There has always been a lot of interest in flipping, also known as arbitrage selling, but this has really taken off post-Covid where so many people have looked to start a side hustle after seeing how risky it is to rely solely on one source of income.
I covered the flipping business model in detail in this blog post and went over the differences between flipping and private label (the latter being my own, preferred Amazon business) and while I’m personally not a huge fan of the arbitrage model, I do recognise that it can be a great entry point for beginner ecommerce sellers.
Flipping allows you to build up a bank to invest in your private label product and you also get valuable experience selling on Amazon. It can also be started with pretty much any amount, I’m talking literally £100+ here, whereas with private label you’re looking at £5k as an initial investment – a huge difference!
For some balance and for those of you who are too lazy to go back and read my previous blog post, the main reasons I’m against flipping as a long term model are:
Flipping is time intensive
Continually sourcing products, especially if you’re focused on retail arbitrage (i.e. buying from stores rather than online), can be very time consuming.
Flipping is difficult to scale
Scaling is a lot less straight forward than when you’re making your own products to sell. You can’t simply put more money into advertising (doing PPC advertising on Amazon when you’re selling another brand is never a good idea!) or expand your product line (you’ll most likely be selling in multiple niches anyway).
You can never sell a flipping business to an aggregator
This is a big one for me, as you can never create a valuable business and brand which you can sell with flipping.
Flipping is a lot of admin work
When you’re dealing with multiple purchases, often at different cost prices, and hundreds of different SKUs, the admin work can get messy! Now this isn’t a huge problem as there’s always tools and software to help you with this, but compared to private label it’s definitely a lot more work keeping track of your expenses, sales, and profit.
In the interest of fairness, I will point out that the time intensity and scalability can be taken care of IF you do things the right way and build processes and outsource, rather than running around chasing the hot product of the week.
Now I know what you’re thinking – why did I even bother flipping then? Well the answer is I didn’t!
I simply don’t have the time to dedicate to this myself. I’m working hard to get to that elusive 4 hour work week, not go the other way back towards 40! But I have seen the interest from some of my blog readers and in the emails I get, so I still wanted to cover flipping properly. And that’s why I asked Henry, someone who’s worked for me before, to see if he’d like to try flipping and then document his results on my blog for you all to enjoy and learn from.
And thankfully he said yes, so enough from me for now and I’ll hand you over.
How Henry’s flipping business on Amazon started
When Andrew first asked me if I wanted to test out flipping for a blog post, I have to say I wasn’t that excited! I’ve been planning to launch a private label product using Amazon Sharks and this seemed like a little bit of a step down. But I thought why not give it a go, as I had a long summer holiday off from my studying, and I could hopefully make a little extra money. So after a bit of research and reading around, I dove straight in and made my first purchase – 10 swimming pools!
Definitely a very seasonal item but it was early June with promises of an impending heat wave in the UK. Coupled with the fact that with the traffic light system and isolation rules, it looked set to be another summer of local holidays, and I felt fairly confident in my purchase.
I placed this order on June 6th and fast forward just a week later and my mind had been completely changed about flipping. All 10 pools sold in one day!
I listed 4 of them at £174.50 first thing in the morning and by the time I got back from the gym 2 hours later, they had all sold. Then the next 6 arrived and I immediately listed them, this time putting the price slightly higher at £179.95 – and all 6 sold within an hour.
I couldn’t believe it was that easy, buying pools off of Amazon and then selling them back on Amazon 7 days later for more than double the price!
To delve into the actual profit, in total I paid £751.80 for the 10 pools. They sold for a total of £1,777.70 and Amazon’s fees were £326.40. I paid £14.33 per pool for next day delivery via ParcelForce, so £143.30 in total for shipping.
That left me with £1,308.00 or £556.20 in net profit. Not bad for about 30 mins work! It’s safe to say that at this point I was much more interested and ready to give flipping a real go. Fast forward one month, and after a LOT of mistakes and learning, I had total sales of £15,846.23 and profit of £3,065.19
I was incredibly happy with the result considering that because of my uni summer placement, I couldn’t put that much time into it. And on top of that I was actually suspended by Amazon for a week, in which time I couldn’t sell anything!
Getting suspended for flipping on Amazon
This suspension was my first taste of Amazon’s seller support and it really was as bad as everyone says. It was incredibly difficult to get any real help and the answers they gave were always different and never consistent from person to person. Thankfully just as I was starting to give up, someone explained exactly what was needed from me and I got my account back!
Just to illustrate exactly how inconsistent seller support is, after finally being told exactly what document they needed from me, I uploaded it thinking everything was finally taken care of, only for it to be immediately rejected. I then re-uploaded the exact same document and it was accepted…Definitely something to be aware of when you start your Amazon journey.
This is also a good time to point out that Andrew had set a rule for me when starting my flipping trial, that to make it a fair test I couldn’t ask him for any help whatsoever. So whatever my question was – about sourcing, products, shipping to EU, help with my listings etc, I couldn’t ask Andrew and instead had to rely on forums and flipping groups. And actually because of this rule I did run into a few problems and made some stupid mistakes, which I’ll go over now.
Not turning off international shipping when flipping on Amazon
One thing I was very scared of was getting any orders internationally as I didn’t know how it would work with Brexit and exporting to the EU, so I turned off all international shipping on my shipping template, or at least I thought I did!
One day I woke up to 4 orders from the EU, 3 from Germany and 1 from Spain.
After speaking to Amazon I found out that I was auto-enrolled in a program that lists your products internationally. So I was now left with two choices:
- Cancel the orders
- Ship them out
To me both seemed like terrible choices – shipping them out would have meant paying 3 times more in postage than what I had calculated and also had the whole problem of import charges to deal with.
But if I cancelled the orders so early on in my Amazon selling journey, it would have messed up my metrics and risked my entire account.
So in the end I decided to ship out the orders, after messaging all 4 buyers to say that there would be import charges as the items were coming from the UK and confirming that they were happy to go ahead.
In the end 2 of the buyers received their orders and paid the import charges without any issues.
1 was stuck in customs for an entire month and then I refunded their import charges as an apology.
And the final one was the worst result – after refusing the delivery due to the import charges, I then paid it for them and re-arranged the delivery, only for the buyer to then request a return due to change of mind. When I replied saying that’s fine but they would have to pay the return shipping costs, they immediately opened an A-Z case saying the item had arrived damaged and Amazon refunded them in full.
So for this one order I paid shipping to the EU, paid import charges, then paid for shipping back to me as well! About as bad as it could have gone.
Moving on to my next mistake and something that I would have done differently if I had the chance:
Sending in items for FBA while flipping
As well as the 10 Intex pools that I sold first, I also managed to get some Bestway pools and kayaks to sell, but rather than listing these as FBM I decided to send them into Amazon to sell as FBA. My thinking here was that I could get a higher price, and while that was true, I didn’t realise how long it would take for my items to be checked-in at Amazon’s warehouses.
For these two shipments, which were sent on 11th June, it took nearly a whole month for the inventory to become sellable.
In that time I could have sold them ten times over. And to make things worse some items were lost after being received by Amazon and I had to make a claim for reimbursement.
I’d heard horror stories with this, with Amazon sometimes reimbursing people less than their cost price, but thankfully for my claim they were incredibly fair. For my missing kayak they reimbursed the exact amount (minus their fees) that I would have received from selling it. So I was very impressed by Amazon here (less so impressed by their ability to lose a giant box but that’s another point).
Moving on to the last point which I would do differently if I started again:
Not properly tracking inventory, sales, and P/L
I thought about leaving this out so Andrew doesn’t see it, as he did warn me about this before starting! But I didn’t properly track my purchases and expenses from the beginning. I kept putting it off week after week and now it’s at the point where it’s going to take me a long time to get it all sorted out.
Thankfully there are a number of tools available to help with this, including spreadsheets and more in-depth software and I’m testing a few of them out now to see what works best for me. The majority of such software is geared heavily towards private label sellers rather than flippers, so I will test a number of them out before choosing one to stick with going forward.
Speaking of which, to finish off this post here’s my conclusion and plans for the rest of this year and beyond.
Planning the year ahead while flipping on Amazon
I want to focus on building a more scalable system, relying a lot less on seasonal ‘hot’ items, which is what I’ve been doing so far. I’m expecting a few slower months as a result, which I’m already seeing this September with sales being less than through the summer, but that will be worth it long term if I can build some more consistency. I have also built up a good amount of stock for Christmas and Q4, so so I’m very excited for November and December, which I’m expecting to be good months, especially if the toy shortage takes place!
So there you have it! Henry generated £15,000 in sales and £3,000 in profit in one month. I have to admit that’s better than what I was expecting.
This will undoubtedly slow down as the summer months and Covid restrictions created some opportunities that won’t always be there, but I’m still very impressed. It will be very interesting to see how Henry does over the next few months and if he can start to create a real scalable business with flipping.
If there’s enough interest then I’ll be happy to turn this into a little series for the blog to both track his journey and go into more detail with the process, looking at flipping groups and software etc. So as always let me know what you think, either in the comments down below or you can get in touch with me directly.
And of course if you have any questions for Henry post them below for him to see. Otherwise, until next time!
All the best,
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Hi Andrew, As a UK seller going to start with flipping in the US (buying in the US and selling in the US) would you recommend to incorporate a LTD in UK or an LLC in US? I know there are a lot of tax implications here probably. But based on your experience… what would be better? Or would you chose another european country to incorporate in? And also, in both US and UK cases, it is better to pay yourself a salary or dividends?
Unfortunately it’s too dependant on your personal circumstances and business set up to be able to give you proper advice like this. I would really suggest speaking to a good accountant. I’m happy to recommend one if you like?
In terms of how to pay yourself, take a look at this blog post I did as I go into a lot of detail on this: https://andrewminalto.com/amazon-seller-taxes/
Hi Andrew, if you are happy to recommend an accountant would be much appreciated. Thank you.
Get in touch with Robin from By the Book Accountancy, he’s helped with a few articles on this blog and is the accountant for a few Amazon Sharks members and the reviews have been amazing so I’m happy to recommend him: https://bythebookaccountancy.co.uk/contact-us
Thanks for the insightful post, really enjoyed it! I recently started flipping on Amazon and it’s been stressful to be honest as I have a full time job. I’m looking to change to the wholesale model but I’m worried about taking the wrong steps. I would really appreciate your opinion on these issues:
1. Register as Sole Trade or LLC with current income of nearly 40k?
2. Is it easier to work with wholesalers using Sole Trader or LLC?
Are you based in the US or UK?
If UK then:
1. You’re at the income level where you could go either way really, and it will depend on a lot of other factors as well: https://andrewminalto.com/sole-trader-vs-limited-company-uk/
2. I would say it’s almost impossible to open real wholesale accounts in the UK as a sole trader, nearly all manufacturers and distributors will only deal with Ltd companies.
I tried flipping a few years back and i didn’t enjoy the process as much as private label. With most of my products now i don’t need to do much apart from send in stock, re order stock and check sponsorship every once in a while. I think i have become lazy and flipping sounds too time consuming haha
My thoughts exactly! I don’t think there’s any comparison to private label in terms of scalability and a potential exit, but I’m still very interested to see how it turns out.
Another good post thanks. If I thought I could make a regular 1K a month profit from flipping, I would definitely be doing it to add to my private label profit. Further posts and advice on this would be great.
Thanks Andrew and Imogen
Glad to hear you found the post interesting. I’m planning to have Imogen write another update for us very soon!
All the best,