How One Simple Excel Mistake Cost Me $10,000
Today, I am going to share with you about a day I still remember. This is about when I was running my e-commerce business and rocking the money flow. I was in the midst of the holiday shopping season. It was between Black Friday and Christmas. For those of you who don’t know, that is when most retailers and shops earn their money. It is called Black Friday because companies would run in the negative (red) through most of the year, yet on that Friday, they would sell enough to get them into the positive (black). I knew first hand how important the holiday shopping season was. For a man running an e-commerce business on his own, those days were extremely high stress. I barely slept, was on the phone more than I cared to be, and I would answer more emails than most people would in many years. I was really busy, but it was bringing money in. One day that stress caught up to me and it ended up costing me around $10,000!
Selling on Amazon is Great!
Many people ask me for one of my secrets to running a successful e-commerce business. While I could name quite a few things, my main secret is to get your products on Amazon. Plain and simple. You want to be a seller on Amazon because it will instantly give you a massive pool of potential customers. When I first started selling online, I would bring in a few hundred dollars a month. Year after year, it would grow. By my second year, I had only made about $15,000 total. It wasn’t much, but I still loved what I was doing and what I was building.
One day, I was approached by another store owner asking me what I thought about selling my products on Amazon. We had one of those relationships where we would help each other out. Though we were competing with each other, we still spoke on how to best increase our sales. I told him I had never thought about selling on Amazon. I was afraid of the costs. Amazon charges merchants to sell on their site. When you list something and then it sells, Amazon takes a cut. In consumer electronics, the profit margin is already razor thin. After a few days of thinking about it, I decided to give it a try.
From a Few Hundred to a Few Thousand
The first month I was on Amazon was slow. I was learning a lot about the platform and how to get my products on the right pages. Amazon does make it pretty easy, but I wanted to take my time to learn. The second month, I started off with a bang and earned a couple thousand dollars. Yes, I went from a few hundred to a few thousand. It just kept growing and growing. At the end of my third year, I had sold over $1 million in just that year alone! It was awesome and the money was rolling in and the orders wouldn’t stop. This was especially the case when the holiday season came around. Everything was running like clockwork
I screwed it all up! When you list your products on Amazon, you have to identify your products by one of their unique identifiers, called ASIN. Amazon creates these numbers for every product on their site. If you want to sell the same product, you just list it under that ASIN. They even provide you with a template for Excel to add and update your items and quantity.
Since I have mad Excel skills, I would create macros to keep my quantity up to date. I would then do some formulas and make sure everything was good. Once done, I would send it over to Amazon and they would update their listings with my latest quantity. Unfortunately, one day I made a massive mistake. It was bad.
I was running behind on my nightly inventory update. I was really tired and burning the midnight oils. I quickly ran my Excel macro and put in the formulas. I sent it off to Amazon and then went to sleep.
Beep! Beep! Beep!
I had a Blackberry back then as there weren’t iPhones or Androids. I was the talk of my social circle with that badass phone. Oh, have the times changed. Anyway, my phone would beep at me when I would get emails. At 2AM, I started getting a crap load of beeps. Normally I can sleep right through them, but this time they just kept coming. I had to check my phone to see what was up. Those beeps were orders rolling in from Amazon. I had a brief smile on my face until I noticed one glaring issue.
I didn’t sell the product people were ordering!
Oh crap! How did this happen? Why are these people ordering this item from me? I didn’t have them in my inventory and I surely couldn’t get them at the price I had listed it at. Damn!
I shot out of bed so quick because I needed to do damage control. I needed to shut off my listing for said product. Do you want to know what the product was? It was a Nikon digital camera similar to this one. The camera cost roughly $350 a piece. My list was selling that camera at $29.99. Yes, you read that right, I was selling one of the most popular cameras for nearly 85% off. People were buying everything I had in stock. The problem was I had none in stock.
In order to reduce the pain, I opened my last Amazon inventory update. I found the ASIN of the Nikon camera in my Excel sheet and looked through to see where the price and quantity came from. Quickly, I realized it was me. I was in such a hurry that I didn’t fill down my formula correctly and both the quantity and price were one row off. All of my product listings were wrong, but this was the one that everyone was looking at.
By the time I had removed the listing, people had bought nearly 200 cameras. The quantity I had listed was 3,800, which corresponded with a stupid memory card the row above the camera listing. For those who don’t want to do the math, here is what it came to be.
Yep, in a matter of hours, I sold over $70,000 worth of cameras I didn’t even have in stock at a price that no one could match. Not even the manufacturer. I was up shit’s creek without a paddle people. I immediately had to cancel everyone’s order and email them my sincerest apologies. Some people understood, but most were very upset and left my with negative feedback on Amazon. Because of this, I was kicked off of Amazon for not fulfilling my customer’s orders. The other part was that it was two weeks before Christmas, which was my selling season.
So, how did this mistake cost me $10,000? Well, since I couldn’t sell on Amazon, I wasn’t getting sales. I could only rely on my other channels, but nothing can compare to Amazon. I rushed my butt off to contact people at Amazon to see if I could get reinstated. After three days and many phone calls and a little pleading, I was back on Amazon. During those three days, I lost out on $10,000 in sales. All because I was rushing to get things done and burning the midnight oils. I made one stupid Excel mistake that is really simple to make. That little error could have cost me much more, but I still lost out on $10,000 in orders. As a one-man show, that hurt. It hurt a lot.
The whole point of this long-winded post is to show you that everyone makes mistakes. Some mistakes are worse than others. Along those lines, it also should show you to never give up when something bad happens. While I did get kicked off Amazon, I didn’t cry about it. I reached out to my contacts and figured out what I did wrong. I pleaded my case and got right back on the horse. The whole fiasco showed me how vulnerable my process was and I was able to clean it up and create an error free process. Good things can come out of bad situations!