Why in the World Would Target Turn Away Perfectly Good Business by Banning Resellers?

Uncategorized Jan 12, 2016

CRO_money_SS_retailer_reward_Target_logo_11-13

We started selling, full-time on Amazon in January 2013. I remember our first major Retail arbitrage trip very well. We went to the local Target and started scanning all of the clearance Toys. I remember that at this time most of them had hit 50% off, which was really exciting. As we checked out ScanPower app we were very excited with what we were finding. All-in-all we filled 3 shopping carts to the brim with toys and proceeded to the checkout.

This was an epic failure by-the-way. Little did we know, the data that we were looking at was still the heavily inflated pre-Christmas info. Price and Rank on most items, especially in the Toy category can be affected by the Christmas rush. Plus, 50% off is good, but not as good as 75% off. If we would have waited, like apparently most of our online competition did, for the price to drop another 25% we may have been able to sell this stuff for a profit, fast.

A few weeks after our stuff got to Amazon the price tanked on the majority of our items. Oh well, at least it was a learning experience right?

This story came to mind when I heard the recent news of Target officially banning resellers. Why in the world would they do that!? Since 2013 we have spent tens of thousands of dollars at Target, buying up all of their sale and clearance items. Thanks to our online sales company our local Targets are able to move their stale inventory at a record pace, I know this because they told me so. I don’t hassle them on price or make their lives miserable by returning the items that don’t sell. I would go in, buy shopping carts full of goods at the prices they determined were reasonable and then I’d be on my way. I’m happy, the Target management is happy and my Amazon customers are happy, so what gives?

Here’s my theory, based on the research that I’ve done and the management that I’ve spoken with; Target loves me and my fellow re-sellers (excluding the occasional bad apple of course), but the brands that sell their goods in Target don’t. Why?

Retailers across the nation find themselves between a rock and a hard-place. They have to sell product, and since every inch of shelf-space is valuable real estate stale, over-priced inventory cannot be tolerated. At the same time retailers also have to be mindful of their relationships with the brands that they sell. Brands don’t want items to be clearanced too deeply for a variety of reasons; 1) When a customer sees that an item is being clearanced this can sometimes ruin the perceived value of the brand in the consumers mind. “This item must not be any good, especially since this store has to go and slash prices just to get someone to buy it!”, 2) A top-dollar product that was once only purchasable by the affluent trendsetters in our society (some people buy expensive things so that they can be in the exclusive “cool club”) and now is available (via clearance) to the masses can stifle demand. “If everyone and his mother has this camera, I don’t want it anymore!”, and finally 3) If online resellers are about to fill the online marketplaces with discounted product, what are consumers going to do when they can get that same item on Amazon for half the price. While consumers are shopping they are looking up online reviews, what’s going to stop them is they see the same items for sale at a lower price online? I bet they usually buy it!

Walmart, Target & Kohls would happily wash their hands of this old merchandise, but they cant. Back in the pre-Amazon selling days retailers would be approached by a liquidation company that would promise to not only buy all of their excess inventory but would do it quietly and professionally. Sometimes these people are refereed to as “Jobbers”. If unsellable inventory is like a dead body, jobbers are the ones that come in and dispose of it quietly, so that the brands don’t notice.

The problem is, now these liquidated items are not being sold in a dimly lit liquidation warehouse in the middle of no-where, instead they can be found and bought with a smartphone and a couple of clicks on Amazon, and what these brands fear most is that this is impeding on business in other retail stores (where the price may be closer to MSRP).

So what should we do? What all successful entrepreneurs do, make necessary adjustments. We have to stay nimble and we have to be willing to change otherwise our business will fail (just ask Borders Books, Sears and JC Penny). For us online resellers this means we may need to either be more careful when shopping at Target, Kohls or the next store that bans resellers or find a new source of inventory all together.

Retail arbitrage is not dead. Those who have the chops to change and adjust to the environment will succeed. Hang in there!

Understanding Amazon Sales Rank

Amazon’s sales rank can be sort of confusing. You may be wondering “Does a good rank mean that my items will sell?” – This short video should help:

How to Price Out-of-Stock Books? What Rank is Too High? How Much More Should I Sell a FBA Book Over an MF Copy? What is a “Collectable” Book Anyways!?

Jennifer asked this question on the Thrifting for Profit Facebook group yesterday:

Estate Sale Question

As you can see from Jennifer’s question she was able to score a ton of books, for pennies on the dollar, at an estate sale(which is better than awesome!). In this article I plan on addressing each of Jennifer’s questions; 1) How to price a book when it’s out of stock on Amazon, 2) What rank is too high?, 3) How much higher should Prime sellers price their books over MF sellers?, and 4) What is a “collectable” book?

1. How should we price books when they are currently out of stock on Amazon?

This is a great question. All of my books are priced in comparison to what other copies are being listed for on that particular listing. This pricing strategy works great, unless there is no competition. What happens when you have a book to sell but there is no comparable prices to be found?

I think that there are two options; 1) Do some online research to see if there is a history of price on Amazon, and/or if this book is being sold on other online marketplaces, and 2) Pick a price-point that you’re comfortable with(from your gut) and move on.

If you choose to do some online research, the first website that I’d go to would be CamelCamelCamel.com, let’s check out the book that Jennifer was wondering about, French Through Pictures:

After doing a quick CCC search I came across three possible candidates for Jennifer’s book:

FTP1ccc

It would appear that the second book on the list is the one that she’s looking for.

According to the Amazon listing page there are copies of this book for sale:

FTP2

Sometimes if the Buy-Box goes away if the lowest asking price is higher than what the MSRP was set at when the listing was created, it looks like that was the case with this book. There currently are 6 offers starting at $37.06.
FTP3
If we would have discovered that there currently were no offers on this book, my next step would be to check price and rank history on CCC by click on the link:

FTP4

As you can see from this screen-shot CCC doesn’t have any price or rank history (this happens from time-to-time). Other websites that I would check if CCC doesn’t pan out; eBay, Abebooks, and Google. Chances are you should be able to find this book for sale on at least one of these sites. If not, you may just need to set the price yourself and see what happens.

If I were selling this book I would probably opt to skip the research and just set the price at a price-point that I thought was reasonable. If I was able to buy this book for pennies, I would probably list it for high at $40 and then come down every month until I hit $11.95, which would be the price that I’d hold it on until it sold.

2. What Amazon rank for a book is too high?

We source books that have a rank of 5 million or better (although there are exceptions), so this book at 4 million plus would be fine.

3.How much higher should Prime sellers sell their books over Merchant Fulfilled sellers

Another great question, at minimum you should match the equivalent MF price, plus shipping. Generally we aim to sell our books at a 10% mark up of the MF price, although it may vary. One other key price to consider is the New MF price. If we are trying to sell a book in Very Good condition FBA my goal is always to price higher than the MF book in the same condition but less than what it costs new MF (if there are any offers). Definitely feel free to experiment around with pricing, it’s always better to start high and then come down over time, then to start low and stay low, in my opinion.

4.What is a “collectable” book?

Only approved sellers can sell “collectable” books. Here is the definition of a collectable book according to Amazon’s Terms & Conditions:

To ensure that customers are able to buy with confidence from all sellers on Amazon.com, sellers listing in the Collectible Books category must be pre-approved. For more information, see Collectible Books.

To be considered collectible, a book should be unique in a way that could reasonably be assumed to increase the book’s value to a collector:

  • First editions and first printings
  • Signed, inscribed, or scarce copies
  • Advance reading copies and uncorrected proofs of out-of-print books

Note: The sale of uncorrected proofs of in-print or not-yet-published books is prohibited.

Collectible books do not include the following:

  • Former library books
  • Remaindered books
  • Book club editions

Hope this helps!

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