Ryan Grant quit his job in September, 2013 and threw himself into selling via Fulfillment by Amazon (and eBay) full time. He took his business to $9,000 in net profit in just a few months. He tracks his online selling journey on his site, Online Selling Experiment, which I highly recommend. It’s one of the only sites I check regularly.
While I post consistently about topics that are not specific to those selling books and media, this is the first in a series that go into other inventory models more deeply. If you’re interested in diversifying, get on the email list and get every article sent directly to your inbox. (And get on Ryan’s list as well).
Enter Ryan Grant.
Tell us about the intention behind Online Selling Experiment. Sum the site up in once sentence for those unfamiliar.
It is my blog where I share tips, tricks, and all financial results, related to selling on Amazon and eBay to make a full time income.
I like the “do or die” approach you took, quitting your job to throw yourself into FBA full time. What were your initial motivations behind making this leap, and how did your early results compare with your expectations?
The main motivation that led me to want to pursue this full time was the amount of control that my employer had over my life. I worked for a large accounting firm, and was working 40 hours a week for May through December, and 55 plus hours per week with Saturdays required for the bulk of January through April (this was known as “busy season”). I didn’t hate my job, but I didn’t love it either, and I knew that it was not a path I wanted to continue down. I had always wanted to be completely self-employed, and I knew that if I never gave it a shot I would likely regret it sometime in the future. I quit my job in September 2013, as I knew with certainty that I didn’t want to go through another busy season. I was 24, single, and risking no one’s well-being but my own, so I decided it was time to give it a shot.
Now, as for how my results compared to expectations. My first month full time I made a little over $2K in profit, and honestly was pretty happy with this result. November was about $5K profit, and December was about $9K in profit. Prior to quitting I had been doing this part time since I was about 18, and in this time I rarely did more than $1,000 a month profit. I was very happy with my first couple of months, and was blown away by the $9K in profits in December. I definitely thought it would take a bit longer to build up to that level of profits. Overall, I would say my results exceeded my initial expectations.
Give us a rough breakdown of your inventory, by category, to give people an idea of what “kind” of seller you are.
I sell in a large variety of categories. Year to date, here are my top 5 categories and the percentage of my total sales that they comprise:
- Toys 35.35%
- Grocery 13.12%
- Beauty 8.26%
- Kitchen 7.12%
- Office Products 7.11%
And tell us about your sources. This is a subject people can be very guarded about (myself included), so be as specific or vague as you’d like.
I currently source via the following methods: retail arbitrage, online arbitrage, liquidation sourcing, and thrifting. My largest source currently is retail arbitrage, but I do a good mix of the others as well to be diversified. Pretty much any stores I go to I look at as a potential sourcing opportunity, and I am constantly finding new stores where I am able to buy inventory.
What books, ebooks, or other training materials would you recommend for people getting started selling with Fulfillment by Amazon?
I usually recommend that people with no prior knowledge of FBA start with Arbitrage by Chris Green. For $9 it’s a good value and covers many of the basics of what people need to know if they are going to sell via FBA.
I have read all of Jessica Larrew’s ebooks and have found tips in all of them that were valuable to my business. The book that so far has led me to the most profits has been Liquidation Gold (available here). I purchased the Proven Amazon Course (available here), and have gone through some of that information. The course has a plethora of information, so I haven’t gone through significant portions of it. I have found the information there to be quality though.
You’re a great example of the potential for relative beginners to achieve a lot of success very quickly with FBA. How soon did you realize “this is working”? Was there an example of a particularly large score you had that was the tipping point, or was it a slow and steady climb?
I would like to point out here that I had a decent amount of experience selling online prior to going full time. I started selling online in some capacity when I was about 18, it was nowhere near the level I am at now, but it was valuable experience in learning the process and getting an eye for products that sell well. In addition to this, I have had a textbooks business (not included in blog financial results) for the past 5 years. Through the textbook business, we utilize FBA for a good portion of our inventory and this experience was very valuable when I started full time. The textbook business is very seasonal (as I am sure you are aware) and it complements the other items that I sell online very nicely.
Every month you have a cool feature where you confess your mistakes from the previous month. What patterns have you noticed? Are there any mistakes you made multiple times that other sellers can learn from?
There is a certain type of mistake that has surfaced a few times, and that is a lack of attention to detail. I have bought items that are too close to expiration and also have bought products that were not in new condition. These are easy mistakes to make (for me at least) and I think the best way to avoid them is to slow down a bit and make sure to check each item you are buying to make sure it is in the appropriate condition, and not too close to expiration (if applicable).
The other mistake that I have made multiple times is letting items sit around my house unlisted for weeks at a time. This is for a variety of reasons, but the main ones are that I would rather go out sourcing, or I don’t want to do the necessary prep (Polybag, create multi-packs, etc) to send them items to FBA.
My advice here is that although sourcing is the most fun part of selling online, you can’t possibly make any money if you don’t list your items for sale. I would recommend setting a rule that items cannot sit at your house unlisted for more than a week before being sent into FBA. Another option is to never go sourcing for more inventory until the inventory you have is processed. This may sound obvious, but it’s easy for me to keep buying stuff and get a serious backlog of items that need to be processed.
You sell on eBay as well. How do you decide what to sell on eBay vs. Amazon? Are there some categories that can be sold on Amazon, but seem to do better on eBay?
I actually did an entire blog post about this, here is a link: http://www.onlinesellingexperiment.com/should-i-list-my-item-for-sale-on-amazon-or-ebay/
The short version of the story is that I list brand new items that aren’t clothing on amazon, and the rest goes to eBay. I end up selling clothing and items that sell better with pictures on eBay. With my product mix, this results in about 95% of my items being sold on amazon.
With the exception of clothing, as I am not approved to sell clothing on amazon, I generally don’t compare the prices on eBay and amazon before listing. The ease of listing on amazon trumps the potential additional profits of selling on eBay for the vast majority of items, so I don’t bother checking. It’s possible this is leaving money on the table, but it’s saving me time, so it’s a risk I am willing to take.
You had a good article on sourcing (non-media) inventory from thrift stores and selling on eBay. Is this a regular source for you? Do you have an intuitive “eye” for value, or is there a formula you apply to sourcing from thrift stores?
I generally go to the thrift stores a few times a month. I have a pretty good “eye” for items that have value on eBay, but I don’t claim to know much about the majority of the items I see in thrift stores. If there is an item that I want to check the resale value of, then I will check the completed listings using the eBay app in the store. There are items that I know to buy without looking up, but when I go thrifting, I end up looking up a large number of items as I am always encountering something new.
One of my main strategies at thrift stores is that if an item looks unique, rare, weird, or somehow caught my eye, is to look it up and see if it has value. Over time this leads to looking up thousands of items and gives you an idea of what types of items have value for resale and which ones do not.
I focus more on return on investment (ROI) compared to profit margins when I am sourcing. They go hand in hand, but my main concern is how much money do I have to spend to obtain a desired return. The ROI that I am looking for varies a bit depending on how quickly I think an item will sell. To determine how fast I think an item will sell I look primarily at the sales rank and the competition of the item. If I think an item will sell within 1-2 weeks then I will accept an ROI as low as 30%. This means, if I spend $20 once the item sells after all costs and fees, I will end up with my $20 back plus $6 in profit. If I think the item an item will sell within 1 month then I am looking for an ROI of at least 50%. Items that I expect to take longer than one month to sell, I am generally looking for 100% ROI.
For the first 4 months that I was selling online full time I would not accept an ROI of less than 100%. I was still able to find deals, but it was somewhat limiting. I believe that accepting a lower ROI will lead to significantly better results down the road. For anyone who may be struggling with what ROI to accept when sourcing, the more capital you have available to buy inventory, the lower the margins that you can accept. The reason for this is that if you only have access to $250 for sourcing, you would be better off being picky and finding the best returns you possibly can. As you build a bankroll it will likely make sense to lower your margins over time.
And when you average all your sourcing methods together, what margins do you see on average?
My profit margins as a percent of sales on amazon are usually around 30%.
Parting words of encouragement?
If you want to succeed selling online, work hard, work smart, don’t assume you know the value of every item, always try new strategies, diversify categories you sell in, and always continue learning.
Thanks Ryan!Also, claim your free book: