Category Archives: Business

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It’s the Little Things That Count

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coins

I’m always trying to find ways to beat the big boys who sell on Amazon. By “big boys” I mean companies that sell in large volume, or drop ship with merchandise they do not physically have. They are able to make most of their profits from the shipping profit margins. But not the little guy.

In contrast, the profit I get is by dealing in products that are in demand, so I need to determine what products can get a nice up-sell profit. That still often means making sure to price the product competitively, meaning that it makes most sense to either match or beat the lowest price for a product so your appears on the first page of results.

Another option is to differentiate your products to make them more appealing. For every product I sell, I try to differentiate myself from competitors in three ways:

    1. Write Good Copy

    – Sell your product by being very specific about the condition of the specific merchandise being sold. Include content that differentiates yours. Sometimes this means you may choose to charge more with the thought that buyers may choose your product due to building trust.

    2. Use Images

    – I scan or grab a pic of every product I have. For books, it often means I try to include a cover image and an image of an inside page that includes the ISBN. Again, the purpose is to build trust, to let the consumer know that what they are buying is accurate. I’ve noticed that the “big” sellers contain no photos and the same standard copy for the condition of the merchandise.

    3. Rounding the Overall Cost

    – I do not know if this really works or not, but with Amazon, the consumer sees both the product cost and the shipping costs (if any). I make sure to charge an amount that, when combined with Amazon-calculated shipping costs, rounds to the nearest quarter. That is, final total price for the buyer ends with .00 .25 .50 or .75. Maybe it’s my own desire for rounding, but it may be a reason for someone to choose my merchandise.

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August is the Time to Sell Textbooks

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Back to SchoolAugust is the month when students are gearing up for school. For some, they want to unload their old textbooks so they can have some money to buy the new. For a book reseller, it’s a win-win. Sellers want to unload and buyers are willing to pay more for used because it’s still much cheaper than buying new.

Use Craigslist

I tend to look at Craigslist to find out if there are any deals. There are some students (or their parents) who just want to get rid of the texts. Once I understand the specifics of the book (ask them for ISBN number and whether or not it i a custom edition), then I can check to see what it is selling for used on Amazon or through a book reseller – I check on BookScouter or CampusBooks. I need to turn a profit, so I look for books that are only a few years old and see what the seller is offering. Since I have nothing to lose, then I may offer a lot less to see how much we can negotiate. Remember, when all is said and done, I want to earn at least $5 when all the dust has settled (postage, seller fees, etc.), but for textbooks I tend to raise my own expected profit margin. Sometimes when negotiating, I’ll start low and then offer a few more bucks for them to ship. Yes, there is the risk that they may collect my money and never ship, but so far I have not been burned.

It’s Still a Deal

In the law of supply and demand, I do not consider low-balling particularly sleazy. I just want to find out how quickly a seller wants to sell their textbook. I’ve seen it the other way too, where a college student expects to charge a bunch, which is far more than someone could get used on Amazon. Once I buy a textbook, I usually attempt to sell on Amazon. If I use a book reseller, of course they offer much less, but it’s a guaranteed sell. I’ll often factor the age of the text before I make a decision. If I use Amazon, I can still charge the least amount so I beat the big boys and still make a nice profit. Of the nine textbooks I’ve sold in a month, my average net profit is $33, which is much more than other books or merchandise I try to resell.

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The Six Things I’ve Learned After Reselling Books for One Month

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purple textbookHow I made $900 in One Month Selling Books, But Not Really

I’ve completed my first month selling books. The good news is that I sold $900 worth of merchandise, after seller fees. The bad news is that I made a net profit of approximately -$150! The reason: start up costs. I spent money on domains, WordPress plugins, scales, and packing supplies to ship books. Of the $900 earned, there were approximately $100 in postage fees. Keep in mind the $900 isn’t truly profit because I had to buy merchandise to resell it.

The Real Story

Now that a large part of my start up costs have been funded, I anticipate less overhead expenses. The good news is that I am tracking everything. In the course of one month, I noticed the following:

  • I did make $430 profit when comparing what I spent on merchandise and what I resold the merchandise for. I have to be careful though because some of the merchandise did not cost me anything – I was reselling merchandise I already owned.
  • The average profit per item was $14.30. I’ll have to monitor this month to month so I can determine how to maintain or increase this average.

What I’ve Learned After a Month

  1. Be aware of all of your expenses, particularly postage – When selling books on Amazon, there’s no way to compete with the big boys who sell books for a penny, with $3.99 in shipping. They are able to make penny profits but they sell so much merchandise. For the sole entrepreneur, you can still charge less than your competition, but you need to search for items that are worth something. Also, books work well because you can use USPS media mail for somewhat inexpensive shipping costs. Paypal is one merchant that allows you to create mailing labels using the media mail rate.
  2. Amazon is better than eBay for selling books – Although eBay doesn’t charge as much, I believe customer behavior is such that they go to Amazon first when searching for books. I find you can get more cash when selling on Amazon. They may take more of a cut, but you are paying for visibility.
  3. eBay is good for buying and selling lots – For instance, my wife wanted to relive her teenage years by buying a lot of Sweet Valley High books. She probably spent $20 for them, then she have me the 50% she didn’t want and I resold them on eBay…for $20. Look for deals, particularly on bulk items.
  4. Textbooks are the way to go – I’ve found that textbooks are your money maker. You can make good profit, but you need to do your homework. Be careful – make sure you identify the year, edition, and ISBN number. I’ve learned a lot about how “international” and “custom” editions can affect the resell price.
  5. Craigslist is your friend, if you are patient and do the work – August is the best month of the year for a book seller, particularly if you seek out textbooks. Some students just want to make more then reselling to their campus book store, so you can find good deals. Sure, I’ve had to pick up the merchandise, but I have convinced a few honest folks to mail me the merchandise by offering a few bucks towards postage, and I pay them via Paypal right away.
  6. Buy books via auction on eBay – I’ve found prices vary immensely for textbooks on eBay, so separate the merchant from the individual. This often happens by only looking at auctions.

Next Month Plans

I mentioned that I had a fair amount of startup costs In addition to selling physical merchandise, I plan to experiment with Internet Marketing. Quite frankly, a lot of it seems sleezy, but I want to find ways to create niche sites that expose interesting merchandise to costomers. I’ll use this blog to also report on that experiment.

 

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Step 2: Cost Benefit Analysis of Reselling Books

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As someone who has a day job in the software industry, a successful project is governed by a cost-benefit analysis. That is, how can we be successful when we consider time, cost, and resources? For book reselling, this means that:

  • I need to determine how much time I will spend looking for books to buy
  • I need to determine what I need to spend on packing materials, postage, and any branding/marketing/web to get up and running
  • I need to know my goals for net profit and make sure I am tracking this

At the end of the day, I do not want this to be a hobby. Rather, I want it to be a money-making business that will give me more time with my family. The concept of a passive income appeals to me, although this would not be considered passive. This business focuses on a 1:1 product relationship. In the future I will look to a 1:many relationship by creating my own products.

So in sum, track the time and money you spend to get up and running. As an example, as an entrepreneur, I started with my own existing book collection (at no cost) and then my own capital for buying used books to resell. One of my merchants, Amazon, holds onto the purchase income until it establishes your bona fides. Meaning, you may not see that income for the first month or two. I am doing lo-fi way of tracking by creating a spreadsheet. It’s simple.

Essentially I track money I’ve spent (on books, postage or supplies, etc.) and then indicate what an item sold for (minus seller fees and postage). This way I can start to see a pattern of the types of books that I am successful with and what I am willing to spend for a book. It takes some trial and error. Generally, I want to be able to make at least $5 net from a sale but I have targeted textbooks during the Summer with the expectation that it will be a hot market through August.

I’m not in the black yet, but soon hope to be.

Income and Expenses

I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.

Michael Jordan
For the Love of the Game: My Story (Crown, 1998)