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A Year of Reselling
This past year was a tough one for generating spend with the easiest avenues being cutoff and the rules changing at many of the banks. For many it was suddenly tougher to generate spend and to meet the requirements for some of the more generous credit card bonuses.
Don’t get me wrong. Some opportunities do exist. Gift card reselling is a practice that has re-emerged for many as a good way to generate spend and it was especially good during the holiday season. Of course gift card reselling is sort of a business. Well, not sort of. It is a business.
Another business that helps to generate a lot of spend is merchandise reselling. As many who follow the blog know, about a year ago I decided to begin a reselling business. I had been reselling for years casually, but I finally decided to do it more formally and almost exclusively on Amazon FBA. This blog and my other writing are my full time work, so this was always a side business and never meant to be a full time job.
A Lot of Growth & Lessons to be Learned
The year of reselling ended up going very well. I started in December, 2016 when there were a ton of deals to be found. My scale wasn’t large due to just starting up, but I made some money. I also quickly learned that January can be brutal with a ton of returns that eat into your profit. Over the entire year in fact, I learned a lot about how to handle returns that I wish I had known back then.
Through the first 9 months of the year, I averaged about $30,000 per month in sales with almost all of it coming on Amazon FBA. Minuscule compared to many Amazon sellers, but a comfortable pace for me given the limited time I have. Some months were better than that and a couple were worse, with the slower months coming when I traveled a lot. In case you haven’t heard, I do love to travel, but it cuts into buying time! 🙂
More Time Invested = More Rewards Earned
As the business began to grow, it required much more time. I paid for Inventory Lab pretty early on in order to manage the accounting and more (well worth it), but simply receiving and re-shipping the items began time consuming. Thankfully early in the year I began working with a Prep Center that receives and re-ships many of my items.
One great side effect of this new business was the credit card rewards earned. For a lot of my purchases I used my AT&T Access More card to earn 3X at Raise for discounted gift cards and at online retailers directly too. I also used my various Chase Ink cards at Gyft, CardCash and Gift Card Mart to earn 5X on gift cards.
All of this merchandise buying along with taking advantage of gift card reselling opportunities has seen my Ultimate Rewards and ThankYou points balances swell. The various holiday airline portal bonuses have helped a lot as well. I am a points multi-millionaire despite having slowed down my new card applications.
Into the 4th Quarter
Throughout the year I took very little money out of the reselling business. I knew the business would need the capital in order to deal with the 4th quarter. While October ended up being much like the rest of the year, things began picking up in November. Those pre-Black Friday sales were big and things continued on from there.
One of the biggest struggles for a growing business is having enough capital. Despite re-investing almost all of my profits, the business quickly became cash strapped throughout the end of November and December as inventory swelled to 4X the normal amount. Suddenly our cards were being stretched to the max, but we managed to make it through and everything has been paid off before the due date. (No interest!)
The sales really started coming through in the middle of November. Since I had traveled for much of October, the beginning of the month was very very slow, but as my inventory began showing up later in the month, the sales began rolling in. And they haven’t stopped.
A Ton of Work
Since the middle of November we have been taking more of the inventory at our house, since the prep center has been overwhelmed and thus slower to turn around the products. In fact, since the first week of December, we have been processing all of our merchandise ourselves in order to get it into Amazon as quickly as possible.
This involved receiving a ton of boxes everyday and processing them. Our friendly UPS driver picked up a new shipment to Amazon everyday as well. Items never stayed in our house for more than 24 hours. It was a lot of work, but thankfully my wife and I have developed a decent process that is much more efficient than when we started last year, but we are still exhausted.
It Pays Off
All of this hard work along with the strain on our credit cards paid off. We finished December with $111K in sales for the month with almost all of it once again being from Amazon FBA. Again, a minuscule amount compared to many, but a lot considering the part time nature of this business. January won’t be quite as good, but it will still probably be double our previous best month.
In fact, I think the business as a whole has matured to a new level. I am more confident in my buying decisions and thus I think we will see strong sales growth this year. But, this isn’t my full time job nor do I want it to be. This means that we will need to hire outside help to perform most of the duties I was, since I simply don’t have time to do it. A good problem to have, but the transition will no doubt create more problems of its own.
A Good Avenue of Generating Spend
As you can see merchandise reselling is an amazing way to generate spend, but it is a business. A time consuming and often rewarding one. Not only have we earned about a million miles/points this past year from reselling alone (not to mention the other avenues of earning), but we have earned a decent profit. It has been a long road full of lessons, but one that I feel was worth it.
This blog isn’t about merchandise reselling and thus I only cover the topic from time to time, but I know many of you wonder about such a business. Hopefully this gave you a look into the process and experience of starting a reselling business. I am here to answer your questions as well! Happy New Year.
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[…] Building an Amazon FBA reselling business: 1st year lessons learned. […]
I have been buying Gift and Merchandise credit for years via Ebay when they had the EBay Bucks and via raise and others and I cannot see how you are making money. You give vague explanations. How about a some specific examples with numbers. First most of the time they are selling Merchandise credit not gift cards. But then you are going to sell on Amazon using Fulfillment by Amazon. I would love to see an example of with detailed numbers showing how this could be profitable from links showing current discount on Raise to all the cost associated with selling on Amazon.
Please shoot me an email, I’d love to talk shop some time.
Do you know a prep center called McKenzie? It is located in Oregon. I guess there is a big cost saving when using a prep center located in a state without sales tax. But for heavy over-sized items, higher FBA shipping costs might offset sales tax saving.
Just have to ask- as tied down as one gets just by having a bunch of stuff listed on eBay, it seems you should find it difficult to leave for long. With a huge pile of miles, I’m always dreaming of around-the-world business or first, or some exotic trip to an unpronounceable destination. How do you enjoy all the miles you net with this kind of business?
I do most of my selling on FBA which allows me to travel since they fulfill the orders. With that said, traveling does slow down the business which makes it tough. I have the ability to put vacation holds on all of my incoming packages when traveling so I just send them to Amazon when I get back.
Hi Shawn, I have always thought about the business of reselling, but haven’t manage to start it. Only problem I have is about looking for what item to buy and sell. Any trick for looking out the popular items?
Start with something you know. A product that you know and are comfortable with can help you figure out the system. As you sell more products and types of products your eyes start opening to possibilities.
I have a crazy full time job but would love to resell just for points for personal use…what is the best area to start, with the lowest risk? I am willing to commit 10-20 hours per week. I am guessing gift card reselling but I have no idea as to where to start. Can you direct me to a good link? TIA
I am starting a reselling Facebook group. (To be announced later today.) I think you could definitely get some ideas from there once it is up and running.
Shawn, can you share which prep center were you using; their pricing vs. Amazon prep.
Is the 5x with Chase Ink at CardCash working? I had read that it stopped working, then was revived. I made two purchases on CardCash in September, and didn’t get the extra points.
Just found the following sentences a bit confusing. I think you meant to say you started back in Dec. 2015……
The year of reselling ended up going very well. I started in December, 2016 when there were a ton of deals to be found.
Whoa! What are you guys reselling!? I have a business that sells, but a traditional optical shop. I know I’m a noob, but what are you all reselling?
Electronics, grocery, personal care, shoes, toys. A bit of everything.
How do you handle the collection of sale tax?
Amazon collects sales tax in the states I need to collect and then I file it.
Congrats!!! In addition to what you mentioned, snapchat spectacles were GREAT last month — especially those who live in the NYC area.
Is Raise earning 3% on AT&T Access now? Your previous article to which you linked says it stopped getting 3% about a year ago.
I’ll make sure to update that. Citi is a little crazy with what counts and doesn’t, but I have found that about 90% of my Raise purchases are coding correctly.
Pretty amazing how closely your story mirrors mine. Also doing about 30k in sales per month the first 9. Then 48k in October, 68k in November, and 121k in December. Cards were getting hit hard. All of the sudden that $37k in limits on my at&t cards wasn’t enough.
I also stopped using prep centers in December. Too long to turn things around as they were backed up 7 business days. UPS boxes blocking the entrance everyday. Was a ton of work but really paid off.
Also learned a lot about buying and preparing for Q4. Been working on my list of Q4 items to start buying year round.
I hate how dependent I am on Amazon. They could flip a switch and my business tanks. This is why I won’t be leaving my day job anytime soon. I will be looking into diversifying my selling channels and sourcing methods (wholesale) in the coming year.
Now the focus will be on getting my tax return in order.
I agree with everything you said. I also learned a ton of new lessons that will be carrier forward for next year. Amazon definitely is tough to deal with and with all of the restrictions I think diversifying is a great idea.
Thanks for sharing Shawn! I’m interested in any data points you may have from someone claiming a high dollar itemv(such as an iPad) was broken or defective. This makes me nervous as they could try to return something else back to you versus the original.
I factor in returns when deciding what to buy but those big ticket items can and do come back. I have had a few issues with fraudulent buyers, but I always record serial numbers of big ticket items. One time I had an expensive smart watch box returned without the box. Every time I have had fraud from a buyer Amazon has reimbursed. The other times when it is just a normal opened return, I generally can sell it for about 90% of the new price as “Used Like New”.
What percentage of your purchases for reselling at for the goal of breaking even and earning points compared to earning a profit?
For me I don’t purchase things for reselling unless I know I can make a decent profit. After seeing how many points you earned I wonder if I should change my strategy.
Also I didn’t know you could earn 5x Chase ink points for buying gift cards at those places. What’s the turnaround time for them to email you the gift card? Raise is really quick so I like them.
Gyft turn around time is nearly instant. Sometimes they need to investigate the purchase and it can take 24 hours. You also need to use PayPal with the ink card.
I always buy to make a profit. But by using cards which are earning either 3X or 5X and utilizing mileage portals I have done quite well. With that said, if I am earning 5X on a fast selling item with low return rates, then I will take a lower profit. Profit is key though. This is too much work for only the miles/points.
Some of the million was gained from gift card reselling too. (It would take me forever to separate out what came from where.) I do resell some gift cards for little to no profit if the time invested is low enough and the rewards earned are high enough.
Nice job. Curious what you mean by decent profits? Looks like you did approximately $300K reselling. 5% net?
Definitely higher than that when all is said and done.
Congrats on a year of reselling!
The idea of hiring help has been on my mind as well, the challenge is that it also introduces a ton of risk. I’ve added folks for sourcing, but, really to get to that next level, I think you need someone from an Ops stand point, and likely a space. That’s a huge jump though in overhead costs.
Yeah we are dealing with those challenges as well. I think we would benefit much more on the ops side than the sourcing side, but we will have to figure it out.
Great job Shawn.. Thanks for sharing this with us.. I wish you could share some more details .. maybe a reselling seminar?
I did speak on Reselling at the Chicago Seminars, but I am thining of doing something where I could go more in-depth. I’ll let everyone know if I put something together.