Tuesday, June 14, 2016

Turnover Tuesdays - Replenishable Inventory vs. One Off Sales

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.








I mentioned in my post A Year of Reselling that I've been trying to increase the number of SKUs that are replenishable rather than one off sales.


Why I Love Replenishables


A lot of these are obvious, but replenishable deals are much, much better to me than one off sales. I still do plenty of one off sales, mostly because they are very profitable but my goal is to one day not chase sales.  Sigh.


There are a few reasons I prefer replenishable deals

1) Chasing sales is exhausting.  Replenishables are easy.  When you chase sales, you are constantly looking for the next sale.  That takes a lot of time and you are constantly monitoring a ton of SKUs, some with just one or 2 units remaining. Something replenishable is easy.  When you start to run low (you know about how many are ordered per week), you order some more.  You don't need to find anything.

2) Sales are basically a race to Amazon. Whoever gets there first can sell for the most, then the prices start tanking and you wonder whether you should have bought fewer.  You either want to be the first or the last to sell (with possible storage fees).  A good replenishable has little competition.  There is no race other than avoiding being out of stock and missing out on sales.  Since you know about how quickly it sells it can be easier to avoid storage fees as well while still selling profitably.

3) Replenishables can be very profitable - My most profitable sales (think 50% ROI+) are replenishables, not usually from sales.

4) Ultimately, I would love to have my Amazon business on semi auto pilot.  I hope I'll always be on the lookout for new products but I would love to be earning $5,000+ a month on items I don't have to think about.  As they say, work smarter not harder.  If you are constantly chasing sales, your "business" goes away once you stop looking for new sales.  If you have a list of 200+ SKUs that are replenishables, you may not be selling all of them at any given moment (might be waiting for price rebound), but you may have enough to provide your business with a lasting monthly cushion.



What to look for

I can't give away the farm here but I can talk in generalities.


Look for stores that others aren't looking at.  Don't look at the Target toys section for replenishibles.  One off sales yes, replenishibles no.  Once again, there is nothing wrong with one off sales.  I like them too, but that's not my end game.  It doesn't mean you can't find replenishables in Target, Walmart and Staples, but it's usually in categories that others classically don't look at.  Sewing kits may not be sexy but if that's where the profit is, I'm happy to sell them (I have never sold a sewing kit - that wasn't a hint!)

Everyone is looking at sale items.  Just because something is full price doesn't mean that it isn't a good item to sell, especially if it is an inexpensive item.  It could be significantly more expensive on Amazon even when you are buying at full price.  You will probably have less competition too since others are looking in the sales section.

It is almost impossible to find them in the electronics or clearance section.  Though I have found one brand through the clearance section.  It was being discontinued by one store and it was very hard to find. I already knew it sold well because I bought it at clearance.  Once I found it, it became one of my go to replenishables.  


Pricing



I price replenishibles much differently.  Again, I can't give away too many secrets but you can think about this on your own to try to come up with pricing strategies.  I am much more aggressive in pricing replenishables than sales.  If I have a theoretically unlimited inventory why not get a few more sales at 20% (if I know it rarely is returned), put some pressure on the competition.  I can always restock once prices improve.  

For sale items, I try to extract as much value from my inventory as possible since I can't get the item at that price anymore.  
Posted by Oren at 2:58 PM
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