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I sold $110K on Amazon in December

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Why is retail imploding before our eyes? The statistics of brick and mortar bankruptcies are alarming. Compounded with the launch of Amazon Go with a cashierless experience and an entry into pharmaceuticals, there is major displacement on the horizon.

Or is this just pie-in-the-sky thinking for people who don’t truly understand the mechanics behind Amazon’s success with their FBA (fulfillment by Amazon) program.

To sum it up, Amazon essentially was fighting in the low margin inventory discount business for the first ten or so years. They had buyers of all background scouring inventory channels to keep them stocked on a losing game of “demand prediction.” They were competing against the well funded rise of big box empires of any niche category. Toys. Pet supplies. Office supplies. Books. Food. Movies. Whatever you want. Instead of ma and pa shops imploding through an invasion of big box stores, a revenge is now happening.

As they entered the web services business, they understood the scale and profitability of becoming a services company. The technology would be the strength. Now, Netflix goes through Amazon to stream and store all their catalog of content, despite being a direct competitor.

For the retail portion, Amazon outsourced inventory risk to individual sellers. At first, this caused some price spikes with shortages in supply, especially at key times of the year like Black Friday. After a few years, competition has become so fierce, there is massive discounting that happens from inexperienced sellers as the gold rush to join the program continues. Now, over 60% of what is sold on Amazon is sold via FBA. Our products are shipped and stored and ordered from an Amazon warehouse. Many small sellers, with no business acumen or credit, get slaughtered in their first deep Q4.

The fees are high. In all, about three times as high as Ebay.

We pay to have items shipped to an Amazon warehouse. We eat the returns and pay for storage in the warehouse. Then, Amazon takes a hefty fee on top of that.

FBA has essentially paid for the massive warehouse expansion the last 8 years. Sellers are getting more savvy. We scour price disparities between vendors and arbitrage the difference. We hunt for clearances and buy in bulk. Many, who want scale, go for private label dreams and search on Alibaba and AliExpress for cheap products to “brand” and ship to the US.

This is a gold rush and it is killing brick and mortar. Call it the uberization of retail and nationwide clearances.

In my first full year of Amazon, I learned a ton. As a business major, I’d say more is learned in the first year of a startup operating under your own capital than business school. Application always trumps theory.

There are so many mistakes a I made through the year, so even though I sold $110K in just one month, I felt like I didn’t do enough. I could have scaled so much bigger. On Facebook reseller groups, there are people doing ten times the amount every month, which creates a followership cycle of business envy. It’s almost like Reseller Porn. “Hey, look at my sales!” We all have secret tricks. Amazon has gated so many categories and brands that there is an actual economic moat for many small sellers.

How can a brick and mortar store compete against an army of small business with extremely motivated and savvy sourcers who look for the smallest of price disparities on Jungle Scout? How can it fight whispers of special nationwide deals on social media? It can take six weeks for a department store to source a T-shirt in a rush. Now, a teenager in their basement can be the largest t-shirt designer in their state by uploading a design to Merch by Amazon. They don’t have to take on any inventory. They get paid a royalty when it sells.

This is sort of the concept behind self publishing. Anyone can do it. There is no barrier to entry.

There are a few safe places. Large items in particular are insulated. So furniture stores are okay for now. As Tesla knows, there is a dealership network that makes it difficult to do direct sales in the auto market. Walmart remains the only colossus that stands in Amazon’s way to win the last mile.

2018 is here. I’m still sourcing part time, on top of a full time job and other projects. I already have a list of SKUs to go deep on for next christmas season to 10X my sales. Do you?

 

 

 

Movie Reviews: The Last Boy Scout

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The Last Boyscout directed by Tony Scott

This movie was a disappointment when it came out. People wanted Die Hard, but Shane Black’s script was more like Lethal Weapon. In a way, you would have almost thought Richard Donner directed the film the way it was shot and scored.

Even as a kid, I was disappointed with it. Bruce Willis played a stereotype of a detective. Boozy with personal problems of all orders. He basically acted like he just didn’t give a damn about anything. Life had already churned him inside and out.

Twenty years later, I understand. Some athletes sometimes have drug problems, even star quarterbacks. Cops have a shit ton of problems ranging the entire spectrum. Maybe people had it all wrong.

This was a case of art reflecting life.

Football is a business that doesn’t truly give a shit about the players. It takes a ton of legal action and scientific research to get the business to admit that it is a brutal sport that takes physical and long lasting tolls on human beings. It is big business not only because of fandom, tv marketing potential, but because of the gambling that goes alongside it. Just go to a sports book in Las Vegas and you can see why. Billions are wagered legally and illegally. And now, we even have the online “fantasy” versions with draft kings and yahoo getting in on the deal.

Twenty years ago, the sport seemed a little more pure. This was the era of Joe Montana, Dan Marino, Troy Aikman, Steve Young, and Warren Moon. These were icons and role models unlike today, with Tom Brady and deflategate, Peyton Manning and steroid/stem cell accusations, and Big Ben and sexual assault allegations.

And then, Colin K and disgracing the national anthem and flag in a selfish act. Send me hate mail, I don’t care. Just because a few people agree with you doesn’t mean it is right. Instead of using a platform for good and work towards actually causing positive change in america, he speaks of obvious issues America has. Yes, there is freedom of speech, however, in the eyes of many he has zero class. Riddle me this, where was Colin K speaking of social injustice and donating money to charity when he had a platform as the Superbowl to talk? Why does he only have “courage” to speak when he is benched? Funny that a guy who’s trademark dance is kissing his bicep really stands for anything but himself.

Where are the boyscouts today? America sure needs them.

Back to the movie. It’s decent. Go check it out again.

Movie Reviews: Star Trek Beyond

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Star Trek Beyond directed by Justin Lin

I’m going to warn you here, this is a spoilerific rant of Star Trek Beyond. If you have not seen it after 7 weeks in the theater, well … it is your fault for reading this.

What would you get if you crossed Guardians of the Galaxy with Galaxy Quest? I argue that it churns out about 75% of what this film is. It is a gargantuan attempt at attempting to ratchet up the drama a little bit more all while missing the essence of Star Trek. Much like how Star Trek Into Darkness looks silly for the third act of Wrath of Khan switcheroo with Kirk going in the engine room instead of Spock (but leaving people in suspense for 3 seconds by bringing Kirk back immediately unlike the original cliffhanger), Star Trek Beyond takes this up a notch by copying Star Trek III’s pinnacle moment of blowing up and crashing the Enterprise, except, yes, they have to resurrect it at the very end.

So VFC.

Very.

Fucking.

Convient.

You know, don’t worry about this version of Star Trek. If someone dies, they will be brought back immediately. If the ship blows up, a new one will be built in the same movie. The original series is classic, especially II-IV because of the three movie story arc. Kirk commanded a damn bird of prey in Star Trek IV. There was no marketing department saying it would be better to land the Enterprise in San Francisco so lets give Kirk a new ship at the beginning.

Then, I don’t know about you, but in all my science fiction readings, never have I read some prophecy that the Beastie Boys would be the ones to save the galaxy. Are you kidding me? Did they really pull the plot of Ghostbusters 2 out of their ass?

Talk about batshit unbelievable, and not in a good way.

This is not the direction I thought the franchise would go after a successful reboot of the series that I thoroughly enjoyed. It was fresh and new despite being a bit tropey. We all figured a reboot using space time would work because that meant there would be a  real sense of danger since the future would be unknown.

Instead, the franchise is trying to compete with the demographics of Marvel’s audience and foreign box office receipts (and easy dubbing) instead of the traditional fan.

What is the result? Each movie is doing worse in the box office and we all know what happens when returns keep diminishing for a franchise.

Another reboot.

Paramount, if you need a writer, I’m your man.