Amazon and eBay sellers:
If you purchase any inventory from online or brick-and-mortar stores, this post is for you.
See, with your competition increasing (Amazon and eBay sellers buying the exact same deals as you, online and in-stores), the ‘immediate reflex’ is for all those sellers (including you) to drop prices. Follow suit and you’ll cut into your profits. So IF you have to drop your prices, why not have an advantage that many of them don’t have?
By ‘advantage’, I mean make your inventory costs LOWER than theirs (this leaves you with a higher profit margin, you dig?), so you can be more competitive if/when you lower your selling prices.
So this post shows you how I achieve just that, and I suggest you do the same. Why? Well, when you ‘stack’ a few of the tactics below for a single purchase (meaning you implement them for each purchase of products you make), or even if you just implement ONE tactic, you can realize up to a 30% (or even more) reduction in your Cost of Goods Sold (COGS). (I’m not talking about Amazon/eBay seller fees here, I’m talking about what you’re paying for your inventory.)
The tactics below with a ‘*‘ can also work for you when you’re buying your business supplies (office materials, computers, smartphone, printers, furniture, phones, etc.) for your own use, too.
Tactic #1: Buying Gift Cards Online*
You’d be insane not to take advantage of this tactic. See, many consumers trade in their unwanted store gift cards for cash. The sites that take their gift cards turn around and sell them at a profit (but the purchase price, for you, is still significantly below the retail value of the card). Yes, there are websites that have the singular purpose of selling you gift cards at reduced rates. The sites are free to use and many of them offer free shipping (or instant delivery for ‘online only’ gift cards).
As an example, you can buy a Macy’s gift card in the amount of $200 for $180.40, or a Lowes.com gift card in the amount of $75.48 for $67.18
See this screen shot for another gift card example:
Depending on availability, you can get in-store cards, online-only cards, and cards that are valid for both online and in-store. I’ve seen gift card discounts as low as 2% off, and as high as 20% off, their face value).
The most reliable websites that do this for their viewers
(I’m partial to Raise.com because of their reliability).
If you want to use this tactic, I highly suggest you buy your cards as early as possible (ahead of the Holiday season) because the available discounts can sharply decrease as Christmas shopping draws near).
Remember, signing up to gift card sites is free (you’re only paying for the gift card(s) when you buy them.) Online gift cards are usually delivered automatically, physical gift cards are mailed to you, of course.
A helpful hint with Raise.com – If a certain gift card is out of stock on Raise.com, Raise will give you the option of receiving an alert when the card(s) are back in stock, by entering your email. I highly suggest you do that AND when you receive the email alert, click through to check out the deal because the first-movers can grab the cards with the highest discount.
Tactic #2 – Gift Card with a Purchase
A lot of different stores will offer bonus gift cards or discounts as special promotions, particularly around holidays, where stores will give a gift card or coupon to those that spend a certain amount or purchase a certain gift card. As an example, the store Half Price Books will offer $5 coupons to those that purchase a $25 gift cards. Barnes And Noble stores also offer (during the Holiday season) bonus gift cards (e.g., buy $75 in gift cards and get a free $10 gift card).
The coupons from offers like this often have an expiration date, so be plan these purchases strategically to make the most of them.
Tactic #3: Buying Gift Cards From Your Friends*
Post a message on Facebook for all your friends to see, asking them if they have gift cards they would like to exchange for cash. For instance, if one of your friends has downsized their home, they may no longer need the IKEA gift card they have in a drawer. Alternately, parents whose kids recently entered Kindergarten may no longer need their ‘BabiesRUs’ gift cards.
Tactic #4: Rewards Programs*
Rewards programs are free cash, just waiting to hop into your pocket, and a lot of stores have them! The rewards go up exponentially – spend more, get even more. Rewards vary from gift cards, to discounts, to free products, and more.
Here are a couple of my favorite rewards programs:
- Very frequently, Kohl’s will give you $10 in Kohl’s Cash (credit towards your online or in-store Kohl’s purchase) for every $50 you spend. No membership sign-up or credit card required. More info on Kohl’s cash is here: http://bit.ly/kohlscash . When I was shopping for back-to-school merchandise to resell, I would use my earned Kohl’s cash to buy more inventory (e.g., clearance toys or more back-to-school products), which effectively brought all my inventory purchases prices down an extra 15$ or so. To find out when Kohl’s cash promotions occur (they’re quite frequent), check here: http://bit.ly/kcpromodates.
Here’s an example of how just using Kohl’s Cash cut my inventory price by at least 40%: http://screencast.com/t/mls5bU0j0c
In addition, Kohl’s now offers (FREE) ‘Yes2You’ rewards, which (when you buy products from Kohls) lets you accumulate points and credit and and receive additional savings. More info: http://bit.ly/yes2you
- I’m a fan of Kmart’s Shop Your Way rewards (also applies to Sears) because you can rack up some significant ‘points’ that apply to future purchases (or get ‘surprise’ points via their email alerts). Your purchases can also enter you in sweepstakes (obviously your chances of winning are low but hey, you never know). Full details here: http://bit.ly/sywrewards
- ToysRus recently improved its rewards program. When you sign up (it’s free), you get $5 in ToysRus rewards (=$5 for a ToysRus purchase) for every $125 you spend. I know that this doesn’t sound like a huge discount, but when you combine it with (say) a ToysRus gift card you bought at a discount (see Tactic #1), the savings are more impressive. There are other perks forToysRus Rewards members, too. Full details here: http://bit.ly/trurewards
Bonus Tip: In the habit of forgetting , losing, or fumbling with your member ID card? Download the FREE Key Ring app (https://www.keyringapp.com/) for your smart phone. The app keeps all your card info for your rewards programs, and even gives notifications when special offers arrive!
Tactic #5: Store Email Lists*
I sign up for email lists at any store or online retailer that I normally source from, and then wait for the deals to roll in (this is a HUGE help with DisneyStore items. When DisneyStore.com items go on sale, they’ll send out an email early morning (generally around 6A to 9A EST New York Time).
Most retailers with email lists make offers that can’t be found outside of those emails, so this one’s important for anyone serious about their online arbitrage.
Just go to your favorite store’s online sites and poke around for their email signup. My favorites are: DisneyStore.com, Boscovs.com, Bonton.com, ToysRus.com, Kmart.com, and BabiesRus.com
Tactic #6: Cash-back sites*
There are websites that offer cash back to you on the shopping you do. All you have to do is sign up to the website (they’re free),
log-in, and start searching for your desired store there. When you see your desired store and their accompanying cash-back offer, all you have to do is click on the link to the store. Then you’re shopping like you normally do, as you are on the store’s regular site. (Your visits are harmlessly tracked because you entered the store site through the free cash-back website).
These are an online arbitrage seller’s dream come true. You can source your products the same way you normally would, but get straight-up cash, usually paid to you once every 3 months or so (usually via Paypal or a check paid to you).
My favorite ‘Discount portals’ are:
Look at the cash back I’ve been receiving from eBates: http://screencast.com/t/nTDc4wQlS . Again, at first blush this doesn’t seem like a lot of savings, but ‘stack’ this effort with (say) Tactic #3 above, and the savings are quite substantial.
Tactic #7: Store-specific Fan/Alert sites*
There are free web sites designed to track great deals for you in specific stores. This can be critical for you if you want to snap up highly-discounted merchandise. Be sure you sign up for their free email or text alerts while you’re checking on the sites, as well as downloading their free smartphone apps (if they offer it).
My favorites are:
- IheartTheMart.com – This guy tracks Walmart in-store deals (a lot of them are ‘consumables’ like shampoo, razors, food, etc.) and alerts you to the double coupons available, e.g. 1 walmart-issued coupon, and 1 sunday paper coupon, for the same product.
- http://www.allthingstarget.com/ – This site alerts you to available Target.com and in-store deals, as well as coupon-match-ups and a mark-down calendar.
Tactic #8: Not paying Sales Tax/Get Refunded for Sales Tax Paid.
This may sound obvious to you, but there are several folks who forget this. As a business, you are not required to pay sales tax when you buy products (online and in-stores) for reselling. These purchases are called ‘Tax-Exempt”
The procedures and laws for buying inventory tax-exempt slightly state by state, but generally if you’re a business, you can get a certificate from your state that verifies your eligibility to be tax exempt (more on that in a moment). In many cases, you can get that certificate online instantly, provided you’re have a true ‘business’ (corporation or LLC, et. al.) in the state.
For instance, New York sales tax for most merchandise is around 8.7%. So if I order $500 in toys from (say) Target.com, I pay over $42 in sales tax. Yipes! But as a business, I can get a refund of that entire sales tax charge after I pay for my Target.com order, by contacting them via this method after the purchase (look under the “tax-exempt guests”): http://bit.ly/nosalestaxt
When I’m in a Target store (or any store within my state) and I buy products, I avoid paying sales tax right there, on the spot, by presenting them with a ST-142 form (this form is only specific for NY State businesses): http://bit.ly/nystexempt
Your procedure for getting authorized to not pay sales tax will vary from state to state. To get info on what you can do, go to Google.com and type (without the quotes): “sales tax exemption procedure [enter your state's name here]”. For example, if you’re in Ohio, type (without the quotes): “sales tax exemption procedure Ohio”.
For the fastest way to figure out how to get your paid sales tax refunded from various online stores (like my Target example above), I recommend this guide: http://jordanmalik.com/nosalestax
Sales tax adds up, so your refunds/savings are substantial. I buy at least $15,000 worth of inventory in retail stores in 1 year. Thus, the sales tax I would otherwise pay at the register would be over $1200! See how that adds up quick?
I TRULY hope this post helps you. Please post a comment below, and good luck!