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01/07/2019 at 8:59 am in reply to: Scavenger Life Episode 393: Happy New Year and Returns Happen #54670
Ebay DED this week. Oh well.
Sales: CAD$417, 5 items, COGS: $70 –> Item profit: $264
Expenditures: $116 (rent mostly)
After-tax cashflow: $150
Hours: 6, $25/hr after tax
Listed: $200, 1 item
I only scavenged 1 item this week! It is a great big ball valve, weighs 34 kg, I got it for $10 and I think I can sell for $500 before the sun burns out.
Man, I am really striking out with inventory. Hopefully this week is better. Also need to scavenge a new dishwasher as ours crapped out. (Pretty sure the pump is toast… crummy old dishwasher anyway so I don’t want to fix.)
Flatware is great. It’s cheap, it stores easy, and it can sell for good money! I sold some Rogers Bros flatware this week for $100.Hah, that pretty much happened to me the other day. Sold some cutlery for $100, but it was acquired before I started my inventory system so it had no location tag. So I had to look on my shelves for a little bundle of cutlery. Nothing. Went through every single bin in the house twice – nothing.
Eventually went back to my original photos in the cloud, and saw I took one photo of the set inside an original box, which I didn’t include in the listing because the box was wrecked. But I did use it to STORE. Went back to the shelf, found it immediately.
01/04/2019 at 3:44 pm in reply to: Scavenger Life Episode 392: No Alarm Clocks – We chat with Troy aka T-Satt about the eBay Lifestyle #54519Hey Geoff, you’re not confused about COGUS. It’s not tax deductible or anything, you just have to clearly distinguish it from COGS so you don’t claim the cost of unsold inventory as a deduction. I do occasionally run into resellers who think they can deduct all their inventory costs every year.
Setting aside taxes, I mainly look at COGUS from a cashflow perspective because it eats into the profits you actually take home.
Yes, I call this COGUS and it’s baked into “Expenditures”. It doesn’t affect gross profit but does affect net cashflow, which is the number I pay the most attention to. Personally I think it’s a critical number to track.
I think it’s 19x because the total sales include shipping income. Still, 19x is incredible ROI.
I cover my extra taxes from ebay and rental property via extra payroll deductions. 10 minutes ago HR called me because they’d never seen an extra deduction request for as much as mine ($550 biweekly). Lol.
Good post. One thing I see a lot is confusion about what cost of goods you can claim as a deduction. As I understand it, you can only deduct cost of goods SOLD (COGS), not cost of goods that remain unsold. So it’s not enough to total up inventory expenses and then claim that, you have to itemize them and only claim the ones associated with an actual sale.
“Excel is fun!”
Yep, it certainly can be. Who needs to pass a turing test, amirite?
That makes sense. I got thrown off by all the definitions I found googling which say it’s supposed to be based on starting inventory. Probably works for Walmart but not for us!
Troy, regarding your STR. After talking to Doubly below I tried calculating it based on your numbers and it’s not working out to 14%. First of all I guess you’re normalizing it to a 1-month period. But is it just the sum of monthly STRs or are you doing something more complicated here?
Cool, Doubly!
The yearly STR based on these numbers would be (#sales 2018)/(#listings Jan 2018) = 1206/1093 = 110%
In my opinion this yearly STR stat is not all that informative or interesting for a fast-growing store such as yours. STR is the percentage of your store that sells every year, but your store doubled in size over the same year. It’s like trying to weigh a running horse.
However if you do the same for month periods it starts to make a little more sense. Another option would be to calculate STR based on pre-2018 listings sold in 2018 but that may take a bit of spreadsheet magic. (Using mainly the sumifs command).
01/01/2019 at 11:52 pm in reply to: Scavenger Life Episode 392: No Alarm Clocks – We chat with Troy aka T-Satt about the eBay Lifestyle #54349Hey Marie. I hear ya – not a big fan of acronyms myself but in my job they’re used everywhere, even when the referent is less syllables. It’s painful sometimes.
COGS is Cost of Goods SOLD to be precise (important term for doing taxes). I also sometimes refer to COGUS (Cost of Goods Unsold) because I think it’s an important number to monitor.
STR is Sell Through Rate. Basically, what percentage of your inventory sells per month (or per any other time period).
For example if you had 1000 items on Dec 1 and on Dec 31 you had sold 100, your monthly STR = 10%.
It’s also possible to calculate it in dollar terms, which will give you a (perhaps interestingly) different number.1191 new listings, holy moly!
You prob know this, but make sure you track those $1500 of random expenses for shed, shelving etc. They’re good tax deductions. One good reason to invest in your business infrastructure: you get a discount equal to your marginal tax rate percentage.
Thanks Troy. The labour cost is for employees, or for you guys at some nominal rate?
2018 sales (no shipping): CAD$60,577
COGS: $11,713
Fees: $9,659
Gross profit: $39,256Total Expenditures: $21,751 (includes supplies, COGS, COGUS, rent on storage)
Net cashflow after tax: $19,010
Total # of sales: 336 ($180 avg)
Listings: 724 made in 2018 ($94,969 est), now at 654 listings. Not sure how many I had at the start of the year.
Estimated inventory value: $27,781 start of year, $58,018 now
STR: 19% (sum of monthly STRs). If I calculate from a base of Jan 2018 inventory this number looks stupid huge, because I’ve been growing a lot.
Hours: 474 (9 hrs/week)
Hourly rate: $40.11 (calc’d from after-tax cashflow)Looks like I have a $10,000 ebay tax liability this year. “Luckily” I took a big loss on the sale of an old rental property so the capital loss will cover these gains. Have made arrangements at work for them to suck out even more payroll taxes to cover next year’s liability so I don’t end up with a huge bill for 2019’s ebaying.
I am pretty happy with 2018. I almost doubled my cashflow from 2017 with a comparable amount of hours. I found auctions which mean I have plentiful opportunities for good inventory if I have the cashflow for them. I think I should have spent more on inventory this year, however. A few missed opportunities.
I’m starting to be constrained by storage space again. Will probably need to acquire another storage unit this year. Also plan to husband my money for large auction buys and not nickel & dime myself to death with single items.
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This reply was modified 2 years, 8 months ago by
simplicio.
12/31/2018 at 5:09 pm in reply to: Scavenger Life Episode 392: No Alarm Clocks – We chat with Troy aka T-Satt about the eBay Lifestyle #54257I guess the theory here is that clearance items are those legendary “loss leaders”, and resellers hurt Target by making them incur the loss without any hope of its leading to other sales? Well, OK, I guess that’s not *impossible*. I’m not a marketing guy, maybe it’s a super important strategy and Target would go belly up without it.
On the other hand, I believe that brick and mortar retail is basically, ruthlessly, about dollars per day per square foot. Under those constraints, sometimes clearance is just gonna be clearance – because those widgets aren’t moving and you need the space. God knows I have stuff I’d looooove to unload on another reseller. Seems unwise to exile them just to maintain your loss leader strategem.
Now, I don’t really know how these pros and cons net out. But I wonder if Target really knows either? Life lesson: start looking under rocks and you’ll find no shortage of garden variety incompetence.
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This reply was modified 2 years, 8 months ago by
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