How My International Team Spent $492k on Inventory
Zack AllenJanuary 31, 20264:08
The seven-step system two people on my team use to buy, ship and price inventory, with me in none of the steps.
Last year, my international team spent $492,370 on inventory for my e-commerce business. That's the number on our inventory sheet. Since 2022, revenue totals $4.2 million.
My team is based in the Philippines. They've been with me for years, and I visit them once a year. Even if you don't run an e-commerce business, the same principles can help you step out of the day-to-day and focus on higher leverage work.
The model and the two roles
The business is Amazon online arbitrage. We buy inventory, send it to Amazon and sell it for more.
It runs on two core roles:
- The researcher, responsible for the buying and the selling.
- The admin, responsible for everything in between.
There are seven steps. Not because seven sounds good, but because that's how many there are.
1. Research products (researcher)
This one looks small next to the other six, but it's the crux. Everything after it depends on this being done well. The researcher spends about 40 hours a week on this alone, going through our suppliers to find arbitrage opportunities.
2. Post the leads (researcher)
Good opportunities go into a shared Google Sheet with all the data: Keepa links, historical pricing and everything else we need to decide whether to invest in an item.
3. Decide the quantity (admin)
The admin decides how many units to buy. That builds in some redundancy, since the researcher isn't making the final call on her finds, which would be skewed. The admin uses historical data, our data and, after years of doing it, her intuition.
4. Place the orders (admin)
Using my cards and our checkout tools, she places the orders.
5. Notify the 3PL (admin)
I don't have a warehouse and have no desire for one. We contract a third-party logistics provider. The admin logs everything in our inventory sheet and passes it to the 3PL, which processes the inventory onto pallets.
6. Ship into Amazon FBA (admin)
The inventory goes from the 3PL into Amazon's fulfillment centers.
7. Reprice (researcher)
Back to the researcher. She found the items, so she handles pricing. On Amazon you share a listing with other sellers, so you have to stay competitive.
We use repricing software. When inventory arrives, she sets a minimum and maximum price we're comfortable selling at, and updates them weekly based on market conditions. We don't factor in our buy cost much here. It's mostly about what the market looks like right now.
Where I fit
You'll notice I'm not in any of these steps. That's by design.
This year, the goal is to buy double what we did last year.
Transcript
Show the full transcript
Today, I'm going to show you the system my international team used to spend $492,000 in inventory last year for my e-commerce business. Here's a screenshot from our inventory sheet. 492,370. Since 2022, our revenue totals $4.2 million. Photo of some actual inventory, so you know it's not just numbers on a screen. And this is my team. They're based in the Philippines. They've been with me for multiple years now. I visit them once a year.
I make this video to show you what has worked well for me. Even if you don't have an e-commerce business, you can apply some of the same principles to remove yourself from the day-to-day operations to focus more high leverage. That's what we help business owners do. Now, for some context, this business is Amazon online arbitrage is what it's typically referred to. So, we purchase inventory, we send it to Amazon, and then we sell it for more.
And so the two core roles of that business are the product researcher R and the admin A. R is responsible for the buying and the selling. A is responsible for everything in between. We're going to go through seven steps. Not just because it's a you know quick sevenstep process, but because that's just literally how many steps it is. Uh okay. So researcher step one is to research products. Now, this one seems like inconsequential in relative to six more steps, but it is really the crux.
It is the core of all of it. The purchasing, everything relies on this being done well. So, she spends 40 hours a week doing basically just this, going to our different suppliers and finding which opportunities we have to arbitrage. And then once she finds good opportunities, she will post them in a shared Google sheet with all the data. We have the Keepa links. If you're familiar with Amazon, you know Keepa. All the historical data, all the things that would help us in making a decision if this is an item we want to invest in and purchase.
From there, my admin will hop on and decide the purchase quantity. So, there's some redundancy there. You know, she's not just making decisions on her own stuff cuz that's going to be obviously skewed. So my admin will come in and decide on a purchase quantity based on historical data, based on our own data and her intuition really is what it comes down to after years of experience deciding how many we're going to purchase of that lead.
Placing the orders. So obviously using my cards and different checkout mechanisms to just boom boom boom boom place orders. That's step four. Step five is to notify our 3PL. So, if you saw in the photo above, I don't have my own warehouse. I don't have any desire to have my own warehouse. I contract that out to a third party logistics provider. And so, we have to let them know that stuff is going to be there.
So, she will put it into our inventory sheet and then propagate that to our 3PL warehouse. They will process the inventory just like this photo on some pallets. And then she will actually it'll go back. We ship the inventory into Amazon FBA and then back to the researcher since she was the one that was focused on the the researching, she'll be also doing the rericing. So, we have to actually make sure this inventory gets sold.
And to do that, we have to list it at the right price. Now, the way Amazon works, you're on the same listing as other people. And so, we have to be competitive. So, we have a software that will competitively price. When the inventory first arrives, she'll set a minimum and a maximum price as to where we're comfortable selling. And then every week, she will update those if needed based on current market conditions.
We don't really consider our buy costs, like how profitable we are in that decision. It's really just like what does the market look like right now. So hopefully this uh is at all valuable to you. This is the system we use. We're going to purchase hopefully double th that this year. And I do not, you'll notice I was not included in any of these steps. And that is by design. So, thanks for watching.
Hope this helps.
