Raising Money for Your eBay and Amazon Business

The Online Seller's News, August 24, 2011, Volume 11, No. 16

Tips, Tools, News and Resources for eBay, Amazon and independent Online Sellers
by: Skip McGrath

In This Issue:

Musings from eBay, Amazon, and beyond

1. Raising Money for Your eBay and Amazon Business
2. Halloween is One Of The Most Profitable eBay Seasons All Year
3. Dropshipping for eBay and Amazon Sellers
4. Beat The Amazon Christmas Toy Seller Restrictions
5. Niche of The Month – Quack Medicine Collectibles
6. New Wholesale Sources for eBay & Amazon Sellers

"Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful." ~ Unknown

Musings from eBay, Amazon, and beyond

Last month I told you about Chad Maslak’s Liquidation Guide. I forgot to mention another excellent resource from Robert Cry. It’s called The Liquidator’s Guide. I was one of Robert’s resources and a contributor to this book. Robert is a professional and has years of experience in the Liquidation and Surplus Industry.

One of my affiliates has come up with a clever way to promote sales and earn commissions. His name is Stuart and his website is called How To Build a Successful Home-Based Business. If you spend some time on his site, you will see how he promotes not only me but other home-business experts as well. This is an excellent example of a very well done affiliate website with lots of quality content designed to attract organic traffic from Google.

Comscore announced that Amazon passed eBay in June and is now the most visited shopping site on the web. Amazon was responsible for 20% of all traffic with approximately 280 million visitors. eBay was second at 16%. That may explain why we are now experiencing almost double the sales on Amazon as we do on eBay. Although I am selling mostly the same products and launching the same number of listings, my sales on eBay have dropped so much that I am no longer a Gold PowerSeller. Whereas my Amazon sales have more than made up for the drop on eBay, so much so that my total sales of both combined are actually up for the first time in two years.

If you would like to learn how to sell on Amazon, Check out the Proven Amazon Course here. If you don’t want a whole course on selling on Amazon, one of our coaches, Suzanne Wells has just written a great e-book called Amazon FBA Secrets.

I don’t have many UK readers but there are a few. Those of you in the UK may be familiar with TameBay –a site similar to mine that helps eBay and online sellers. One of the founders and writers on TameBay was Sue Bailey. Sadly, Sue passed away suddenly earlier this month. Sue was highly respected in the eBay UK community and even had lots of followers here in the US and Canada and she will be missed.

People keep friending me on my original Facebook page, but for some reason they aren’t finding my Facebook business page. I tend to use my personal Facebook page for personal stuff –although I do post the occasional business-related announcement there. But, if you want to get my Facebook posts related to eBay, Amazon and online business then visit my Facebook Business Page and hit the Like Symbol. Starting next month I will only be using my original Facebook page for personal and family stuff.

Every year eBay publishes a list of products that their research has shown will be hot for the coming holiday season. You can see the eBay Holiday Hotlist here.

Lets get started with this month’s articles:

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1. Raising Money for Your eBay and Amazon Business

I have already written about Kabbage.com a couple of times. Kabbage is the company that gives Amazon and eBay Sellers cash advances to purchase inventory to sell. Kabbage made an interesting announcement last week. This really small new company scored a huge round of professional venture capital last week to the tune of $17 million. This will give them the capital to provide more cash advances to more sellers on more platforms. In fact they recently added Yahoo Store sellers and plan to add Etsy, Shopify, Facebook and Sears Marketplace.

The way Kabbage works is that they are integrated with the Amazon and eBay API (the program that lets them access data from those sites). When you sign up with Kabbage you give them permission to check the API to determine the volume of your sales on the platforms. Then based on your sales volume, they calculate an amount of money you qualify for. This takes about 3 minutes.

So let’s say you qualify for $5000. You decide how much you want advanced and within minutes Kabbage sends the money directly to your PayPal account. Now you can use the money for anything you want –although the biggest reason people get advances is to buy merchandise to resell.

I talked with Kabbage user and eBay seller Tom Pardee last week and this is how he uses Kabbage:

I work my eBay business part-time. I stick pretty much to my specialty products as I have a lot of experience with them, but earlier this year when things were slow, I came across a piece of high-end exercise equipment at a good price and bought it using nearly all of my working capital.

Just a few days later the largest inventory deal ever for me in 12 years on eBay dropped in my lap. It was ENORMOUS. It was so well priced, but I had just depleted my normal resources. I tapped all my local investors and still was a few thousand dollars short of purchasing this super deal.

I was not about to let this deal slip away. I needed help quick and did a little research and came across Kabbage. I looked them over and took the plunge. They were like a rainy day partner and helped me make the deal of a decade. I have since used them several times and have increased my business significantly this year. Cash when you need it is king.

Here's another example of someone using Kaggage.com.  This is from Cindy Shebley at CloverCitySells:

Last June I was invited to participate in the Kabbage.com beta program. It was easy to walk through the online application process and I had an answer on my advance within a few minutes. Once my advance was approved, Kabbage.com transferred the money into my PayPal account within 10 minutes of starting the application.

With the funds in hand I bought several cases of backpacks for the back-to-school buying rush in July and August.

It was smooth and easy from start to finish and with the funds I was able to capture part of the seasonal upswing in sales.

So if you need or think you may need some cash to purchase inventory or build your business, give Kabbage a try. But if you are using it to buy inventory, make sure it’s something you can sell. Do your research. Use the Completed Listings feature of the eBay search engine or research your products on Terapeak or HammerTap before you commit to buy.

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2. Halloween is One Of The Most Profitable eBay Seasons All Year

Halloween is quickly approaching, and ghosts, ghouls and goblins yelling “trick or treat,” will soon surround us. But Halloween isn’t just for kids anymore. Americans are ready to spend an estimated $5.8 billion on the spooky festivities, and you can leverage their enthusiasm to make money on eBay and Amazon.

Halloween is traditionally one of the single most profitable eBay selling seasons and even though Halloween isn’t until October, Halloween marketing and sales starts next month. Halloween is profitable for two reasons:

• The markup on Halloween goods is high. These product typically have great profit margins

• Everyone buys new stuff every Halloween. You may have a few things you use at Halloween over and over like our smoke machine, but most costumes, mask and party goods are purchased new, every year.

Even though the economy is still soft, it doesn’t seem to affect Halloween that much as most Halloween buying is for kids and parents don’t like to skimp on their kids even when times are tough.

eBay also helps you out at Halloween. Starting in September eBay runs several Halloween promotions. Here is what eBay says about this year’s Halloween promotion:

From September 12 to October 31, eBay will be lighting up the site--jack o'lantern-style--to drive scary seasonal sales your way. Start now by sourcing costumes for men, women, kids and pets as well as ghoulish home décor items, then get ready to list before the campaign begins next month.

If you haven’ t ordered yet, don’t wait! Now is the time to get your orders in for Halloween goods. We feature several wholesale suppliers in our last article at the bottom of this issue for Halloween costumes and supplies.

Lastly, a great resource is a free industry trade magazine, Selling Halloween. Once you subscribe you will get access to their buyer’s guide and this is where all of the wholesale manufacturers and distributors who carry Halloween gear advertise. You will also learn the hottest products and latest trends way in advance of your competition.

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3. Dropshipping for eBay and Amazon Sellers

How to find real dropshippers that will work with small eBay and Amazon Sellers

I get so many questions about dropshipping and the questions show that readers can really be confused or even mislead by what they have read online. So I apologize if this is somewhat basic for my experienced readers, but I wanted to put out a clear description of the issue for those who may be new to dropshipping or considering it for the first time.

Dropshipping is selling something you don't own. That may sound illegal –but it’s not. Dropshippers are companies that offer merchandise for sale that will ship the merchandise directly to your customer once you pay for it. Here is how dropshipping works:

• You find a company that agrees to dropship. You list their merchandise on eBay, Amazon or your website for sale without first purchasing it.

• When the item sells, you collect the selling price (retail) and the shipping cost from you customer.

• Now you send the wholesale (lower) price + any shipping and handling fee to the dropshipping supplier.

• The supplier then ships the item to your customer.

• Your profit is the difference between the retail and the wholesale price

Disadvantages of Dropshipping for eBay and Amazon

• Lack of control – When you dropship, you are at the mercy of the shipper. They control the packing and shipping experience. If they pack an item improperly or take too long to ship, the customer will blame you –not the dropshipper. Poor service from a dropshipper can negatively affect your customer satisfaction ratings on eBay and Amazon.

• No control over inventory – If a dropshipper fails to warn you about their low inventory level, you may sell an item they cannot deliver. This puts you in a very bad position with eBay and Amazon. If it happens too often you could find your account suspended or closed. This happened to me, just last week with one of my solar products. The only way I could fulfill the order was to buy it from another seller on Amazon and have them ship it directly to my customer.

Advantages of Dropshipping for eBay and Amazon

• No up front investment in products - When you sell drop shipped products, you don’t pay for merchandise until it sells. This eliminates tying up money in inventory.

• Eliminates risk – If something doesn’t sell, your only risk is the listing fees

• Product depth and variety – When you buy products to resell, you are limited in the number and type of products you can sell by the amount of cash or credit you have to purchase. When you dropship, you can list many more products for sale
  
  

There are two types of dropshippers and it is important to understand the difference:

1. Aggregators

2. Manufacturers, Importers or Master Distributors

Let's look at each type before you decide what kind of company you want to work with.

Dropshipping Aggregators -- Aggregators, also known as Dropship Warehouse Companies, are basically middlemen.  These are the outfits you see advertising on the web claiming to have millions of brand name products you can sell online. Many of them also offer pre-made websites loaded with these products (Never buy one of these websites –but that’s another subject for a future issue). Just type the word dropshipper into Google and you will get dozens of results for these types of companies. 99.9% of them are a total waste of time and money and I am still looking for that other 0.1% that aren’t. (Haven’t found them yet).

Aggregators list products in a virtual warehouse that other, real wholesale companies, have in stock. Aggregators rarely, or almost never, have actual products in stock.

If you sign up with one of these companies, you will soon find that most of the merchandise they offer is already selling on eBay or Amazon for about the same price they are offering it to you. I have been selling on eBay successfully for over 11 years and in my opinion, although there are a very few exceptions, it is very difficult to make money on eBay or Amazon working with Aggregators.

Most Aggregators make their money from membership fees and/or handling fees. When you order something from them, they order it from the real wholesaler, mark up the cost and/or charge you a fee. Because of this it is very difficult to make any money as they have already taken most of your profit.

Dropshipping Manufactures, Importers and Master Distributors -- There are thousands of actual manufacturers who will dropship. 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, you are ordering directly from their stocking warehouse and you are getting the lowest drop ship price available. This is where you can make the most money on eBay or Amazon.

The drop ship price will still be somewhat higher than if you ordered an item in quantity, but still low enough to make a profit. One dropshipper I work with gives me a ten percent discount when I order a case of his product. So what I do is buy the case but leave it in his warehouse. Then when I get an order for that item, he fills it from my case. The ten percent I save usually covers the shipping fee, so I could offer free shipping to offer a better, more competitive selling price.

It is not well known, but there are thousands of manufacturers who will dropship for you. I currently work with three different companies which dropship for me.  We list several of these manufacturers in the member’s area of our website for people who purchase The Wholesale Buying System or The Complete eBay Marketing System.

You can also find dropshippers in the Thomas Register but the best place is to attend wholesale trade shows such as the ASD/AMD Wholesale Trade show held in Las Vegas every March and August or the various wholesale trade shows that are held all over the US and Canada. Worldwide Brands is another excellent source of reliable drop shippers. Their membership may seem somewhat expensive, but they have thousands of sources and all of their sources have been contacted to insure they will work with small eBay and Amazon sellers. Also, the purchase price is for a lifetime membership. I joined over 9 years ago, so the price per year is now pretty small.

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4. Beat The Amazon Christmas Toy Seller Restrictions

Toys are obviously one of the hottest products during the Christmas Holiday season. And even with the lousy economy, I think Amazon will still be hot. High gas prices and people shopping for bargains will drive more traffic online this year and Amazon seems to be winning the online shopping game.

Since so many sellers try to sell toys at Christmas, Amazon restricts toy sellers to those using FBA and experienced sellers. They don’t require a lot of experience, but you must have some. Here is this year’s notice from Amazon:

To maintain buyer confidence in Amazon this holiday season, we are implementing Holiday Selling Guidelines for the Toys & Games store.

Effective September 19, 2011, we will stop accepting new non-FBA sellers in Toys & Games.* Effective November 15, 2011, only those sellers who meet the following performance criteria will be eligible to sell in Toys & Games from November 15, 2011 through the first week in January 2012:

• Seller's first sale on Amazon.com must be prior to 09/19/2011 (sale does not need to be Toy-specific).
• Seller must have processed and shipped at least 25 orders (do not need to be Toy-specific) during the 60 consecutive days preceding 11/1/2011.
• No greater than 1% short-term order defect rate as of 11/1/2011.
• No greater than 2.5% pre-fulfillment cancel rate for the trailing 30-days preceding 11/1/2011.
• No greater than 5% late shipment rate for the trailing 30-days preceding 11/1/2011.

*Orders fulfilled by Amazon will not be subject to the holiday season restrictions provided your account is in good standing.

You can find your Customer Metrics in your seller account. If your performance does not meet the above criteria, we encourage you to take corrective action.

We will provide final notification about your eligibility to sell in the Toys & Games store by the middle of November 2011.

Beginning November 15, 2011, we will monitor the performance and listings of sellers who are approved to sell in Toys & Games during the holiday season. Amazon Services reserves the right to cancel listings, suspend accounts, and prohibit the sale of specific products to maintain a marketplace that is safe for buyers.

Here are some steps you can take to remain eligible to sell in Toys & Games throughout the holiday season:

• Monitor your Customer Metrics and take corrective action if necessary.
• Utilize Fulfillment by Amazon (FBA) to ship products to your customers.
• Check your orders frequently in the Manage Orders section of your account
• Minimize order cancellations; don't show more stock for sale than you have available to ship.
• Ship orders and confirm shipment in a timely manner.
• Ensure your seller policies are up to date.
• If you work with outside drop-shippers, solidify their SLA commitments for providing prompt shipping confirmation.

Frequently Asked Questions

1. Why does Amazon implement Holiday Selling Guidelines for the Toys & Games store? Buyers have high expectations for purchases made during the holidays. We want to ensure that our sellers in Toys & Games provide a high-quality customer experience.
2. When will all sellers be able to list in the Toys & Games store again? All sellers will be able to list in Toys & Games during the first week in January 2012. We will post an announcement in your seller account when the holiday season restrictions have been lifted.
3. How will I know if I'm approved to sell in the Toys & Games store during the holiday season? Amazon will notify you by e-mail of your eligibility by mid-November. Note that as of September 19, 2011, no new sellers will be eligible to sell in the Toys & Games store until the holiday restrictions have been lifted.
4. How do the Holiday Selling Guidelines affect me if I use Fulfillment by Amazon (FBA)? Orders that are fulfilled by Amazon will not be subject to the holiday season restrictions provided your selling account is in good standing.
5. Do these restrictions apply to my Webstore? Yes. Again, this is to ensure that that our sellers in Toys & Games can provide a high-quality customer experience and that all orders are fulfilled and delivered in a manner that meets or exceeds our customers' expectations.
6. What is an order defect? An order has a "defect" if it incurs a negative feedback, an A-to-z Guarantee claim or a service credit card chargeback. Your order defect rate is defined as the number of orders with a defect divided by the number of orders in the time period of interest. Order defect rate is the key measure of your ability to provide a good customer experience. Learn more about performance criteria for sellers by searching with keywords "performance measurement" in our online Seller Help.

One thing to look for is Jennie Hunt’s Christmas Toy Guide that should be out soon. Jennie shows you the hot toys to buy and where to find them. But don’t wait until then or miss the September 19^th deadline. Hit the clearance table at your local Wal-Mart or Toys-R-Us this weekend. You can pick up almost any item from a clearance table at these stores and turn a profit on Amazon within a few days if you price it right.

Even better, Check out the Proven Amazon Course here and learn how to sell with FBA or get the FBA Scouting tool, FBA Scout with 200 free scans to find out what items are selling on Amazon for –before you buy them.

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5. Niche of The Month – Quack Medicine Collectibles

The history of quack medicine is thousands of years old. The early days of the United States was a wide open market for quack remedies. Once you got out of the cities there were few doctors and a lot of the early pioneers were illiterate. Traveling salesmen sold all types of elixirs, potions and just plain weird devices. Today, thousands of people collect these devices.

Here are some of the things that have sold on eBay over just the past few weeks.

Machines and devices are the most desirable to collectors but bottles and potions also sell very well. The sell through rate in this category is one of the highest of any niche collectible category on eBay.

Here are some tips to maximize sales and final value:

• The weirder or stranger the better

• Devices with all parts and in working order get the highest prices

• Devices in the original box with instructions sell for much more than those without.

• Bottles or potions must have an intact label. The better the label the higher the price.

• You can also cut out and mat or even frame advertisements for quack medicals devices from old magazines

• As with anything you sell on eBay good photos, good titles and good descriptions matter. The more you can write about it the better. The best way is to just Google the name of the device and you will find plenty of information on the web. Don’t copy/paste the work of others, but use the information to create your own description.

• Even though you are selling something that is obviously an antique or collectible, you should add the following statement to your listing:

“Not FDA Approved. Sold as a collectible only – no representations made or inferred as to the efficacy of the device.”

Where do you find them?

I have seen them at flea markets but the dealers usually know what they have and it’s hard to buy them at a good price, although you will occasionally find a bargain there. Mostly they show up at small country auctions and that is where you will always get a good price. You can also advertise. Take out a small classified ad on Craigslist and in your local paper that says: “Collector pays cash for old quack medical devices and potions. Call Skip at 360-555-1212.”

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6. New Wholesale Sources for eBay & Amazon Sellers

Since Halloween will be here soon, lets start with some Halloween suppliers.

The Halloween Resource Center sells the most complete line of Halloween costumes and decorations you can imagine. Halloween is their only business.  No website. Email Steve Sellers at Hallrsctr@yahoo.com and he will send you a CD with the products and the pricing. Reference the ASD show in your email.

Forum Novelties is a huge seller of Halloween merchandise and they still have stock on hand.

B-day Parties is mostly about costumes and supplies for birthday parties, but this time of year they also feature several Halloween products and they sell costumes year around.

Fun Express carries a few Halloween supplies. They don’t have a great selection but I did see a few things there that I did not find elsewhere.

Dreamgirl – OK this one is really different. Dreamgirl sells a line of hot costumes for women. This is totally adult stuff –no kids clothing here. But adults love costume parties and these items could do very well. Use the contact form to get wholesale information.

Franco Costume also sells adult Halloween costumes. Once again you have to use the contact form to get wholesale information.

Enough of Halloween. Let’s look at some other stuff:

Scale-Model-kits is an international wholesale distributor of all types of scale model kits.

Action Lighting sells a wide variety of lighting products including light ropes and other specialty lights.

Port Supply is a wholesale distributor of marine products like those found in boating stores such as West Marine. In fact West Marine owns them. They have warehouses Distribution centers in Hollister, California and Rock Hill, South Carolina.

McConnell Aviation Group is a large wholesale distributor of Flight Training Products, Pilot Supplies, Aircraft Accessories and Aviation Publications to Flight Schools, Pilot Shops, Fixed Based Operators (FBO's) and Book Stores nationwide.

Edmo Supply is a wholesale distributor of aircraft avionics, avionics test equipment, installation and pilot supplies. They are a wholesale-only distributor.

And if you are looking for Liquidation or surplus goods, don’t forget one of our advertisers, Topper Liquidators. They are very good people and have always taken care of my readers.

That’s it for now. See you again in a couple of weeks.

Skip McGrath
The Online Seller's News

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

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