Introduction
I know most people blog about their success stories of their huge ROI from reselling, but not here at MPD. Here, I like to give you my failures so we can all learn together. Anyway, at the beginning of November, Best Buy had these Dell Venue 8 7000 tablets on clearance for $279.99 each. With 9.5% tax, it came out to ~$306 per tablet. Amazon FBA at the time had them for $325 and after FBA fees, I’d net $305, which is break even. However, after Discover AP, BBY RZ, and Shopkick, I’d net about 25% ROI.
Race to the bottom
If you’ve ever sold anything on Amazon, you’ll know the term ‘race to the bottom;’ it’s when there is so much supply of an item, sellers get nervous and keep undercutting each other (most taking losses) just so they can liquidate. And that’s what happened to this tablet. I should have been more aggressively priced, but I originally picked $330 as my price. I didn’t actively look at the listing like I usually do. Fast forward to last week when I noticed the FBA price had tanked to $265. Now with fees, I’d net $245, taking a whopping loss of $60 per tablet! ABANDON SHIP!
Since I bought these in November and am in Best Buy’s holiday return period, I’m able to return them for the price I paid for them. Thus, I did a removal order on the 15 tablets and will return them to the store. My loss is the $1 per tablet it cost me to ship to FBA plus the minimal inventory fees. I’m going to see if I can return them to a gift card to save my Discover AP.
Lessons learned
- Don’t buy crap. I mean, everyone knows Dell made a tablet like 5 years ago. Who knew they are still making tablets today? Exactly. Unless it’s Apple or Samsung, don’t bother with the crappy tablets. This applies to all items and not just tablets. The problem with lesser-known items (aka low rank items) is that when a glut of supply hits the market, prices will plummet faster than a fast moving item (like the JBL Charge speakers.) Also, let’s not forget to mention the higher rate of return on crappy items (and they may return it after your source’s return period.)
- Source from retailers with a generous return policy. Self explanatory.
- Know when to hold them and when to fold them. Similar to the first bullet point. If it’s a fast moving item, you can weather out the storm (like I’m doing now with my Air2’s and watches.) If it’s a slow mover, just pull the inventory. This Dell tablet isn’t a collectible item. The only direction the prices will move is DOWN.
Quick addendum – Right after I pulled the inventory, I noticed Best Buy dropped the price to $239.99. I could have gone in the store and done a price adjustment to $239.99+tax and probably just pushed to move them at $265 on FBA, which would have resulted in a $20 loss due to FBA fees. I’d still be positive with AP, but I think there are better opportunities at Best Buy to make money (pre-AP rebate.)
Those Dell Tablets were on sale directly from Dell for $200 + tax at the end of November, which is certainly contributing to the plummeting prices.
Ah that must be why. Thanks for the data point
Hi MPD, Big fan of your blog and an ardent reader of your posts. What’s your strategy re: Apple Watch and Air2? I’ve got an Apple Watch on there and prices are dropping by the day due to oversupply, newbie sellers leading a race to the bottom and all the current sales (maybe also the Watch 2 anticipated to be released in Q1 2016). I’ve tried to hold on but kind of losing faith. Do you think the prices will rebound?
Well, the sale ends on XMAS, so you’ll know within a week if prices will rebound or not. If they don’t, recall and return before the holiday return period expires. I’m banking on the prices rebounding, but it’s like the stock market at this point.