Introduction
The Apple pencil was quietly released on 11/20/15 (or around there) for $99. I had no idea until one day, a reader mentioned he was having issues buying them from Best Buy. Anyway, I immediately pounced and bought 3 of them.
Ebay instead of FBA
It took a couple of days for them to arrive and I immediately posted them on eBay. I chose eBay because I didn’t want to risk returns on FBA. I could just imagine a customer buying mine for $175 and returning it a month down the road once he found one for cheaper in stock at $99. Anyway, immediately they sold for $170-$189. I won’t do the math, but clearly, I made a nice profit.
Stock issues
In the weeks that passed, some were able to get more stock from Best Buy, but for the most part, they were hard to buy. Eventually Staples had them in stock! Even better with Ink right? I was able to buy 10 more from Staples in mid January. They took about a week to arrive.
When patience kills your margins
By late January, the Pencil was going for about $139 on FBA. However, due to my laziness, I waited almost an entire month to ship them in. By the time they hit FBA at the end of February, the price had dropped to around $125. My laziness cost me quite a bit of money.
Liquidating at a loss
As I type this on Monday afternoon, the Prime price has dropped to $119. If I liquidate at that price, I’m only going to net $99.50 after fees. Since my cost basis was $109.50 due to tax, I’m now losing $10 per pencil. So in total, I will have lost $100 for the 10 pencils. Luckily the early profit will offset these losses, but it’s still painful. I won’t even mention the 5K Chase UR points I earned since the point of reselling is profit, not points.
Lessons Learned
- If it’s a newly released item with low inventory, sell them ASAP!
- Some items you can have patience with like the Apple iPad Mini 4, but for new items you can’t wait
- From the time I received the 10 pencils and the time I shipped them to Amazon, every couple of days, I’d hear a little voice in the back of my head, “Ship out those pencils. You are losing money daily.” I KNEW IT too. My laziness was costing me money.
- For “hot” items like this, don’t wait to bundle into a big shipment, which is what I was doing. Get them to the FBA warehouse ASAP!
I know the MS crowd hates the idea, but I merchant fulfill much of my inventory. Been selling on Amazon for 5 years, Ebay for 16. Everyone assumes you can’t compete against FBA sellers, its not true, especially at Christmas time. I sold the same Ipads, Xboxes, Apple watches and WIIus as everybody else, but I shipped them all myself. The pen you mention reminds me of the Fitbit bands. I bought as many locally as I could when they were new and hard to find. The price was bound to drop on Amazon, so I sold quickly and shipped myself. FBA adds a lot of time and uncertainty to reselling popular items. If you think you have a temporary spike in prices, consider FBM for at least some of your inventory. You can grab a few sales while the price is high and move on.
Oren thinks I’m nuts for merchant shipping items, but a mix of both FBA and FBM has worked for me. This is a part time business for me and not a hobby, so I may be able to devote more time to it than most.
My unicorn last year was Yeti Rambler cups, buying for roughly $30 and reselling around $60. Their production fell behind and created scarcity. Look it up on CCC (either the 20oz or 30oz). Free Priority mail boxes for shipping. Would have made a dollar or two more with FBA, but knowing the slowness of processing during the Holidays, I opted to quick sell. There were 180 sellers when I first listed, half were FBA!
I tried to dabble in to Marketplace. Out of 5 vacuums, 2 wanted to be returned because 1 buyer said, “It’s too heavy” and I forgot the 2nd stupid excuse. They both assumed since it was Amazon, they had the same easy return process. By them claiming the item was defective, I had to eat the return shipping costs too, which was like $30 a person. So at least with eBay, I can say NO RETURNS and most ppl won’t try to pull those stupid excuses on me. Plus I don’t want to be hit with the A to Z guarantee BS. So it’s not for me, but if it’s working for you, more power to ya. Hey, look at it this way – you have one less Marketplace competitor here.
Returns are definitely an unpleasant cost of reselling. The big box stores have spoiled consumers by accepting any lame excuse for a return (or none at all). I have done the math on some returns and just told the buyer to keep the item. If they claim defective and I don’t want to fight it (or don’t expect to win), I know I will lose the total sale anyway. The math sometimes doesn’t work out for getting the item back and trying to resell. If it does, I’d rather do MF returns than FBA.
Ebay can absolutely be a better venue to reduce returns, but has become tougher on sellers if the buyer claims defects or misrepresentation. Some folks sell their high return items on the classifieds to avoid these problems.
I’m not concerned about competition, but the MS’ers who sell at break-even or a loss can be a bother! Most FBA folks wouldn’t touch the low margins that the MS crowd is content with. That’s why they make Chocolate and Vanilla!
Best of luck to you.
While I’m generally not a fan of MF, its more b/c I prefer not to touch my inventory at all, there is a time and place for it even for me. Q4 is a great example, when shipments are taking up to 2 weeks to get checked in and out of back order. A hot item like the Yeti, can sell 150 MF in a matter of hours. Granted its no fun shipping out the 150+ items that sold in hours, but i suck it up in Q4.
You’ll be sick when I tell you I sold several of these things for $399 FBA in mid Dec. Sold several more somewhere around $170 as well. Had a single return of one from the $170 price point that I had to resell around $130 and just break even on
Oh man that’s nice. I’m surprised no returns at $399 too.
I saw your post a while back on reselling / being banned from Kohls.
I had the same situation but I just called them, I got a good rep that just said I had to go in store to prove my address with a utility bill and they would lift the restriction on my Kohl’s charge. It also helped to make a new account.
Also, I’m just curious, what did you do with all your Kohl’s Cash? I ended up spending it instead of reinvesting it.
Correct, I just spent it on random stuff. I vaguely remember I had to do the utility bill trick when I first got the card.
So very true. I got some stuff sitting in my house from December I need to send out still. Hopefully nothing hot and exciting though something tells me I may have missed my chance on some of the winter gloves I didn’t get out. This is why I send everything I can to a prep center. Then as long as my laziness doesn’t prevent me from building the shipment items get to AZ very fast.
I should look into prep centers down the road, especially for the tax savings.
The tax savings is what made me make the plunge. When I realized I could actually save money to have someone else pack and ship my stuff it was a no brainer. It is a real game changer. Especially, if you are trying to scale 😉
Do you have to give the prep center your FBA password (ultimately your amzn password)?
No, I create them an account in seller central that only gives them access to the shipment section. Then they can build shipments and nothing else. I’ve also used Prep Centers that you still build out the shipment, send them the labels (via a shared drive), they give you box measurements, you input it and then you give them the shipping labels. I of course prefer giving them access via their own account then doing all that work.
Vinh, Why don’t you become like an authorized seller for some of these products? I mean instead of reselling get them straight from the company and sell them on ebay amazon etc. Don’t you think it’ll be more profitable/stable?
You’re talking about wholesaling, which I know some ppl do. I haven’t gone down that route yet and don’t think I will. I’ll test out private labeling instead.