Managing Cashflow Sucks
My profit for this month came in at around $1,700, not bad for about 10 hours of work! My most recent product I launched on Amazon was a new, unique type of sunglasses but unfortunately it’s not doing very well. I’m selling for around $30-$40 but the competition is so insane that my advertising fees are eating up all of my profit. It sucks because I have a great product, but getting the visibility is just too hard and my margin is hovering around 5% right now which just isn’t worth the headache.
My last shipment for one of my top selling products made it to the U.S. fine but then somehow, my freight forwarder and UPS lost about 500 units. UPS managed to find 250 of them but my freight forwarder wasn’t able to track down the other 250 units. This meant that I lost about 30 days worth of inventory so I’m going to run out of stock a month earlier than I had expected.
Within a month of the product arriving to the U.S., I’ve already had to place a follow up order for an additional 2,000 units to avoid running out of stock and hopefully getting enough to last me through the Christmas season which is the best time of the year for every Amazon seller.
Production of 2,000 units, plus another product that goes along with this one, totaled about $10,000. The shipping to the U.S. is another $1,000 then from the port to Amazon’s warehouse is another $2,000. All of this money has to be paid up front and I won’t be able to recoup a single dollar until this product finally arrives at Amazon and starts selling.
It usually takes about 3 weeks to produce, 3 weeks to ship across the Pacific, then another 3 weeks to get to Amazon’s warehouse. So I’m forking out $13,000 and not seeing a single dollar come back for 9 weeks. BUMMER.
In the profit graph, there’s a huge dip on the day where I prepaid $2,000 in shipping to UPS which is what caused my drop in earnings. I’ve been hovering around $15k in sales and a 20% profit margin which would have held true this month if it wasn’t for the one time shipping fee. But at the end of the day, this is part of running a physical product business and there’s no way around it. Next month should have lower costs and I should see a bounce back up to $3,000+ in earnings.