Everyone who is selling on Amazon is waiting for Q4 including me. From what I am seeing and many other people too.. this is going to be the biggest Q4 we have ever had. Not sure about the US as i don't sell there neither I live there, but in the UK... I am 99% sure that it will be the biggest. We do Online Arbitrage and selling on Amazon in the UK. Sometimes we also source products from retailers aka Retail Arbitrage
In this article we will have a look at what is happening on the UK market, what is different with previous Q4's, why I think this will be the BIGGEST EVER and how to get ready for it.
Let's start with some basics first...
What is Q4 and Why is everyone talking about it
Q4 stands for quarter 4 which is the last 3 months of the year. That includes October, November and December. For Amazon sellers, at least in my opinion it includes January as well. January is still a strong month for sales. During this time of the year sales start picking up. You see... everyone is getting ready for Christmas and they start buying more. There are many people that see their sales quadrupled. Especially online or retail arbitrage sellers.
To summarise Q4 is the time of the year where you can make the most out of your Amazon business.
What makes this year different than the rest
In 2018 we a few thing happened that will probably change Q4 quite dramatically. Amazon is getting bigger and bigger everywhere which is good news for people selling on their platform.
Well, not entirely but in the short term at least it seems that way. Amazon has been steadily eating up other businesses for the last few years but in 2018 that is more obvious than ever. They are also implementing new rules for the new sellers.
I have created this list so you can see nice and easy the biggest changes of 2018 that will have a HUGE IMPACT on Q4.
That is what is happening in the UK right now. In the USA is probably slightly different but very similar. Here is a list of all the business going bust.
What does all of that mean ? It means 2 things:
- Less competition for selling toys, which sells like hot cakes during Q4
- It also means that slowly but steadily people doing Online arbitrage will have no place to buy stock
That is why I said that in the LONG TERM Amazon's growth in not that good. Yes, you will make more sales but you will struggle with sourcing products. Not just that but if Amazon's growth continues with the same speed it may become a MONOPOLY on the market, which we all know is a bad thing for any country and it's economics.
With Toys4Us and other retailers out of the picture and toys category gated for new sellers, expectation are the toys and games category on Amazon will EXPLODE and there will be a significant increase in sales overall.
What should you do about it ?
If you are selling on Amazon you better start thinking about Q4 NOW! This is the moment where you need to be ready and to make as much money as possible.I am going to describe what I mean by getting ready. Basically, you need to start organising your CASHFLOW. That is the important thing.(ahhh money again). If you are already selling on Amazon and you are ungated in most categories all you need to do is increase your cashflow around October. Save some money and start poring more and more from October onwards.
If you want to make money this Q4 (which you do if you're reading this) the most important thing that you can do right now is to find as much CAPITAL as possible.
If this is going to be your first Q4 you MUST take action now. Follow the steps and you should be ready for a busy Q4.
1. Get Un gated everywhere you can :
Start by getting unagated in toys and games as this will make a lot of sales during Q4. Toys are also cheap to get, as a whole it's an ok category. You have to make a few sales before trying to get ungated, around 10 I think. Then there are a few ways to get ungated:
- Apply to get Ungated on your own - to do that in most cases you will need at least 10 products bought together from a distributor or manufacturer and an invoice that clearly states your business name. There are plenty of wholesalers that you can use to do that.
- Use a paid service - this one works for UK and USA as well. I have personally used it in the past and would highly recommend it. The service works and if they can't make it work for you for whatever reason you get your money back. I got un gated in health and personal care that way.
2. Find a way to source loads of products:
You will need deals. A lot of good deals. How to find them ? Well, there are plenty of softwares out there that can search for deals all day, all night. The problem is that you have to wait for the software to find the deals. Sometimes if you start scanning in the morning the results will probably be ready in the evening. Then you have to manually double check them and etc... That means you will lose a lot of time in checking the results from the sourcing software. Which is not ideal . There are 2 tools I would recommend :
- FBA Wizard PRO - I have used it in the past and it gets the job done. You can start up to 14 scans i think and then it takes quite some time for the results to show up. For the reason I have mentioned above I have stopped using it. However recently in the Amazon seller communities people say that they get more and more mismatches. I can't confirm that. Give it a try if you want it comes with 14 days free trial.
- Bookable VA - This is the sourcing tools that I use and I am quite happy with it. Why ? Well, it's because this is actually not a sourcing software but a website with deals sourced and checked. So the way it works is like every day, Monday to Friday you get deals that are pretty much ready to be bought. This allows me to save a tremendous amount of time. You still need to do a quick check of course but with other software tools you actually wait for the scans and then you start checking them and etc...It is a huge time saver so, yeah. Give it a try.
What I do exactly is the following:
I use Bookable and I also manually source some stuff as well. I am based in London and therefore I have access to loads of different places and malls and etc.. where i can go and check for discounted products. If you want to make money with online arbitrage on Amazon you can't rely only on one type of deals. I have 3 types of products :
- Wholesale (fast) Inventory - these are usually branded , very popular product that makes at least few hundred sales a month. Finding that kind of products is not always easy but it's worth the extra time because this will allow you to have a fast moving product making consistent sales all the time. Keep in mind that wholesalers prefer using with established companies (ltd) in most cases therefore it would be better if you trade as a company. I search for wholesalers manually and it is actually part of my daily routine. It should be part of yours too. All you have to do is email 2-3 of those every day and you will find something that is worth it. You can also use paid directories to find suppliers and wholesalers. I personally haven't had any success with these.
- Slow moving, more expensive products - these are products that I would actually buy for myself. They are expensive with and usually good deals. I am sourcing them myself the same way. I will say it again, I live in London and here sourcing from retailers is very easy because there are literally thousands of them. In most cases retailers are willing to ship directly to a prep centre instead of me buying the products and taking them with me. So yeah, do i spend a lot of time sourcing ? No, absolutely not. I mostly buy electric stuff, something that I would buy for myself. That way I know at least a bit about the inventory I buy and can help if anyone asks a question in Amazon.
- Filler Inventory - this is the deals from your sourcing solution. In my opinion you can't rely on just one sourcing solution. It is ok for most of the year but in Q4 you need as much inventory as possible and you need to get it from everywhere you can. YOU MUST SPEND TIME TO FIND PRODUCTS AT LEAST IN Q4
3. Analysing deals :
You have to be able to analyse the deals you find. I use a tool that does that perfectly. It's paid but not expensive at all. BUY BOT PRO This Chrome Extension allows you to analyse a deal in seconds. It also allows you to copy the deals to a google spreadsheet with a click of a button. Highly recommend it ! If you don't want to pay for for a software you can obviously do it manually. Here are some of the features and how this will help you:
- AUTOMATED DEAL ANALYSIS & BUY DECISIONS
- ROI & PROFIT CHECKER
- BSR CHECKER
- COMPETITION ANALYZER
- PRIVATE LABEL CHECKER
- HAZMAT CHECKER
- ELIGIBILITY CHECKER
- SUGGESTED PURCHASE QUANTITY
- AMAZON FEES BREAKDOWN
- BUY SHEET AUTOMATION
- VAT CALCULATOR
- CUSTOM CRITERIA
- BREAK EVEN POINT AND ETC...
It basically tells you everything you need to know about a product. Give it a try for free for 14 days. Thank me later 🙂
4. Product Prep:
You can prep the products yourself or use a prep centre. When i started i was prepping everything myself, just so i can learn how it's done and HOW difficult it is. Honestly, why would you do it yourself? It costs about 1£ per unit. It is not that expensive really and can make a huge difference on your business and your life as a whole. If you need to prep 200 units a week, this is a lot of work guys honestly, just get a prep centre and use your time for something else. Sourcing for example. I will include a list with prep centres below :
To name a few. I would say that you MUST have a prep centre for the upcoming Q4. You won't be able to meet the demand of goods if you are prepping yourself. I would recommend EasyPrep. Now that you realise that you need a prep centre( or maybe you don't) we need to move to the next step.
5. Pricing :
This is probably the most important aspect of an Amazon business. I have personally done a mistake which costed a lot of money. I didn't know all the expenses I had with this business for a good few months and was making decent sales at a loss. You don't want that happening to you right ? It is not as simple as: a product costs 15 i sell for 30 and keep the rest. It actually is very different. Think of it as having a shop on the high street with the difference that it is inside Amazon. Oh yes, another difference is that it is cheaper to set it in Amazon and the traffic will most likely be bigger. It is easier to start your own shop inside Amazon than having a physical shop somewhere, is it not ?
Anyway back to pricing. Luckily you've got BUYBOTPRO. Yes it helps with that too. It's going to tell you what is your break even point, so you know at what price you have to sell not to lose money. You see.. I wish it was there when I started but because there was nothing like it I lost some money selling at a loss without realising it.
You now know how not to lose money. What do we do next ? Well you will actually need help with changing the prices. A quick list with tips :
- On the home screen inside Seller Central Amazon gives suggestions to match your prices with what they recommend. DON'T DO THAT, JUST IGNORE THEIR RECOMMENDATIONS.
- Amazon has it's own repricer. You can access it by clicking pricing-->automate pricing -their repricer works however the prices never go up. On the other hand it is free.
- Paid Repricers- I use a repricer and I think it is necessary to do so. Most of the sellers nowadays use them. There are quite a few good ones I would recommend using BQOOL . It gets the job done and works quite well. It will allow you to automate your prices across all the marketplaces that you sell in. Another popular one is Repricer Express.
Using a repricer is important guys unless you can stay in front of seller central all the time and pay attention to the prices and etc..Again, this is something that will save you a lot of time, time that you can spend elsewhere. You can also use the free Amazon repricer which never goes up. You choose.
6. Inventory Management and Profit Calculation :
You must know what is happening with your business, how much your inventory is worth and how much money you are making. How you do that depends from the scale of your business. Now if you are just starting and have less than a hundred products you can do all of that yourself by using spreadsheets. I use 5 sheets for tracking the whole business. I will explain all of them below:
This is the guide explaining the spreadsheets I send to my virtual assistants:
- Spending -Google spreadsheet which describes the amount spend on stock, stock description and it's status. Product that we buy needs around 2 weeks to reach Amazon. During that time price can change multiple times) depending from competition and other factors) and that is the risk of the business. Here we MUST be able to track the following:
- Name of the product
- STATUS BAR - THIS REPRESENT AT WHAT STAGE THE PRODUCT IS OF ITS JOURNEY - Products journey is the following : bought-->dispatched-->received by prep-->ready for amazon-->ready to sell. This will help to identify what went wrong and most importantly who's fault it is. TO ACHIEVE THAT WE HAVE TO STAY ON TOP OF YOUR EMAIL AND ME ON MINE THATS IT. Also to be able to fill the status bar till the end, we have to check when Amazon receives the delivery that all the products are there.
- Retailer Link
- Amazon Link
- How many
- Price of a single unit
- Total cost ( quantity x unit price) + delivery and prep fees
- Sales per month( buying decision)
- Fees( Delivery and prep fees) which is a certain amount 2 £)
- Potential Profit ( quantity x sales for) - total cost
This spreadsheet helps us monitor what products are bought every single day of the week and how much we spend on a weekly basis.
- ROI (return on investment, take BOOKABLE VA's ROI INFO)
Also invoices MUST be collected and left in Dropbox folder. Create new folder for each day of buying stock. Invoices should be whole and clear. Things that need to be able to see are :
- Invoice number ( we need it if contacting suppliers)
- Product type and quantity
- Amount spend
Weekly spreadsheet describing all the transactions that the Amazon seller account has occurred.
You can easily access the information from Seller central - payment summary and you can sort them in any way you find convenient: last few days or weekly and etc..
The spreadsheet is pretty much the same the only difference is that it is for each transaction that happens. It can be done once a week or every single day depending from you.
This spreadsheet helps us with monitoring the business and also explains which deals TURNED OUT to be good and which not so much. It will also tell us how much profit we make on each sale and calculate profit margin %.
- Bought for = Total cost for the unit sold (use info from the Spending spreadsheet(price of the unit + delivery and prep fees)
- Bought for - Total = profit
- ROI = Profit / Cost x 100
Inventory TAB - we have to create a new tab. There we will have 3 columns - sales for the day, bought products for the day and total amount on inventory worth!!!! Tell me what you think about it.
- Prep centre spreadsheet.
We use third party warehouse to do our prepping. That allows us to order anything( it doesn't matter how big). It is also very convenient and automatic. Prep centre is a business which probably sells on Amazon as well. They should not have any information regarding our business. This is the simplest spreadsheet. All we have to do is fill in date ordered, name of product and expected quantity. Also a status column.
- Refunds / issues
This spreadsheet is used to monitor refunds and issues. When an email is received saying that there is some kind of a problem the product goes here.We use different colours to highlight the issues. Here we need to fill in regular information Name, links and etc and also :
- Status - We use red for Problem, Green for contacted and blue when refund is received.
- Reason - Here we describe what caused the problem so we can avoid it in future
- Invoice photo or link - This Should be easy to find and see in both the buying and refunds sheets
- Amazon Returns
Every product that gets refunded needs to be returned to us. Then I will decide what to do with it.
We will try to sell it somewhere else so we can cover a little bit of the loss.
The transaction sheet amount needs to be bigger than the Spending one !!! That is our goal, a lot bigger!!
Ill explain the journey of your product until it reaches Amazon.
- Step 1 Products is bought and shipped to prep centre(use free shipping where possible) 1 week
- Step 2 Products are received by prep centre We wait for enough products to send to Amazon( we aim for at least 50 units a week)
- Step 3 product is being prepped 24-72 hours depending on how busy prep centre is and how many products.
- Step 4 Products reach Amazon and are being received, 1 week
- Products are ready to sell
Ok i don't really know why I decide to include that but someone might find value in it. So all of these stuff were done manually on spreadsheets using formulas and etc..It kinda works. Not very good though. I prefer everything being as automated as possible and done by computers. Less mistakes that way. Now back to inventory management. You see.. if you have a business you need to be able to say at any given time how much your inventory and everything is worth. Your accountant will want the information at some point. There are 2 options :
- Inventory Management Software
- I find these to be quite expensive but a good one is SellerLegend. It's quite easy to use and comes with 21 days TRIAL period. There are other option out there but I never managed to try them, most of them work only with US accounts. It is important to understand that this calculates how much your inventory is worth as well as profits.
- Fetcher - this is probably one of the most popular profit calculators out there. Very easy and intuitive to use. It's also much cheaper than most of the other profit calculators out there. It is developed by the people behind Jungle Scout so it's people that know what they are doing. However it can't calculate how much your inventory is worth. Comes with a 30 day trial.
- Using information from seller central to calculate it yourself
- All you have to do is go to seller central --> Reports--> Manage FBA Inventory and download the file. Then you have to open it with word or something similar. What you can see there is your prices in Amazon and the quantity. If you know how you price things you can get an idea of how much in total your inventory is worth. It is not very accurate but it's free.
Alright so i think that is everything about profit calculation and inventory management. Remember it is up to you how you do it as long as you actually do it. Track your expenses and track your inventory.
7. Sending invoices and asking for feedback
To be able to win the BUY BOX more often you need good rating. Amazon has there own algorithm which decides who wins the buy box. It takes into account loads of different factors but your rating is one of the main ones. So how do you get a good rating in the next few months ? Well, you can't do much about it if you are not selling. What you CAN do though is ask for a seller feedback every customer that buys from you. It is pretty much the same thing like asking for a review of your product if you do Private Labelling, however if you do arbitrage you don't need a review of the product but seller feedback.
You will need paid software to do so:
- Jumpsend - another tool from the founders of JungleScout. Easy to use and understand.
- Amz Finder - this one is not that popular but it is the one I use. It's buggy and sometimes it doesn't work properly but it's kinda free. Or it was £1 or something like that.
You can try them both, they both have trials I think so go ahead and pick one. Now, I want you to know that some of your customers have unsubscribed from receiving emails from sellers on Amazon. That means that some people wont get your messages but....that's life. I think that it is good to ask for feedback. That will also allow you to sort out a problem instead of money being taken directly from your account because someone returned your product. You will also send invoices that way. If someone wants an invoice you Must be able to give them one. This is something that I do and think that it is good to be done. At the end of the day it is your business and you can whatever you want with it.
Final thoughts and setting a target
We are coming to the end of this article. Before that I want to quickly mention about setting your targets for Q4. This might sound stupid to most people but i want to give you an example of setting a target up for this Q4 and what it would take to achieve it. I personally always find it easier to achieve something if it's broken down to the last bit. Now to set a target you probably should've been selling for sometime to be able to make any calculations. Now let's start with calculating all of the stuff I mentioned and see how much running your business would cost you in total.
Price per Month
BUY BOT PRO
TOTAL - £351 A MONTH
These figures are not 100% correct and I am using them just to give you an idea of what you can expect. It all varies from so many factors that I won't have enough time to mention all of them.
Remember guys that in this business you HAVE TO HAVE THE MONEY and if anyone else is saying that you can start with 100 or a thousand pounds is probably selling courses. I mean sure you can but you won't be making any money, no honestly, you simply won't. It is a fast paced business model where you need to be selling tons. It works, that for sure but you won't get rich quick. It is also very competitive.
Let's do some basic maths now ( I am so bad at this). Let's say that you're profit is around 20% on a sale. You've got 10k to invest in stock. From now till the middle of January which is when Q4 will end we have got around 20 weeks. You're target is to double your 10k. You want to make 20k in 20 weeks. That means 1k in profit a week. If you're profit margin is 20% you need to be selling 5k a week and for those 20 weeks you need to sell 100k. If your stock is worth half of it which is 50 k that means that every week you need spend 2.5k on stock only.
That ladies and gents is the reality of Amazon Arbitrage right now in the UK. At least from my perspective. Hope you enjoyed that post. If you have any questions please let me know in the comments below. Good Luck!