Today’s post will be a little bit different, as it is a guest post from my friend Jonathan Gosz. He is selling online (mainly using Fulfillment by Amazon) while working a full time job that requires at least 40 hours per week of his time. Jonathan started selling online within the past year, and will be sharing his results from 1st quarter 2014 today. Here is his post:
Hey everybody! Jonathan Gosz back here with an update. If you missed my first post check it out HERE.
I will be going over a brief summary of what the past 3 months have been like for me continuing to sell online on a part-time basis.
So as Ryan says, let’s get right to the numbers.
Sales from January 1st through March 31st:
January – $3,603
February – $7,114
March – $7,520
April – on track to be a little over $8,000 in sales
Over these 3 months I have made about $6,500 in profit. I have also been a few hundred dollars positive in cash flow each month, with the majority of the profits being reinvested in more inventory.
As you can see my numbers have grown a lot from January to February and March. This is mainly due to me taking quite a bit of time of in late December and early January to focus on my day job and spend time with my family.
Over the last 75 days I have been averaging about 15-20 hours per week working on selling online. This is a little higher than in 2013 because I decided that I wanted to start growing my business by between 5-10% month over month and that is currently my main focus.
I wanted to share a couple of tips that I have learned over my last 3 months selling online.
#1 – Business supplies
I recently purchased a refurbished Zebra LP2844 ($100) thermal printer, a Dymo Label Writer 450 ($90) and a KDC300 ($200) barcode scanner. Total cost of about $390 in supplies, but well worth it if you ask me. The two printers are worth much more than their value plainly because they save time. Time is the MOST VALUABLE asset as a part-time seller in my opinion. Time is my main limitation and supplies that allow me to gain more time are extremely valuable. For more information on the barcode scanners feel free to read the post HERE from Ryan.
#2 – Credit Cards
Now a lot of people will argue with me on this one but I encourage everyone to have a credit card or four that have a decently large limit with rewards. The main reason for this is getting either 5% rotating category rewards or 1.5% cash back all the time add margin. In a world where margins are everything this adds more. Also it gives you the ability to scale at a rate you may not be able to with cash only. Now I don’t suggest you start maxing out credit cards, you still have to be careful and smart with them, I pay mine off in full every month. But they allowed me to scale in ways I wouldn’t have been able to with cash.
The main reason I wanted to do a follow-up post was to show everyone that if you are willing to put in the effort and the time the results will follow. Currently I am on pace to do $2500 a month in profit for the next month or two and the goal is to increase that by few hundred dollars per month until Q4 where I plan to get really crazy!
Well that’s it for me, thanks for taking the time to read, if you have any questions or comments feel free to leave them below and I will get back to you as soon as I can, until then, keep up the hustle!
Thank you to Jonathan for sharing how the past 3 months turned out for him, as well as for sharing the tips. If you have any questions please let him know in the comments. Make sure to subscribe using the button below so you don’t miss out on future posts!
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Hi,
See if you can help me. For example I want to sell a Shampoo. The bottle already has a UPC code. I am going to do Three Pack Shampoo offer, wrap it up in a plastic bag.
Do I need to hide all the UPC codes on all shampoo and generate a ONE NEW UPC code for the package?
Can you please clarify the concept when you need to stick a new upc code? I am just confused.
Hello,
You need to hide all of the UPCs on the individual bottles of shampoo. On the outside of the packaging you will put a label on the outside that provides amazon the information they need to “tag” the item to you. So in this case, no new UPC is needed, but you will be putting a different label on the outside that lets amazon know what the item is and that it is your item. Let me know if you have further questions on this.
Best Regards,
Ryan
Credit Card rewards, store rewards, and cash back portals are a great way to sweeten deals, but they usually lend themselves more to online shopping than in-person sourcing.
You can easily get a 15% bump from office supply stores by using a 5% credit card, going through a 5% portal, and getting 5% store rewards.
Hey MLH,
Yes that is very true, that is also part of the reason I shop online so much for items to sell, anytime I can find a sale plus use rewards its extra money back for me.
-Jon
Is there a minimum return you expect? For example I can find 50% roi but its a $5.00 or $6.00 profit. Id like to have a bigger per item margin. I guess this comes with experience?
Hey Sally,
When I first started I would mostly only buy items that would give 100% return. I have changed with more experience to go lower eventually you will find what is comfortable for your business model.
-Jon
Hi Jon & Ryan,
How does taxes work for FBA. Is is same as eBay where at 20K you get 1099? Does Amazon send you the 1099 for all your sales? Ryan did you do a post on taxes in past? Congrats to Jon for a great sucess! Thanks
Hi GS,
Yes amazon will send you a 1099 if you do over 20K in sales for the year similar to eBay. I have not done a post about taxes to this point, but I will definitely consider doing one in the future.
Best Regards,
Ryan
Hey Jonathan, I have two questions for you. I’d like to know how much money you first put into your business when you realized you wanted to do it part time, and whether or not you think you could’ve taken off so fast without Ryan’s help. Thanks.
Hey Jay,
Great questions, when I first started I was extremely skeptical to say the least. After sourcing with Ryan a few times I was hooked an convinced, when I first started my purchases were smaller, a few hundred at a time. To date I think my largest card swipe has been $1500 or so. I am continuously reinvesting money but I did start slow, only spending $500-$1000 a month, now its not uncommon to spend $4-5000 a month.
As far as Ryan’s help goes, I am 99% sure I would not have gotten started at all without seeing him do it first. The ability to grow fast I also attribute to the knowledge I have gained from Ryan. Many tips and tricks as well as basics of how to list my first items on Amazon/eBay and how to ship FBA. He helped me scale up much faster than I could have on my own.
-Jon
Jonathan
Congrats on a great start!
Do you use wholesale sources for your inventory?
Hey Charlie,
Currently I do not source through wholesale, I have purchased in bulk from warehouses but not wholesale from the manufacturers.
-Jon
Jonathan,
Very encouraging post. Thank you for sharing your numbers.
When you say you’re “averaging about 15-20 hours per week working on selling online,” does this include both sourcing product and prepparing it for shipment?
Thanks,
-Jeff
Hey Jeff,
Yes when I say 15-20 hours per week, this includes driving, sourcing, processing and shipping.
-Jon
Hey Jonathan and Ryan,
Very informational post.
My question is what drives the constraint of this business? Is the most difficult resource to get money/items to sell/time?
Meaning, if say someone who’s new to the business starts with $50,000 in cash, can they be successful very quickly? Or would the difficulty in sourcing be so great that it doesn’t matter how much capital they start with and they’ll still have to learn how to source the items first?
Cheers,
Will
Hey Will,
That is an excellent question. The biggest restraint after you have some experience in my opinion is time. If you have the money and know what to look for then there are plenty of deals out there, but finding and processing them takes a good amount of time.
If someone was to start out with $50K in cash I think they could see a good amount of success pretty quickly. It would take awhile to learn how to source, especially at that volume, but it would be possible to do quite well quickly.
Best Regards,
Ryan
This is an interesting idea and goes to my comparison of FBA selling to day trading. If you had $50k, you could just buy huge bulk of retail arbitrage or wholesale inventory at a lower cost than market value. Like buying Soybean futures or something.
The hope is you can dump the product before the price flip flops on you.
I have some of the same questions as Jay. Right now I feel like I’m reinvesting almost all my money back into Inventory and would have nothing to live on. I assume this get’s better and as you continue to grow, you’ll continue to make more profit to live on each month? Even though ebay is more work, my profit seems higher?
Hey Andria,
Yes eventually with every business you get to a break even point where you have so much inventory and monthly sales that you are bringing in more than you spend. I cannot tell you when that will be, because everyone’s business is different. What I can say is create yourself a budget, figure out the ROI you want on items and go from there. Numbers dont lie.
eBay is more specialized and very different from Amazon and the few structure is as well, for more on ebay I suggest checking out Ryans post on what to sell on ebay vs Amazon.
https://onlinesellingexperiment.com/should-i-list-my-item-for-sale-on-amazon-or-ebay/
-Jonathan
I love the sharing of these numbers. Hope you don’t mind these detailed questions.
–So when do you think you’ll have positive cashflow each month above several hundred dollars. Wont you always need to spend thousands each month on new inventory?
–When can you feel confident you’d make enough each month to pay your rent/mortgage and bills(>$2000 cashflow month to month)?
–Do you have a sense of how much money you have to fund for inventory to make x amount of profit? For instance in March, you said you did $7,520 in sales. How much did you have to pay for all that inventory, and how much of that $7,520 was net profit after fees?
–When funding inventory on credit cards, ever worry that you’ll buy a bad batch of items and get behind?
Hey Jay,
Thanks for the question.
With this type of business getting started it is very difficult to scale and have large positive cash flow. Currently I am working to scale and have the luxury of having a full time job that covers all of my needed expenses.
Yes you will continuously spend lots of money for new inventory so there really is no good answer I can give for how to get thousands in positive cash flow other than there is a breaking point where you have enough sales to continuously pay yourself a substantial salary.
– In March I had approx $2600 profit on the items i sold and I have been pretty consistent running at that same rate of profit = 1/3 of total sales. This is not an every case scenario but for the amount of sales I am doing it has been accurate for me.
– Like anything in life buying something worthless is a risk, buying a car, house, investment or inventory is always a risk. But risk taking is part of the job in this area of business.
Hope that answers a few questions for you.
-Jonathan
One thing I will add here in regards to constantly having to spend more money on inventory. You don’t have to continue to spend more money on inventory to see results. At some point you can choose to stop reinvesting any additional funds, and just use the money that you currently have allocated to selling on amazon. For example, you decide that once you obtain a payout of $5,000 you will no longer invest any additional capital into the business, and will just use this $5,000 to buy new inventory. It is at this point that you would start to see cash flow turn significantly positive, as you would be essentially just playing with profits, and only spending a fixed amount on inventory.
The other point is that, although Jon is only a few hundred dollars positive cash flow in each of these months, he has built up an inventory of approximately 1,000 items that are completely paid for. Therefore they will contribute to profits in future months without having to spend any cash in those months to earn the profits.
Hope that helps.
Best Regards,
Ryan
Okay, this makes sense. You put a bunch of money up front to invest in inventory. Keep re-investing the profits till hopefully you can make enough each month to pay yourself back for the initial investment + money to keep buying new product.
It’s funny because this sounds a lot like day trading. You use money to buy initial stock, trade each day, and hopefully pay yourself back. As long as you make the right bets, you’ll make enough to keep buying/selling AND make a living. There’s always the fine line in how bullish you want to be.
In this case, you’re buying toys to sell on Amazon vs trading stocks on eTrade. As you say, there’s always risk in a bad bet.
Hey Jonathon,
Thanks for the inspiring post. I am just starting out I actually just sent my 4th shipment in. I work full time so I am trying to scale this up with limited time but so far so good.
I was just wondering what categories are you mainly selling in?
Also how long do you hold a product before you lower price and try to get it out of your inventory ?
Thanks
Chad
Hey Chad,
Thank you for the kind words.
Honestly the answer I give people when they ask what category I sell in is that I dont discriminate. I will go with anything that has margins, but mainly it seems that I gravitate toward toys and games.
I have about 1,000 items at the Amazon warehouse at any given time so I generally reprice a few hundred once every couple of days just to make sure the market hasn’t significantly changed.
For the most part I find a price that I know will sell and let it sit for at least 3 months before drastically lowering the price.
-Jon