Many people in the retail or e-commerce world will tell you that Q4 is the best time of year. There can be a big bump in sales, however, Q1 can also be a lucrative time.
My first Q1 was kind of a disaster or as some would say, “a learning experience.” After beginning selling on Amazon in Sept of 2013, I had focused entirely on sourcing product to sell in December. I sold ornaments, toys, gingerbread houses, games, and more toys. Did I mention toys? I bought at Toys R Us, Walgreens and more and easily made 100% ROI on most of my purchases. I was able to make the down payment on a new car for my husband for his Christmas present. Not just a new car for us but a real new car. Life was good. Then came January. I knew there would be a “dip” in my sales but I actually experienced more of an icy cold plunge. My first January payout from Amazon was around $100. I worked hard in 2014 to learn like crazy so that this type of sales dip would not happen in 2015. Here is a summary of my own experiences as well as some of the collective knowledge I’ve gained from the amazing community of sellers I’m in.
- New Years brings fitness resolutions to Q1. People buy sports equipment, clothing, socks shoes, and more. Start stocking those items as early as possible as stores start bringing in spring clothing soon and people still want their winter fitness wear.
- There are some major shopping holidays in Q1. A few of the items you can sell are party supplies, specialty grocery items (look for holiday limited edition flavors), decorations, wreaths (yes, lots of people put up Valentine’s wreaths), holiday themed clothing, temporary tattoos, makeup, decorative lights (make sure to check if they are ok to sell on Amazon), yard decorations, garden flags, table cloths, kids art projects, and plush.
- Chinese/Lunar New Year – Jan 28th
- Super Bowl Sunday – Feb 5th
- Valentine’s Day – Feb 14th
- Mardi Gras – Feb 28th
- St. Patrick’s Day – Mar 17th
- Easter – April 16th (Technically this is Q2 but start stocking up in Q1)
- Linens are big in February. Lots of big stores do their annual “white sale” or bedding sales this month. People have fixing up their homes on the mind.
- Trade show and conferences resume in Q1. Check your local urban conference centers for “off the beaten path” trade shows that are within a drive of your home and start there. Connect with wholesalers, white labelers and other professionals that can help you grow your business. Traveling to larger shows such as ASD in Vegas can be good too. Just make sure that you have a clear strategy when attending a show that will help you earn more.
- Expand your current relationships. Take the time in Q1 to personally call all of your wholesale accounts and connect. See what their thoughts are, how they are doing and if you can help them in any way. If their products provide you with a good chunk of income, an in person visit might be just the thing to cement your relationship and build confidence. Check to see if they will produce exclusives just for you to increase their bottom line and yours.
- Use your knowledge to create your own products. Whether you create your own information, print on demand merchandise, white label from another manufacturer, or private label your own brand, learn more and grow your selection of unique products.
- Analyze your data from 2016. See what products were the most profitable. Sometimes our perception of our most profitable areas and the actual data do not agree. Look at profit in terms of percent, dollars and time spent.
I hope these tips will help you smoothly continue to grow in the beginning of 2017. My Q1s have grown to be much more profitable than that first $100 one in 2014. I look forward to 2017 and what it will bring.
What are your Q1 tips and fears? Please comment!
Recently we polled our members to see how they are sourcing products for their Amazon and online ecommerce businesses. This was the result.
Although this is a small sample of our total membership, I was surprised by the results. A majority of people are still sourcing via arbitrage, whether it be online or in store. This is definitely a somewhat risky but profitable model in the short term.
This leads me to wonder, what is the future of arbitrage? Is it a sustainable business model? I will say yes with some major reservations.
- This model will become harder and harder to do on Amazon.com as the rules are tightened, brands are restricted and inauthentic claims are harder and harder to fight.
- Those who have been doing it successfully for at least a year are at a bigger advantage because they have achieved some mastery and cash flow.
- While Amazon.com may be more challenging, those who can adapt to international marketplaces such as Amazon in Europe and Linio in Latin America will thrive. (Linio will be adding major shipping functionality from the US in 2017 which will make it a much better fit for arbitrage than it is now.) Many people in other countries are desperate for our brand name goods and the seller marketplace and warehouses are not nearly as congested as the US ones are. Developing countries in particular will be great for arbitrage such as Latin America (Linio.com), India (Amazon.com), and even China.
- Sellers who learn international marketplaces besides Amazon will be at a huge advantage. For example, if selling in the UK, what other marketplaces besides Amazon make sense for selling?
- Sellers who can sell in multiple marketplaces will be safer. For example, selling on Ebay, Jet, Facebook, Pinterest, Instagram and even local will be able to fully capitalize on their deal sourcing capabilities.
An Overview Of Online Marketplaces In Europe from BVOH
Arbitrage is still a viable business model for many but keep a lean inventory to make sure that pivots are not too costly. The days of just send it into Amazon and move on are over. Accounts must be much more closely monitored, records kept better and growth strategies must be employed.
I would love to hear YOUR arbitrage experiences and opinions. Please comment below.
Kelly is a full time seller who lives in Michigan. She sources via RA, OA, wholesale, and private label. Her only other steam of income besides Amazon is selling her returns on Ebay.
“To be honest I don’t really like being told what to do so I am better at working for myself. I also love setting my own schedule and working when I want to. I want to be available to my kids when they need me and to go on vacations when I want to. My goals now are to start working towards retirement by building my business and putting money away so that I can live comfortably and enjoy my kids and someday grandkids.”
I sell around 10,000 to 12,000 units a month with gross average sales around $220,000 to $230,000.
A Few Things
“I just recently got married and we have 5 kids between the 2 of us. A 22 year old, 20 year old twins, a 9 year old, and a 7 year old. All girls except the 7 year old ( poor guy.) We enjoy camping and going on vacations to anywhere warm as we live in the frozen tundra of Michigan…lol”
What do you love about being a member of Scanner Monkey?
“I love all the great people! Everyone is so helpful and I know I can get an answer quick if I just ask. Not to mention Scanner Monkeys are a blast to hang out with.”
In a recent email to sellers, Amazon further refines the ecommerce role that they want to play in the marketplace.
“In the past, one unit of each ASIN in storage has been exempt from the twice-annual Long-Term Storage Fee. Effective with the February 15, 2017, Long-Term Storage Fee assessment, this exemption will end. A Long-Term Storage Fee will be assessed on all inventory that has been in a U.S. fulfillment center for six months or more. There are no additional changes to the Long-Term Storage Fee at this time, other than there will no longer be a single-unit exemption effective February 15, 2017.
You can, however, remove these units for free: Starting today, September 19, 2016, we will reimburse you for the return fee or disposal fee for one unit of every ASIN for which you file a removal order. This promotion applies to inventory in U.S. or Canada fulfillment centers and expires end of day October 14, 2016, after which time normal removal-order fees will apply.”
Amazon, as the “everything store” had an emphasis on the availability of, well, everything. In order to do this, they were willing to house and store a large variety of items provided by third party sellers so that a customer could look on Amazon for that obscure textbook, rare bra size or discontinued toy and have it shipped for free as part of their Prime subscriptions. With Amazon’s business growing exponentially, and warehouses filling as fast as they are built, this strategy is changing.
Amazon sellers have been adjusting to their further restrictions on warehouse storage for a while now. Amazon wants our inventory levels to be low enough so that we do not carry more than a 6 months supply of any product unless we are willing to pay a high storage fee. Until last week, sellers could keep 1 of any item in stock with no long term storage fees which allowed for the stocking of rare books and other hard to find items, this is no longer the case.
Now, the fee structure and communication that sellers are receiving is letting us know that Amazon wants to be the place for popular items. They want items that will sell in the next few months and that’s about it. It’s a mass business that is far more profitable and predictable overall for them but less welcoming to the treasure hunter or picker. These sellers stock items that may sell for hundreds of dollars but appeal to a very specific buyer who may not even look for this item for 8 or 15 months from when it is sent in. Source the rare book, prep it and send it in to Amazon and then as Ron Popeil said, “Set it and forget it”.
This business model is not one that is helping with Amazon’s new plans so they are discontinuing it. As a way to help sellers transition, at least, we can have these items returned to us for free until Oct. 14th 2016. This is actually very helpful. For those who stock thousands of books, having them returned for a fee of $.50 each or disposed of for $.15 each can really add up. It also means that the prime fulfilled rare book may be coming to an end.
Impact On The Individual Book And Other Long Term Item Seller
This cost of storage is now an issue so each item will have to be carefully evaluated to see if it is worth storing and selling via FBA (fulfilled by Amazon). The business model will have to be adjusted significantly and those with greater expertise will continue to succeed, perhaps even to a greater extent. When any business become harder, it means that those who are willing to do extra work can be rise to the top.
New Business Opportunities Arise
In online used clothing sales, there has been a rise of more customer focused niche sites such as Swap.com (see our blog post about that here) as well as Instragram and Facebook selling. The used clothing item, which had formerly been the domain of eBay, thrift stores and garage sales is now upscaling and diversifying as more and more customers look online and want a used product shopping experience that is seamless and enjoyable. There used to be a wide range of online book stores and used books sites that were gobbled up by Amazon and eBay such as Half.com. Currently there are used book sellers that do a huge business on Amazon with both FBA and MF sides to their businesses. They are large companies with warehouses and staffing and may be in a position to take further domination of this used book market with warehoused and shipped merchandise that is sourced by third party sellers. Sites that have not been able to get off the ground due to Amazon’s domination may now have a shot as over time, the selection of hard to find items goes down on this giant retailer. We may see the rise of more corporate online second hand stores that provide an Amazon style shopping experience for buyers and an outlet for the selling of millions of hard to find items.
Another sales opportunity for these hard to find books is to convert them to Createspace and Kindle e-books. There is a business model where authors and estates are contacted by a consultant and a revenue share is put in place. Out of print but in in demand books can be made available and accessible. Perhaps these hard to find books can even be sold more, if the price goes down because it’s a print on demand (POD) product. Are you the professional who knows enough to contact these people and work with them? For many authors or their descendants, understanding Amazon’s POD system is just not a priority so the knowledgeable book seller can switch to a role as a service provider.
Regardless of your plan to adapt, think hard about your inventory levels and take advantage of this free grace period from Amazon.
We’d love to hear what you think and how you will adapt to these new changes. Please comment below.
“Robert” is a humble seller. He quietly helps and supports others and never touts his own horn. I have had the privilege of knowing him for several years and he finally answered some questions on the condition of anonymity.
He has been selling online for 17 years and sells full time. He focuses entirely on selling online with no other streams of income. He currently sources primarily via wholesale and online arbitrage. He likes this business because does not enjoy the 9-5 life and has the goal of saving money for retirement as he’s already been living debt free for a long time.
Moo-Lah: He is on track to sell $1.7 million in 2016. (Yes, you read that right.) He says that his ROI varies and he mostly works solo except for a prep center that he uses to send in his inventory.
A Few Things: His fave foods are pizza and anything chocolate and he enjoys reading. He works hard, travels and keeps his nose to the grind stone.
What does he love about being a part of Scanner Monkey?
“I like the sense of community and sharing. 99% of the folks are genuinely nice people. I know I can turn to the members if I have concerns and I don’t mind helping others who may need it.”