I’m a Sucker for a Good Scheme

Hi! My name is Jax and I love me a good scheme

 

One thing I can say about me is that I have always loved a good scheme. I think I get this from my mom.  Mystery shopping has been so fun in part because it feels like a scheme-have someone pay for my groceries?! Sure! Our most successful scheme to date has renovating our basement into a studio apartment and renting it out on Airbnb. Since we started listing on Airbnb in November 2015, someone else has paid our mortgage each and every month.

 

Risk

When I began mystery shopping I was very nervous. I didn’t know what to expect, I have mild social anxiety, and I don’t like doing things that I’ve never done before. But the reward outweighed the risk. Worst case scenario: I’d never do it again. Best case: I get a free dinner for Mr. Beach Life and me. I did not know that best case scenario would lead to bringing in an extra $300-$500 each month, on top of comped meals and other things we use.

The Airbnb space was far more risky. We paid about $18,000 to turn the finished part of our basement into a studio apartment. We put in a full bath, a mini kitchen and a closet. We closed off half of the basement, installed a steel door and furnished it entirely new. We did it with the hope that we could make some money renting it out-either on Airbnb or long term. The worst case scenario is that now our home had an extra bedroom and full bath, and would make a great guest suite for when our family visits. Best case scenario: We make some extra money to put towards the mortgage. If you follow my extra income reports, you know that we’ve been lucky enough to have a better than best case scenario month after month.

 

New Scheme

Mr. Beach Life and I are ready for a new scheme. We’ve entered the world of retail arbitrage with Amazon FBA.

 

Preparation

We spent many hours reading about how to use Amazon FBA to make money from retail arbitrage (short answer: buy things for cheap and sell them on Amazon for a profit.) We did not buy any course guides or anything like that. We used are top notch research skills (I am a trained librarian, you know) and took our time to read and evaluate for ourselves. After reading everything we could get our hands on the process still seemed too good to be true, but we decided to forge ahead.

 

Guidelines

Mr. Beach Life and I decided that if we were going to do this we needed clear guidelines for what we were going to sell. We decided that we would invest and initial $500-$1,000 for inventory. The items we purchased would have to have a “good” Amazon rank (approximates 250,000 or less) and would have to net us a profit of at least $5. This guidelines might change in the future. Hopefully we will gain a sense of what sells and what doesn’t and raise our profit margin higher. We also decided to not buy products that had a costly monthly storage fee. Again, that might change in the future, but since we’re still figuring out how this works we want to keep the costs low.

Tools

First thing we did was download the Amazon Seller app. It allows us to scan barcodes, see if products are selling and estimate our profit after all Amazon fees. The app is free but you need an Amazon account to make the most use of it.

The other tool we acquired was a printer. Buying a printer has been on my to do list for awhile, but I hadn’t pulled the trigger because I didn’t want to spend the money. We need a printer to print off the shipping labels to mail our goods to Amazon’s warehouses.

The Process

Mr. Beach Life and I went out the Sunday before Thanksgiving armed with fully charged cell phones. We visited 5 stores and scanned hundreds of items. We made several purchases but we disappointed in the amount of items that we weren’t eligible to sell (spoiler: some of this was user error.) Even so, we came home with several bags worth of things to sell.

However, the majority of our purchases came from Black Friday online deals. We scoured online deals and compared the prices on Amazon. Of course, most of the things we were looking at were also on sale at Amazon. We used our best judgement and did some more research and figured out which items would be going back up in price after the Black Friday/Cyber Monday sales.

Then it came time to process our goods. Mr. Beach Life entered them all into our seller account and found that some of our items were not as good of deals as we originally thought. We set those aside to take back to the stores.

The rest made it into our inventory. We boxed them up, printed the shipping label and took it to UPS to deliver to Amazon. It took 3 days to get to the warehouse and our items are still in the process of being added to our inventory after one day.

 

The Cost

Merchandise: $868.73

Printer: $53.49

Seller upgrade: $39.99

Packing Supplies: $25.56

Total: $982.45

Where is this money coming from?

To be totally transparent, right now all of these charges are sitting on my credit cards. They will make it look like I have made no progress in paying them down when I publish my debt report next week. I made the decision to take $1,000 from savings (if needed) to get our inventory started. I am happy to take money from savings if I think there is a strong likelihood that I can turn it into something more. But worst case scenario is that I am out $1,000 and know that retail arbitrage is not for me.

 

Expectations

Our first shipment of items has just made it to the warehouse, so it will be another couple of days before they will be available for purchase. We are sending out our second shipment by the end of the week, so those items will start to be available next week.

I don’t believe we will make our initial investment back the first month we are selling. It would be nice to have a few sales in the first couple of weeks to validate if our instincts are correct. It helps that it is Christmas season and a majority of the items we bought would make great gifts.

There it is! The latest scheme! Since it is still in it’s infancy, I don’t have a lot to report, but will provide more details as we get further into the process.

 

Have you tried retail arbitrage? Any tips you’re will to share?

Disease Called Debt

5 Responses

  1. Financial Panther

    I’m always nervous about these type of experiments simply because I’m so risk adverse! Will be interested to hear how this goes. I was debating about whether to do this for some Banana Republic deals I saw. They had a 50% off everything sale, so I figured I could buy a bunch of suits using my credit card, then sell the suits for more later. Would have been a nice way to get some manufactured spend on my cards and perhaps make a little profit.

    • Jax-This post may contain affiliate links

      I’ve been selling books online for over 10 years now, and have dabbled in eBay sales. I’ve wanted to start FBA for awhile, but didn’t want to pull the trigger on the start up costs. But once Mr. BL said he was interested I figured to just go for it. One thing that is frustrating is that for a lot of popular brands you need proof from a distributor that you’re buying from them before Amazon will allow you to sell them new. So if you are going to get started, make sure you’re allowed to sell Banana Republic stuff before you buy any!

      That’s a great idea to use inventory spending for credit card bonuses! We ordered a bunch of stuff online so I tried to go through ebates and Topcashback for extra bonuses.

      • Financial Panther

        I figured I’d just sell the suits on eBay, which I think anyone can do. Alas, I was too scared to pull the trigger on it this year, but I might give it a go next year if the 50% off deal is going again. I could easily see myself buying a few thousand dollars worth of suits with the primary goal of hitting spend on my cards, and then a secondary goal of trying to make a few bucks too.

  2. jumpstartfromscratch

    Good luck. I’ve had some bad experiences selling with Amazon. Too long a story to tell in a comment. Keep an eye on all the amazon transactions.

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