I bought a closed video store: Confessions of a DVD reseller

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Confessions of an FBA seller who bought a DVD rental store: driving cross-country for 3,000 DVDs to sell on Amazon

How did I come to buy a closed video rental store?

The time: Almost two years ago.

A friend tipped me off to two friends of his whose video store had just closed in Des Moines, Iowa. And they were actively liquidating their inventory.  In fact, they had debts to pay and were getting desperate. And it was thousands of DVDs

That was everything I needed to hear. I immediately drove to Iowa.

And I made the drive, despite these facts:

• There was no offer for the DVDs on the table.
• I had no specifics on how many DVDs were for sale.
• I had no direct contact with the sellers.

I just knew a video store had closed, and I was determined to own everything that was inside.

Here’s why I was determined to buy these DVDs

• The video store was across the street from Drake University. Their DVD collection appealed to a hipper, younger audience. As someone selling these DVDs FBA, that meant money.
• The owners had gotten out of the video rental business and just wanted to liquidate DVDs. To me, this meant making a lowball offer they just might take.
• The volume of DVDs. I’d been told by my friend who knew the owners, was estimated to be “around” 2,200 DVDs. They also admitted they were just eyeballing it, and the number of DVDs could be much lower or much higher.

Knowing only these details, I drove to Iowa. I drank a lot of coffee, ate hash browns at a few trucks stops, and after many hours, arrived in Des Moines.

My first glimpse of the collection

My friend arranged a meeting with the video store owners at the house where the DVDs were stored. They greeted me at the door and said “follow us.”

They took me into the basement, and there they were: box after box of DVDs. The number was definitely in the thousands. This was big. While my pulse quickened, I maintained my poker face and started the pre-deal banter.

I first asked them if this was the store’s entire inventory of DVDs, or if it had been picked over by other resellers.

They explained they had been trying to sell the collection on Craigslist since the store closed two months before, but had gotten few inquiries and no buyers.

I’m going to return to the massive lesson we can draw from this in a future article, but until then let me  just yell at Amazon sellers in the corn belt for a second:

Hey Iowa – are you all asleep out there? This DVD collection was on Craiglist for two months!

A mini DVD reselling bombshell

“The only interest we had on Craigslist was from people who just wanted those,” one of the owners said, pointing to a giant box in the corner.

“What are those?” I asked.

“The Criterion Collection DVDs.”

Oh. My. God. In my head, I raised the amount I was willing to pay by at least $1,000.

If you know a little about film, you probably know about the Criterion Collection. They have an expertly-curated catalog of DVDs packaged and marketed to film aficionados. They are known for their highbrow film selections (including a lot of foreign films and cult classics), their extensive and high-quality extras, and elaborate packaging (some of their DVDs even come packaged with books). If you are extremely passionate about film, and you have money, you probably own at least a few Criterion Collection DVDs.

These DVDs were also a goldmine to resell FBA.

I was laying eyes on the largest lot of Criterion Collection DVDs most people would ever see. There were at least 100. And it’s the rare Criterion Collection DVD that sells for under $15 on Amazon. Do the math.

Off to a good start.

The art of the deal

Aka “testing my ad-lib, totally made-up, amateur negotiation moves”

The DVD collection was very impressive. It was also a massive gamble.

Even attempting to estimate my potential profit would be complete recklessness. I was looking at over 2,000 DVDs, only 5% of which I could actually see and scan. The rest were buried inside the many boxes that surrounded us.

Here’s what I could see: A lot of music-related DVDs. Cult classics. Anime. And so on. All of this was encouraging.

This was, after all, a store across the street from a major university, and the collection reflected the hip and “edgy” tastes of its one-time clientele. There were all good resell these DVDs FBA for a huge profit.

Have you heard of “price anchoring”? It’s this negotiating tactic used by salespeople where you get the customer to say aloud how much money your product will save them. Well I was pioneering the “reverse price anchor,” where I tell them all the ways buying this DVD collection was going to cost me money, and all the ways it would potentially lose me money on Amazon, before getting them to throw me out a price.

Truth is this is probably the oldest negotiation technique in the book, but it felt new to me.

“Right off the top,” I said, “85% of these won’t make me more than 40 cents.”

This was a fair estimate. There’s a glut of the majority of films on Amazon, and most are penny-DVDs.

“And these are ex-rentals, so I’ll probably have to buy a high-end DVD cleaning machine to refurbish them.”

Also true.

“So…. What were you thinking?” I said.

They looked at each other. Clearly they hadn’t talked this through beforehand.

How I calculated the value of the DVD collection

Here’s what was going on inside my scheming head: I had already appraised this as a very high-value collection. I estimated the Criterion Collection box alone would bring in at least $1,000. And there were over 2,000 more DVDs on top of that. Maybe 3,000+.

Based on this, I was willing to pay $2,500 for the DVDs on the high end. I had $2,000 in my pocket. But I didn’t tell them any of this.

If it came to me actually offering $2,500, and they still said no, I had a Plan B. I would ask if I could be alone with the DVDs for a couple hours, scan a thousand or so, and adjust my estimate based on what I learned.

They didn’t seem prepared to be pressed for a specific price. They went in circles for a couple minutes without giving me a number, so I changed my approach.

“You mentioned you had some store-related debt to pay off,” I said. “How much is that debt?”

They didn’t even pause.

“$1,790.” One of them said.

I took out my cash-roll, peeled off two $100 bills, and extended my hand with the rest.

“Does $1,800 work?”

We had a deal.

The logistical nightmare of owning thousands of DVDs

I’d brought a truck, but there was no way it was carrying this many DVDs. I needed to get the collection down by 40%, at least.

The DVD sellers were cool, and we worked out a deal where I would stay in town for a couple days, scanning & listing DVDs in the basement until I could fit what was left in my truck.

This was the scene:

Problem was, these DVDs were ex-rentals, so there was an extra step: Cleaning. Nearly every DVD was visibly scuffed, and selling a DVD that skipped was the fastest way I knew of to receive negative feedback on Amazon.

I had heard people chatting on an Amazon FBA forum about the JFJ Easy Pro Universal CD/DVD Repair Machine. So I went on Amazon and had one overnighted to the house (thank God for Amazon Prime).

The next day it arrived and I got to work. Or I tried to. But there was one massive problem: The JFJ Pro was painfully, brutally slow. Between adding the cleaning liquid, cleaning off the DVDs, and all the back and forth, it was over a minute per DVD, at the quickest possible pace. I did the math and realized this just wasn’t going to work.

I also did the math on shipping the DVDs to myself via Media Mail. That wasn’t appetizing either.

The art of creative DVD transport

So I went to the hardware store and dropped over $100 on the two things that will get you out of most problems in life: Tape & bungee cords. Lots and lots of bungee cords.

I was going to solve the lack of truck space by taking a page from the Beverly Hillbillies playbook. I was stacking upwards.

I’ll skip my woeful tale of getting the DVDS into my truck, by myself, with the muscles of that guy from the comic book ads that got sand kicked in his face. But this was the scene when I was finally finished:

3,000 DVDs, on the road

If that image above looks perilously unstable, you’re right. Somewhere outside of St Louis, I lost an entire box of DVDs on the interstate. And the box held hundreds of DVDs. Picture it: Me darting in and out of traffic, grabbing armfulls of DVDs and retreating to the shoulder, watching 18-wheelers turn copies of Kentucky Fried Movie to dust while I waited for the next break in traffic. I got most of them, but this folly cost me hundreds.

It was a long trip.

Getting home and sorting the DVDs

Once home, I brought the entire DVD collection into my office and started assessing my potential Amazon profits.

Right away, things were looking very, very good. I never had any doubt I would make money, but I didn’t know if it was $3,000 or $30,000. My early estimates were that this was somewhere in the middle.

Then the real labor began

The real work came over the weeks that followed. And yes, it literally took me weeks.

Scanning everything. Determining what went in the “sell on Amazon” pile and what went in the “sell somewhere else” pile. Inspecting each DVD for scuffs. Setting aside the DVDs that needed cleaning.

The hardest part of buying 3,000 DVDs to resell

The biggest challenge of all of this was something I never expected. It was the DVD cleaning. The cleaning terrified me.

This one issue threatened to eat up a huge portion of my Amazon FBA profits. Every inquiry I made into companies that cleaned DVDs in bulk returned quotes that averaged about $1 per DVD. This was a massive blow to my profit margins. I was desperate for a solution.

About 1,000 of the DVDs definitely needed cleaning. The rest I could take my chances with on Amazon. I went onto an Amazon FBA forum and put out a cry for help.

Enter this story’s hero. Brian Freifelder of Philadelphia Media Exchange, owner of an industrial-sized DVD-cleaning machines. He contacted me privately, with an offer: He would clean DVDs in bulk for $1 each, However, he would also give $1 credit towards this for any DVD I gave him ranked better than 100,000.

The clouds parted and angels started singing from the heavens. I had hundreds of DVDs with a Sales Rank of better than 100,000, that would also bring little-to-no profit on Amazon. This could solve my biggest problem totally for free.

I spent days and days putting hundreds of scuffed DVDs into spindles (to save on shipping), and scanning everything to separate the DVDs I couldn’t sell on Amazon. The numbers are a little fuzzy, but I think I sent Brian roughly 1000 DVDs to clean, and 700 DVDs for the $1 credit. Meaning I had this massive DVD-refurbishing job done for $300.

Major bullet dodged.

The comedy of errors continues

Buried at the bottom of one of the boxes was a smaller box, and in it were 200 DVDs without cases. I hadn’t noticed it until I got home. For a moment I considered this a nice bonus, something I could bundle and sell on eBay.

But this fanciful notion didn’t last. In a moment it hit me: My last move before leaving Iowa was throwing away a another box of DVD cases. Empty cases. 200 of them.

Do you see where this is going?

Back in Iowa, I’d noticed the empty cases and asked the guys I bought them from what the story was. They told me they weren’t sure, but that they’d lost the DVDs that were inside and weren’t charging me for those. I only took the box out of the basement as a gesture of politeness, and promptly threw the box in a dumpster behind the Hy-Vee grocery store.

This was easily a $1,000 folly.

I’ll go ahead and wait for you to stop laughing at me…

My DVD pricing and listing formula

Here’s what I do when I know I’m at least tripling my money on a haul no matter what: I price high. Really high. I get really, arrogantly bold with my Amazon pricing.

Now I always price high with my Amazon FBA offers, but I priced outside even my comfort zone with these DVDS. If an item had a good Amazon sales rank (better than 100,000), I didn’t even care if I was the lowest FBA offer. I’d go for second or third-highest, knowing it didn’t matter if it paid off or not. I would probably make my money back on this whole DVD collection in two weeks, making the rest gravy, so I could afford to be bold. And if certain DVDs weren’t selling, I could always lower the price later.

With DVDs ranked worse than 100,000 on Amazon, I aimed to always match the lowest Amazon FBA price. Unless it was stupidly low (like matching the lowest merchant fulfilled price), in which case I’d match the next FBA price, or go $7 to $9 above.

Worse than 200,000, I aimed to match the lowest merchant fulfilled offer.

And if a DVD would bring me less than a $2 Amazon payout, it went in the eBay lot pile. Messing with $1 DVDs would take over my life if I let it. So I deemed them trash and moved on.

That was my DVD pricing formula.

And now, the profits

There’s no reason to dance around this issue… The DVD collection was a goldmine.

First, I’d been told it was “around” 2,200 DVDs. When I actually counted, it was a hair over 2,900. That’s 30% more DVDs than I thought I was buying.

The quality was insanely high. 75% of the DVDs giving me a net profit of more than $2 on Amazon. Go to a thrift store and tell me if 75% of the DVDs there will bring more than $2. No way.

I didn’t even talk about the DVD box sets

There were two massive boxes that contained nothing but DVD box sets. Hundreds of them. You wouldn’t even believe it. TV shows, movie collections, Simpsons box sets shaped like Homer’s head… It was just about everything you can think of. Major, major money.

Ironic sidebar

In a cruel irony, I owned more DVDs than almost anyone on earth, and I didn’t even watch movies. Seriously. I’ve probably seen less than 50 movies in the last 10 years.

Of the nearly 3,000 DVDs in my possession, in the end I kept six of them. Six.

(And now, two years later, I’ve watched exactly two of the six. Cannonball Run and the documentary about the metal band Anvil, if you’re wondering.)

It would be irresponsible to claim a realistic profit estimate, but…

I’ve brought in $15,000 on Amazon from this collection as of the time I’m writing this. And they’re still selling.

And that concludes the weird story of the time I bought a closed DVD rental store.

-Peter Valley

 

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