The most exciting time of the year for online sellers is already in progress, but it is about to get going in earnest now that I’ve sold the last of my dog costumes for Halloween. My first year I got started late in the game (December) and I still had a nice return. Since then I’ve tried several approaches to Christmas and I’ve learned a few things that I hope will help you:
Christmas starts in August – I’ve mentioned this before. Every year my sales volume starts climbing starting in August. There are plenty of early shoppers out there. Plus, people are preparing for parties and family events in advance.
People buy more than toys – We know this intellectually but it took a great experience with appliances (thanks Dad!) for me to really get it. All my Christmas craft and Thanksgiving Dinner books have been selling for weeks already. I sold several cases of mincemeat in September and my other special holiday foods are selling nicely.
Black Friday is a mixed bag – While it is critical to have as much inventory up at the warehouses as possible before Thanksgiving, whether or not to go shopping on Black Friday (now pushed into Thanksgiving by some retailers) is the question. I’ve done both: shopping and not shopping.
If you are going to shop, then you need a strategy and a helpful elf or two. Pre-plan your stores and timing. Have family members willing to stand in line while you shop, and to drive inventory home while you are at the next store. In addition, if you find something good at one store, have someone buying it for you at the other branches. If you can partner up with another seller (a family member or close friend), then you can really maximize your efforts and meet up later to settle up on the goods and money. I use this strategy with my friend Lesley at book sales and it is great. She’s working religion; I’m working textbooks and so on. At the end of the day we divvy up our finds. We have a sticker system and everything. Obviously, you need to trust the other person and to have similar buying criteria. Although we didn’t plan it this way, right now we are sharing the buy box on a product and are each selling several units a day. When pricing our products, we matched what was up there rather than playing the undercutting game and it worked out great.
When looking at the sales flyers, you want to take advantage of sales that are only on that day to get goods that would normally not be low enough to return your margin. Sites like www.fatwallet.com leak the sales flyers for all the major stores ahead of time so you can get a jump on your shopping and plan your route based on what you see. My dad and his wife hit the Toys R Us every year as a tag team and are willing to stand in line for hours to check out. The question is – are you?
Other sellers scour the internet for online sales at Wal-mart, Target, Toys R Us, etc., and place their orders before the stores open to the crowds. I did that one year with some slow cookers and a few other things. Your inventory is delivered to your house and you can turn it quickly up to Amazon.
When I don’t shop after Thanksgiving, I feel some anxiety thinking about what I might be missing out on, but the fact is Thanksgiving weekend is a big time of togetherness for my family and that is important to me. Last year I was in Florida visiting relatives. My uncle and I went shopping Thanksgiving evening as many stores opened at 9 or 10 in the evening. It was a nice compromise since we are night owls anyway and I could show him how to shop in relative peace since the store we went to wasn’t crowded (yet).
Frankly, my budget is such that I can easily spend all my inventory dollars long before Thanksgiving and I don’t miss the crowds and lines when I don’t shop Black Friday. The best strategy is to have a strategy. Know what you want to accomplish and focus on your scouting objectives. It is a hairy, exhausting day. Make sure your suffering is worth it. I still shop and replenish the really good sellers in early December.
Toys are highly volatile – I love toys but they are a lot of work during the holidays. I have to watch my pricing every day if I want to sell my merchandise. There are a lot of crazy low-ballers who want the sale at any price (apparently) and who don’t have faith that a low rank means lots and lots of sales for everyone. You can buy something with very few sellers and a week later there are a lot of sellers. Over the past few years I’ve diversified to include food, appliances, bedding and much more because relying primarily on toys is risky.
Know your merchandise – The only way to really know what things cost is to scan a lot all the time. Each year I’m a better and better seller because of my experience from previous marathon scanning sessions. I know where I can buy My Little Pony cheapest and which ones are the most popular. I can spot a good deal across the store. I have a good sense for what they will sell because I’ve sold a lot of them over the years. Even though experience makes my job easier, there’s no reason why you can’t be successful. If this is your first holiday season, spend time getting to know your brands. Shop in different stores and note the different prices. If you’re going to sell toys, go to ToysRUs, Target, Wal-mart, BigLots and Tuesday Morning, for example. When you see the same doll in these stores, you’ll understand that the stores think these toys are expected to be hot. You’ll also see a wide range of prices which is helpful when you are prioritizing where to shop.
My Dad really works his ToysRUs (see his earlier blog post). He studies it. He gets help from the store manager. He studies the flyers and he plans his shopping trips. This helps make him successful selling toys at Christmas.
I’m not a gambler – There’s a lot of speculative behavior at this time of the year where sellers buy items they think are going to be hot. Even though the margins are wrong at the time they buy the doll or whatever, they’re hoping they can make their margins as Christmas gets close by charging a higher price to the last-minute shoppers. Sometimes this works, a lot of times it doesn’t. Less experienced sellers often panic as Christmas gets closer and drop their prices, which is bad news for everyone (except the buyer!). I’m conservative in my approach. If the margin isn’t right on the toy when I scan it, I don’t buy it. Even then you can get burned by Amazon swooping in or with a ton of other sellers undercutting each other.
Jessica Larrew has a new handbook out where she gives an excellent analysis of last year’s hot toy list. Why is this so interesting? Because it shows the lifecycle of several hot toys on Amazon and it uses actual price data to explain why she doesn’t rely on the Hot Toy lists from retailers and other sources for her holiday shopping. One of the things I learned was that there often is a short window of time where a toy is priced very high – but it is very short. It is safer to buy accessories and related toys to the hot toy as they tend to be less volatile. Her handbook which she co-wrote with Beth Maus is called Why We Stay Away From Hot Toy Lists and How We Succeed at Christmas Without Them. It came out a couple of weeks ago. If you buy the book using this link I will make a small commission. You can also find it directly on Jessica’s website: www.jessicalarrew.com for the same price.
Margins are generally better at Christmas. You can often price higher now than during the rest of the year. It is worth looking at your current inventory and seeing on which items you can push your prices up a bit. People will pay more to get Amazon’s great benefits – gift wrapping, free 2-day and cheap overnight shipping. Many want to get online and do all their holiday shopping at once without having to spend time at the post office to send out gifts. Every single year sales at Amazon have gone up and an up and up over Christmas while falling at retail stores.
Spot trends before Amazon. I say “generally” on margins because on the most competitive products the margins are thinner than a hair. Amazon will come in low. That’s why I look for things that Amazon doesn’t sell. Exclusive toys from Target, Wal-mart and ToysRUs can’t be sold by Amazon and usually have pretty good margins. New toys that Amazon isn’t selling yet are great. The first year Monster High products, LaLaLoopsy, Inkoos and other hot toys came out was exciting because Amazon didn’t sell them yet. Now it is impossible to get a good margin on these toys because Amazon is selling them.
Don’t rely solely on your taste, likes and dislikes. You need to think outside of yourself. I’m often surprised at products that are fast sellers like a stuffed singing fish I sold recently. I couldn’t believe it! That’s why I tell people to scan everything. You just never know. I have instincts and experience to help me when I’m scouting, but I’m learning new things all the time. Just because I wouldn’t buy a Snuggie doesn’t mean I don’t sell them on Amazon.
Accessorize. Many hot toys and other gifts have line extensions that can be more successful from a margin perspective than the main toy. For example, Monster High dolls are all but impossible to get at a margin that can compete with Amazon. I recently sold some Monster High wigs. I’ve sold Monster High headphones and diaries in the past. I’ve sold MH erasers. I sold LaLaLoopsy minis for a profit when I couldn’t sell the bigger dolls. Years ago I discovered a huge stash of Dippin’ Dots ice cream refills at BigLots that I sold for a nice fat margin.
Keep some at home. If you find a large quantity of a particular item with the right margin and a low rank, you should buy it right? Absolutely! However, you may not want to send them all in at once. While I don’t normally recommend keeping inventory at home (I mean that is one of great advantages of FBA – cheap storage), at this time of year you will face a lot of fierce competition. If you find that your stuff is selling like hot cakes, replenish. If you find a bunch of low-ballers have come in and are selling the toy below cost, then return the extras and use the money for something else. I buy at BigLots, Target and other national chains all the time but I’m also well aware that everyone else does, too. I may find an item with very few FBA sellers and by the time my stuff is in the warehouse, there are dozens. If the prices are right, then great. We all win. If there are a lot of stupid sellers or Amazon starts to sell it low, I cut and run. The exception to this would be something that you know will sell all year round like dog food. Toys sell all year round, but not like at Christmas and generally not for the same prices as Christmas. I got stuck with 12 crockpots because I sent 25 of them in and then Amazon drove the price down. I had to pay to return them to me and then had to do the walk of shame to return them to Walmart. Do you understand what hell it is to stand in line at Walmart customer service after Christmas?! Lesson learned.
Keep your eyes on the brand. A lot of off-brands and knock-offs sell around this time of year because of walk-by traffic in retail stores. On Amazon, buyers search by specific brands. Off-brands and knock-offs tend to do poorly. Look for licensed products and major brands. If it is “As Seen On TV!” at the right price, it can do very well on Amazon because the manufacturers have advertised it heavily for you.
Look for more expensive gifts. This is the time of the year when people buy that expensive appliance or game console for their loved ones…or themselves. Obviously you want to see a low rank without too many other FBA sellers.
Get everyone’s holiday lists early. This is not about selling per se, but be sure you know what your friends and family want as early as possible. Nobody bargain shops for great gifts like an FBA seller, but we need some notice. Last year I got my niece’s Christmas list in early December and one of the toys she wanted I had already sold out on. If only I’d known earlier! I got it at a great price earlier in the season and sold a bunch. I could have easily saved one for her. The ironic thing is my mom got her the gift and guess where she bought it? Amazon!
For those of you who’ve been through a holiday season before, what have you learned? Please share in the comments below. Good luck to everyone during this, the most wonderful time of the year!
On a personal note, I’d like to thank everyone for the kind thoughts and wishes sent my way over the past week or so regarding the passing of my mother-in-law. I was so lucky to have had her and will miss her. I’m slowly getting back to work for myself (I’ve been helping with the estate). If you’ve sent me a message and I’ve not responded, please kindly send it again.