Inside A Millionaire’s Arbitrage Account: Gaye Lisby’s February Month End Numbers
By Gaye Lisby – March 18, 2022
Hi, everybody. I’m Gaye Lisby.
Today, I’m going to give you an update on my February sales in one of our Amazon accounts. Now I’m gonna actually show you the backside of our account.
I’m talking about the tool that we use that keeps track of a lot of information in our account, which is called Inventory lab.
Many Amazon sellers use inventory lab to be able to keep track of your numbers. Unfortunately, most Amazon sellers do not import the numbers that they really need to be keeping track of. This is one of the reasons they get off track and turn their Amazon business upside down very quickly.
In our Amazon seller tribe coaching rounds with Garry Ray, Garry shows us exactly how to manage our inventory lab account to keep track of every expense. This allows us to understand that it’s expenses that bleed in our profit.
When the profit is bled out, there’s nothing to reinvest in your business, which may lead to the closure of your business.
Now, one of the things that you will see in my inventory lab account is that there’s no line for investment and for interest payments. The reason is that I don’t borrow any money to build my business.
Here’s a fact: there are some gurus or teachers out there who show you big numbers. But, they don’t show you what they’re spending in interest to maintain their debt load.
One of the great things that I’ve been able to do, and I’m so thankful for it is that I don’t carry any debt load. This makes a big difference in general arbitrage, which is the model that we teach people to start with.
Why General Arbitrage?
General arbitrage is a really great way to understand the Amazon platform. It has a lot of paths where you can scale into wholesale or closeout or private label or whatever things that you want to do for your business in a massive way.
I say all this time: there’s money all around us. The reason is that every time I go to any store. Whether is picking up medicine for my 87-year-old mother in Walgreens or buying some stuff in the grocery, I always find something profitable for our inventory. I have proven this over and over every day.
This is why the general arbitrage model is so fun because we can teach you how to take advantage of that flow of money. I sometimes say that Amazon is like a straw. You can stick it into the milkshake of money and you can suck out all that great goodness that you want for your life and your household to change your family’s lives.
Inside My Inventory Labs Account
So let’s get into some numbers.
What you’re seeing right now is the backside of my inventory lab account. I’ve filtered the date so it shows everything from February 1 to February 28.
Remember, February was a short month. It has always been and will always be probably the least month you will ever have in the calendar year of your 12 month selling period.
Generally, the sales in this month are the lowest it will ever go. Then it just starts building from there into that massive surge that most of us experience sellers know. I’m talking about that six weeks period of excitement in Q4 where things just get massive and they can double and triple.
So we’re looking at this 28 day period. The supplier line is going to be blurred out because I don’t want you to get sidetracked by that and say, “I gotta find that exact store and buy exactly from there because that’s how Gaye does it. And that’s how she’s able to make this money.”
No, that’s not the trick. The trick is to find inventory in any store that you have available to you. Finding what store I have available to me is not gonna solve your problem. But knowing what to find is going to be a big help to you. I also want to increase your proof of concept. As Garry says, “a lot of people have proof of concept that is too high.” They’re like, “Well if I can’t do $10 million, I’m not gonna do it at all.” Or they’ll say nothing good ever happens to me.
I’m proof that anybody can do this. Always kind of jokingly say if two menopausal grandmas from Branson, Missouri can do this, then anybody can do this.
This is one of the accounts that my sister and I have on Amazon together. So let’s look at some of the numbers. You’ll see the revenue number is 111,645 and some change. The profit is 21,177. Well, that’s a pretty good profit.
If I’m running my numbers correctly, that’s going to be 19% net profit. Now, the 19% net profit is a handsome profit. That’s something that can be a life-changing income.
Here’s how we do our business. Colleen and I are fairly inactive to the day-to-day operations of the business. We have people doing the buying, prepping and shipping for us. Fortunately, we own our own small warehouse on our own property here in Branson, Missouri.
Some of those who have been in Amazon’s seller tribe have actually been here and been in our warehouse and shared time together as Amazon seller. So that was a precious time, precious opportunity.
Now, let’s go over the reports of profit and loss statements.
Profit & Loss Statement
One of the things that you’ll be able to see is the net profit. You can see here; the net profit is much lower than the profit figure you saw on the other page. Well, there are a couple of reasons for that.
First, the profit and loss statement from your Amazon account, if linked to your inventory lab and you are importing, all of your cost, you’re gonna be able to track down every penny. You will see what is going out and what comes in. It is an exciting thing to see because you’ll know how much you are really making. Many often say revenue is vanity, right? Profit is sanity, but cash is king, right?
Inside the inventory lab, you’re going to see the cost of goods sold. As you can see, we actually had to spend $61,338 on our inventory. You can also see that 61 translated to 111 in revenue.
This means we’re reaching the 2.1 or 2.2 multipliers that Garry has taught us to consider.
A lot of people who are new to Amazon selling get really hung up on these selling fees. Let me just squeeze you with something you can’t change. There’s just a little bit you can do to manipulate and squeeze these fees out.
But, since speed is of the essence in retail, the first to market wins the game. I don’t usually do that because I can make up for whatever little bit of profit, I might lose from not squeezing my fees down to the lowest common denominator. I can make that up by just buying more inventory and selling that inventory faster.
We have five team members in our operation and we’re not dealing with that. We don’t have time for that. Plus, obviously, we’re also helping people in the Amazon seller tribe to grow their businesses as well.
Here, you can see the referral fees, transaction fees. Once again, I don’t get hung up on any of these numbers because I can’t change them. It’s Amazon’s playground. It is what it is, right.
Long-Term Storage Fees
The long-term storage fee is where I probably would get a little more hung up on. if I found that I had a lot of long-term storage fees, then I would see what that inventory was and get it there and make sure it wasn’t costing me money.
You can see also here, some of the expenses we have are a security service, tax fee and the PS ups shipping. This occurs when we do merchant fulfilment, which we don’t do a whole lot ourselves.
Other fees here are from warehouse supplies, employee benefits and payroll taxes.
Payroll Taxes and Gross Wages
Next, I want to show you that two payroll taxes and gross wages were inflated. I’ll need to have Colleen change something on the backside of this. What happened here is that the gross payroll wages were taken out twice. You can take the 7,415 and add it back into this net profit cause that shouldn’t have been taken out twice.
This fee could go in our pockets, mine and Colleen’s business bank account. We can use it in any way to grow our business. If this wasn’t a mistake, I can show you the real numbers for this one.
There are other fees that you can see in our inventory lab account. You can see that there’s an inventory lab subscription, the internet cost, etc.
There’s an Amazon seller tribe member that helps us with prep and shipping in another location. You can also see the taxes that Amazon collects and submits on our behalf. We don’t have to deal with those too much.
As you can see in February, we did pretty well even if it was the shortest month all year long. If you take that total net profit of 5,000 and add the gross payroll that was duplicated, we should have at least 7,554.
We’re thankful for that. We’re able to employ some people to help us. We have two buyers that we employ on a full-time basis, and then we have two prep and ship people that we employ on a part-time basis.
We also have a seller tribe member who ships for us in another location on a very part-time basis as well. We have a retired bookkeeper who actually does oversight on our credit card statements, our credit card numbers through the week, and just make sure that everything is lining up for us.
You need to have someone look up your credit card statements. We learned this hard way because my Facebook account got hacked by a bad terrorist group.
They were able to get a hold of our bank account and, credit card. We lost $6,000 over that. We were able to recover that after a period of time. But, it was a frustrating period of time for us.
This experience taught us that we needed to have a much better day-to-day oversight. And so we get this retired bookkeeper she’s in her seventies and she loves numbers and she loves details. So she just gives oversight to that. It makes her a couple of hundred dollars extra a month, and it helps us know that we are keeping our eye on the ball.
Hopefully, you learned something from the things that I’ve said that can help you in your Amazon seller journey. Garry and I both have pledged to be as open as possible with our numbers so that those of you who come into the Amazon selling space don’t just see the upside in their business.
They would also see the downside and know that they can carry expensive debt while growing their business.
You can see with my net profit margin, I could carry a debt of two, 2%, 3% maybe, and still be able to grow my business.
But if you’re carrying credit card debt that grows by 19%, 20%, 29%, then you are in trouble. You cannot do that and grow your Amazon business. You’ll be upside down and outta business in a very short period of time.
So hopefully this has helped you. Love to hear what you’re thinking and as always, we’re here for you in the Amazon seller tribe.
If you want to find out how Garry and I grew our businesses, then I invite you to join the Amazon Seller Tribe today. There, we share everything that we do and the things we’ve learned in our journey.
You can join today and start your 7-day free trial to find out if the Amazon Seller Tribe is for you.