Hey Gleamers:
Wanted to just write a quick post to discuss an issue with retail arbitrage that I ran into myself. That is not knowing what you’re selling. I’ll break this overall issue down into a few points that will hopefully keep you from making the same mistake.
Don’t Just Buy Anything
I wanted to get started right away doing some testing in the world of retail arbitrage. So I searched Facebook marketplace and saw someone selling a lot of 28 books all of the same author. Someone was a solid fan of this author, so perhaps there are more people like her out there on Amazon. They seemed like a good buy as the seller only wanted $25. A mix of paperback and hard cover. Okay I thought, surely these are selling well on Amazon, the biggest online bookstore! I even did a quick search on a couple of titles to see their best seller ranking and ratings. I had no idea who this author was, nor the content or context of these titles. Big mistake.
Do Your Research
I did a couple of searches quickly on Amazon before making the purchase. Had I done some additional due diligence using analysis tools such as the Jungle Scout Chrome Extension or their Jungle Scout Web App, I may have avoided this dead inventory. Albeit I hadn’t purchased those tools when I made this purchase, it would have been a good step to do so before going forward. They are useful for seeing sales velocity on a particular Amazon item and I’ll be doing a review on them in the near future.
Know Your Product
I discovered I went into this inventory blindly. I knew nothing about how popular the genre is nor who the author was. I assumed a lot when I made this purchase. Don’t assume. Know what you’re buying. I really didn’t know a whole lot about the book market either. How many sellers were selling their used copies of the same books. How many of those are power sellers or stores like Goodwill who pay nothing for their inventory so they auto-price their items down so they’re always cheapest even if they are losing money! It’s a cut throat market I tell ya!
Know Your Fees!
This is the biggest problem I’m facing right now. I had to become an Amazon Pro seller to enable the ability to offer free shipping! I read somewhere that increases a potential sale by 30%, and personally it’s an expectation of mine, so I suspect it will assist in future selling. Once you start selling more than 40 items a month it does typically pay for itself, considering without pro status, you pay $0.99 per item sold.
The problem with Amazon is they’re not cheap. It takes a lot of your margin to sell on their platform. For example, below is the break down of the latest book I just sold:
| Cost/Sale | |
|---|---|
| Used Paperback Book Sale | +$4.98 |
| Amazon Fees | -$2.55 |
| Shipping | -$2.66 |
| Packaging | -$0.07 |
| Printer Label/Print (Free Label from FedEx) | -$0.02 |
| Book Cost | -$.89 |
| Total | -$1.21 |
As you can see, I lost money. I priced this book too low, just to try and move inventory and be ranked better, and in turn I screwed myself. So you have to know your all your costs and more importantly your Amazon fees before you know how to price your item. Hard lesson learned.
If Buying Used, Buy In Person
These books were used and overall in okay shape, but they don’t sell very well compared to new books. I really wouldn’t recommend selling used items on Amazon. It may be OK on E-bay, but items just seem to move slower when you’re a tiny footnote on an Amazon item listing. Amazon really wants to sell new items, not your old busted books.
Don’t Mess With Low Priced Items
My final screw-up was that I thought I’d have low risk by not spending a lot of money on my initial retail arbitrage experience. I was right in that I was only out $25, initially. However, once you start factoring in the pricing screw-ups, the monthly costs of Amazon pro service, and more, it starts to add up.
Selling a bunch of books to make .20 cents in profit on each book is not worth my time. Going forward I would suggest not to bother wasting your time on anything that makes you below $20 profit per item because the juice just isn’t worth the squeeze unless you’re selling A LOT of volume.
Hoped this helped a little and as always if you have any questions be sure to drop them into the comments section below!
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