Saturday, January 26, 2013
How Kraft Foods Made a Mortgage Payment for me in 2012
Some Amazon sellers are skeptical that groceries are a lucrative product to sell on Amazon, and rightly so. I discovered the grocery category to be quite profitable because of the consumable nature of food items. Buyers will purchase multiples of the same item, return to restock, and I am able to build my grocery business around what my local stores offer. I much prefer a product that I can restock for an indefinite time rather than having to discover new items each time I want to sell something. I can figure out a product once, replenish it hundreds of times, and create a steady stream of income. Furthermore, there is always something new and improved, a different flavor, scent, or product offering every time I go grocery shopping. Not only can I replenish what I already know is working, but it is very easy to find new products that will work based on what I have learned about selling other items.
The first mental stumbling block is the question, "Why would anyone even buy groceries on Amazon? Why not just go to the store and get them?" I certainly can't speak for every grocery buyer, but I have paid attention to feedback comments and shipping addresses and drawn a few conclusions. I notice that many grocery items go to large cities like Manhattan, New York, Chicago, Los Angeles, San Francisco, and Seattle. I believe the city dwellers enjoy the convenience (both time and physical effort) of having groceries shipped to their door. I also see larger multipacks (6-8 of an item bundled together) going to more remote locations in states like Wyoming, Utah, Colorado, and Alaska. I am wondering if these products that I can easily find are not so easy to find in other states. I have checked Google Maps to see where these products are being shipped, and many times it is a resort, game ranch, national forest, campground, or bed and breakfast. I am wondering if small businesses in these industries are using Amazon as their food supplier and taking advantage of the Prime shipping. Finally, about 35% of my grocery items go to APO/FPO addresses. Obviously, our military service personnel and their families enjoy their Prime accounts and like to order goodies from the USA. (Hint: Think microwaveable foods, items that won't spoil in the heat, and are portable in backpacks.) Bottom line: Don't assume everyone, everywhere has access to what you see every day in the grocery store.
I wanted to share my experience in 2012 selling a few grocery items and let you be the judge. Here are a few screen shots of some keyword searches I ran on my completed sales from Jan 1, 2012 - Dec 31, 2012.
I sold a variety of food products made by Kraft. The average profit per item is $5.35 (average cost per item is $2.86). This screen shot shows 184 orders, but actually 228 Kraft products sold because some of those orders included more than one unit. My total profit on grocery store items made by Kraft in 2012 was $1,219.80. My mortgage payment is $1,002 - so Kraft products paid my mortgage once plus $219 left to pay my car insurance one month.
I had 87 orders for grocery items with "vanilla" in the title. Many of these orders also contained multiple units.
I had 151 orders for grocery items with "cinnamon" in the title. Many of these orders also contained multiple units. Based on this information, I can deduce that cinnamon is a popular flavor and I am always on the lookout for more cinnamon flavored items that will work.
I had 174 orders for grocery items with "cake" in the title. Many of these orders also contained multiple units. And none of the cake items were Hostess products. I did not sell any Hostess products on either eBay or Amazon. (Hint: These items are not prepared cakes!)
I had 117 orders for grocery items with "cereal" in the title. Many of these orders also contained multiple units. I sell cereal in both single units and multipacks of 3-4 boxes. Cereal comes in about a million variations and is a very popular food product, so this category always presents opportunities.
I had 109 orders for grocery items with "salt" in the title. Many of these orders also contained multiple units. You can get more basic than salt, right?
On some of the Amazon selling groups, you will see sellers complaining or criticizing the sale of groceries. First, they can't believe buyers actually buy groceries online. I have just disproved that theory. One downside to selling food products is that buyers cannot return them if they are not happy with the purchase. Amazon does not accept food returns - so the refund is given to the customer and sellers do not get the food product back. I can live with that. I have no problem selling a $3 box of cereal for $12.50 for a profit of $6 - 100 times - and have to refund 2 or 3 buyers a month. The $600 profit is totally worth the loss of a few boxes of cereal. Works for me.
Add-On status can hurt you if you are selling groceries, but there are workarounds. I have learned to make my bundles larger, and therefore more expensive, so they don't go into Add-On status. I have also learned to sit tight and wait if another seller's low price drags an item into Add-On status. They will get frustrated, drop their price lower and eventually sell out, and they usually don't return. Sometimes I am the only seller left on the listing and sales then resume at my original price point. (Learn more about Add-On status here.)
I want to encourage you to give grocery items a try on Amazon. Don't believe everything you read on networking groups - let's face it, a lot of people just go there to complain. You can get sucked in to all that negative drama, or you can follow others who make it work. I am proof that this works and you can make a good living doing it. In fact, I can't go to the grocery store anymore to pick up personal items for my family without either restocking or discovering new items to sell. It is almost too easy.
If you are interested in personal coaching to learn how to add grocery items to your Amazon inventory, contact me at eBaycoach @ yahoo.com for more information. I can teach you how to do this in just a few lessons over the phone. Once you discover how to make money selling groceries online, you won't mind running out for milk or bread anymore!
Sign up for my Amazon Grocery Class here and learn how to use the resources available in your area (grocery stores!) to make thousands of dollars on Amazon every month.
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