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No monthly storage or removal fees for eligible new products

March 20th, 2019 by Skip McGrath

Starting March 18, 2019, for a limited time, Amazon will waive monthly inventory storage and removal fees for qualifying sellers who launch new-to-Amazon ASINs in eligible categories through Fulfillment by Amazon (FBA).

To learn the details and find out if you qualify, visit Monthly storage and removal fee promotion for new ASINs.

Top Execs Are Bailing Out Of eBay

March 19th, 2019 by Skip McGrath

eBay

The latest to leave is Dan Morales, the chief information officer (CIO), who has been with eBay since 2011.  Top Execs at both eBay US and on eBay’s foreign sites have been leaving at a rapid rate.

Other recent departures include:

  • Susana Voces, “general manager of eBay Spain and Italy
  • Laura Chambers, vice president of Shipping & Transportation, Authentication and Consumer Selling
  • eBay Chief Product Officer R.J. Pittman
  • Linda Cornelison, senior manager of Global Customer Trust and Returns
  • head of eBay marketplaces in the US, Scott Cutler

eBay is going through a major restructuring in a bid to recapture its growth which declined dramatically under its prior CEO, John Donohoe However, the new CEO, Devin Wenig, has not improved things.  It’s no secret that eBay sellers and most employees at eBay despised John Donahoe.  Devin Wenig is liked a bit more.  However, when he took over, he promised to return eBay to its roots, such as bringing back its focus on collectibles, but that has yet to happen, and it’s no longer clear if it ever will.

eBay recently laid off over 500 employees including 300 at its San Jose headquarters.  In addition, eBay recently announced that it is reorganizing its business units, and will consolidate its various geographical regions into a single team, The new unit will be led by general manager of markets and senior vice president, Mr. Jay Lee.  His responsibility will include the Americas, APAC, UK, Central and Southern Europe, and all Cross-Border Trade (i.e. Global Trade).

It’s not only the executives, but sellers (including myself) are continuing to bail out of eBay at a rapid rate.  In its last quarterly report, it showed total sales growth at about 1%, which if far below industry averages.

An activist investor group led by Elliott and Starboard,  believes the eBay needs to be completely reorganized to return to growth.  One big push they are lobbying for is for eBay to sell off their non-related businesses such as StubHub and eBay Classifieds.

The last activist investor was Carl Icahn who forced eBay to split off PayPal.  PayPal has experienced incredible growth since the split, whereas eBay has gone into a stall.

eBay Mandates GTC on all Fixed Price Orders

March 16th, 2019 by Skip McGrath

eBay

eBay sellers used to be able to select the run time for their fixed price listings – but no more.  From now on, all fixed price listings must run for 30-days and be listed as Good Til Cancelled (GTC).

I heard from my eBay sources this was in the works a couple months ago –which is another reason I stopped selling on eBay.

This move is another indication of eBay’s plan to limit seller’s ability to be unique.   This was just the first shoe to drop.  ANOTHER change in the Spring  2019 update,  requires sellers  to list the item specifics when listing items not in  the eBay catalog. And eBay will be announcing more significant changes in the Fall 2019 Update.

 

Other eBay News:

This one is actually helpful:

In October 2018, eBay announced that several states passed laws requiring eBay, as well as other online marketplaces, to collect sales tax on taxable items mailed to addresses in those states. In such cases, eBay calculates, collects, and remits the sales tax on your behalf. We collect the sales tax at checkout and you do not need to take any action. We do not charge a fee for this function.

This is a big help but you are still required to register with every affected state and remit the taxes to them. Here is a list of the affected states .  A company that can help you with this is TaxJar.  

Does California Proposition 65 Apply to my Business?

March 15th, 2019 by Skip McGrath

Question

The State of California passed Proposition 65 in 1986 as a way to inform customers about hazardous chemicals in products they buy.  The law went into effect in 1988 and requires the State of California to publish a list of chemicals known to cause cancer or reproductive toxicity.

The law requires you (as a seller of the product) to list any hazardous chemicals in your product that are on that list.  Prop 65 was voted into law in California in 1986. Then it was known as the Safe Drinking Water and Toxic Enforcement Act of 1986.  The purpose of Prop 65 help Californians make informed purchases about exposure to toxic chemicals.

There are about 900 chemicals on the list and more are added each year.  Under the law, businesses with more than 10 employees are required to warn consumers about any hazardous chemicals in their products.

Now, you may be thinking I don’t have 10 employees so the law does not apply to me.  But, that is not the case.  If you sell a product made by a company with more than 10 employees, then you are affected.

I wanted to clarify this with Amazon, so I opened a support ticket.  Here is the answer I got back:

I understand that you are concerned regarding the Proposition 65 regulations.

I would like to inform you that regardless of having more or less than 10 employees in the company. If any hazardous chemical or material is been use, then the seller will be asked to provide the Prop 65 warning required for their product.

If you are not the manufacturer of the product you are listing, and selling their product, then you must provide with any Proposition 65 warning you have received from the manufacturer of the product and update the required details, since the company producing the product has more than 10 employees.

As you have mentioned, that you have less than 10 employees in your company, however if you wish to sell a product which is regulated as Hazardous chemical, then you shall receive an alert regarding Prop 65 Warning showing on the products. And, if your listings do not require a warning, no further action is required from you.

For further more queries, you may contact them, using the URL provided below:

https://www.p65warnings.ca.gov/new-proposition-65-warnings

For more information about the California Proposition 65 (Prop 65), please visit the URL provided below: https://sellercentral.amazon.com/gp/help/G202141960?referral=A3H0MJ2WNEP5IF_AQUGADIRXN89R

It appears that Amazon will warn you if you try to list an affected product, but I am not sure that works 100% of the time.   I know it’s a lot of work, but it may pay for you to check your products against the list yourself.

Is Dropshipping Still a Good Business Model?

March 14th, 2019 by Skip McGrath

You may have some experience with dropshipping – but not everyone does, so let’s take a minute to fully understand it.

What exactly is drop shipping?

Drop shipping is selling something you don’t own. There are many companies that offer merchandise for sale who will ship the merchandise directly to your customer once you pay for it.

Here are the basics

  1. You find a company that agrees to drop ship. (Most people find them by Googling the term dropshipper or drop shipper).  You list their products on eBay, Amazon or your website for sale without first purchasing it.
  2. When the item sells, you collect the retail  selling price and the shipping cost from the buyer.
  3. Now you pay the wholesale (lower) price plus any any shipping and handling fee to the drop ship company.
  4. The drop ship company ships the item to your customer.
  5. Your profit is the difference between the retail and the wholesale price

There are three types of drop shippers and it is important to understand the difference:

  1. Aggregators
  2. Manufacturers and/or master distributors
  3. Direct Importers

Let’s look at each one so you can understand how they work

Aggregators

Aggregators are companies that search distributors and overstock dealers for wholesale merchandise, and put it in a virtual warehouse.   In other words they don’t actually stock any product. They offer the products for sale on a drop ship basis.   When an item sells, they go out and buy it.  In general, these companies make their money from membership fees or drop ship handling fees rather than profit on products.

Almost all aggregators charge a membership or a sign-up fee. They claim to do this to screen out people who just want to buy one or two items at wholesale prices for their own personal use.  But, in reality these fees are a big part of their income.

Some aggregators also offer pre-made websites filled with their product.  They usually charge an extra fee for this.  Never do this.  It’s almost always a scam, and search engines penalize websites like this and you will never be found.

In general, I suggest you avoid aggregators, or any company that charges a fee. Before you sign a long-term contract, or pay an application fee to any drop ship company, make sure they offer some type of guarantee or trial period.

My favorite research tool is Terapeak. With Terapeak you can research products to make sure they will sell and what price they will sell at before you waste your time and money on listing items that won’t sell or won’t make a profit.  Terapeak is optimized for eBay, but I find their information works well on Amazon also.

Manufactures and Master Distributors

There are hundreds of actual manufacturers who will drop ship. Some of them do it directly while others use the services of a master distributor. When you work directly with a manufacturer of the product, or their master distributor, then you are getting the lowest price available and this is where you can make the most money on eBay, Amazon or a web site.

There is a way you can find manufacturers who will drop ship for free. Go to www.thomasnet.com. This is the home of The Thomas Register, the largest data base of manufacturers in the US and Canada. You will see a search bar on the home page –just select type in a product you are looking for into the search box. It’s best to be a bit general.  For example, I would search the term “men’s clothing,” instead of “polo shirts.”  Once you get to a category it will be easier to find specific products.  The Thomas register also offers names of manufacturers who will drop ship.

When you link to the drop shipping sources page on our website you will see that we have listed both aggregators and several manufacturing drop ship companies. Just because a company is listed does not mean we recommend it. You should check each company out carefully. If they charge a fee, make sure they offer a free trial period or a refund.  And, before doing business Google them for reviews and/or scam warnings.

Direct Importers

A Direct Importer is usually an overseas manufacturer with a warehouse in the United States.  The are generally reliable, but you should follow the same cautions I outlined above.  One word of warning:  Make sure they have an actual warehouse in the US (or Canada) and are not shipping from China.  Most of the companies who do that are very unreliable.

Pros & Cons of dropshipping

Pros:

Cash flow is the biggest pro.  You can start with very little money because you don’t have to pay for the products until they sell, and you collect the money from the customer.

The other pro is the savings on storage costs.  This is especially important for large items such as furniture and appliances.

Cons:

The biggest negative is that eBay and Amazon and Walmart.com don’t like drop shippers and are creating policies to make drop shipping difficult.  In fact, I suspect they will soon ban the practice.

One of the biggest problems with drop shippers is they run out of stock.  This means you can sell something and have to cancel the order because you can’t deliver.  Do this a few times and your selling account will be closed.

Another negative is price.  Because they are not selling in high volume most drop shippers will increase their prices, or add a steep drop ship handling fee.  This can kill you margins

Lastly, most drop shippers don’t care about your customer, and give really poor customer service.  I have seen situations where a drop shipper will take 4 or 5 days to ship a product.  And, even worse, I have had dropshippers ship the wrong product and then want you to pay for the return.

Another issue is fake or counterfeit products.  This is a major problem with general dropshippers (aggregators).  If  you read the fine print in their contracts (and you should), you will see a statement that says they are not responsible if you get fake merchandise.

So there you have it –my take on dropshipping.  Basically I am not a fan and suggest you avoid this business model.

Wholesale Sources for Amazon & eBay Sellers

March 13th, 2019 by Skip McGrath

wholesale sources

Many wholesaler sources do not want the general public to see their wholesale pricing.  Therefore, they will often send you to a retail site or a website with no pricing.  When you see that, do two things:  First, look for a link to register for a wholesale account.  Second, if you don’t see that, use their Contact Us form to request wholesale Information.

Kraft Klub Inc. wholesales decorative and functional home and garden décor items to the trade. Items include a wide range of styles and finishes; from colorful enamel to rustic and gray zinc, and are great for a wide variety of décor needs.

Lizzy James Designs Inc sells a line of jewelry handmade in San Diego, CA, Pieces include including wrap bracelets that can be worn as a necklace.

TLC Designs wholesales handmade accessories from a remote village on the island of Bali

Van Roehling Sauces & Rubs sells a delectable blend of German heritage and Texas spices to give you a zesty flavor of authentic, home-style sauces, rubs, candied jalapeños, and salsas.

Hanna’s Candle Company makes a line of scented candles and home fragrance products that are affordable and relevant to today’s home decor colors and design.

DaVinci Jewelry offers two completely different looks, which gives the wearer more versatility in her wardrobe and a savings.  It’s like having two pieces of jewelry in one.

Kalamazoo Candle Company sells a nice line Soy candles with natural scents that will fill a room without over powering it. Available in a variety of sizes and over 25 fragrances.

Living Textiles Company is a leading design house of modern home accessories and lifestyle bedding collections including nursery blankets and swaddles.

Creature Comforts wholesales a line of upscale gifts for dogs and cats. Products include hand painted ceramic dishes and treat jars, and all natural treats!

The LEM Company sells meat processing and jerky making equipment and supplies to the do-it-yourselfer hunter and home processor.

Jeremiah’s Pick Coffee Roasting Co. offers a large line of coffees teas and Accessories. Coffees include both organic and gourmet coffee.

Idaho Gifts Wholesale by Sandy lists gourmet and gift companies from Idaho.  Products feature huckleberry, dark chocolate, humorous products and more.

My 3 Best Retail Arbitrage Sources

March 12th, 2019 by Skip McGrath

My 3 Best Retail Arbitrage Sources

I don’t do much Retail Arbitrage anymore because all that running around is too time-consuming.  These days I concentrate on buying wholesale products where I can just place an order by email, by telephone or on a source’s website.

But I used to do a lot of retail arbitrage for several years.  It was highly profitable and very easy to source products.

Here were my three most successful sources. I would be willing to bet these are all still good today.

Dollar Store

This one might surprise you but I always found profitable products at my local Dollar Store.  (Hint: You get the best prices when you buy in case size lots).  The easiest products to make money on were in the Health & Beauty category – things like shampoo, moisturizing cream. face cleansers and body wash.  But I could also find great things to bundle as well.  One of my best sellers were cheap paintbrushes that I sold on eBay or Amazon in lots of a dozen each.  My cost was 10¢ each when I bought by the case and I could get $9.95 a dozen on eBay and $12.99 on Amazon if I sent them to FBA.

(Note:  Family Dollar Store last week announced they will be closing over 300 stores nationwide.  When this happens they typically discount merchandise up to 60%-off)!

Trader Joes

Trader Joes stores are only located in 17 states so unless you live in one of those states or near a state line, they may not be available to you.  Trader Joes is well known for their all natural and organic products.  If you don’t think these items sell, just try typing Trader Joes into the Amazon search bar.  You will find over 2000 items for sale.  I had really good luck creating multi-packs of their organic fruits like mangoes and apricots,  I also did well with  Tea Tree Tingle Shampoo , Conditioner and body wash bundles.  I never had a problem doubling my cost after fees.

Costco

Costco was one of our best sources for products.  Their house brand is called Kirkland.  Once again try typing that into the Amazon search bar but this time you will get close to 10,000 results.  Don’t be put off by the competition.  Here again, I almost always doubled my money after fees with almost any item from Costco.  One of my top sellers were 1.5 pound smoked salmon fillets (in foil pack – no refrigeration needed).  I was paying $11.50 each and selling them through Amazon FBA for $31.95.  Costco also once had a line of Travel Dog Beds for about $14 each.  We sold over 400 of those at an average price of $36.00 over a one-year period. (At one point we were selling as many as 5 per day).

One warning about Costco.  They also have an online site and some sellers have tried drop shipping from there.  Don’t do it! You could find your account cancelled.

Setting Yourself Up For Success

March 11th, 2019 by Skip McGrath

Setting Yourself Up For Success

This is something I have wanted to get off my chest for a while. So please forgive me if this sounds like a rant –I don’t mean it to be.

Have you ever seen a forum post that went something like this: “eBay and PayPal are just out to screw us. They are the only ones who are making money from this,” or “Amazon FBA fees are so high it’s a rip off and no one makes any money except Amazon.”

If you spend any time in forums or message boards you will come across comments like this fairly often. Don’t get me wrong –there have been instances where eBay, PayPal or Amazon, or a buyer from one of these, has screwed over a seller. It does happen –but it is usually the exception –not the rule. That is not to say that both eBay and Amazon have policies that sellers don’t like –they do. But what can you do about it? They own and control the platform. If you want to sell you have to do it by their rules.

If you want to be successful at any aspect of online commerce be it eBay, Amazon, Blogging, affiliate marketing, or whatever, the first thing you have to do is take ownership and responsibility for it. And then you have to treat it like a business.

It doesn’t matter if you are full-time or part-time, if you approach what you are doing with anything less than 100% commitment and 100% focus, then you are treating your business like a hobby.

If you are going to sell online, the first rule you have to learn is that eBay, Etsy, Amazon, and the other selling platforms, make the rules. They are all profit-making businesses and run their business from that perspective –not yours or mine. You may not agree with many of their policies and strategies (I know I surely don’t), but spending time grousing about it is a complete waste of time. (In fact, eBay’s new rules and policies became so frustrating –I just gave up and quit selling on eBay altogether).

The idea that only eBay or Amazon is making money is just silly. There are over 400,000 sellers who make a full time living on one or both of those platforms and many thousands more who make a part-time income. And that also goes for Etsy, Rakuten and the other sites. In the case of eBay, if sellers aren’t making any money they leave (and, like me, many have). Unlike Amazon, eBay sells nothing themselves, so fees from successful sellers are their only source of income.

So, having got that off my chest, here are some of the thoughts, actions and traits I think all sellers have to employ if you are going to be successful.

Attitude – A positive, can-do attitude is essential to succeed in any business. If you think the deck is stacked against you, or you blame others for any lack of success on your part, then you are wasting time and energy on unproductive thoughts. And that is a sure way to lose money because it leads to bad decisions. When you sell on a platform like eBay, Etsy or Amazon you have to follow their rules –it’s as simple as that. So rather than trying to find clever ways around them, embrace them and make them work in your favor –or just find a new platform.

Here is a real example. I have two cousins who recently retired. They are both about the same age, had the same parents and had similar educations. One of them is the type who thinks everything in the world is rigged against the little guy and the other one had pretty much a positive attitude and just worked as hard as he could. One of them retired with an excellent retirement income and over a million dollars in savings. The other one is trying to live on about $1800 a month social security. I think you can guess which one is just surviving on social security.

Focus – Do one thing at a time until you do it well enough that you can move on to something else. You will inevitably make mistakes –I have been doing this for 14 years and I still make them. As long as you learn from them that’s OK, just keep focusing on your goals and your business (or your niche) until it is successful.

Don’t try and do several businesses at once. If you are well on your way to learning how to sell on eBay, Etsy or Amazon, stick with that until you are consistently profitable month after month. Just because I come out with a new book about blogging or affiliate marketing, doesn’t mean you have to try and do that also. Wait until you master what you are doing now, then come back and buy my book later.

Risk – This brings me to the concept of managing risk. Nearly every decision you make involves some level or risk. If you try and avoid risk altogether, there is just no path to success. The key is learning to take a lot of small and manageable risks. Some will pay off while others will not. But you learn from both. When a scientific experiment doesn’t get the result the scientist hoped for, he or she considers that a successful experiment because they learned what doesn’t work. Taking risks works the same way.

Risk management is about making small mistakes that don’t knock you out of the game. For instance, we had a coaching student a couple of years ago who was actually doing well. She was growing slowly, but she was growing and making money. And then she took a big risk and bought over $5000 worth of a liquidation product that turned out to be all junk. That was just too big a loss for her to sustain and she had to go back to work to recover from it. Had she made a $1000 mistake she might have survived it –but $5,000 was just too much to overcome.

Avoid negative influences – One thing I see all the time are sellers who allow themselves to be discouraged by other people. If you want to be successful, you must learn to completely ignore what  Nixon’s VP, Spiro Agnew  called the “nattering nabobs of negativism.”

You can’t always avoid them –sometimes they are even in your family. And you don’t want to argue with them. The best thing you can do is listening politely and let the words run into one ear and out the other. Instead of giving these negative folks the time of day, seek out other people who are positive and successful. Surround yourselves with those folks and listen to what they have to say.

Money management – More businesses fail because they did not understand their costs and how to control their cash flow. This is a subject that really deserves your time and attention. You should know where every dollar is coming from and where (and when) it’s going. Evaluate every expense with an eye to cutting it, but don’t cut the things that are important like research or services that save you time.

Be judicious in your cost cutting. Let me give you an example. I have never been a fan of Skype. For some reason, I prefer to have a phone in my hand and I like to walk around when I am on the phone. Skype ties me to my computer. But I started looking at my phone bills and they were getting out of hand, so now I am using Skype more often and I am looking at those Skype phones so I can still walk around while I talk.

When you look at an expense it should do one of two things; Save you time that you could use to do something more profitable, or it should have an ROI –return on investment. Look at each expense and ask yourself “What would be the effect on my business if I lowered or dropped this expense?” Then evaluate your answer and make a decision.

 

How To Lose Your eBay or Amazon Account

March 10th, 2019 by Skip McGrath

Not a week goes by that I don’t get an email from a reader who has been suspended or shut down by either eBay or Amazon. The reasons why often vary and there are a few things you can do on Amazon that you cannot do on eBay and vice versa. But there are many similarities too. Let’s look at some ways to get in trouble with your account:

1. Poor Customer service – this comes down to feedback and star ratings. If they get too low on either platform you run the risk of suspension or having your account cancelled permanently. If you are merchant fulfilling on Amazon, a poor record with A to Z guarantee claims and/or order cancellations will cause you problems. On eBay it can be things like cancelling sales because you can’t deliver (this often happens when you are using dropshippers who run out of product that you have listed and you cannot fulfill the order).

2. Conspiring with other sellers to fix prices – this is a very serious one and in fact is not only against eBay and Amazon Policy – it’s also a violation of a Federal Law called Price Fixing. Never, never, never contact another seller and mention anything about pricing -even if you are doing something innocent, it’s very easy to be misunderstood. You don’t have to necessarily contact the seller directly. I know of one case where an Amazon seller mentioned a product and the seller’s name on a Facebook post and said something like “I wish this guy would raise his prices up near mine so we could both make money.” Someone forwarded the post to Amazon and the seller was hit with  a policy violation.

3. Selling fake, knock-off or counterfeit merchandise – this one is easy to run afoul of. There are dozens of companies that sell fake branded goods including fashion names like Ralph Lauren, Coach, Tommy Hilfiger, Channel, Dior and so on. And it’s not just fashions – there are companies selling fake iPods, iPads and even iPhones and their accessories. You might think you are getting the real thing, but if you list it and someone complains you will get shut down.

Look at the  screenshots below from AliExpress. Notice the seller doesn’t use the brand name, but the product logos are almost identical to Tommy Hilfiger and Channel.

How To Lose Your eBay or Amazon Account

If you list those items, even if you do not claim they are the real brand, you will get an intellectual property complaint because you are using a trademarked logo and/or essentially selling fake goods.

4. Item Not as Described – Get too many feedbacks on eBay or returns on Amazon for this reason and you could get in trouble fast. Make sure you always provide a full and accurate description.

5. Selling non-permitted goods. One good example on both eBay and Amazon are any accessories or parts related to Assault Rifles such as the AR16 or AK-47. Even if a part is not made for those rifles but will fit them, eBay or Amazon may shut the listing down and issue you a policy violation. Currently I am appealing a case with Amazon because I sell leather slings for hunting rifles.

Amazon said they could be used on an assault rifle so they ended the items and issued me a policy violation. I won the appeal sort of. My sling comes in two colors, tan and black. So far they have reinstated the tan one, but have not yet approved the black one. What’s interesting is that Amazon sells a nearly identical sling but from another company. And theirs comes in black, tan and camo.

Also Amazon has restrictions on certain types of products by category. If you log into Seller Central and then go to this page you will see a list of categories on the left side of the page. Click on the category and you can read about what products or type of products are restricted or not permitted. http://www.amazon.com/gp/help/customer/display.html/ref=hp_left_cn?ie=UTF8&nodeId=201414190 (You will need to be logged into seller central to use that link).

Many of the items such as alcohol, tobacco and drug paraphernalia are restricted on both eBay and Amazon. On eBay there are also certain brands that are restricted such as Tiffany. If you only do this occasionally you will just get a policy warning, but repeated attempts to sell restricted goods will eventually get your account cancelled.

And just as a final note – I actually asked a contact at Amazon for the top 3 ways sellers can lose their accounts and this is what he said:

1. Make sure your customers get their stuff by the promised delivery date
2. Answer customer inquiries within 24 hours
3. Accurately report your inventory so that you’re not forced to cancel orders if you run out of stock
Number one and three can be avoided altogether by using FBA. They only affect merchant fulfilled sellers. Number two is something I check four or five times a day. My average for answering customer questions is under 4 hours but you definitely want to keep it under 24 hours.

I know of one case where a seller got suspended because she was taken to the hospital and ended up being away from her computer for over a week. She did get the account back by sending Amazon a letter from her Doctor, but if something like that happens to you and you can’t respond to customer emails, ask a family member to open a support ticket telling Amazon that you are ill or what the circumstances are and that might prevent a suspension.

How much does your inventory really cost you?

March 9th, 2019 by Skip McGrath

I know among my readers, there are sellers of all sizes and levels of experience. Some of you dabble on eBay and/or Amazon; some of you are like me – an average sized seller in the $10,000 to $25,000 month range ; and some of you are very large sellers grossing over $50,000 a month in sales, or even much more.

But one thing we all share in common is inventory. If you want to sell products online, you have to acquire them first.
For some of you small eBay sellers, that can be nothing more than a few hundred dollars worth of goods you buy from flea markets, garage sales and thrift shops. For someone like me to generate over $20,000 a month in sales I have around $40,000 to $80,000 tied up in inventory depending on the time of year. Those of you who are huge sellers have much more than that. I met a few sellers at this years SCOE conference for sellers who have over $500,000 tied up in inventory.

In yesterday’s post you learned how to determine the true cost of products you sell. Determining the true carrying cost of your inventory is just as important because learning how to control those costs can put a lot of money in your pocket at the end of the year.
Let me use a mid-range example to demonstrate:

Say you have 500 different skus sitting in Amazon’s warehouse. And on average you have six of each item at any given time. That means you have 3000 total items sitting in FBA. Now let’s look at your costs:

Rather than make up numbers I am using some numbers I researched from my own account. Of course I have over 800 skus, but I am going to use 500 just to keep it realistic for more of you.
My average item cost is $21.00. So if I multiply 21 times 3000 items that means I have about $63,000 worth of goods sitting in a warehouse. So what are my costs?

First is the opportunity cost – how much interest could I be earning on $63,000 if that money were earning 4% interest? The answer – $2,520; so that is one cost.

Next is carrying costs – As I pointed out in the previous article we operate pretty much on a cash basis. We use credit cards to buy goods to resell so we earn the travel points which help offset the cost of attending trade shows and such, but we tend to pay off the card in full each month so we don’t incur interest costs.

But many sellers use their credit cards (or other funding sources like Amazon Lending or Kabbage) to finance their inventory. So let’s assume at any given time you have $30,000 outstanding in credit card balances. If your annual interest rate was 15%, that means your inventory is costing you $4500 per year to carry.

And then there are storage costs. Depending on the size and weight of your items, your monthly storage costs for 3000 items would run between $1350 and $3000. Let’s take an average point of $2000, which works out to $24,000 per year. If we leave opportunity cost aside and just look at carrying and storage costs, that means we have to earn $28,500 in profits just to cover our inventory carrying costs before we start making any profit.

So how can we reduce these costs?

Back in the early 1980s the Japanese carmaker Honda came up with something called Just in Time inventory. Since inventory cost of car engines and parts were so high, the idea was to work with their suppliers to coordinate the shipment of inventory to their factories to arrive just in time so they did not store any parts longer than one day. This saved Honda millions of dollars per year in opportunity costs, storage costs and carrying costs. Honda became so good at it over the years that today almost every car manufacturer does this as well as thousands of other manufacturing companies for all kinds of products. Although this method works best for manufacturing, you can use a version of it too.

For the first few years selling on Amazon I never really worried about my storage costs until one day I decided to actually delve into them and see what I was actually spending. I was shocked.

The thing about storage costs that can lull you into just accepting them is their very low cost. Some of my items cost as little as 2¢ or 3¢ per month; But others were as much as 30¢ or 40¢ per month. When I started adding them up it was a huge amount of money. So what to do?

I decided to start adopting my own version of Just in Time (JIT) inventory control. One of the problems I have is that several of the items I sell, I am buying at distributor pricing, which means I get lower prices, but I have to buy in very high volumes. Here is one example: I have a product that sells for $21.95 and the monthly storage cost is 10¢.

But I have to buy those in lots of 144 at a time to get my low distributor pricing ($8.75 each versus $11.50 each when I buy in smaller case lot quantities). In the past when I got a shipment, I would send all 144 of the items into Amazon. This particular product sells pretty well – about 1 or sometimes 2 per day. So it would take me about90 days to go through the entire quantity and I would be paying storage on the unsold product during that entire time.

Now I only send in about 24 units at a time. So yes I am making more shipments, but I am storing them in my garage for free rather than paying as much as $100 a month to store the entire quantity at Amazon.

For my normal products where I typically purchase in case lots, what I try and do is estimate the time to sell out and subtract the shipping time to determine when to send in more. For example I have some products that only sell one per week and in the past I might send a dozen of them to Amazon at a time. Now I break up my shipments so I am sending in, say, 4 of one item, 6 of another and so on.
Remember I have 800 separate items in FBA and typically carry several of each item. When I ran the numbers I saw I was on tract to save almost $10,000 in storage fees this year since I started getting smarter about my inventory management.

 

Determining Your True Selling Costs on eBay and Amazon

March 8th, 2019 by Skip McGrath

If I asked you how much it costs you to sell on eBay or Amazon, you might know if you would look up the fee schedule and say something like: “Amazon’s commission is 15% or eBay and PayPal fees average around 12 to 13%. If listing and selling fees were your only costs, you would be essentially correct – but the question is not about fees, the question is: “What are your true selling costs?” Knowing how to determine that is the difference between profits and losses.
True product Cost – The first thing you have to know is how much are your products really costing you. Besides the basic wholesale cost there are other costs you need to add to determine your true products cost. First is your inbound shipping cost. Just yesterday I received a case of an expensive brand name body lotion that I sell on eBay and Amazon.
There were 48 bottles in the case and my cost was $5.30 per bottle. But since lotion is somewhat heavy the shipping cost came to $34.45. So let’s do some math: 48 X $5.30 = $254.40. When you add in the shipping the total is $288.85. Now divide by 48 and you get an item cost of $6.01. Now since I sell through Amazon’s FBA program, I also have to label and ship the product to Amazon. Labels and plastic bags cost about a penny, so I am now up to $6.02. Shipping to Amazon will run me $19. So dividing that by 48, I get an additional cost of 40¢, which makes my total product cost now $6.42 and we are not done yet.

I also have storage costs at Amazon. The 30-day storage cost on those items are only4¢, but we are now up to $6.46. And no – we still are not done.

On this product I average about 1 customer return per case of 48. So if I take that total cost of $6.44 and divide it by 4, that adds another 13¢ to my cost which gets us to $6.59.

So even though the product originally cost me $5.30, you can see that my true cost is really $6.57. That assumes I pay cash for the product. If I was borrowing or financing on a credit card, I would also have to add in the interest cost on the entire case until it was fully paid off. (Note – We often use credit cards to pay for merchandise, but except for large buys near Christmas, we pay our cards off each month to avoid interest charges.)

OK – that is how you find out your true product cost – now how about selling fees?

Amazon Selling Fees – If you are a basic seller fulfilling your own sales, then whenever something sells, you pay 15% + 99¢ on each sale in most categories. If you are a pro seller, you pay $39.95 per month + 15% of each sale.

Note – Some special categories such as Kindle accessories and computers are different but I am going to use 15% to keep things simple. If you sell in one of those other categories, just change the math to suit your needs.
So if you are selling more than 40 items per month, it is better to pay the $39.95 per month and get rid of the extra 99¢ on each sale. So let’s just use the 15% for the rest of this example.

Going back to our body lotion in the previous example, I sell that for $12.99. We use FBA which I will get to next, but let’s look at it if I were merchant fulfilling.

True product cost
$6.57
Selling price
12.99
15% Amazon Commission
-1.94
Net After fees
11.05
Less true product cost
-6.57
Gross profit
$4.48
That means my profit as a percent of the selling price works out to 34%.

Now let’s look at FBA

Sales price:
$12.99
Amazon commission 15%
-1.94
Order handling fee $2.04

Weight based handling fee
-0.46
Net after fees
$8.53
Less true product cost
-6.57
Gross profit
$2.00

So as you can see I make a lot less money when I use FBA. But what you don’t see is that I sell about a dozen of this item a week in FBA, whereas when we were merchant fulfilling I only sold about 1 per week. So I am making $24 a week on this one product in FBA versus only $4.48 per week when I merchant fulfilled.

You may have noticed that I have not included shipping as the shipping credit Amazon gives me for this product actually covers the shipping cost. And there is no cost when Amazon ships through FBA.

eBay selling fees – Unlike Amazon, eBay also has listing fees that you pay when you list an item. First off, eBay gives you 50 free listing per month. After that you pay 30¢ per item whether it’s auction style or fixed price listing. ($0.05 for fixed price Books, DVDs & Movies, Music, and Video Games listings) Since most full time sellers list far more than 50 items per month let’s just use that in our calculations.
Final value fees are the fees you pay when an item sells. (If you offer free shipping eBay also charges you the final value fee on your shipping cost). eBay used to use a sliding scale where fees went down as a percentage as the price went up, but earlier this year eBay went to a simple 10% final value fee on all sales with a $250 maximum fee on really high priced items.
Let’s use the same lotion product for this example:

Selling Price
$12.99
Listing fee
0.30
Final value fee
1.30
Net after eBay fees
11.39

In addition to eBay’s fees, about 95% of all eBay sales are paid through PayPal. PayPal’s fees are 2.9% + $0.30. So on this sale the PayPal fee would be 38¢ + 30¢ or $0.68 total. Take that away from you net after eBay fees and you are left with $10.71. Now let’s subtract our true product cost of $6.57 and you are left with a gross profit of $4.14.
So let’s compare our fees:

Amazon FBA
2.00
Amazon merchant fulfilled
$4.48
eBay
4.14

As you can see, from the standpoint of pure profit, merchant fulfilling through Amazon is the most profitable. However, remember when I sell through FBA my sales are far higher than when I merchant fulfill. But let’s add another wrinkle. The latest multi-channel strategy used by professional sellers is to use Amazon FBA to fulfill your eBay (and website or any other venue) sales. Let’s look at how this works.
One advantage of using FBA to fulfill your eBay sales is that Amazon passes on their extremely low shipping rates to you, the seller. This means you can be more competitive on eBay. Here is the example:

Body lotion selling price with free shipping on eBay – $17.99
Amazon pick & pak and shipping cost – 5.95
eBay listing fee -0.30
eBay final value fee -1.80
PayPal fee -0.82
Net after fees – 9.12
Less true product cost- 6.57
Gross profit – $2.55

So I make 55¢ more selling on eBay through FBA than I do on Amazon, but less than if I sell it and fulfill myself. (Again we are assuming that when I ship myself shipping, is covered).
By now, you probably are wondering why do all this? OK – here is how it works in the real world:
When I sell on Amazon through FBA I typically sell about 12 of these per week and net $24, much more as we near Christmas or Mother’s Day.
If I sell these individually on eBay and charge shipping, I typically sell one or two per week. But when I offer free shipping my sales go up to about 4 per week. So my weekly net profit on eBay with Amazon fulfillment is right about $11.52. That means just this one product nets me $35.52 per week. And remember I have over 800 individual products on Amazon and over 200 of them also sell on eBay.
If you wonder why I don’t sell all 800 on eBay it is because the listing fees would run about $255 per month and many of those products just don’t sell that fast to justify that, so we only list our fast moving products on eBay.
And consider this – I don’t have to ship the item every time it sells. Since we average about 40 sales per day on eBay and Amazon, just think how much work it would be to pack and ship all of those items. Since our business is just my wife and myself, there is no way we could do that and would have to hire someone to help. And once you do that, there goes a big part of your profits.
eBay optional fees – In addition to the listing and final value fee, eBay has several optional listing enhancement fees. Some of these are listing designer (10¢), Gallery Plus (30¢), sub-title (50¢) and Bold ($2). Given the cost of this item, it would not make sense to use any of those service, but when I sell very high-priced items such as the $400 camera lens I recently sold, then I sometimes use Bold or Gallery featured.

(NOTE: This post was taken from some earlier information and, I know fees have changed since then, so to be 100% accurate you will want to check the latest eBay & Amazon fee schedules)

Understanding Bar Codes, ASINs, ISBNs, SKUs, etc.

March 7th, 2019 by Skip McGrath

If you have been selling on eBay or Amazon for a while, you may already know most of this, but I get questions from new sellers often enough that I know there is some confusion out there. So here is an article that explains the basics.

With the millions of products available , how does a seller keep track of the inventory? In the past, businesses hire employees who manually track merchandise causing significant costs in terms of money and time. Good thing, the advent of bar codes had begun.

Bar codes are technically called, Global Trade Item Numbers (GTINs), are unique product identifiers, which make obtaining product information across different databases and platforms easier. It’s a symbol, which, when scanned, will show the unique attribute of a product.

With bar codes, operational efficiency is realized because these entail faster and more accurate recording of information– so time is saved, errors are reduced and all in all, costs are cut. Aside from these, putting barcodes in your products would enable you to meet business regulatory requirements, since agencies and online selling platforms such as Amazon, now require unique identifiers in products.

As a general rule, you need a bar code in order to sell a product in Amazon. Amazon requires this in order to reduce, or even eliminate duplicate product listings and incorrect search matches, and because items with barcodes are more efficient to receive and ship to customers.

So far, there are five main types of barcodes used in Amazon:

· International Standard Book Number (ISBN)– This is found in books, CDs and DVDs and can come in both 13 and 10-digit numbers.

· Universal Product Codes (UPCs)—This code system was developed in the United States and has been widely used in North America, UK, Australia and New Zealand

· European Article Number (EAN)—Invented by the French, this is a superset of the UPC system, and is used worldwide for products that are sold at retail point of sale.

· Japanese Article Number (JAN)—This is what product identification numbers in Japan are called.

· Amazon Standard Identification Number (ASIN)—Amazon assigns its own version of barcodes to items that are uploaded into their inventory. This is a code system that is unique to the Amazon marketplace. If you know the ASIN of an item, you can type it into the Amazon search box and it will come up.

Amazon requires a UPC (or EAN) number for almost any product you list on Amazon. If you want to sell an item that does not have a UPC number, or if you are creating a unique item such as a bundle of products, then you will need to purchase a UPC number. Note – If you are creating an item on Amazon that requires you to purchase a UPC number, you only need the number – not the actual bar code  artworkgraphic. This is because you generate your own bar code label when you create a shipment to Amazon. That label identifies both the product and who it belongs to so Amazon knows who to pay when the item sells.

eBay recently started requiring a a UPC or ISBN on some products. But they are encouraging sellers to use them on all products to make your products easier to find.

How to Obtain Bar Codes

There are companies nowadays who sell/ lease bar codes.  One service I use is Bar Codes Talk, They have sold over 4 million barcodes (and counting) and have satisfied a lot of clients. But there are plenty of websites that sell bar codes. Another good supplier is Nationwide Barcodes.  Their site also includes a lot of good information.  Bar Codes Talk  is very popular with eBay and Amazon sellers.

Ideally, barcodes are integrated into the design of your item, so if what you will be selling is not yet manufactured, then you may want to coordinate with your barcode vendor so that the product identifier will be incorporated with the design. But if your product is already manufactured, then you can still easily obtain bar code labels.

Bar codes help you achieve operational efficiency, plus, it allows you to sell in one of the world’s busiest online selling platforms.

Seller SKUs

SKU stands for Stock Keeping Unit and it’s a number that you generate to help you keep track of your inventory. There are several systems to create and track SKUs. Here is one way I do mine:

The first letter stands for the category of product – J for Jewelry, B for Books, K for Knives and so on.

The next letter is the month I bought the item and listed it on eBay or Amazon, so a SKU that started with B3 would be a book I sent into Amazon in March.

Next I put the cost of the item. I use the simple “paintbrush” code. Paintbrush is a ten-letter word with no letters that repeat, so each letter stands for a number. A SKU that started out B3PNH would be a book, I sent in March that cost me $1.40. Then I usually come up with some type of abbreviation to identify the product. So if the book was Tom Clancy’s Hunt for Red October the code might be B3PHH-RO. The RO would stand for Red October. (Some other ten-letter words with no repeating letters include: Cumberland, springvale, pathfinder, monkeyspit, motherland, crazywomen and falconview).

If you tend to sell a lot of items from one supplier, another way to go is to use the initials of the supplier and the part number of the item. So for my Novobead jewelry, I might use NB4105. The advantage of this is that I can search the term Novobeads in my Amazon inventory and the SKUs will come up in order. So if I sort by quantity, I can see which beads I am out of, or low on stock and I have a nice list with the part numbers to place on my order sheet. See image below:

The column after the price is quantity inbound.  The next column is the quantity on hand in FBA. (This is the column I sort to see what I am low on).  So if I want to place an order with my supplier, I just use the SKU number without the letters NB as that is the manufacturer’s part number.  The next column is any unfulfillable quantity and the last column shows if any are reserved.

How to Make Money With Your WordPress Blog

March 6th, 2019 by Skip McGrath

I just finished an excellent article that covers 25, no-scam ways to make money with a free WordPress blog from www.WordPress.org.

You can read the complete article here.  I used to publish a book titled Make Money Blogging From Home.  (Now out-of-print), This article covers all of the topics in my book albeit in a shorter form.  I highly recommend anyone who blogs to read this book.

I also publish another book related to blogging titled How to Make Money With The Amazon Affiliate Program.

Amazon Publishes Video Series To Help Sellers

March 5th, 2019 by Skip McGrath

How would you like to get advice from some of the top entrepreneurs in the world?  Well, Amazon has just published a series of short videos that does that.  Each approximately 2-minute video is billed as a Two-minute mentorship and they deliver.

The videos cover a variety of topics that sellers will find very helpful.  A few of the featured entrepreneurs include:

  • Mark Cuban from Shark Tank.
  • Arianna Huffiington (founder of The Huffington Post – now owned by AOL).
  • Tim Ferris (Author of The 4-hour Work Week).
  • Amy Cuddy (Harvard lecturer and author of Presence).
  • Angela Duckworth ( University of Penn Professor and author of Grit).
  • Plus six more.

I watched the entire series (takes less than 20 minutes) and found it full of good ideas that I can use in my business and many of the videos were very inspirational as well.  Click here to see the entire series.

_____________________

Learn to sell on Amazon with The Complete Amazon Marketing System by Skip McGrath.  The Complete Amazon Marketing System has been our best-selling course for the past ten years, and has the lowest return rate of any product we sell.

Tips for Growing Your Online Business in 2019

March 4th, 2019 by Skip McGrath

Luck can only take you so far

If you want to grow your business consistently, you have to take things into your own hands. There is only one force that can make you fail and that force is you. Let’s look at some tips that can help you strengthen and grow your business in the face of any adversity the market can throw at you.

1. Take Risks – All businesses are inherently risky. You will never grow or prosper if you only take small safe risks. Don’t go crazy –it’s always good to be prudent, but there is just no way to succeed in business without taking risks. And once you take a risk, stand behind it. Don’t go all wimpy too soon. I have made buying decisions that at first looked very shaky – only to eventually pan out and become very profitable. Just try and avoid taking any one or two large risks that could totally decimate you if they did not work out.  (If I lose a few hundred –or even a thousand dollars –I can survive that.  But if I were to lose $10,00 or more on a single venture, I may not be able to recover from that.

2. Love What You Do and Do What You Love – If you are selling something online that you just don’t care about, take a look at doing something else. I try and find products to sell that are fun and relate to my tastes and experiences. That is one of the reasons we sell cookware, cutlery, kitchen gadgets and gourmet food. I love to cook and those are things that I enjoy so it’s fun to shop for them and write about them. I always test new products out for myself first to be sure of the quality and value.

3. Get Help With Taxes – The new tax bill took effect in 2018.  If you haven’t done it yet, this is the year to incorporate or form an LLC. Once you do that, find a CPA and sit down with him or her and learn some strategies to reduce your taxes. Last year I learned to fix one small mistake I had been making for years that caused me to overpay my taxes. Just this year alone it will save me over $1400. Over the last five years I have overpaid almost $5000 because of that.

I now use My Corporation to form corporations and LLCs (and I did my will with them also). I used to recommend Legal Zoom who you hear advertised all over the radio and TV, but two of my readers complained of delays, bad customer service and constant attempts to upsell them.  So I now  work exclusively with My Corporation  for most of my legal needs (including trademarks).

4. Manage Not Just Your Time But Your Goals as Well – Having a plan and setting some goals will help you get through the year profitably. The key to setting goals is that they must be both measurable and achievable. A general goal such as “I am going to increase my inventory this year” may sound good, but how do you measure it. But if you say, “I am going to double my inventory this year,” that is something you can measure at several points along the way. You would constantly monitor your inventory numbers to make sure they are always increasing and you are on track to double your inventory in any given month.

As for time management – goal setting works here too. I make a list of everything that is important for me to accomplish at the beginning of the week. Then I prioritize the list. I put the things I dislike doing the most, at the top of the list (such as paying bills). By getting those out of the way first, the rest of the week goes smoothly and I usually accomplish 100% of what I set out to do that week.

5. Go Multi-Channel – If you are still selling on just one venue, that is a huge risk. Not only are all your eggs in one basket, you are missing a huge part of the market for your goods. Folks who shop mostly on eBay are different than those who traditionally shop on Amazon, but they buy many of the same things. Why would you want to ignore one group of people, when the one thing they have in common is green? And today, many people are using Walmart.com

6. Avoid Negative Influences – Negative influences can be anything from friends and family to stories or blog posts you read. I get email from people who tell me they read a message board post from several eBay sellers who said it’s impossible to make money on   Amazon today. Well if you think that way, then it will come true. In the meantime folks like me, who don’t bother reading that drivel, are quietly making nice sums of money –and yes we are doing it on Amazon too, as well as other sites.

Most importantly, avoid negative people. There will always be people who have no imagination or self-confidence and believe the world has stacked the deck against him or her.

When those people talk to me I smile politely and let it go right over my head. The last thing you want to do is argue with them. And unless they are your close relatives, just avoid them in the future. This is your business. You are in charge and you are responsible for the outcome. And that means if it fails –it is your fault –not the fault of big corporations, eBay, the government, zombies or some unseen outside force that had it in for you.

7. Be Excruciatingly Honest – the best way to be honest is very simple:

Do not lie, cheat or steal and don’t associate with people who do.

This is one of those policies that is good to follow in both your business and personal life. It will cost you money occasionally, but in the long run with pay huge dividends that far exceed any losses you suffered.

8. Be Generous With Your Customers – Offering a no-questions-asked money back guarantee and a liberal return policy may sound risky, but it’s not. Yes, you will have the occasional person who takes advantage of you, but in the long run you will make far more money because people will trust you and want to buy from you.

9. Work Hard –There really is no substitute for hard work. There is no such thing as a business that runs on autopilot –that only works from boats and airplanes, and even then you have to turn it off when you dock or land. Karen and I work very hard at our business. The important words in that sentence are “our business.” It’s all ours. We take full responsibility for it and we enjoy the fruits of our successes. Between us we put in about 100 to 120 hours a week. That sounds like a lot, but we don’t have to commute, we don’t have a boss, and we decide when to take a coffee break, go on vacation, or when to buy a new office chair.

Now that you have read this you realize there were no specific “how-to” tips to improve your sell through rate, but general tips that will help you build a successful and profitable business. The other advantage of following this advice is that you will be happier –I guarantee it!_____________________

Learn to sell on Amazon with The Complete Amazon Marketing System by Skip McGrath.  The Complete Amazon Marketing System has been our best-selling course for the past ten years, and has the lowest return rate of any product we sell.




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