Today’s post will be the 9th month in an ongoing series of guest financial results posts from selling on Amazon. If you missed any of the first ones, you can find them HERE.
Take it away Dana:
Happy New Year everyone! I hope you all had a wonderful Holiday season – both personally and professionally and are ready to kick off a new year. I love January because it’s like a do-over. It gives us a chance to stop and reflect on the past 12 months and see what worked and what didn’t and apply what we learned. For me – 2016 was an amazing transforming year for me both personally and in my little business.
Before I jump into this month’s post wanted to answer some reader questions from last month.
Barb shared how she appreciated the realistic information that I was sharing and it’s taken her 2 years to be profitable. Barb – I very much appreciate the kind words and I really hope what I’ve shared has been helpful. I too hear of people selling millions and wonder what their secret is. However I remind myself – Do I really want to sell millions? That is not my personal goal. I don’t really need to make as much as I did in my old job (although that would be nice), but I’m mainly doing this for a happier life. So you really have to step back and make sure you know YOUR why in going into business. If it’s to make millions – great! If it’s not – never compare your progress to theirs.
James asked what made me switch from OAXray to Tactical Arbitrage. GREAT question! I had a particularly slow month and went through an expense cutting exercise. I wasn’t doing a lot of online arbitrage (OA) at the moment so I canceled OAXray. I then saw a trial for Tactical Arbitrage (TA) and read great things about it so I signed up for that. Three months later I actually never found enough inventory with TA to even cover my monthly subscription so just this past month I’ve gone back to OAXRay and in one 30-min session made more than my $99 subscription fee. Now – that’s not to say one is better than the other. I like the ‘idea’ of TA much more. If you know how to use TA properly I think it can be much more profitable – you can use it on any site. But the key is it has a much steeper learning curve and with everything else I had going on I just never had time to sit down and learn how to use the darn thing. I still plan to because I think it’s a great tool. But for the quick wins I needed I find OAXRay to be easier for those.
Brij asked if when I’m sourcing wholesale if I provide FBA labels for the shipment and ask them to ship directly to Amazon. I personally have not done this…yet. However I do have a wholesale account with someone who offers this service. So it doesn’t hurt to ask if they will. It really depends on the product. You’ll need to do a comparison between shipping to you and you doing it vs shipping directly to Amazon and having Amazon do it – or if they will do it. Each has pros/cons and cost. I don’t have any experience with either option yet.
I thought I’d start this month’s blog with a recap on why I’m even here.
After dreaming for years of wanting to start my own business I finally took the leap. My original goal we to own my own niche website and that still is my ultimate goal. But having never sold anything online before I decided to start with Online and Retail Arbitrage and learn the ropes for Amazon. So in December 2015 I bought some Wii Balance Boards from Best Buy and some camera bags for another store online. I spent one evening prepping and packing them and then dropped them off at UPS on my way to the airport to catch a cruise for New Year’s Eve to celebrate a friend’s wedding. When we returned from the Caribbean 4-days later I saw that over half of my stuff had sold – while I was laying on the beach! I was hooked!
Now, my stuff didn’t sell for much, if any, profit – but it did prove that if you had the right inventory at the right price things would sell. So I set off to learn how to identify the right stuff at the right price.
Mid-January of 2016 my husband and I spent a weekend going around town and buying stuff. It took me a week to get it all prepped and honestly almost brought me to tears. The prepping, labeling and shipping of my first box was a bit overwhelming, feeling like I had no clue what I was doing. I could manage multi-million dollar projects and Fortune 500 accounts in my day job – but I couldn’t pack a box! But I watched lots of videos and kept buying and shipping stuff in and soon got the hang of it all.
End of January I found out my business unit at my day job was being sold to IBM….and who knew how long we’d have jobs or what those jobs would be. I was facing the 3rd potential layoff in less than 10 years and quite frankly I was tired of having my day and life dictated by other people. So in March – I told my boss I didn’t want to make the transfer to the new company and put in my 2-week notice
It was the single scariest thing I’ve ever done – but looking back on this year I wouldn’t change a single thing. I’m not anywhere near making what I was making but I’m so very much happier. We’ve spent 2016 making adjustments to live on less – including selling our primary home and remodeling and selling our vacation home in Colorado. We are now living in our RV waiting to close on our new home back in Arkansas at the end of January and hopefully close the chapter of this past year living in and out of moving boxes. 2017 will be dedicated only to Amazon boxes 🙂
So how did we do? While November was good, December didn’t disappoint in terms of gross sales. And as I take time to go back over my numbers I certainly have learned a lot.
Let’s recap my November goals and take a look at the numbers for December.
Goal 1 – to beat November Gross Sales numbers. We just barely squeaked by with about $63 more in sales (according to InventoryLab)…but I’ll take it. Our gross profit margin slipped a bit as I used the increased December traffic to off-load some of my previous non-selling inventory. My thought was better to sell at less of a profit than have to recall them before the February long term storage (LTS) fees hit and then have to figure out what to do with them. But 56% Gross Profit Margin I’m still very pleased with. Note: click to enlarge this image to get a better look, same goes for the other images included in this post .
Here is a sales snapshot for Dec (note – I’m not really sure why the numbers are different than what InventoryLab is reporting. The numbers in the previous chart came from IL. From what I’ve read it’s about timing of when the sale occurs versus when the item is actually shipped)
You can see sales really tapered off around Christmas, mainly because I really ran out of most of my inventory. I know a lot of folks use the week leading up to do a lot of Merchant Fulfilled orders and I did some. However I much prefer FBA – and will probably stick to that for 99% of my items.
My eBay sales were really down for December and I’m not exactly sure why. I haven’t put a lot of effort into learning the ins and outs of eBay. I’m either going to have to learn how to market listings there better or abandoning it as a channel because right now it’s not making sense to pay for JoeLister cross-listing along with the eBay fees. Although I really don’t want to limit my sales channels.
Our expenses were a little higher in December, mainly due to higher storage fees. Here’s a look at the net profit breakdown:
And some more details on the expenses:
The services that are used that show up in the subscription fees section are OAXray for help with online arbitrage, InventoryLab for listing and accounting, TaxJar for managing sales taxes, and JoeLister for selling products on eBay that are currently listed on Amazon.
So before we move on to the other goals – let’s take a look at 2016 as a whole. We did over $72,000 in Amazon Gross sales and just under $77,000 across all channels. We had an average Gross Profit Margin of 50%. I’m extremely pleased with that. This was entirely RA/OA (and with limited RA resources). Our average net profit margin was 20% and I couldn’t be happier with those results. I did take 99% of that and roll it back into the business and I really didn’t start paying myself any sort of salary until November – and I started only with $500/month. So obviously this gig hasn’t replaced my salary in its first year, but I’m starting to see some reward and most of all – I’m still having fun.
Let’s review the rest of my goals I set for November:
Goal 2 – Update all my end-of-year inventory. I use InventoryLab for my FBA inventory, and that has worked well but I really need to get a system in place for tracking inventory and COGS for my eBay inventory and any other channels that I eventually plan to expand to. So I’m testing the Inventory tracking function in Xero and I have to say so far I’m pretty happy with it. I’ll be paralleling it with InventoryLab over the next few months and then will move solely to Xero for COGS and inventory tracking across all my channels. I’m using A2X to bring in my Amazon invoices at the SKU level and then OneSaaS for my eBay invoices and it’s working pretty well at the moment. I’m happy to answer any questions you have on how it works.
Goal 3 – Get my books in order. My hope was to be ready to hand stuff over to an accountant in January but with the sale of our condo in Colorado I haven’t had much time to nail down an accountant just yet. I have a short list of folks that I plan to contact this week – so this will probably roll into February. Honestly – just thinking about it gives me anxiety because we had so many changes this past year…I have no idea how much money I’m going to owe…really can’t even bring myself to think about it – lol.
Goal 4 – I hinted in last month’s post about a new venture starting a Facebook Marketplace but I haven’t had much time to devote to it just yet I had reservations to attend the Dallas Market in January and right now I’m thinking of a late Spring launch. Definitely more to come on that!
So as I look forward to next month – and next year for that matter – here are my goals for January:
Goal 1 – $8,000 in Gross Sales. I’ve gone back and done a spending budget and I’ll be working on making sure I’m spending enough on inventory to have a chance to hit that goal. Many say January sales are lower but then I read some do as much or more as December. I think it depends on your inventory mix – so we’ll see.
Goal 2 – Nail down accounting stuff. Again – way too much anxiety around this. Mainly because this is my first year in business and I really have no idea what to expect. But the sooner I can get in front of an accountant I think the better my anxiety about it all will be. Knowing is half the battle.
Goal 3 – Attend the Dallas Market and create a plan for launching my new Facebook Marketplace
Overall for 2017 here are the major items I’m looking to get accomplished:
1. Working to add wholesale to my inventory mix. This is not as easy as it sounds and I’ll be working very hard in 2017 to make this happen. With all the suspensions happening doing RA and OA makes me very nervous so I’m really going to be concentrating hard on this
2. Launch my new Facebook Marketplace. Ultimately I’m looking to build a brand and eventually expand to Shopify and maybe Etsy – but baby steps on that.
3. Streamline my processes and offload more of the administrative work. I started on this last year but never made much progress in offloading stuff. Partly because I enjoy doing it – but partly because I just never took the leap to hire a Virtual Assistant. I have moved my prep/shipping back in-house and actually my mom is doing it for me. She enjoys it and it’s saving me a bundle!
So that’s my year in a nutshell. I really have enjoyed sharing my results with you guys. I’ve tried to be as transparent as possible – and Lord knows I had no idea what I was really doing when I started all this. Just learning how to calculate a gross profit margin makes me feel pretty accomplished! I know I have so much more to learn and I’m excited for what 2017 will bring!
Thanks for reading! Till next month….
Ryan’s last words: Thank you Dana for putting this post together and sharing this update on your business!