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Understanding ROI (Return on Investment) for Online Sellers

December 14th, 2018 by Skip McGrath

Understanding ROI (Return on Investment) for Online Sellers

According to Investopedia, ROI is “a performance measure used to evaluate the efficiency of an investment, or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.”

The return on investment formula is:

ROI = (Net Profit / Cost of Investment) x 100

In its simplest form, ROI is the percentage profit you make on your sales.  Look at a very simple example.  You buy an item for $10 and sell it on Amazon for 29.99.  The Amazon and FBA fees come $7.05 so your gross profit is $22.94.  Subtract your cost and you get a met profit of $12.94 on an item that costs you $10.  To get your ROI you would divide the $12.94 profit by your cost of $10 (and times 100) and it gives you an ROI of 129.4%.

If you were investing in a stock that you bought for $100 and sold six months later for $120, your ROI would be 20% (less commissions).  It’s the same with a product.  The example above is somewhat uncommon, although I have seen higher ROIs.

I recently bought a book at a garage sale for $1 that I sold for $14.  That is a 1400% ROI before fees.  But in the normal world, you have selling fees and storage fees.  When you are selling on Amazon you always want to calculate your fees The fees on that book were $4.12 – so that gives me a net profit of $9.88 and true ROI of 988%

I have over 200 products that I buy wholesale. Due to competition, I can only double the price, or sometimes not even that.  Let’s look at just one.

I have a product where my product cost is $60 and the most I can sell it for is $113.00, if I want to win the buy box.  The Amazon and FBA fees on that product are $29, so my net after fees is $84; less my product cost that gives me a profit of $24.00.  When we do the math on that one, my ROI is 48%.  That is a more normal experience for most sellers.

So far we have looked at ROI as an individual transaction, but ROI is normally measured over a year.   So looking at that last example, if I ignore things like inventory carrying costs and storage fees, and I sell one of those products a month, then my annualized ROI is 12 x 48 = 576%.  Not bad!

But there is a real world to consider.  Its fine to look at the ROI of a single product to compare it to other products –that helps you determine what your winners are.  If you focus selling your higher ROI products and eliminate the lower ones, the theory is you will make more money.

But there is another factor you need to consider.  How often do you sell that item?  If you have to purchase those by the case of 12 –and you sell one per month, it will take an entire year to get your investment back.

Now let’s look at your ROI in this context.  Your landed cost on the case is $720.  In the real world you do have interest carrying costs.  Let’s say these are 8% for the whole year. Add that to your cost and you are at 777.60.  Now let’s look at ROI over the whole year.  Your profit on the whole case is $288.00.  Dividing your cost and you get an actual ROI of 37% for the whole year.  That is still not a bad ROI.  There are not that many investments where you can make 23% a year.

But we are still looking at only one product.  Let’s look at our whole business.  To keep it simple we will assume this is our first year in business and we had no starting inventory.  Starting in January we purchase $10,000 per month in product and send it into FBA. (I am going to ignore the interest carrying cost in this example as it would just get too complex, but remember in the real world, money tied up in inventory has a real cost).

So over the course of the year we purchased $120,000 worth of inventory.  We will assume our sales are pretty good and as of December 31st we only have $20,000 worth of inventory left.  So what is our ROI?

If our total sales on the $100,000 worth of inventory that sold for a total of $212,000, and the Amazon and FBA fees (and returns) came to $59,360, that means our net was $152,640.

Even though we sold $100,000 worth of the inventory, remember we still have $20,000 left at the end of the year, so we have to account for that also.  Let’s do the math.  Our profit was $152,640 minus our cost of 120,000.  That gives us a net margin of $32,640. Divide that by our cost of $120,000 and our ROI for the year was 127% which is  quite good.  Most brick and mortar retail stores are thrilled to earn a 20% profit at the end of the year.

As you can see, even though you are making insanely high ROIs on a few products, you have to look at your overall business.

Slow Growth Ahead for eBay?

December 13th, 2018 by Skip McGrath

This from Ina Steiner’s  eCommercebytes blog – Click the link at the end to get the full story:

A Wall Street analyst sees more stagnant growth ahead for eBay. CNBC reports that Morgan Stanley analyst Brian Nowak downgraded the stock over concerns of low growth in the coming year.
But it isn’t shareholders’ teeth-gnashing that concerns us – rather, how this will impact readers. Low growth in Gross Merchandise Volume (GMV) means the pie isn’t growing for eBay sellers.
Nowak said he now expects eBay to grow “low to mid single digits in 2019,” according to the CNBC report. Read Full Story

New Wholesale Sources for eBay, Amazon and Online Sellers

December 7th, 2018 by Skip McGrath

Wholesale Sources

Remember – many of these websites do not carry wholesale information.  When you see that, simply use the Contact Us section of the website to request wholesale information

Alice’s Cottage carries an extensive line of fabric home accessories, gifts, kitchen textiles and lavender scented products, as well as a paper line of note pads, cocktail napkins.

Global Metal Company supplies antique reproduction and restoration hardware in brass and iron for doors, windows and furniture.

Raine & Humble is a wholesaler of pillows, throws, candles, aprons, kitchen textiles with operations in Australia, UK, USA, France, Ireland and New Zealand.

Dorothy Fagan Collection  consists of inspirational French and Italian collectible art prints, books & journals.

International Durus offers a line of very nice handcrafted jewelry consisting of natural indigenous materials such as coconut wood, shell, metal, seed beads, silk, resin, horn, feather, leather, etc.

Wissman Raumobjekte offers a nice line of tasteful and stylish furniture. The furniture is all made in Germany, and thus meet the high quality demands. Although made in Germany they carry stock in the United States

Mettle Filtration specializes in plain steel extruder screens, hard to find meshes, and extra heavy wire cloths

Knit Denise sells a complete line of knitting and crochet products

Messermeister sells a large line of fine kitchen knives and other tools.

Felco is a line of Swiss-made pruning shears and other tools.

Superior Glove sells cut-resistant gloves in all sizes

Lee-Mar Pet Supplies is a large distributor for all kinds of pet supplies and they offer a drop shipping service.

 

 

 

Proven Amazon Course Goes on Holiday Sale – Only 4 Days Left

December 6th, 2018 by Skip McGrath

Jim Cockrum announced that his New Proven Amazon Course (PAC – 2.0) is on his only sale of 2018 until December 10th.

“Are you ready for a business that can be run from anywhere in the world, that doesn’t involve you shipping anything to customers, and that’s virtually competition-proof? Amazon is exploding with activity, and we can show you how to get in NOW!”

“Make this course your road map to an incredible business!”

Attendees pay thousands to attend our live events. The full videos from his live events are captured and included as part of PAC.

There are only 4-days left at this incredible sale price.  Sale ends December 10th.

If you are looking for an alternative to my own Complete Amazon Marketing System – this is the only other course I recommend

Keep Sending Inventory to Amazon Right Through Christmas

December 5th, 2018 by Skip McGrath

Remember to keep sending inventory to FBA right through Christmas and even right after.

Why?

Because Amazon will sell over $2 Billion worth of Gift cards this holiday season and people will be spending that money mostly during January. Also remember that a lot of folks return unwanted gifts and then use the money to buy something they want.

Last year, January was not as big as December n—but it was still one of our best months during the rest of the year. So, keep sending that inventory in.

New Way to Sell Books on Amazon – On Autopilot

December 4th, 2018 by Skip McGrath

Zen Arbitrage is a complete “business in a box” (without the box).

Best of all, they offer a free trial period so you can actually see how it works and make some money before you sign up.

  1. Totally integrated system: get started in seconds
  2. 100% web-based: nothing to download – works with Mac or PC
  3. No Amazon experience required: full training included
  4. Total freedom: run from anywhere in the world
  5. Full video training, live webinars, and personalized support.
  6. Total simplicity: everything in one simple dashboard

If sourcing inventory from your pajamas has appeal, Zen Arbitrage makes it possible.

Watch the demo video (very short & quick) then start your free trial and start making money right away.

Need Help Sourcing from China?

December 4th, 2018 by Skip McGrath

I recently discovered a new way to get some help sourcing from China.

Leelinesourcing is a Chinese company that provides complete sourcing service. They have already served more than 2000 users.  Leelinesourcing covers consumer electronics, outdoor products, kitchenware and general merchandise of all types.  Their sourcing service include product sourcing, quality inspection, FBA prep service and FBA shipping service. They have a lot of experience working with Amazon (and eBay) sellers.

They will help you find products, negotiate the price & terms, check the goods for quality and quantity, and in general make sure you get what you paid for.

Some products are rare or hard to find, or the order quantity too small, so it’s difficult to find the right suppliers. They can help can help solve that problem.

Essentially they are professional purchasing agents who source products according to your needs.

They have deals with several shipping companies to save you money on shipping costs and they have offered to provide a discount of their service fee to my readers, so be sure and mention my name when you contact them.

Easiest way to contact them is with Skype.  I recommend you work with Sharline.  Here is her Skype number: sharline1983.  Or you can email her at sharline@leelinesourcing.com.  It will not cost you any money to request a quote.

Amazon to provide More visibility into policy violations that may affect your account health

December 2nd, 2018 by Skip McGrath

Amazon recently added product condition complaints to the Account Health section of Seller Central. View your Account Health to see any actions we’ve taken that may affect your ability to sell, the reasons for those actions, and next steps to resume selling.

You can view your Account Health in Seller Central by clicking on the Performance tab

In other news about Amazon

Amazon has increased their unplanned service fees.

When you follow Fulfillment by Amazon’s shipping guidelines and ensure that your suppliers and carriers also follow them, Amazon can efficiently and accurately unload, receive, and store your inventory at the fulfillment center.

When there are problems receiving inventory, we may perform unplanned services to accurately process products, at your cost.

Starting today, Amazon will provide a fee preview mode for six additional safety-related unplanned services.

The fee preview for unplanned services only displays if there have been problems with your inventory shipments.

Amazon will soon begin charging fees for these additional unplanned services. We will notify you at least one month before the fees go into effect.

To see specific shipment issues and the new unplanned service fees that may apply in the future, go to your Shipping Queue or see the Fee Type column in the Inbound Performance report.

For more information, see Inbound performance summary and Unplanned services.

Annual 40%-off Holiday Sale Starts Today

December 1st, 2018 by Skip McGrath

Winter Sale

Every year about this time my book selling business  slows down because of holiday selling, so I have my annual Christmas sale.  This starts today, December 1st, and runs through the end of the month.

Just use the coupon code – 2018SAVE40 when you check out of the shopping cart.

Don’t forget to hit the APPLY button, or the code will not take.

Here are the books covered by the sale:

The Complete Amazon Marketing System.

How to Make Money Selling Used Books on Amazon, eBay and The Internet.

How to Make Money with The Amazon Affiliate Program

The Wholesale Buying System shows sellers how, what and where to buy goods to sell on eBay, Amazon and the Internet.  Includes access to my private list of wholesale sources that will work with small sellers. Remember, if you are buying, or have, the Complete Amazon Marketing System – do not buy this book because you already have the information

The Amazon Profit Booster is a 3-book set that teaches advanced techniques to sell on Amazon.

eBay to Amazon talks about how to transition from selling on eBay to selling on Amazon.  My course tells you how to get started, what to sell, discusses packing and shipping and much more.

If you just purchased a book and missed the sale, I am sorry, but I am not set up to give refunds.

New Wholesale Sources for eBay & Amazon Sellers

December 1st, 2018 by Skip McGrath

 

Wholesale Sources

The Indiri Collection supplies quality artisan crafted .925 sterling silver jewelry from the island of Bali.

AREA STARS supplies lifestyle brands featuring resort wear, handbags and jewelry.

The Exotic Bean sells USDA certified organic, shade grown roasted coffee from Thailand. Their coffees are trademarked as The Worlds most Sustainable coffee.

The  Fezz-a Hipstore  supplies Turkish towels, cotton scarves, cotton throw blankets, bathrobes, terry towels, decorative pillows, wool socks and wool hats & gloves.

Wrapped in A Cloud sells a nice line of blankets and robes both plain and monogrammed

Parade Street Products offers fashion accessories, gift, resort, and impulse items that are fun, functional, fresh and affordable.

Maria’s Style offers offers a unique line of pasta sauces, jams, soups and more. They specialize in gourmet all-natural foods, with low minimums and private labeling!

Price King Inc. (est. 1970) is a leading wholesaler selling mainly to C-stores, $1 stores, variety stores, drug stores and others.  They carry lots of low-priced items suitable for bundling.

Mister Snacks Inc. sells exotic snacks and snacks mixes under the names of Sunbird Snacks and Stone Mountain Snacks, nationally and internationally.

Marukai Wholesale Mart specializes in the importing of Japanese products, such as groceries, goods, furniture, health products and electronic appliances. The Marukai Wholesale Mart continues sells over 20,000 specialty products at discounted prices.

Scripture Candy provides wholesale and retail candy with scripture verses.

Bella Cucina Artful Food is a premier specialty food manufacturer in America. They are an artisan producer of highest quality Mediterranean-inspired foods.

Peacock Imports offers a line of gourmet all natural Preserves and Spreads, Mango Spread, Mixed Tropical Fruit Spread, Pineapple Preserve, Strawberry Preserve, Orange Marmalade. Their products are 100% Natural with no artificial flavors or colors.

Unilution Inc is a direct importer and wholesaler for electronic gadgets including; digital cameras, electronic Sudoku games, Bluetooth headsets, sexy lingerie and more.

THREE WAYS TO LEARN HOW TO SELL ON AMAZON

November 30th, 2018 by Skip McGrath

If you prefer learning from a printed instruction book, then take a look at my product

The Complete Amazon Marketing System.  It is a 2-volume printed complete course that teaches you how to sell on Amazon.  I start with the basics and take from there through.

One of the best courses on the market is The Proven Amazon Course from Jim Cockrum.  It also starts with the basics but quickly gets you into advanced areas such as product research, bundling and private labeling.   The wholesale sourcing segment is excellent.  The The Proven Amazon Course contains essentially the same information as my course but is video-based, whereas mine is a printed product.

The third course is fairly new but has been getting rave reviews.  It is called The FBA Stars course.  It is also video based but the videos are all pretty short and very well organized.  Best of all, he is offering one-on-one support and guidance.

All three of these courses have a money-back guarantee program

Buy and Re-sell Books on Amazon for Nice profits

November 29th, 2018 by Skip McGrath

Retail Arbitrage

If you have been following me for a while, you know I am not a fan of retail arbitrage.  Although it can be very profitable, I just don’t have the time to go from store to store looking for deals.   But there is one exception.

Did you know you can buy books cheaply on Amazon and turn around and sell them quickly for a nice profit?  The system is Zen Arbitrage.

Best of all, Zen Arbitrage is a completely automated system that does all the searching for you.  This means very little work on your part.

1.   Zen Arbitrage finds cheap books with low (or no) FBA competition.  Resell via FBA

2.  Relist at your higher Fulfillment by Amazon price.

3.  Profit the difference

When you visit Zen Arbitrage, be sure and watch the short Demo Video that shows both how easy this is and how you can make over $100 with just a few minutes work.

How To Make Good Money Selling Used Books on eBay, Amazon and the Internet

November 23rd, 2018 by Skip McGrath

Sell Used Books for Profit

Selling used books on eBay, Amazon and other Internet sites is one of the greatest opportunities available to home business operators today.

Sales of used books on the Internet increased over 30% last year. Almost one of every 10 books sold is a used book, and the majority –over 60% of those are bought online from small individual businesses –many operating out of their homes.

How To Sell Used Books on eBay, Amazon and the Internet is a complete guide to starting and running an online book business. It is now available for immediate delivery at: http://www.skipmcgrath.com/products/sell-used-books-ebay-amazon.php.

Anyone can learn how to start and run an online book business for about $100 in start-up costs.

Used books are the perfect product for the small eBay, Amazon or online seller.

  • They are easy to find
  • Although there are tons of expensive books, most books sell for less than $25. This attracts few thieves and scam artists
  • Used books are highly profitable.  You can buy books for a quarter of fifty cents that will sell for $10, $20, $30 or more –sometimes much more.
  • Books are easy to list, store and ship
  • Book prices are easy to research and determine
  • Books and book condition descriptions are standard and well understood.
  • Book cover photographs are available for most modern books just by typing in the ISBN number
  • It only takes a couple of minutes to create a book listing. Amazon, eBay and other sites have standard pre-written descriptions that will fill in automatically just by entering the ISBN number
  • Perfect, low-risk business for the part-time seller
  • The online book market is growing at double-digit rates and shows no sign of slowing down. Used books make up a larger and larger portion of that business
  • Recession-proof business. When the economy slows down, used book sales increase

In How To Sell Used Books on eBay, Amazon and the Internet I show you everything you need to get started and give you the resources you need to grow your business into a profitable online venture.

This has always been one of my best selling books and has an extremely low return rate.  How To Sell Used Books on eBay, Amazon and the Internet is an eBook, but I have set it up so readers can easily print it out on their home computer printer.

I do show the basics of listing a book on Amazon, eBay and some other online sites, but this is not a  – How to Sell on eBay or Amazon book. So you should know some basics such as how to register and how to create a listing. Listing on Amazon and some other book-selling sites is pretty simple and we cover that in detail.

Click Here to read about How To Sell Used Books on eBay, Amazon and the Internet and the free bonus offers that come with the purchase.

See Also

Take Advantage of The Amazon Gift Card Boom

November 22nd, 2018 by Skip McGrath

Take Advantage of The Amazon Gift Card Boom

This year Amazon will sell over $2 Billion in gift cards.  Most of these will be redeemed between December 26 and January 31st.

To take advantage of this, keep sending inventory to FBA all through the month of December.  A lot of sellers think the big selling period ends a couple days before Christmas day and stop sending inventory to Amazon, but that is a mistake as you could miss out on some great business.

Amazon Will Split Its New HQ Between 2 Cities

November 16th, 2018 by Skip McGrath

It has been public knowledge for over a year that Amazon plans to move its worldwide headquarters out of Seattle, but the new location has just been announced

This week, Amazon that they plan to split their new HQ between two cities: Crystal City, VA (A close-in suburb of Washington, D.C.) and Long Island City, NY (Near New York City)

I am really scratching my head over this one:  Washington and New York are known for their high taxes, high cost of rent and labor and poor traffic.  Since all costs are eventually passed on to us sellers, we will see those costs in higher fees eventually.

Having said that, it is important to note that between the two locations, Amazon will reap just over $2.8 Billion in tax benefits.

I make it a habit to stay out of politics, but I think it’s interesting to note that newly elected congresswoman Alexandria Ocasio Cortez is a huge critic of this deal which is located in her district.  See the story here. And here are her comments:

Washington (CNN Business)Alexandria Ocasio-Cortez won’t take office until January, but the progressive firebrand is already casting herself as the voice of the people in the debate over Amazon’s arrival in New York, even as fellow Democrats rushed to welcome the company.

“Amazon is a billion-dollar company,” Ocasio-Cortez wrote on Twitter late Monday. “The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.”



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