Thrift Shop Where the Rich Live

The Online Seller's News, May 24, 2011, Volume 11, No. 10

Tips, Tools, News and Resources for eBay, Amazon and independent Online Sellers ~ Published Twice Monthly since 1999
by: Skip McGrath

In This Issue:

Musings from eBay, Amazon and beyond

1. Thrift Shop Where the Rich Live
2. How to Pack Fragile Items for Shipment
3. Are Barcode Scanners a Good Investment?
4. How to Sell eBooks to Kindle Readers
5. What Does the PayPal 1099 Mean to eBay Sellers
6. New Wholesale Sources for eBay & Amazon Sellers

"Diligence is the mother of good fortune." ~ Benjamin Disraeli

Musings from eBay and beyond

If you bought my book, The Virtual Peddler, you know how to get the most out of yard sales, garage sales and estate sales. But how do you find the really good ones? You can look in your local paper for the sales in your town –but what about the sales in the next town, or that town that is 20 miles away but has better yard sale demographics?

There is a new service called Yardsales.com where you type in your zip code and set a mileage number of how far to search. You can search just in your zip code or up to 50 miles away. The basic service is free. It’s free to post a yard sale and it’s free to look for one near you.

They do offer a premium service for $49 year, but they are running a deal for only $29 for a short time –and I made a deal to get my readers and members of OnlineSellingCoach.com a $20% discount from that price if you use this link. (The price will be adjusted after you use the promo code Skip2011).

The premium feature is for serious sellers who find merchandise at sales. It gives you five neat benefits:

1. Be the first to know!
2. Automated alerts will notify you via email or text message if there is a sale or item that matches what you selected
3. Set up to ten different alerts, change them when you want and as desired
4. Get alerts anywhere from your mobile phone or computer
5. Custom alerts are the easiest way to hunt sales in your area

Have you ever tried selling something in a color where it was important to accurately state the color (fashion items come to mind). Well there is a new service called Online Auction Color Chart. They sell you a chart so you and a buyer can communicate accurately about the true color of an item.

The forum is now up and running at OnlineSellingCoach.com. Members can now ask questions from our experts. We have set up several categories including one for eBay, Amazon, Social Media, Craigslist and general online selling questions.

We are still holding the charter rate of $9.95 through the end of May so don’t wait much longer to get in. (Actually due to the Memorial Day holiday, we will hold it open until June 3^rd. so no one misses out.

I recently set up a page with My Recommended Digital Cameras on the EZ Cube website where I also list Budget Light Tents for eBay & Amazon Sellers including a page with light tents not to buy.

I often get questions about setting up on other selling venues and storefronts. This week’s AuctionBytes has a great case study. Greg Holden profiled an artisan seller, Nathalie Girard, who answered the fundamental questions everyone faces about finding hosts for your website and storefronts and which storefronts and how many to use. By looking at her example, you can get ideas for your own ecommerce plan. This is an excellent article for anyone who is looking for alternatives to eBay or who is looking into multi-channel selling: Case Study: Strategic Planning Helps Multi-Channel Seller Grow.

Ina Steiner and Jeff Bezos

In the same issue, Ina Steiner scored another coup when she got Amazon founder and CEO, Jeff Bezos, to talk about Amazon’s efforts to grow their third-party seller force (folks like you and me to sell on Amazon). Ina also reports on Jeff’s comments at a recent event at Consumer Reports Magazine HQ where he spoke about the future of Amazon and some new things coming down the road. Click here to read the whole story.

What do you use for brainstorming and managing new projects? I use a pad of paper for brainstorming and thinking, and email for task assignments and communication. BizPad replaces this. It’s an online pad of paper that uses email to assign and track tasks.  Since it's already familiar, there's nothing new or complicated to learn. This qualifies as a "cool tool." http://bizpad.com.

Lets get started with this month’s articles:

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1. Thrift Shop Where the Rich Live

SIMPLE FACT: Thrift shops in wealthy neighborhoods have better quality goods.

I don’t do as much thrift shop shopping as I used to, but I still hit them occasionally and keep my eyes open for new places. Well last week I had an occasion to visit Mercer Island, WA. Mercer Island is a very expensive and exclusive suburb of Seattle and home to one Mr. William Gates who owns this little company nearby called Microsoft. Small fixer-upper homes on Mercer Island start at a little over $800,000 Million with the average home probably going for around $2 million.

Before leaving home I hit Google and typed Mercer Island Thrift Shop into Google and got the following result:

It turned out it was the only one on Mercer Island, but what a great store. This is proof it pays to thrift shop where the rich live. Look at this one review I found:

"This thrift shop prides itself on its boutique feel and higher-end offerings of second-hand clothing and housewares."

And they were not kidding. Here is a short list of just some of the things I found:

• Almost new Cuisinart food processor in the box with all manuals - $25
• Pair of Gucci, size 7 women’s pumps with the Gucci double GG logo - $40
• Burberry scarves (2) 1 in cotton and 1 cashmere --$20 for the pair.
• Seven for All Mankind Blue Jeans, medium wear and tear for only $10
• A stack of Golf shirts from local country clubs –all new with tag for $2.00 each
• Old Bronica camera in excellent condition with extra lens and case - $75
• About 2-dozen pair of men’s and women’s Nike shoes –all for between $3 and $5 each.
• Racks of famous name brand ladies blouses and slacks for between $2 and $10 each –Most are lightly used but many pieces still have the new tags on them.

Now you might make the occasional find like these things in your local thrift shop in a lower or middle class neighborhood –but if you live in or near a city with a wealthy neighborhood containing a thrift shop, then you may want to make a special trip or put it on your list for a regular stop.

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2. How to Pack Fragile Items for Shipment

If you sell anything breakable, you have to pack it and ship it to your buyer. Remember, what you are selling. That antique plate or collectible sugar bowl is now someone’s treasure. And when someone receives their treasure broken, they are pretty unhappy and you are risking a negative feedback. Feedback percentage is very important to any eBay seller, but it is especially important in the art, antiques and collectibles categories where people are always worried about getting fakes or misrepresented products.

This may sound extreme but my policy is to offer a 100% no-questions-asked money back guarantee on everything I sell. A lot of people read that and say "No Way. I would go broke." Well in 12 years of selling on eBay I average about one item per year that is returned for a refund. When we had an antique shop I lost more than that in shoplifting. So think of it as a cost of doing business. Believe me you will make more money if your feedback is 99.7% or better, than if it’s lower.

How you pack depends a lot on what you are shipping. If you sell glassware, pottery, or any breakable item, then you need to be careful. So let’s look at how to pack and ship really fragile items:

1. Proper materials. The first step is to get all the materials you will need. These will include Styrofoam peanuts, bubble pak, boxes, tape and tissue.
2. If you are shipping a hollow item like a vase, then you want to pack the inside too. I usually use newsprint for this. (You can buy blank newsprint at office supply stores. Don’t use old newspapers).
3. Now bubble wrap the item with the bubbles facing inward so the flat side is out. This makes it easier to tape.
4. Place the wrapped item in a box that has at least one inch of space on all sides and fill this space with newsprint, bubble pak or Styrofoam peanuts.
5. Now place this box inside another box with at least two-inches free on all sides of the item and fill all of the space with Styrofoam. This is called the box within a box method and is simply the safest way to ship breakable items.
6. Lastly double tape the box seams top, bottom and the side flaps.

Remember that all of this packing material will add a pound or so to your shipping cost. So when you calculate shipping for your auction listing, you may wish to add a pound to the item weight.

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3. Are Barcode Scanners a Good Investment?

My answer to that question is a big YES! A barcode scanner can not only save you money –it can make you money. And they are huge time savers.

If you sell books or media, a bar code scanner allows you to go to a garage sale, thrift shop or library sale and scan books and DVDs quickly to find the ones that will sell on Amazon. If you take a scanner with you to Wal-Mart, Target or Big Lots, you can scan items to see if they are selling on Amazon and how much they are selling for. (The clearance tables at Wal-Mart are a goldmine).

Bar code scanners don’t work with eBay, but if something is selling for X-dollars on Amazon that is a good clue to its value on eBay.

There are also scanner applications that will tell you where a given item is selling at a lower price. For example, let’s say you are in Best Buy and you see a DVD player you like. You scan it and the results will show you other sites selling the same item and what they are charging.

Bar code scanners are also huge time savers. When I am entering my items to upload to Amazon, without a scanner I have to look at the little numbers under the UPC code on an item and type that number into the web form. But with a scanner, I can just scan the item and my web form is prefilled with all the information I need.

There are several scanners on the market. If you sell media (books, movies, music) there are several choices.

• MediaScouter
• Neat-o-scan
• ASellerTool
• FBAPower

All of these scanners work on a cell phone PDA (Except FBA Power which works on an Android or iPhone). You can either buy or rent the software and install it on your PDA, or the companies will sell or rent you a PDA already loaded. I am not sure about MediaScouter but the latest version of the ASellerTool also includes a UPC reader for non-media products.

There are also several scanner applications that work with iPhones and Android phones. In my opinion this is a much better way to go. These are much more versatile as they will scan and work with all kinds of products –not just media. And you don’t need a PDA.

The two I recommend here are MediaScouter and FBA Power. I use FBA Power. I don’t have an iPhone, but I use it with my 4G-iPad and it works fine.

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4. How to Sell eBooks to Kindle Readers

Amazon announced last week that they are selling more Kindle eBooks than printed books for the first time. This happened about 2 years ahead of schedule. When Amazon introduced the Kindle in 2008 they thought it would take about 5 to 6 years before eBooks would overtake printed books.

Here are the two popular Kindle models available from Amazon today:

3G Kindle - $189

Wireless Kindle $139

I bought my first Kindle in 2009 and upgraded to a new 3G Kindle in 2010. As a voracious reader and lover of books (I read 2 to 3 books per week), I was very hesitant –but when I got my first Kindle it only took reading about a dozen pages or so and I was hooked.

What does this mean to you? First of all, if you read a lot like I do, a Kindle will save you money. (Note – If you already own an iPad, then you don’t need a Kindle, as there is a Kindle app for the iPad).

Secondly, you can make money either selling your own eBooks to Kindle readers or you can create eBooks from public domain materials to sell on Kindle. Hundreds of people are doing this – yet they have only scratched the surface of what is possible.

There are some folks who are making big money selling Kindle eBooks. I recently read about Amanda Hocking in the Wall Street Journal. She sold over 34,000 eBooks in ten months. Her program is called The Kindle Revolution. Amanda shows you step by step how to find and create products and how to upload them to Amazon for the Kindle market.

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5. What Does the PayPal 1099 Mean to eBay Sellers

Starting this tax year, PayPal, under an agreement with the IRS (If you can call the IRS holding a gun to your head, an "agreement") will start sending out IRS Form 1099, Miscellaneous Income, to eBay sellers who use PayPal and sell over $20,000 a year and receive more than 200 payments per year (Bronze PowerSeller level).

First of all, a 1099 form has nothing to do with sales tax. That is a state matter and the 1099 relates to US Federal Income Tax.

IRS Form 1099 is used in the US income tax system to report various types of income other than wages, salaries, and tips (those are covered on a W-2 form).

There seems to be some confusion among sellers about the taxes they have to pay.

All the 1099 form does is tell the IRS how much money you received from PayPal. This does not mean you have to pay tax on all of that money. The IRS does require eBay sellers to pay a tax on their profits. Or, if you have a loss, you can deduct the amount of your loss from any other ordinary income you have. So how do we figure that out?

Ok – let’s say you sold $20,000 worth of merchandise on eBay and that everyone paid with PayPal. So you would get a 1099 stating that you earned $20,000.

The first thing you need to do is get IRS form, Schedule C – Business expenses Profit and Loss. This is a form where you list the cost of the items you sold and any other expenses you incurred in your business. (Note: If you incorporate or form an LLC – there are different forms to use. Check with your CPA or tax preparer).

So let’s say the products you sold cost you $12,000. You subtract this from $20,000 and now you have a Gross Income of $8,000. Next make a list of any and all expenses (no matter how small –pennies and nickels do add up). Here are just a few of the expenses you can deduct:

All of these expenses are deducted from your Gross Profit to get your Net Profit. The Net Profit is what you will pay taxes on. So, for example, if all of these expenses added up to $7,000, then you would subtract that from your $8,000 gross profit and you would only owe taxes on your $1000 profit.

But what if, you didn’t control your expenses very well and you came up with $9,000 in expenses. This means you had a business loss of $1,000. No problem – you can deduct that $1,000 business loss from any other income you had such as from your regular job.

If the IRS sees your 1099 from PayPal and a schedule C business profit and loss form in you tax return then you are fine. But if they get a 1099 from PayPal and you do not file any business income then you can expect a very legal and scary-sounding letter from the IRS.

Once your online business gets to the point where you are making enough profit to file a schedule C business profit and loss form, I strongly suggest you get professional help from a tax preparer such as H&R Block or any of the many tax prep firms that around today.

If you incorporate (or form an LLC), I really suggest you find a CPA - Certified Public Accountant to do your corporate taxes. Believe me the fees you pay will be offset by the taxes he or she will save you –and your risk of being audited by the IRS goes way down.

If you would like to incorporate, I suggest you look at My Corporation. I used to recommend Legal Zoom but I had one bad experience with them and also got mail from readers of similar problems. Since switching to My Corporation, I have not heard one complaint. Even if you are only doing $10,000 to $20,000 in online sales, a corporation or LLC will save you money in taxes and give you excellent liability protection.

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6. New Wholesale Sources for eBay & Amazon Sellers

This is the best time of year to source Liquidation goods from liquidation and surplus sellers.

One of the best companies that work with eBay sellers is one of our advertisers, Topper Liquidators.

There are two other companies that work with eBay and Amazon sellers:

Liquidation.com

Via Trading

If you are looking for wholesale clothing, RG Riley is one of the oldest and largest surplus apparel dealers.

If you are new to liquidations, a great investment that will save you money and keep you from getting a bad deal is Chad Maslak’s eBook, How To Buy Surplus, Liquidated and Wholesale Merchandise Without Getting Burned!

I often get requests for suppliers of CDs, video games and DVDs

Mountain View Movies, is a wholesale DVD and Video Game distributor located in NY State. They specialize in purchasing closeout, liquidation and surplus stock from large stores and chains.

Shipping large items such as furniture is somewhat problematic for eBay and Amazon sellers, but it can be done. The Shine Company carries a very nice line of outdoor garden furniture and they solve the shipping issue by dropshipping for you.

One of my readers recommended International Gift and Wholesale as a large online dropshipper of a wide variety of products. But I have no personal experience with this company and have not checked them out, so be careful. They are probably fine, but I am always leery of large dropshippers that handle a wide variety of merchandise. So start small. Place a test order or two to see how their service is. And read their terms and conditions carefully so you know what you are getting into. I am not saying this because I think there is something wrong with this particular company –I do this for any large dropshipping operation that deals in a wide variety of merchandise.

IndoTeak does not dropship as far as I know, but you might be able to arrange something with them. But wow, do they make some beautiful things. I have seen their furniture in person at a trade show and it is incredible. They were just selected to furnish the US Embassy and the US Ambassador’s home in Indonesia.

DPC Wholesale is a large general wholesaler who does have a dropship program. You will have to register with them and fax them a copy of your sales tax certificate before you can order. Their minimum order is $50 which is also the minimum for dropshipping which is fine as who wants to dropship ten dollar products –there is just no profit in that.

Casey’s Distributing carries over 10,000 sports collectible products at wholesale-only pricing. Follow the steps on their website to register.

Do you love tools and gadgets? Check out Tool Logic for some really unique products.

Dog Tracker features a Made in the USA dog tracking system. Really cool stuff for hunters and even for folks who have dogs that sometimes run off.

That’s it for now. We publish twice-monthly. See you in early June.

Skip McGrath
The Online Seller's News

P.S. If you missed the last issue, click here to read it.

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