Hope everyone’s sales are doing well so far this month! I have noticed a few themes in some of the questions that I have been getting asked via email, and in today’s post I wanted to share the answers to 6 questions that I have been seeing consistently as I am guessing others have these questions as well. So, let’s get started.
How do you handle accounting when selling online?
This is probably the question that I am asked most frequently, especially with the sharing of my financial results. I am using a mix of a program called InventoryLab and Microsoft Excel to keep track of everything. When I list my items for sale I am using InventoryLab, and I enter in the buy cost of every item that I am selling. As items sell InventoryLab will obtain the information about the selling price, fees, etc, and show you the profit/loss on each individual item. This is where I get my income statement from. I am also able to download a full report of my inventory that contains the buy cost information to determine the total cost of all of the items that I have in stock.
As I spend money on a monthly basis, I keep track of it in Excel. Basically I just note the date, store, amount, and what I bought, and then at the end of the month I total this information up. I will also add up the total deposits from amazon for the month, and subtract my total cash spent, and this gives me my cash flow statement.
I find that using this combination works quite well for keeping everything in order. If you don’t have Microsoft Excel, you could use Google docs or a similar spreadsheet program to track your spending. If you haven’t tried InventoryLab and are interested in trying it, you can sign up for a 30 day free trial HERE.
How many hours per week do you spend sourcing?
Most weeks I average around 20 hours per week sourcing. This varies quite a bit as some weeks I will spend 40+ hours sourcing, and other weeks I will barely do 5 hours of sourcing. It depends a good amount on how much sourcing I have done recently, and what else I have going on at the time. Later this month, I should have a “week in the life” post ready to go. Summer has been quite inconsistent for me in terms of which hours and days I am working, but I should be able to have a “normal” week before the end of the month that I can share on the blog. Along these lines, it’s one of the biggest perks of being self-employed to be able to set your schedule and have freedom to switch things up as needed.
Do I do private labeling or wholesale? And if not, do I plan to?
Private labeling for those who don’t know is basically purchasing a product from a manufacturer that is unbranded and putting your own brand on the product. An example of this would be if a manufacturer sells generic pizza cutters, you can order them from the manufacturer and have them stamp the handle of the pizza cutter with your brand name. Essentially it’s a generic product that you are able to brand as your own.
I have not done any private labeling up to this point. It is something that I plan to explore further down the road, as I would like to eventually build my own brand as opposed to selling only other people’s products.
As far as wholesale, I have placed a couple of wholesale orders. So far, it has not become a very significant source of inventory for me, but I do plan to add more wholesale into the mix soon. Finding consistent suppliers of products is a main focus of mine, and I believe is an important step to creating a sustainable business. One caveat to wholesale sourcing, is that the margins are often quite a bit lower than retail arbitrage, but that comes with the territory of constantly having the same item available to source consistently.
How can I make money selling online?
The short answer is that you create a consistent income by consistently sourcing products that are profitable. As these items sell you will get your money back, and can take profits out of the business if you so choose.
Let’s say you want to make $1,000 a month selling online. In order to do this let’s say you have $2,500 in cash to start with and you will only be buying items that provide a 100% return on your investment. We’ll say that you invest the full $2,500 in inventory in your first month. At the end of your second month you sold half of the products you initially bought. So during the month you brought in $2,500 in cash, and you still have $1,250 in inventory left from your initial sourcing. In total you have $3,750 in assets when you started with $2,500. Now, what you would likely want to do is reinvent the inflow of $2,500 in cash that you received into more inventory that you can get a 100% return on. If you continue this trend, you will fairly quickly have turned your initial $2,500 into a significant amount of inventory that will continue to sell, and you should find the level of inventory that you need to have on hand to maintain taking $1,000 out of the business per month in profits on a monthly basis. Then, by consistently continuing to source enough products to maintain your inventory levels with the cash from the business, you will be able to create a sustainable $1,000 per month in income. These are arbitrary numbers used for example purposes, and you could change any of them to fit your situation.
For me personally, I am trying to continue to grow, so I am not currently pulling much out of the business and am reinvesting as much as possible.
What other tips do I have about the grocery category?
After I wrote this post, I was asked for more tips about the grocery category. Here’s what I have put together from several people that had inquired:
The first thing I would say is to look up as many items as you possibly can to find potential items to resell. When I first started out I would walk down random aisles in the grocery store and look up any item that caught my eye to see if there was resale opportunity on amazon. This has led me to purchase quite a few products to resell. When you do find a product that is good for resale, take a look at similar products of that brand, or different brands of that same products.
Another main thing I would say is to think about what is selling seasonally, and also what is on clearance at stores based on the season. For example after most holidays stores will have a clearance sale for items that were for that holiday. After Halloween for example I purchased a lot of candy, including candy corn, at 75% off retail prices, and sold it on amazon often for about twice the retail price. I sold candy corn into December, so people really are buying these items when they are out of season.
My main advice would be to look up as many items as possible, and to “test” out as many as possible when the profits are within an acceptable range. This is how I have learned the most.
As far as FBA versus MF, I would try to FBA them right away. My experience has shown that buyers are often willing to pay more for an item when it is sold via FBA, and it also saves you a ton of time not having to ship individual orders.
Also, here is a profit calculator that should help show you the fees, and show you what your profits would be. You just start by entering any product and then following the steps: https://sellercentral.amazon.com/gp/fba/revenue-calculator/index.html/ref=ag_xx_cont_xx?ie=UTF8&lang=en_US
What tools should I use for selling online as a beginner?
You really don’t need to invest a ton in equipment just to get started. If you are planning on sourcing inventory in retail/thrift store I would download the Amazon Seller App for your phone. It’s a completely free app for selling on amazon, and will provide you with the information you need to get started. This combined with the actual amazon website should provide you with the information you need about what the current competitive landscape is like for the item you are selling.
As far as things you may actually want to purchase: a usb scanner and a shipping scale are nice to get started, but they are not essential to get your feet wet. I have compiled a complete list of the supplies I am using (and listed them in order of which I would buy them) on a brand new page here on my blog: https://onlinesellingexperiment.com/resources
That’s all I have for today, if you have other questions for me, let me know in the comments and I can try to answer them there, or I also may dedicate a future blog post to questions as well.