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Make Toys R Us Work For You…

If you know how, Toys R Us can be an important part of your Amazon.com business

I have another great guest blogger for you this week — my Dad. You read some of his story in my book.  In this post he goes into more detail about how he makes Toys R Us work for him.  Dad lives in a small town in North Carolina and yet he has built a successful business for himself by careful shopping at the few stores he has.  He sells a mixture of books and media and new toys and other items. He works his business part-time around a very busy schedule of board meetings and church service, and still makes thousands of dollars. My Dad’s a planner.  See what he did to ensure his success right from the beginning. With no further ado, here’s Phil Stine:

Until I became an Amazon FBA seller, I had probably never been in a Toys R Us more than three times in my life. But I knew that toys would be a big part of my Christmas profits and as well as a steady year-round source of income (kids have birthdays all year long). So last August I went to my local store and asked for the manager. When I eventually found him, I asked him what he thought big sellers would be for Christmas. (I didn’t tell him I was going to re-sell things.) He very kindly spent half an hour showing me what he thought would be big, and where they were on the shelves. Looking back, he was remarkably accurate on what would be popular.

This gave me a good orientation to the layout of the store, and this knowledge was very valuable when I later came in with a discount coupons and flyers in hand for some very popular items. All Fisher-Price items are together and arranged by age; all Lego toys are together; remote control items filled up one complete aisle, all Xbox programs were in one area, and so on. I learned very quickly also where the Bratz Dolls were, where the Barbie dolls were, where the Justin Bieber dolls were, where I could find the dollhouses or karaoke machines. When there’s a great one-day price on a hot item, you can’t afford to waste time trying to find a clerk to point you in the right direction. Some little old grandmother will beat you to the item every time.

While there, I signed up for the Toys R Us Rewards card. This gave me advance notice of some sales, but most of all ended up giving me many discount coupons over the months.

Most of the year, there’s one flyer a week from Toys R Us, giving discounts for that week. Getting into the Christmas season, one feature of these was that they included a coupon with a big discount for a very large number of items from 3:00 pm Friday through 1:00 pm Saturday only. I generally checked these prices and rankings on Amazon before I went to the store and circled the ones that looked like I could sell for three times what I would pay. Then about 2:00 o’clock Friday afternoon, I’d head for those items, scan them to be sure of ranking and price, and fill up my cart ready for checkout at 3:00. Even now, well after Christmas, I do the same with the weekly flyers. I generally go the first day of the flyer, and go first to the items I’ve circled as being potentially profitable. Having put those in my cart, I then do more of a browse of other items that are discounted or which I know have been pretty popular. There are always some pleasant surprises, but I have to get to the toys in the flyer before other customers.

Occasionally Toys R Us will put out discontinued items at large discounts. I found a big stack of discontinued X-Box 360 Guitar Controllers that had originally retailed for $45, and were now marked down to $4.50, except with my discount coupons I got some for $3.75. As I took all the ones they had out, they would bring out a few more the next day, and I’d take those. I eventually bought about 30 of these, none for more than $4.50, and sold them all for $65! Every single one of them sold, and sold within days of being listed on Amazon. Here’s the lesson; the store wants to bring in the new, but buyers may not care if it’s last year’s model. You can really profit from that.

Thanksgiving Day, Toys R Us opened up at 9:00 pm. The flyers with special prices for that night were good only until 11:00 am the next day, but they were so good I braved the crowd. The line wrapped around the building by 8:00 that night, but I eventually got in and went directly to my circled items. Some were gone already, but I kept at it until I was ready to check out about 12:30 am. The checkout line snaked through the baby section of the store – I didn’t get out until after 3:00 am. But, I had $1500 worth of toys, which I sold for over $4500. I went back the next morning to clean up the less popular items. This year my wife will be with me, so we can fill up three or four carts. I never in my life would have thought that at age 68, I’d be shopping at Toys R Us at 3:00 in the morning, but my checks from Amazon.com for November and December were almost $17,000, so I guess it was worth it.

I didn’t sell everything I bought, and in January, I was a little discouraged as I still had quite a bit of inventory with Amazon. But in the past few weeks, things have begun to pick up, and many of those toys are moving out of the warehouse now. Thank goodness for birthdays. I still make my weekly visit to Toys R Us. It’s going to be a good year.

Dad has a process and a plan, which makes shopping Toys R Us profitable and manageable for him. Consider how you might approach your local stores for maximum efficiency. What about you? Do you shop at Toys R Us? Do you have tips you’d like to share? Please post them!

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{ 23 comments… add one }

  • Chet Hastings March 27, 2012, 3:14 PM

    Thanks for this article. As a middle aged eBay and Amazon seller, I plan on living till I am 140, I am always glad to read what other middle aged sellers are doing? Love the techniques he is using with Toys R Us, However I noticed that Mr. Stine did not mention anything about scanning but rather worked from fliers and other store info to check products prior to going to the store.

    I was curious at to whether this is Mr. Stine’s main mode of locating products. He is doing amazingly well with this tactic it would appear and I congratulate his resourcefulness. I have been a long time eBay and Amazon seller but have regretfully been ignoring the FBA program and am about to rectify that mistake. Working my way through Retail Arbitradge and will soon be ordering your book.
    Do you go into any detail in your book about the best iPhone to purchase for use with the Bluetooth scanner?

    Thank you for sharing this information.

    Chet Hastings

    • Cynthia Stine March 28, 2012, 9:46 AM

      Chet,

      Thank you for your post! Dad uses FBA Scout and scouts everywhere he goes, but tries to plan his ToysRus outings because the store is so massive. I use an Android phone for my FBA Scout and have friends who use the iPhone. I’ve not heard of one being any better than another. If you can get a 4G phone, you’ll appreciate it. I have 3G and it is fine, but my friends with 4G have faster service.

      Cheers,
      Cynthia

  • Linda Myers March 28, 2012, 7:31 AM

    Phil and Cynthia,
    Thanks for great info. What would help me is to know how much of the $17,000 was net profit…after your expenses of purchasing the items for sale….and listing and shipping to amazon. I know it’s net after amazon fees, but would like to know what your actual overall net profit is. Same questions for you Cynthia, and your friend who scouts at Target…Thanks so much for sharing.
    Linda

    • Philip Stine March 28, 2012, 10:04 AM

      Those checks from Amazon represent about 100% profit. Whatever I buy from a retailer I price on Amazon at 3X what I paid or I don’t buy it. I then have expenses such as packing materials, plus overhead such as what I pay to FBA Power monthly and my phone bills, etc. Amazon takes out the shipping charges plus their various fees and charges before they send me a check. For example, if I buy toys for $100, I’ll price them for $300. After Amazon takes out their charges and fees, I’ll get a check for say $250. Take out my $50 expenses and I’m left with $100 profit. So between 50 and 60% of the $17,000 was pure profit.

    • Cynthia Stine March 28, 2012, 10:37 AM

      Linda,

      I assume you want to know the net profit so you can figure out margin. In my book I go into my numbers for my first year. I hesitate to use Dad or Lynn’s numbers as benchmarks (for one thing, they’ve not given me permission) because their situations are different from mine and because there is so much “it depends” in the answer to your question. Both Dad and Lynn have less than a year in this business. Both had credit and the ability to invest in inventory in a way that I couldn’t (and still can’t – I run my business on a strictly cash basis). In other words, Lynn’s $7,500 check that I talk about in my book had to cover inventory costs of course, but not all of that inventory was sold in the $7,500 check, so it doesn’t give you an accurate view of what her initial investment actually bought her. That’s why, in my book, I look at a year. Over time you can see how the business is truly performing.

      If you look at my previous blog post on Amazon’s new fees, you can see how I allocate my costs into my purchases to give me a more accurate view of what a “good deal” really is.

      When you buy something, you should be looking at a 3X return at least. Target, ToysRus, Walmart, BigLots, they all offer opportunities to buy with at least 3X – sometimes 10X or more – returns. If you assume that 1/3 is cost of acquisition, 1/3 is cost of running the business, shipping supplies, CPA costs, returns, etc., then you should have 1/3 left to put in your pocket after you pay back your costs. Others may be able to run their business with higher profits, it depends on the inventory they find.

      I recently read the book “How to Sell at Margins Higher than Your Competition” by Lawrence Steinmetz which is a bit dry in places, but has a great explanation of how margins impact your business in ways you don’t realize. You may find it useful.

      Cheers,
      Cynthia

      • Bob August 28, 2012, 2:05 AM

        Hi Cynthia,

        I’m a complete newbie to this. I was wondering how does a cash buyer prove/show expenses to the irs when filing taxes, especially if there’s no receipt from places like garage sales? On aside, I should quit thinking so much and start my FBA business already! Ugh.

        • Cynthia Stine August 28, 2012, 9:12 AM

          Bob,

          There are several ways you can show the IRS what you spent on your business. The easiest is to have a separate business bank account. Take the cash out of there and then use a bookkeeping program like Quicken, Quickbooks or Outright.com to record how you spent it later. You would put the information in the “split” however makes sense to you. For example, if you used all $500 on garage sales, you could say that. You could break it out by sale or do a lump of “8 garage sales, spent $426.50 on inventory, $38.45 on gasoline, $10.95 on meals….” You get the idea.

          And yes, just get started! Until you’ve earned $600 in one year, you don’t even have to worry about taxes. 

          Cheers,
          Cynthia

  • anon March 28, 2012, 10:28 AM

    It works out that you are helping the stores get rid of stock-but why do you have to take ALL of the great deals? Could you leave some for the “regular” shoppers please?

    • Cynthia Stine March 28, 2012, 10:44 AM

      We are the regular shoppers. We read the same sales flyers and shop the same stores as everyone else. There is more inventory than I can afford to buy and plenty of great deals to go around.

      Cheers,
      Cynthia

  • Lynn March 28, 2012, 12:11 PM

    I was under the impression that Toys R Us was too expensive & avoided shopping at their stores until recently, and have been kicking myself ever since! I find a lot of great deals in the older-layout stores that are choked with merchandise & clearance items.

    You are right on the money when you mentioned that there is great profit potential picking up the “old” merchandise when Toys R Us wants to bring in the “new”. To Amazon customers there is no difference, they just want what they want.

    Great post, thanks!

  • Mike March 28, 2012, 7:44 PM

    Good Stuff Cynthia, you are an inspiration to us part timers out here. Wondered your thoughts on a few things. First, you mention you are all cash basis…if you were like me and could extend credit to buy stock, would you? Second thing, how long is an average amount of time before you hope that a product will sell/flip…do you get nervous after a certain amount of time? And finally, when one makes the transition to FBA (which I have not) how much product would be a minimum amount you would send in for your first time?

    Good Selling,
    Mike

    • Cynthia Stine March 29, 2012, 11:38 AM

      Mike,

      Thank you for your kind words! I’m glad the blog is helpful. I use rank to help set my expectations for when something will sell. For books, if the rank is 100,000 or less, my expectation is that it will sell within a month (depending on how many other offers, etc.) In my book I list out my experiments and how long it took for them to sell. Ranking is not perfect, but it is an indicator that something has sold in the past and that it will sell again. The minimum amount I would send in is one box-full of merchandise. My small box is 18X12X12 which I mostly use for books, and my standard big box is 20X20X20 which I use for toys and appliances. The more you send in one shipment (multiple boxes), the lower your cost per pound, but the important thing is to just get stuff up there – don’t wait.

      If I had credit, I would buy inventory. Absolutely. By now, I have a good idea of what to buy and what sells fast, etc. I would still be concerned about being able to pay it off quickly and not getting into more debt than I can resolve in a month’s income. Lynn did that with her first big check – she paid off all her credit cards and then took what was left and used a portion of it to buy more inventory.

      Cheers,
      Cynthia

  • john March 30, 2012, 5:03 PM

    Cynthia thank you for doing such a great job of explaining things about FBA. I would love to get started with the program. I really enjoyed the guest commentary by your dad. This sounds like a great part time business for those of us reaching our senior years. My one big concern is that with a lot of people doing FBA is the business becoming too saturated or will it become that way? Are things still going to sell if Amazon has too much inventory of a particular item? What has been your experience and do you know what the numbers are as far as people doing the FBA program? I would love to purchase your book and get started. It sounds like fun. Any help that you can give me with my concerns are greatly appreciated.

    • Cynthia Stine April 2, 2012, 7:33 AM

      John,

      FBA sellers are still a small percentage of the overall number of sellers on Amazon.com. The percentage of FBA sellers using FBA Scout to find inventory is even smaller. The trick to success in this business is to take a smart approach which is where tools like FBA Scout and FBA Power are so helpful. They give FBA sellers a competitive advantage over others trying to sell in this business. If you select inventory that is selling quickly and price it smartly (not always the lowest – I go over this in my book in more detail), it will sell regardless of who else is selling that item.

      Hope this helps!
      Cheers,
      Cynthia

  • ray March 31, 2012, 9:50 AM

    Great post, Mr. Stine! Thank you for the information.

    Toys R Us shoppers are AGGRESSIVE!

    I hope you keep a stun gun on your belt, should things get too rough!

    ray

  • Marketing Locally Guy November 8, 2012, 5:48 PM

    Hi,

    Where do you get the flyers and coupons for Toys R Us? Thanks :-)

    • Cynthia Stine November 8, 2012, 6:08 PM

      You can sign up for emails online. Also, if you join the Toys R Us shopper reward program (at the store or online), you’ll be sent materials in the mail and email – however you prefer – and you’ll earn rewards/specials/discounts only available to members.

      Cheers,
      Cynthia

  • Marketing Locally Guy November 8, 2012, 6:29 PM

    Thanks. I signed up for the rewards card right before commenting…what about the credit card? 10% discount? I went to Target and found some toys that had potential but not anywhere near 3 x profit. 3 x profit sounds exceptional. Thanks again.

    • Cynthia Stine November 8, 2012, 8:24 PM

      The 3X is not necessarily profit, it is gross. In other words, I buy something for $5 and sell it for $15 or $10 and sell it for $30, etc. When you take out shipping, fees and other costs, I generally double my money with this approach. Occasionally, I’ll get 4X or more. The 3X is a start for me, not a firm rule. It tells me to look closer and analyze what I’m seeing on my screen. Sometimes an item may be so big or heavy that the actual net profit is too small to be worth my trouble.

      Many people use their Target cards to get additional savings. The trick to using Target credit is to pay it off every month because the interest rate is high. Same with TRU or any other store with a credit card. I bought some items at Target the other day, but found Wal-Mart to be much better. You have to keep circling back to the stores because they get in new inventory, have sales, etc., that make it worthwhile. Toys R Us had a 1-day sale a few weeks ago on Barbie dolls that made the margins work for a change. TRU is especially known for sales that only last a few hours. My Dad takes advantage of those.

      Hope this helps!

      Cheers,
      Cynthia

  • Georgene Harkness November 28, 2012, 5:45 PM

    You said: “And yes, just get started! Until you’ve earned $600 in one year, you don’t even have to worry about taxes. ”

    Cynthia, may I interject something here? Amazon is not required to send you a 1099 until they have paid you $600, BUT, please don’t make the mistake of thinking that you don’t need to report your FBA income until you have reached $600. This is absolutely not true. You must include *all* income in your tax return, even if it is not reported to the IRS. Income from your FBA activities would be reported in the business portion of your tax return whether it is a Schedule C and included in your personal return or whether you have a more formal arrangement, such as a corporation. From that, you reduce the income by the expenses you have incurred and that may **or may not** result in taxable income to you, but the income MUST be reported.

    Why is this important? Because small businesses sometimes/often get audited, and, for example, if you have a cash business, it is going to be easy to see whether you ended up with more money at the end of the year than you had when you started. The IRS generally starts with your bank account when doing an audit – to see the difference between what came in and what went out. If you end up with even $500 more at the end of the year that isn’t reported **somewhere** on your tax return, I promise you they will be looking for it.

    I am a CPA and have many years of tax returns behind me, but please don’t take my word for it: check out the facts at IRS Publication 525, Taxable and Nontaxable Income. Every reader should Google this Publication. And remember: it doesn’t matter what your CPA says when the IRS comes calling. No one is responsible for paying your taxes but you.

    And I am sorry for sounding so gloomy but I truly believe that is important. And despite all I did just say, I do agree with this part: Just Get Started!

    • Cynthia Stine November 29, 2012, 8:20 AM

      Georgene,

      I appreciate your perspective. You are quite right that all amounts are required to be reported to the IRS. I should have clarified that the reason people don’t have to worry about taxes until they make over $600 isn’t because they don’t have to declare it, it is because the amount is so small. They just report it on their taxes at the end of the year. The IRS isn’t expecting quarterly tax payments or anything like that from such small amounts.

      I’ve been either an S corp or C corp since 1994 and I always pay my taxes on everything I do. In my book I encourage people to set themselves up as a business from day one with a name and tax ID, separate bank account, separate credit cards, etc. For many people, however, I recognize that they are going to give this a “trial run” of a couple of months to see if it is really going to work for them. Some will drop out having only sold a few items. I’ve heard over and over again from my readers that they want to see if it is going to work before going through all the trouble of setting themselves up properly. The $600 mark is a good place to decide if this is working or not. It is going to be reported and the amount will start to be significant at tax time so it is a good time to get set up as a business and start having expenses to charge against it and so on.

      Thanks for your post!

      Cheers,
      Cynthia

  • Georgene Harkness November 29, 2012, 8:23 PM

    Thanks for understanding the intent of my comment, Cynthia. You have been such a help to me in many ways that you probably don’t even realize.

    And I do absolutely agree that when deciding whether the business is going to be “worth it,” $600 is a good dividing line to choose.

  • Melvin November 17, 2013, 6:59 AM

    Hi cynthia, For all the new sellers that reads these post and find it exiting Cynthia can agree with this but they day you find your first product that you pay 5 dollars for and its selling for 60 dollars on Amazon with a ranking of 1000 you won’t see the thrills yet. I am hungry everytime I search for products I am searching for the thrill a product that I can take home and make 3 or 4 or even ten times my investment. Think of it as this if you are making 8 dollars and hour at your job and your boss tells you for this week we are going to pay 25 dollars and hour for 8 hours of your time everyday you come into work this week well thats the excitement I go out with everyday. FBA selling and scouting for products you just don’t know til you try but you have to learn the basic first. Thanks and have a great day happy scouting.

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