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“Pie in the face” for some Amazon sellers?

 

Ed. Note – As I write this (I originally made a video), my theory about the Pie Face game price on Amazon plummeting is dubious, as consumer demand for the game seems to be outpacing Amazon's supply (the toy is ranked #2 in Toys and Games). But my advice (below) still sticks: Be very cautious when buying what you think is 'hot' because hundreds of other sellers may follow suit.

I’m seeing some risky seller activity this December: Newer Amazon sellers are flooding the marketplace with newly-'hot'/fad products they are buying for near-retail price online and in retail stores, thinking it's going to continue its high-priced selling streak on Amazon.

To wit: A few weeks ago, the Pie Face game seemed to be in short supply on Amazon (and other retailers) and it was selling for upwards of $60 to $70 on Amazon and eBay.

Many Amazon sellers posted the game on various Facebook seller help groups noting that the game is hot and 'BOLO' ("Be On the Lookout").

Then what happened? Hundreds of Amazon sellers bought the game online/in stores to resell it on Amazon. And that’s why you now have - just 3 wees from Christmas ~650 sellers of the game on Amazon. Note that's not qty:600, that's 600 individual 3rd-party sellers, each selling who-knows-how-many units.

And then another thing happened: All the other retail chains got their shipment of Pie Face and priced them at ~$10 and up. (To be fair, most major online retailers like Walmart are now sold out again. I wonder what percentage of (say) Walmart's sales of Pie Face were from Amazon and eBay sellers?)

Ed. Note #1: The lowest Amazon FBA price is now around $25, just above the full retail price (this amongst a price war by the 600+ Amazon sellers). The 'glut' seems to be tapering off, but it's impossible to know how much more inventory is out there.

Ed. Note #2 Beware the Pie Face game listings on Alibaba and other china-based sourcing sites, these are all fake/counterfeit knockoffs. 

This mad-rush-to-source-fad-products is what I see every year and it’s getting increasingly worse. I’m not spelling doom for you or for any Amazon seller.

This doesn’t mean it’s the end of the world, but sourcing fad products via retail/online arbitrage is something I don't do anymore. Why? Many sellers are going to be doing the same thing. See the barrier to entry (or the 'costs and obstacles') to be an Amazon seller (and to source a product online via arbitrage) is virtually nothing - anybody can hop online to be an Amazon seller, and the first thing they're going to do is start looking for the next Zhu Zhu Pet (the toy that sold for up to 8,000% ROI several years ago. Remember: There was an announced shortage by the Zhu Zhu pet manufacturer (due to unforseen demand). There is/was no announced shortage of Pie Face (yet).

So buying 'what's hot' is (generally) a strategy I tell other sellers to avoid. Thus, if you're sourcing via arbitrage, instead of following trends and doing what everybody is doing, try to think independently. Because if you don’t, you end up in a situation like the Pie Face game where there is saturation.

Instead,:

Focus on deeply-discounted name-brand or major-character items that are in stores or online (buy at least 50% lower than retail. Usually clearance-priced items are an indication that the production run has ended or the stores are liquidating something because it’s no longer interested in selling.) Stick with the hotter brand names and/or 'evergreen' characters or brands on sale/clearance: Hot wheels, Barbie, Hasbro, Legos etc. Why do I recommend that? Two reasons:

1.) The fact that it’s clearance-priced (or deeply discounted), you’re going to be paying far less than full retail so your risk is lower. (Versus the Pie Face game that many sellers went to the store and bought at or near full retail price.)

2.) The fact that it's clearance-priced usually means the item has ended its production run (e.g., the factories aren't producing any more for the year/season/forever).

Don't turn down sourcing a product you find just because it's not in the Amazon catalog. Think of items that are not on the Amazon catalog. That means you have to go through the slightly time consuming processing of creating the product for the first time, whether it’s a bundle or whether it’s your local craft store, think of products people might be interested in buying by doing research on Amazon, see whether other similar things are selling and go find something unique that nobody is doing. Find a product that’s not on the Amazon catalog or create a bundle; combine two popular products into one listing as opposed to just a reindeer child’s hat and the reindeer child’s trousers Christmas outfit. Combine it and make it a bundle.

Focus on some 'boring but necessary' products you can find on sale locally (they may not be 'boring' to the end buyer, like Christmas ornaments, Hoilday garden/patio decor, Christmas tree disposal bags, Hershey's Christmas Chocolate, Stockings, anything on sale locally to you but where an online customer has to buy 'multiples' and needs them quickly (via 2-day shipping) this Christmas.

Also remember everything takes off during the holidays (used products too.) I have used toys and use books that are selling well right now. See, most online consumers get into a spending mode and they’re buying more than just their holiday gifts, they're buying other necessities and things they want, too.

For more ideas on what to sell, see: http://Jordanmalik.com/resources.

And also this post and this post - you’ll see some of the ideas in there about how I don’t follow trends anymore and instead I follow the 'long-tail' niche stuff.

Also get your costs down, whether you’re sourcing at retail stores or sourcing online see this post where you can “reduce your online arbitrage and retail arbitrage inventory costs by up to 40%”.

My #1 tip: A lot of my sales right now are products I bought right after Christmas last year when no other seller wanted them. Nobody, I mean nobody – consumers nor most online sellers - want to buy Holiday products right after the respective Holiday. So right after Christmas of last year I bought merchandise I paid from $1 to $5 per unit. The $1 items are selling for $11.95 and up, and the $5 items are selling for $25 and up

So right after Christmas this year, think about your survival and revenue next year. Buy holiday-themed items and stick them in your closet or garage or small room and them ship everything into Amazon 2 to 3 months before Christmas of 2016.

I’m always sourcing year round. Many sellers are entering Amazon right now and they’re sourcing stuff just for Christmas just a few weeks before the Holiday and that can be very dangerous, because that’s when everybody else is doing it. So make sure you source smart and source year round, not just toys.

Good luck and keep me posted.

-Jordan

{ 3 comments… add one }
  • Jim December 7, 2015, 10:43 pm

    Excellent advice Jordan. This is my 5th Q4 on Amazon and it’s definitely becoming more and more saturated with FBA sellers. I would estimate 80-90% of all my inventory this year was from merchandise I purchased just after last Christmas (late 2014/early 2015). I held these items until Q4 this year and the prices have held much better than when I’ve purchased the current “hot” items just as you’ve described. In certain cases, I have been the lone seller as others have sold (dumped) their items during the year. I’m looking to repeat this process this year as well for next year’s Q4.

    • Jordan Malik December 8, 2015, 10:01 am

      Jim – That’s it, man! That’s the stuff. I don’t want to discredit retail arbitrage entirely, there is still a lot of opportunity in: niche/end of production; merchandise priced ultra-low (kind of like the stock market), and merchandise that you can ‘hoard’ till later (=wait till the intense competition subsides).

  • James Harsch December 7, 2015, 8:56 pm

    Interesting too that Amazon is saying in the listing that the list price is $21.99.

    I haven’t seen that on other listings…

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