Part-Time FBA Profits: Thrifting + Retail Arbitrage
Show of hands: How many of you FBA sellers are doing so part time? If your arm is coming back down you are amongst the majority of FBA sellers. Why is that you ask? The reasons are many but most FBAers will tell you the actual setup of Amazon not requiring set amounts of time, effort or budget to start selling is what makes part-time FBA enticing. It provides an actionable and (to most people) exciting answer to the question of “How can I make some extra money on the side?” Who doesn’t have the ability to a) look for good deals and b) access the internet? THAT’s why its so easy to do FBA on the side but unfortunately most part-timers have limitations that can ultimately limit their potential revenue selling online.
With the natural time constraints doing FBA on a part time basis, having a solid plan of action is the key to succeeding in this role. What plan you ask? Well, I’m not going to tell you that ours is the be all end all of FBA but what I will say is that it works for us in our part time FBA business and can work for you as well.
Thrifting + Retail Arbitrage = Best of Both Worlds
By now you’re probably thinking “who is this guy?” Jeff Roth is my name and I run the part time FBA Blog Scanontheside.com. We began our part time FBA business in 2014 and I’ve enjoyed writing about our findings and aim to provide helpful tips to other part-timers along the way.
The method that we find works best for us is as such: Combining thrift store (new in box items) + major retailer seasonal/post-holiday/clearance/toys + regional discount store sourcing. I feel very strongly about this method for part-timers for this reason: The high margin/low competition finds from thrifting new in box items provide a solid foundation of profits to allow for potential misses and high competition limitations of retail arbitrage. I can’t tell you how big of a mental (and fiscal) boost it is when I find a brand new $3 item thrifting that I can sell for $50. Sure, its a matter of luck of what items are available in these thrift stores but consistent stops in our local thrift stores have proven to be well worth the time.
Sourcing seasonal and post-holiday items at huge discounts has also proven to be worth it thus far as long as the sales rankings hold water so be sure to follow the rankings closely. Be sure to plan ahead and see which stores are getting rid of which post-holiday merchandise and make the most of your limited time. Don’t be afraid to call the stores, ask for the manager and ask “When is your Christmas stuff going to 75% off?” Heck, don’t be afraid to ask for MORE of a discount? It works for us more times than you would believe and what’s the worst that could happen? Keep an eye out for non-holiday items that are also lumped into the holiday clearance including toys and gadgets that sell year-round. Don’t be afraid to hold onto the items you find now for Q4 when their selling prices will more than likely increase.
We like to focus on major retailers post-holiday because we know that these stores need to clear shelf space for their new merchandise. People ask what % off to wait for on these post-holiday items? There’s no right answer but at least 50% is the starting point and from there determine if your margins are high enough or if you want to risk that merchandise being gone by the time they get down to 75+% off. As a side note, there are some great clearance-specific shopping blogs out there that detail which stores have which items and what % off everything is at so check them out for even more time-saving tips.
What about Online Sourcing?
We have not gotten into a lot of online arbitrage to this stage and I know there are some well publicized books and resources out there focusing on this method. In our minimal delving into online arbitrage, competition issues (way too many sellers) have been a recurring battle. Again, this has not been something we have done enough research in to make an educated opinion on but for now our time is well spent in our current methods.
We have found the local aspect of thrift + retail limits the Amazon competition on many of our items. Sure, most Targets and Walmarts nationwide have the same closeouts and clearance items everywhere but time and time again we have found low or no-competition clearance items in these stores that sell as soon as they hit the Amazon warehouse. With our approach, especially when it comes to thrifting finds, you don’t really need to worry about competing against Amazon unless its you and 50 other FBA sellers doing so. Have a few of the same item to sell? List it pennies below Amazon and if the sales ranks are good it will sell.
Regional Discount Stores?
I also mentioned the term ‘regional discount store’ as part of our strategy. Let me clarify. Locally there are a few of what I like to call regional discount stores that we like to source on the weekends. No, I don’t mean the dollar store but rather more ‘mom and pop’ retail stores that offer items you just can’t find regularly in the big box stores. You might not be getting items at insane clearance prices but with the uniqueness of the items sold here, the competition by in large is much less and thus the margins are still there. Don’t forget this rule that always holds true on Amazon: Less competition = higher margins. Find a sourcing spot that sells things others can’t find and you have yourself a winner. I will tell you the majority of our great retail finds have been at these types of stores because of the uniqueness of the items we find here.
With respect to our local discount stores, we have become somewhat friendly with the owners of one store. Because they had seen us time and time again buying from their store, they figured we weren’t buying 10 of the same item for ourselves so discussions ensued on what we were doing and why. Guess what? The store owners just want to sell their stuff and don’t care who they sell to. They’re THRILLED we’re buying their goods and even give us extra discounts each time we buy there. If these stores exist in in our local area then I’m pretty sure they’re everywhere so start asking around and make a list. Maybe a local store you’re thinking of has older inventory. PERFECT! Less competition.
Allotting Your FBA Time
My full time job involves daily travel which allows me the freedom to take 30-45 minutes a day to source during my normal daily route. It all comes back to time conservation and proper allocation of it. You and I don’t have time to walk into Target and comb the aisles scanning everything in site like some full-timers recommend. Its just not realistic. Instead, plan ahead and attack the specific sections we’ve discussed. Set a timer and make sure you’re not putting yourself behind the eight ball with your scanning. Also, don’t forget to ask the store managers if there’s any new clearance or seasonal clearance sections beyond the obvious ones since at times stores will put overflow clearance items in new areas.
We all know it takes a lot of time to also list, label and ship the items to the warehouses so lets be sure to make good use of our sourcing methods. Remember, if you find a good deal at one store there’s a good chance that same store has the same deals throughout their chains so strike while the iron’s hot. This is true especially with toys around Q4 as you can never have enough of a high ranking, good margin toy come November and December, trust me. We learned the hard way last year running out of basically every toy we had in stock way too early.
Why not 100% Thrifting?
Some have asked me along the way: “If you find such great things thrifting, why don’t you just do that and skip the retail stores?” Its a great question with a simple answer: If I only had 10 minutes a day, I would! Meaning, I have enough time to do both so why would I shut out a whole source of sellable items? If your time is limited I would without question start in the thrift stores and work your way around them. Hit the areas in each store with the items you’re seeking and get in and out. Once you know each store well, you will cut your scanning time in half and open up time for other opportunities including retail.
2015 and Beyond
So here’s to a prosperous 2015 for you in your business. Go and get approved to sell in every Amazon category possible because as many experts predict the ability to sell in these categories such as Apparel, Jewelry and others will become harder and harder as time goes on. Fulfillment by Amazon is a growing community that I learn things from each day and put to good use and you can too. If you’re a part-time FBAer like us wondering about subjects such as gated categories, prep techniques, time saving tactics and more feel free to visit us at Scanontheside.com.