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So, you’ve studied, digested, and mastered the basics of reselling right? Good. Now it’s time to source some product, because knowing how to resell is useless if you don’t have anything to sell.
As a precursor to this post, remember that reselling does not come without risks. There is no guarantee that your product will sell and, just like with manufactured spending, you will have to float money (in the form of product) for an undetermined amount of time. This post is for information purposes only. I take no responsibility for any consequences (positive or negative) that may arise by following any of the information mentioned in this post. (I would love to hear about your experiences though!)
Now that that is out of the way, hit the break to learn about sourcing product.
There is no “one size fits all” sourcing method. Online and offline sourcing both have their own pros and cons, so it’s up to you to choose what works best for your situation. Let’s compare:
The biggest advantage to sourcing online is being able to source at anytime. The biggest downfall is the competition. There are many more eyeballs on the internet than there are in-store making the deals sell out quicker.
Shopping offline, on the other hand, usually offers higher profit margins thanks to garage sales and thrift stores, but requires much more time and gas.
So, which sourcing method should you use? That’s up to you.
Since I have a day job already I almost completely source online, because driving around looking for product is the last thing I want to do when I get home from work. However, that might not be the case for you. If you’re already an avid thrift store shopper or garage saler, then in-store sourcing might be better for you. If you’d rather sit in front of a computer to source, more power to you. All you need to do is find your prefered method and run with it.
I won’t lie and say that sourcing product is easy, because it’s not. It takes a lot of work. You won’t always leave a store or website with product to sell, especially at first. However, once you get used to sourcing product and you know what sells, it does get easier.
Let’s start with the necessary tools.
The most important offline sourcing tool is a smart phone. If you don’t have one, get one. If you don’t want to get one, I hope you have a really good memory and you know what sells. As I mentioned above, I primarily source online but occasionally I will source product while doing my grocery shopping.
Here are the three must have apps for offline sourcing: Amazon, eBay, and Profit Bandit.
There’s a plethora of online tools available, which is another reason I prefer online sourcing. All three of the offline tools I mentioned above apply to this list as well, because their online counterparts are much more feature rich.
Here are a few that I suggest: PriceBlink, CamelCamelCamel, and the FBA Calc.
There are three things to look for when sourcing: Price, Popularity, and Margins.
Price: By this, I am referring to the upfront cost you will be paying. You need to be able to float that money, so you don’t want to buy something too expensive. For example, I bought a few laptops recently that cost me upwards of $5k. I planned on flipping them quickly, because they were selling fast and Amazon did not expect stock in for 3 – 4 weeks (or so the ad said). I sold two the same day FBA received them, however, the next day Amazon received their stock and they undercut my price. Fortunately, I was able to float the money while I waited for Amazon to go out of stock again, but that may not always be the case. Make sure you can float the money for 1-2 months, just to be safe.
Popularity: You need to make sure an item is popular, otherwise your chances of selling it are slim. If you get a great deal on an item that isn’t selling, you are going to be floating money for a long time. As a rule of thumb, I only buy items to sell on FBA that are ranked 60,000 or less in their respective category. I will go further in-depth on this in my next post.
Margins: This is the profit you expect to make when selling an item (after fees). Everyone has their own rules when it comes to margins. I like to have 40-50% margins on average. So, if I buy an item at $100, I expect to make $40-$50 off the transaction (after fees). I don’t always stick to this 100%, but it’s a good guideline to have.
Thy sky is the limit when it comes to sourcing sources (that’s a tongue twister). As long as a store has great deals, coupons, or other promotions, I’ll source it.
Here are a few stores I regularly source at.
If you are new to finding deals, check out this post.
Store reward programs are one of the best ways to increase your margins. They often give you exclusive rewards and coupons that can turn an unprofitable item into a profitable one. I suggest signing up for every store reward program possible.
Here are a few I use.
Next week I’ll be posting on selling product, so definitely check back!
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