving to spend 2 hours in one store on monday, 3 hours of driving to look at 3 stores over a 4 hour period tuesday, doesn't make any sense. This year I'm going to consolidate the RA trip days and bring enough capital to really take advantage of opportunities I find.

My current YTD P/L is still based on inventory from last year (first shipment of 2019 is just barely checked in to FBA warehouse)

So thats where I stand, I'll keep my little journal updated and hopefully have some win to show for all this hurly-burly.

Worked at ecom (Shopify Dropshipping) for almost 3 years. Started a few stores that ultimately were all shut down, and in total I did around $20k profit and around $100k in sales. A lot of good learning experience (managing a small team, FB ads, general business experience, Taxes).

I wish you luck and you're ultimately on the right track (I've failed multiple times at ecom), and all of this is preparing you for whats to come down the line. Good luck!
 
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MHP368

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I suggest you look at the PPI course within PAC

yes! , actually thats one thing i'm working on right now, I have a 3 pack bundle, I've run one set of tests and have 3 winners for keywords out of ten, I have 7 more varieties of the bundle coming in this week (some slight differences in the items but basically all 3 items are in the same niche) and I'll be running more tests on those, it isn't a slam dunk as far as traffic according to the impressions but I think I can make a dent in the niche.

One of the items in the bundle is something I cobble together at home using some things I get wholesale handmade and another item I get at a retail store, should make it a bit more difficult for copycats.

Thanks for the words of encouragement walter!
 

MHP368

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Update time :

1.) So as Walter mentioned I am utilizing something called PPI , briefly I have an item or bundle and I pay amazon to show my product at the top of the results page when certain exact keywords are typed in. I choose 10 at a time, how do I choose them? google has some free methods, you can used paid keyword software, ask someone "hey if you were trying to find x on amazon what would you type?" etc , so you send some of the product or bundle in to FBA and pay for a week of advertising and then analyze the results. You see because you're paying amazon money they'll spit back data that you normally couldn't access - lots of software makes estimates for sales per week / clicks etc on an item but this will tell you objective facts. This is just data gathering so you want to offer good money per click (2 dollar bids) and have a decent daily pot (maybe 20 or 30 bucks) , it doesn't actually end up costing you all that at the end but if you don't show the algorithm you're serious this doesn't work (So even with a max bid of 2 dollars for my last run I paid 40ish cents at most and the busiest day paid out like 6 dollars)

So we want to analyze impressions vs clicks, impressions means that you're item was shown at the top of the page, the clicks are what you pay for, if someone clicked the item we've just learned that for that keyword the title of the item or picture matched the buyers idea of what they were looking for when they typed in whatever the keywords were.

Impressions is just how many people actually typed in those exact keywords in that timeframe (which is itself useful because that can tell you if the niche or product is viable before you've gone all in)

Out of my ten keywords (this was back around xmas) , 7 were flops , of the remaining 3 only 1 was good but it was very telling. I had designed a bundle as a "gift" set , none of the keywords with the word gift had any traction. I had however also thrown the word "decor" into one and this keyword was the only one that got clicks.

The gift keywords barely even had impressions, meaning no one was looking for a gift bundle of these items, the decor had impressions and clicks - whats more some folks apparently thought my offering as pictured or described in the headline matched the idea of "decoration".

So I orders 6 more variations of the bundle but with a decoration focus , 2 of the items are small trinkets, one of them is something thats a mix of a retail item, an item I found on etsy and a few modifications I made at home - this is the centerpiece "decoration" bit , the fact that I had to do a little work to make it will prove somewhat of a barrier to entry for copycats if the idea ends up being any good.

I'll be organizing these 6 variations today and taking pictures and then sending them in this week for another ad campaign to further narrow down results.

If someones clicking but not buying that can tell you a lot as well, especially since you know what keywords they typed in and thus what other items are showing above and below your own (take hints from them to improve your own description or offering)

One neat thing about this somewhat slow but still useful system is that you'll sometimes discover gaps in supply and demand on accident that you can exploit.

For instance lets say you were trying an all natural organic dog shampoo, you run the campaign and discover that oddly enough "acai based" dog shampoo had lots of impressions and clicks, even though your item isnt acai based (maybe this was just a keyword you found off a keyword planner software program or google) , you just tossed it in because why not? well low and behold no one is offering this product, a little digging and you find this is some new yuppie mom blogger trend with almost no competition. Boom. Retool you're shampoo and go with it.

2.) state of the business :

So I did my weekly P/L , this only includes my cost vs what I got back from amazon for a sale and refunds. It does not include my monthly fee to use FBA, my charges for sending items in or my charges to have them pick / pack (which I've started doing this year so I can focus more on the actual retail arbitrage / proper buying)

Not doing good! , so the silver lining is some folks are getting great bargains on toys, I'm doing a fire sale on leftover toys from xmas. One positive is I'm ungated (allowed to sell) in almost every toy / game category one could imagine so hopefully that pays dividends moving forward. Lots of other sellers (and wholesalers) have been offloading toys this past month as well.

I'm at negative 84.39 right now. I have about 620 dollars in the business account to use for inventory. Amazon has 175 dollars for me pending dispersal. I have a little more than a hundred dollars worth of stuff (my cost) that just needs pictures and packaging. I have 45 products at amazons warehouse right now, only 2 books left (I decided in October to give up entirely on books).

Tuesday I'm going to take a compact SUV out for an entire day of attempted sourcing , I dont have fancy software or a scanner just my smart phone, I have an external battery bank for it. I've decided to focus on higher ticket items.

Last year my sourcing was very sloppy and laissez-faire , 2 hour car trips to buy 120 bucks of product, buying a hundred dollars from a wholesaler and paying 30 bucks shipping (that works out great, everyone should try it, real profitable)

So now I'm going to only source when I have 300+ dollars at a time and try to make one big trip instead of wasting time and gas.

I definitely don't get the "chasing treasure" thrill some RA folks get from this, I didn't get it when I was trying to flip estate sale junk either.

I'm hoping the PPI campaigns and bundling will reward me enough so that I can focus more on market analysis and sourcing just for those instead of this cell phone hustle. I've at least opened up a lot of free time by limiting my sourcing trips.

I'm keeping physical journals now, one at home and one in my car, dump other business ideas I think up - stuff like that. Have to focus on this though.

It occurs to me however that perhaps I need an entire new skillset and business track if I'm going to make it.
 
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MHP368

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Update :

So "better" retail arbitrage run this time but everything that would have been a slam dunk (50 dollar item selling for 250 etc) I was "gated" meaning I have to buy from a legitimate wholesaler to be able to send it in. So I'm getting better at sourcing but...yeh spending 8-10 hours slogging around retail stores is not my idea of productive.

I had about 200 dollars left after my RA run though and I found my first decent OA opportunity (in only 20 minutes! , 120 dollar item with free shipping sells for about 300 so even with a price war or some adverts needed I have some breathing room), prior to this I'd spent nearly 20 hours online and found nothing. So on that note i'm going to pivot to an OA focus here , i've decided to give tactical arbitrage a try and sell "lists" of opportunities i've found on fiverr (or some equivalent site) so that the monthly cost doesn't drag me down too badly.

I'm still not profitable and this is about the 6 month mark so...considering the RA/OA flip idea was a secondary goal to save up enough money for a different focus (manufacture / import of my own product) , i'm just about at the point where i'm willing to accept this as a failed venture.

I want to update on the "PPI" campaign however , at least someone coming upon this later might garner some useful information even if the OA fails and I stop burning money on this.

I'm going to go ahead and stop acting paranoid and let you all know what exactly i'm exploring here.

So the niche is buddhist decorative items, my first run back in late december was vaguely "buddhist gifts" , but I found doing paid advertising that the impressions were coming from decor, well we have whittled things down further.

see : here , notice on the "decor" keywords simply changing between the term "buddhist" and "buddhism" massively altered the impressions received , little optimizations like this can make or break things. I had 8 different amalgamations of a bundle all running these keywords, one sold. I'm not too worried as I imagine a few more will sell organically in the coming month and all the stuff I made them with is just chinese junk anyway (so plenty of room to play), we can see here that all the money I urinated on and flushed down the toilet was spent fighting for one really hot keyword "buddha statue"

So we've gone from gift to decor to statue , 74 thousand impressions is a lot for something that only has 7 pages of results and my low click through rate is understandable considering I only had 4 of my bundles that included a statuette and they were tiny (2 bronze and 2 faux sandstone) and not at the forefront in the picture.

Those were the #'s for a one week campaign as well.

Heres my sponsored info , again, an understandable CTR considering I had tiny little statuettes here.

So I want to flesh out my hesitancy on continuing with exploration of this niche , I'm on the fence on wether or not i'd being throwing good money after bad right now by trying to import some buddha statues and running another campaign (eventually the idea here with PPI is that I fine tune my offering enough so that I just get organic traffic).

If you go to amazon right now and type "buddha statue" , you'll see a first page flush with options , now i'm sure I could get higher than 0.238% CTR and better conversion if It was just a buddhist statue by itself (but , I haven't determined what the customer is actually wanting to see when they type "buddha statue" , do they want the fat chinese buddha? [bodai] , "Calling The Earth to Witness" buddha? , bronze? gold? , I haven't actually determined anything on the specifics)

running over to ali express I see some statues that aren't on page one and at prices where I think I could at least break even on further experimentation. I hesitate though , I don't have enough funds to bother hunting for a real manufacturer instead of a trader posing as one (because I couldn't afford actual freight or a real wholesale order anyway) and the 4 sponsored products i'm competing with range from 13.99 to 88 dollars , are people buying buddhist stautes price conscious buyers or can I compete for that higher value? because it certaintly isn't worth a dollar a click for an item that moves for 14 bucks.

I'm going to poke around with tactical arbitrage this week and see how I feel about "buddha statues" as a niche once I've digested the information.
 
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MHP368

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Ok so I'm going to move forward with this, 2 pronged attack, online arbitrage and in this case some forward motion on "buddha statues"

On the latter lets take a more broad look, demographics look good, small (low competition in general) growing #'s, young folks especially. These aren't wealthy people but its not exactly a penny pinching purchase so I feel I can price high enough to leave some room for a bit of price competition or the need for advertisement. Its not a 5 star niche but its okay.

Keyword research looks ok as well, max cpc on google 3 dollars with a CTR of 4% , average is 1.17$ , thats almost 30 dollars a click (not sales, click) but I wouldn't be relying on paid google adverts if I got to the stage where I was having a custom statue / statuette made, that just drives some traffic for initial amazon reviews.

backing up a little more, who are these people? young adults and apparently equal parts baby boomers but with the growth coming from the young adults. Its definitely the kind of thing where you could tell a story with the brand and buying the thing has an ego component - meaning this is the kind of purchase that sort of accents someones sense of self.

Drawback, not a consumable, one time purchases, so again not a product thats hitting it out the ballpark. Plenty of facebook new age / buddhist / meditation groups for targeted ads on that platform.

alright so I'm turning on all my chrome extensions and going back to amazon "buddha statue" , so 4 sponsored and only one has reviews, 4.5 stars. Of the remainder on page one mostly 4+ stars, a 3.5 star review for an object that isn't a statue of the buddha , I actually count 12 listings on page 1 that don't meet that description (which is good for me) , 6 that have no reviews (also good, items without reviews are still on page 1, thats going to be me initially) , page 1 has 60 items. Of the relevant items for sale I'm seeing they've been categorized in 5 different ways "home & kitchen...health and household...etc"

heres a screencap of what i'm looking at

First two are sold by amazon, lots of these only have 1 fba seller so I could actually probably make a play on that angle but I'd rather not. Lets look at price range and size, now apparently people are googling a lot for larger size statues (perhaps for their yards?) but on amazon here i'm seeing (for obvious reasons of cost of shipping /storage) 4 inch to 22 inch statues. Prices ranging from 7 dollars up to 300.

The material used is all over the place, porcelain, plastic, wood. I don't see any pattern on that factor (other than the current sponsored ads all looking like they're all bonded stone, however all 3 of those are being sold by the same seller for whom buddhism seems to be the main niche so that doesn't actually tell me anything about whats selling , just what this company happens to be pushing right now.

So I'm going to self statues of the buddha to married childless millenials and married baby boomers with grown adult children. Apparently my demographic has quite a large income gap but i'm not offering something that I think is the type of purchase where price consciouseness is the big deciding factor. I've noticed these things are mostly ugly but I dont want to have my opinion be the arbiter here, lots of search volume and a reasonable number of holes in page one so we'll just keep the ugly factor in the back of the mind. So thats demand.

On the supply side I'm going to check some southeast asian and non "ali" chinese sites and see what I can do, I'm thinking a few in the 50 dollar range a few in the 80 a few in the 100 and a few 150. Shoestring budget though so I might just cop out and test the waters with chinese junk again , I've tried bundling as a unique offering so here I think it will be rather straight forward, just statue that currently isn't being sold on the platform.

The positioning edge here is pretty much as above (for now just offering something new) , although i'd like to think that maybe people are tired of poorly done molds with big flat noses and a bunch of crust on the bronze? , I personally feel the wooden and faux sandstone ones have cleaner artwork. I'll be checking to see if maybe I can get real sandstone ones premade anywhere.

Will report back.
 

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So confession time, this was very much "me too" and "money chasing" , the entire endeavor

Little over month 6 in I'm dissolving the llc today.

Gonna get back to basics, find a need, a frustration to crush, somewhere to add value. TBH I don't have a strong skillset foundation and of course more importantly i'm not offering anything the market really wants. Keep it simple, back to basics.

I've been on an info gathering journey these last few weeks, hone my atrophied sales skills, learning about marketing , copywriting, google adwords, all that good stuff. Gotta keep in the game though, keep accountable (its easy to action fake by reading books / threads / taking courses online as we know), i'm leaning toward productivized service offerings.

by days end:

1.) a brain storm of niches and possible models (meaning revenue models)
2.)dissolution paperwork for current ecom business in the mail / email out to registerd agent regarding this / finalize any sales taxes owed

This will be my final update to this progress thread.
 
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Scalr

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So confession time, this was very much "me too" and "money chasing" , the entire endeavor

Little over month 6 in I'm dissolving the llc today.

Gonna get back to basics, find a need, a frustration to crush, somewhere to add value. TBH I don't have a strong skillset foundation and of course more importantly i'm not offering anything the market really wants. Keep it simple, back to basics.

I've been on an info gathering journey these last few weeks, hone my atrophied sales skills, learning about marketing , copywriting, google adwords, all that good stuff. Gotta keep in the game though, keep accountable (its easy to action fake by reading books / threads / taking courses online as we know), i'm leaning toward productivized service offerings.

by days end:

1.) a brain storm of niches and possible models (meaning revenue models)
2.)dissolution paperwork for current ecom business in the mail / email out to registerd agent regarding this / finalize any sales taxes owed

This will be my final update to this progress thread.

Thanks for sharing your progress with us. This is true hustle, don't give up!
I assume you are trying something else now. Maybe for others that land here, post a link to keep following you on your next adventure. All the best!
 
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MHP368

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Yeh I didnt even send in the last batch of buddhist stuff , would have maybe cleared 30% after considering the costs to nail down exactly what people wanted (although of course that nargma would be much better on reorders)

The timetable just didn't make sense though , my end goal was raising 5k to manufacture my own good and I spent six months and was three grand in the red diddling around with rrtare arbitrage , to mm those results screamed "reasses this entire venture you would have done better buying scratcher tickets"
 

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Why dont you try drop shipping? low cost, great way to fund your way up to amazon fba
 

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So, Decided I needed another level of accountability and probably just somewhere to get this written down and out of my head. Outside eyes on things would be great too.

Real quick explanation of where I'm coming from and how I landed on this model, I work 4 days on 3 off then 3 on 4 off, 12 hour shifts, half an hour to forty five minute drive. @ kids 3 and 6, wife works same job same place same hours.

So every week I have roughly half the week to work on this, work days I have enough down time to answer customer emails / supplier queries from my cell phone but not much else.

My job has nothing to do with business as such (healthcare), the only business related skill I have is a novice level of sales experience (I did door to door vacuum sales and was doing pretty darn well all things considered [the product is bs being the main barrier to sale], ended up managing the office of a competitor, also did some car sales years back)

I've had 2 failed businesses prior to this.

Ok so, the end goal short term is about 5k to manufacture my own doodad. I have nothing specific in mind but I think private label is a dead end , because this company and others in its orbit is kind of crushing lots of niches. My thought is skip that and actually modify / build something that adds value and "pulls" instead of just slapping a logo on some widget and having to sink huge swathes of money into advertising.

So I could just do overtime for the money but the wife wont have it and frankly I agree, I want to be financially independent but not at the cost of my family (it took us 3 years to get on the same schedule) , i've weighed what i'm willing to sacrifice and that isn't it.

I tried the ebay / craigslist / letgo / offerup flipping model and its jsut not happening, I managed to get my money back out of my initial investments in junk from estate sales and actually profited 400 dollars (it only took a year and a half) and got some nice crap to hand out for birthdays and such but...not happening. The population of my local town is just shy of 30k and the closest town to that a whopping 21k , 30-45 minute drive to an actual metro. Essentially it was 90% flake buyers or people expecting me to drive an hour to drop off some 15 dollar knick knack for me to make 9 bucks, no thanks.

Got an llc and amazon account setup in september, retail arbitrage as the chosen model.

I got a broad amazon course (I had gotten walter hays import book and its a course his book is affiliated with) , So for year end 2018 my P/L just based on items sold and the pick and pack fees and such from amazon looked fine, 386 dollars profit. Total however? I lost 1138.58 , (without considering my time of course) That was starting with 500 dollars for inventory and putting in an extra 200 a month september , october, november and december so 1300 dollars into the company just for buying inventory. Not a great start. I'd been lackadaisical on the basics, just "knowing the numbers" , I found out for instance that I had assumed i'd made some money on an item that actually cost me money every time it sold and had re ordered it once!

So this year every sunday the first thing i'm doing is a weekly P/L spreadsheet, I'm in the red a little more than a dollar as of yesterday.

I have some wholesale contacts but no solid products or lines worth the time to engage with right now.

Going forward I have a few things to attend to,

1.)
I spent about 230 dollars attempting some amazon merch plays, might as well have burned the money.

2.)
One of my better sellers and something I was reordering from a wholesaler was very low margin in terms of actual dollars (150% ROI technically), well making 3 bucks from a 2 dollar investment is fine, until the inevitable race to the bottom price war because i'm not actually adding value , you can eat up 3 dollars pretty quickly when a bunch of automated repricer algorithms are knocking off a penny every 15 minutes vying for the buybox [so the headline here is, flip higher value stuff] .

3.)
bundles , if I have a 2 dollar item a 5 dollar item and an 8 dollar item I can sell that for 40 bucks , people see multiple items and just don't do the math, if they like what they see they'll click buy , it also takes longer for copycats to grab hold of the listing and start a price war. I haven't decided what portion of working capital should be solely devoted to creating these types of listings but I think between 20-40%. lastly

4.)
I'm going to wait until I have a larger chunks of money before sourcing anything , last year (well q4 that I was active) I had this mindset that I needed to be sending goods in every week no matter what, ended up with wholesale shipments where shipping costs just to get the items to me were adding 21% to my COGS , I was just sort of back of the envelope estimating that such and such would kinda maybe sort of still make me money. I don't think anyones ever "ho-hummed" their way into millions. I would also sometimes take multiple trips to individual stores for sourcing, 2 hours of driving to spend 2 hours in one store on monday, 3 hours of driving to look at 3 stores over a 4 hour period tuesday, doesn't make any sense. This year I'm going to consolidate the RA trip days and bring enough capital to really take advantage of opportunities I find.

My current YTD P/L is still based on inventory from last year (first shipment of 2019 is just barely checked in to FBA warehouse)

So thats where I stand, I'll keep my little journal updated and hopefully have some win to show for all this hurly-burly.


Good to hear, how did the Walter Hay book help your endeavors? Are you scanning and buying from clearence sections at Walmart and Target? Which are the best stores for retail Arbitrage? How do you find hot selling items?
 
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MHP368

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how did the Walter Hay book help your endeavors? Are you scanning and buying from clearence sections at Walmart and Target? Which are the best stores for retail Arbitrage? How do you find hot selling items?

1.) Never advanced along far enough to need it, although I did find some weird connections (for instance I tracked down a manufacturer in turkey of childrens clothes) , so its a solid book.

2.) yeh, clearance anywhere and also online, one place often overlooked is pawn shops, people pawn things that are brand new in the box and you can buy them for 20 or 30% of retail in many cases. Lots of software is available to assist you but to start just the amazon seller app with keepa opend in a seperate tab, you have to get very comfortable with going over the graphs to make sure you aren't buying duds and "luck" does play a role, be prepared for long long days (10 hours to spend 300 dollars and not end up with junk) , you're own hatred of being inside walmart and thrift stores and things will be your own worst enemy, also remember to get a resale certificate (however its done in your state) so you arent paying sales tax at point of purchase.

If I had to do it again i'd focus completely on online arbitrage out of the gate, everyone and there grandma is using software like tactical arbitrage but if you get good with it (and deal sites / online couponing) you can get similar or better returns to retail arbitrage and save yourself the trips , nothing will sap your morale quicker than spending days mindlessly scanning in the consumerist hellscape that is a modern big box retail store.

oh and dont forget to expand out if you do go that route, I found some decent picks at places like bestbuy (open box returns for 50% off where everything still new in box but they had to discount it because it wasnt "new new" ) , don't feel married to walmart.
 

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little more brain dump...

know your numbers, seems obvious but take the time every week and break down everything to the cent.

dont buy cheap crap, you might think 2 one dollar items that go for ten bucks bundled is great margin (3 or 4 bucks profit once amazons done taking their cut) , its not, no skin on the bone for advertisement. Shoot for 20$+ items at least, 3x cost is a good rule of thumb . If you have a 15 dollar item that sells for 50, amazon takes say 5, that leaves 30 dollars, once youve shipped it in the price will go down 10 dollars (happens all the time), you now have an item that will cost you 20 bucks all in that sells for 40, that leaves you a little room to advertise, you shouldn't even bother scanning items that cost less than 20 bucks (unless its a 50+ dollar item on sale)

The hardest thing abour RA/OA via FBA right now is that amazon no longer tells us rankings for categories, so if an item ranks "90,356" you have no way of knowing if thats out of 5 million items or one hundred thousand, so for each category you have to sort of learn as you go (they have cheat sheets online but those are just estimates, use them) , this is HUGE because without knowing actual ranking all the keepa and camelcamelcamel charts in the world are meaningless to you.
 

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little more brain dump...

know your numbers, seems obvious but take the time every week and break down everything to the cent.

dont buy cheap crap, you might think 2 one dollar items that go for ten bucks bundled is great margin (3 or 4 bucks profit once amazons done taking their cut) , its not, no skin on the bone for advertisement. Shoot for 20$+ items at least, 3x cost is a good rule of thumb . If you have a 15 dollar item that sells for 50, amazon takes say 5, that leaves 30 dollars, once youve shipped it in the price will go down 10 dollars (happens all the time), you now have an item that will cost you 20 bucks all in that sells for 40, that leaves you a little room to advertise, you shouldn't even bother scanning items that cost less than 20 bucks (unless its a 50+ dollar item on sale)

The hardest thing abour RA/OA via FBA right now is that amazon no longer tells us rankings for categories, so if an item ranks "90,356" you have no way of knowing if thats out of 5 million items or one hundred thousand, so for each category you have to sort of learn as you go (they have cheat sheets online but those are just estimates, use them) , this is HUGE because without knowing actual ranking all the keepa and camelcamelcamel charts in the world are meaningless to you.

Thank you for all the tips, when you sell open box items from Best Buy what do you list them as condition wise on Amazon and Ebay? Have you ever received negative feedback for selling Open box items?
 
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Thank you for all the tips, when you sell open box items from Best Buy what do you list them as condition wise on Amazon and Ebay? Have you ever received negative feedback for selling Open box items?

"new", not even "like new" , its functionally new as far as i'm concerned (although obviously i'm checking to make sure everythings still sealed and present in the box before I ship it in)

An amazon FBA buyer is going to get a box from amazon , think "oh good!", tear open that box, open the box with the goods and move on with their life , I've had boxes that we're overly scuffed returned but never recieved negative feedback and even if I did amazon would remove it (boxes get scuffed up at their warehouses all the time)

One thing on this though, I wouldn't send in an open box return where the box was obviously damaged (and then try to play off the damaged box as amazons fault if it became an issue) , for bestbuy and electronics stores I've never seen this to be a problem (although I only did this for 6 months) , when I was scanning items at "babys r us" it was consistent, especially the display models being sold for a discount, they're far too scuffed up to send into amazon and risk it (plus if you think about it, someone buying for a baby might very well be buying a gift for someone else and will be much more fussy about appearances)

but definitely the big place where I think no one doing RA is utilizing is pawn shops, brand new in box, pawn shop paid pennies on the dollar and now they have it up for 50% or 30% of retail (and you can often negotiate for a lower price)

As for ebay thats an entire different game , I would go the estate sale route with that but I wouldn't touch anything without using third party software, watchcount, checkaflip, terapeak (costs money but worth it if youre serious) , I tried to wing it and ended up with all this "high value low volume" type stuff , for isntance I got a thousand dollar persian rug for 200 dollars , only to find out persian rugs arent desireable anymore

all sorts of antiques and memoribilia with great margins where the items only selling to weird hoarder ladies in the appalachian mountains once every 6 months, that kind of thing, you really have to consider the velocity of money, 90 million+ amazon prime users in the US (and prime users are active buyers), vs 179 million active ebay users in the first quarter of 2018 (last stat I could find) and lots of people just buy a few things every few months on ebay if that.

On ebay "like new" has almsot no bearing on the final sale price, if the thing serves it function and looks like it does in your photos / matches the description then your fine.
 

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