I made a huge mistake. Well, sort of.
The story is about a seasonal product I launched for this year’s Halloween. Usually I’m very sceptical about seasonal products as they are risky to deal with – especially if the product only sells for a few weeks or one month max every year – like with Halloween, Christmas, Easter and similar occasions. The reason why such products are so risky is simple – you can never really accurately predict how much inventory you need as you don’t know how many units you’ll sell in that short period of time.
If you under-stock, you’ll run out of stock way too early and miss out on profit and when you over-stock and can’t sell everything, you freeze your money in dead stock for a whole year, until you can sell the item again next season.
Knowing all this, I still wanted to give it a try, mainly because I saw that there’s basically no competition for that product on Amazon – so I thought – easy money, right!?
No one sells that product on Amazon and in my opinion, the product is great and should be quite popular.
But it’s that demand analysis that let me down. As I did not have any Jungle Scout data for the previous year, I had to guess the potential demand. I did check sales on eBay via Terapeak for last season but the specific product type doesn’t really sell on eBay that much and sales data was very low and not reliable (I compared it to similar products).
Obviously I did check Google Trends and as you can see from the graphic below – it seemed like a no brainer! Massive demand in November every year. Well, at least search numbers were good but as it turned out, that doesn’t always correlate directly with sales.
Taking all this into consideration, I decided to “bet” a £1000 – getting 500 units into Amazon FBA, costing me just under £2 each. My net profit after VAT and Amazon fees was planned at around £5, selling the product for £11.99.
So not bad at all! If I sold all 500 units, I would make £2500 NET profit – so I decided it was a risk well worth taking. Plan B was if I “only” sold 300 units, that would still cover the cost of all units (£1000) and leave me with a profit of £500 PLUS 200 more units I could sell next year.
So really – it was a no brainer to me and I did send all 500 units to Amazon on September 23rd – so well ahead of Halloween and giving me plenty of time to get rid of all 500 units easily!
Long story short, by 1st November I sold 121 units! 🙂
That was shocking indeed! I only sold 25% of what I was planning to sell. And as you can see from Amazon stats – the conversion rate was great, at over 30%! The problem was that there were only 362 sessions and 505 page views! Which means that people simply did not search for that product on Amazon. Those who searched, bought! 1 out of every 3 people!
There just simply wasn’t enough people searching for the product.
There were no sales spikes either. When I listed the item, I started to get a few sales a day. And it actually went like that all the way until Halloween – with no spikes, increases or anything like that. I was truly shocked!
My bet on the competition was correct though – basically my listing was NUMBER ONE for the main search from day one. I did also create a Sponsored Ads campaign for this listing but couldn’t spend more than £10 for the whole month of October as people simply did not search for those keywords.
To sum it all up – I made about £600 profit by selling those 121 units but as I invested £1000 in stock, technically I made a loss of £400. At least this year.
I did withdraw stock from Amazon of course and now have 379 units sitting in my warehouse, waiting for next Halloween! If the same scenario repeats next year and I sell about the same number of units, it will take me 3 more years to sell everything and get my desired profit.
Numbers wise it’s not that bad of course! I invested £1000 into this product and will make a return/net profit of £2500 in 4 years’ time. It’s not a loss and hopefully I will be able to sell the stock successfully over the next few years (I will make sure to write a post on how it goes next year, at around the same time).
So what we can learn from all this?
There are definitely risks involved when selling a seasonal product, especially if it’s a unique product, with not much competition.
Google Trends is helpful to analyse trends but it’s obviously based on Google search data and it does not represent what people buy on Amazon.
Would I do it again with this product?
I would, but I would be more careful. I would start with 200-300 units, as a number lower than that wouldn’t make sense for me financially/time wise. So I would simply be more conservative with my sales predictions. An order of 250 units would cost me slightly more but I would re-cover my investment this year and would have stock left to sell off next year.
Also, I wouldn’t recommend dealing with such high risk seasonal items IF it’s your first or second item you’re getting into on Amazon. For me – this was more like an experiment and it did not affect my financials in any way but for someone who is just starting out with a small budget, risking it all and putting a bet on such a highly seasonal product wouldn’t be a smart move, at all!
Another tip – if you’re working in a niche where you see there are related but seasonal products – start tracking them in the Jungle Scout web app this year, so that you have data on how well the item performs and maybe next year you can make an informed decision on how many units you can sell.
Lastly – my product was sort of unique in the way that there was no competition and it has no solid track record on eBay. But usually that won’t be the case! Which is why you should check the product using Terapeak – it gives a full 12 months of data (even 2 and 3 years with the extended subscription) and it will show you exactly how sales are spread during the year:
This is very handy to predict sales and stock levels for not only short-lived items like Christmas, Halloween etc. but items that are seasonal for summer or say winter. So definitely check Terapeak out if you plan on doing any kind of seasonal product business on Amazon!
Ok, that’s it for today!
Hopefully this story will save some of you from making costly mistakes when selling seasonal products on Amazon FBA. I would LOVE to hear your stories if you have similar or hopefully – much better experiences with such items! So please leave your comments below the post!