Amazon Blows the Door off Sales, But Profits Stink

The Online Seller's News, November, 2011, Volume 11, No. 22

Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers ~ Published Twice Monthly (except in December)
by: Skip McGrath

In This Issue:

Musings from eBay, Amazon, and beyond

1. Amazon Blows the Door off Sales, But Profits Stink
2. Another Challenge for Amazon FBA Sellers
3. Niche of The Month - New (and used) Toys & Games for Christmas
4. My List of Top Selling Used and Vintage Items
5. Amazon Throws a Huge Curve Ball on the Kindle
6. New Wholesale Sources for eBay & Amazon Sellers

"The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather in a lack of will." ~ Vince Lombardi

Musings from eBay, Amazon, and beyond

Our new membership site www.OnlineSellingCoach.com continues to grow members and we are seeing a lot of staying power.  With any membership site the biggest challenge is to continue to provide new content and services to keep members engaged.  This week we added a new expert to our Forum. Sharon Ware runs an eBay design and consulting service called Dandelion Consulting. Sharon designs eBay Stores (including my store). 

Sharon is a Certified eBay Education Specialist. She joins our other experts posting on the forum to answer your questions about selling on eBay.  Other forum experts can comment on almost any aspect of online selling including selling on Amazon, setting up websites and blogs, affiliate marketing and building email lists. 

Take a look at just a few of the benefits you get with a membership to Online Selling Coach: 

• Weekly and Monthly training on new and emerging niche markets; including products you can start selling immediately.
• 40% discount on all books sold at www.skipmcgrath.com
• Access to our archives for our member's only training, webinars, audio, video, and other premium content.
• Free eBooks and courses on eBay, Amazon, Product Sourcing, Blogging, Social Media, and Internet Marketing.
• Year Membership includes a Free 30 minute One-on-One over the phone coaching consultation.
• Exclusive Membership Access to our Live Webinar Trainings.
• Massive discounts on tools, technology, software for running researching, and automating an online business.
• Pay as you go affordable monthly membership fee. NO CONTRACT – you can cancel at the end of any month.
• 100% Satisfaction; including a 30 Day Money Back Guarantee on your first month.  After that you pay month-to-month for as long or as little as your like.
• Constant updates delivered to you via our members only newsletter
• Learn from real eBay PowerSellers, Amazon Sellers, and Online Marketers. 
  (People who actually do what they teach)
• Get Massive Members only discounts on our trainings, courses and product's past, present, future.

I hope you will check out www.OnlineSellingCoach.com today.

Not sure what online business to start?   

A few months ago I came out with a new book called: How to Make a Living Working from Home - SIX Home Business Plans. 

None of the six plans are complete enough that you won't need to learn more about the topic and methods, but there is enough information to get you started making money and I tell you about all the additional resources, tools and information you will eventually need.  There is enough information to get you started making some money so you can afford the additional resources.   

With times so tough, I have decided to put one of my books on sale each month. So for the month of November, I am reducing the price of How to Make a Living Working from Home by Ten dollars down to only $17.00.  The book is fairly basic – aimed at beginners who are not sure how and where to start. So if that is your situation you may want to give it a try.

I received an interesting and valuable email from one of my readers, Steve F. from Quarryville, Pa.  I took his advice and checked my fees and found two items Amazon was overcharging me for.  Steve's tip saved me over $40. 

Hi Skip, 

Just a heads up that you may want your reader to be aware of on Amazon FBA weight fee.  Let them know to be sure to check their settlement reports that they are being billed the correct weight-handling fee.  I just found an item I sell through FBA that weighs .02 pounds.  I was being billed correctly for weeks at .01 per item weight fee.  However on the last settlement report I was billed $6.64 per unit.  Someone had changed the weight to 16.6 pounds! I had sold 23 units so the total was $152.72 when it should have been .23.  I contacted Amazon and they did verify that the .02 pounds was correct and they will be crediting my account.   

However this led me to checking all of the items I sell on FBA and I found 12 other SKU's in the system that were substantially over on the weight in Amazon's system.  Your readers can check the weight in the system by using the Amazon FBA calculator. 

If any item is over they should report it to Amazon.   Hope my experience saves them some money.   ~ Steve F.   

So take a look at the calculator and see if Amazon is overcharging you. If you find any mistakes, just send an email through seller support and Amazon will in most cases correct the fees and credit your account.  In my case this took them 3 days after I wrote them.

Probably the best-selling eBook of all time is The Silent Sales Machine, by my good friend Jim Cockrum.  Jim has just released the 7^th edition with tons of new material.

The first few copies of The Silent Sales Machine were sold in 2002. The book has been updated seven times and has re-launched to thousands of eager readers each time. It is arguably the all time best selling eBook about online business success ever sold.

Each time the book is updated all past customers get a free copy (as will you).

So, what's in the book?

Updated and ready for 2012, you'll be educated, inspired and hopefully prompted to action by this book.

You'll learn:

• The business models that work online
• The basic skills that can be used to open up a world of opportunity
• How to create multiple hands free income streams
• What DOESN'T work but is being heavily hyped by “celebrity” gurus
• How to recognize the opportunity online that is all around you
• Where to start and where NOT to start

You'll read success stories, examples, and real world eye-opening truth based not on theory, but on real world, workable business models that you can duplicate.

Best of all – The Silent Sales Machine will only cost you $5.00.  That is a steal because Jim has sold thousands of copies for $19.95.  This book is a great companion to the book I am discounting this month - How to Make a Living Working from Home - SIX Home Business Plans.  If you get both books I want to give you one word of warning – when you read Jim's book you will think we disagree about affiliate marketing –but if you read both books carefully you will see that we really don't –we just have a different approach and I will leave it up to you to decide.

Lets get started with this month's articles:

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1. Amazon Blows the Door off Sales, But Profits Stink

Amazon had an amazing quarter but their stock dropped almost 20%.   Amazon sales grew by 44% from $7.56 Billion to $10.87 Billion, but profits fell. Operating income was $79 million in the third quarter, compared with $268 million in third quarter 2010.

What happened was that Amazon made a decision to invest in their future and took a lot of charges in the quarter (they said the next quarter will also be low on profits too).  Amazon took a big hit on the cost side to prepare for what they feel will be amazing growth.  Here are some of the investments they made that impacted costs and therefore profits:

• Amazon has opened and will be opening several more warehouses both in the US and overseas.
• Amazon paid for the new Kindle Fire manufacturing in the 3^rd quarter but will not begin delivery until the 4^th quarter (November).
• Amazon made a decision to sell the new Kindle Fire for $199 although their manufacturing cost is closer to $206 (They will make it up on selling the books)
• The Company launched Amazon.es, a Spanish-language website offering customers a vast selection of books, DVDs, video games, music, and consumer electronics.

There were some other charges as well, but these were the largest cost drivers that ate into profits.  In general this will work out well for Amazon sellers.  More warehouses are always welcome.  That is a sign of growing sales, which is good for sellers. The Kindle Fire is sure to attract new customers to the site and bring existing users closer to the platform.  Every time someone comes to Amazon to download a book or a movie, they often buy other things while they are engaged.  So even though I took a big hit in my IRA, I think I'll hang on to my Amazon stock. 

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2. Another Challenge for Amazon FBA Sellers

 
Well – another fee increase from Amazon. What's new?  I can't complain though –even though my Amazon fees are much higher than my eBay fees, my Amazon sales are so much higher, and I turn my inventory over so much faster, that Amazon is far more profitable.  The main change is the < $25 Pick & Pack fee that jumps from sixty cents to a dollar and the charge for oversize items that doubles from $3 to $6. (ouch – be careful if you sell oversize items).

At least the new fees don't go into affect until after the holidays.  Here is Amazon's message about the new FBA fees as of February 1, 2012:

• The Pick & Pack per Unit fee will be $1 for all Standard-Size Units ordered on Amazon.com. Standard-Size includes any packaged Unit that is 20 lb or less with its longest side 18 inches or less, its shortest side 8 inches or less, and its median side 14 inches or less. A Unit exceeding any of these dimensions is Oversize.
• The fee for Media Units under $25.00 will change from $0.60 to $1.00.
• The fee for Non-Media Units under $25.00 will change from $0.75 to $1.00.
• The fee for Standard-Size Units of $25.00 or more will remain unchanged. See Example 1.
• The Pick & Pack per Unit fee for Oversize Units ordered on Amazon.com will be $6.00. For Units that exceed the Standard-Size definition above, the Pick & Pack per Unit fee will change from $3.00 to $6.00. See Example 2.
• We will use the Outbound Shipping Weight rounded up to the nearest pound to calculate the Weight Handling Fee and decrease the per-pound fee from $0.40 to $0.37.
• The Weight Handling Fee will be based on Outbound Shipping Weight, which is the combined weight value assigned to the Unit plus the packaging weight (box and packing materials).
• The packaging weight will be 2 oz for Standard-Size Media, 4 oz for Standard-Size Non-Media, and 1 lb for Oversize products.
• To reflect the costs of industry-practices by carriers, including UPS and FedEx, the Outbound Shipping Weight will be rounded up to the nearest whole pound when calculating the Weight Handling Fee.
• We will reduce the per-pound Weight Handling Fee for orders placed on Amazon.com from $0.40 to $0.37. See Examples 1, 2, and 3.
• We will use either the weight of the Unit or the Dimensional Weight of the Unit to determine the Outbound Shipping Weight.
• For small Units, we will use the weight of the Unit to determine the Outbound Shipping Weight.
• Following industry practices, for all Units ordered on Amazon.com with a volume greater than 5,184 cubic inches (based on length x width x height), we will use the Dimensional Weight if the Dimensional Weight is greater than the Unit weight.

The Dimensional Weight is the volume of the Unit divided by 166.

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3. Niche of The Month - New (and used) Toys & Games for Christmas

Remember the TV Show – The $25,000 Pyramid Game –The show even had a board game.  Find one of those used and you can sell it for up to $20 –Find a new unused one and it will bring $70.  Or how about any one of the Clue games?  Find one in really good condition and you could get up to $100 near the holidays.  And then there are toys.  What will the hot toys be this year? The ones you can buy at full retail at Wal-Mart or Target and sell for double or triple as we get near Christmas. Don't believe me – Watch this one: 

Last week this toy was selling on Amazon for only $86.95.  By early December, I am betting it will be selling for close to $150 –or even more. 

But what to buy and where to find it? 

Every year Amazon publishes a Holiday Toy List - This helps buyers navigate toy selections by age and gender.  It also shows you, the seller, what Amazon predicts will be the hot toys based on early sales.  It always amazes me, but during the holiday season, people will pay far more than retail to get the hot toy or the right toy for their child or grandchild.  

There are two great tools to help you with your holiday toy shopping

1. Jenni Hunt's Holiday Toy Guide shows you which toys to buy, and where to buy them at prices that you can make money at.  I used one of her tips to purchase the Lego Star Wars Millennium Falcon shown above.  I paid $55 and they are now selling for $124 on Amazon and more on eBay.  (I have mine priced much higher since I expect they will be selling for over $150 by early December). 

Jenni began publishing her guide in early October, but it's not too late to get Jenni Hunt's Holiday Toy Guide. Jenni's guide will tell you exactly which toys to buy and where to buy them to make money this holiday season.  And – here is another reason to join Online Selling Coach(OSC).  All OSC members get a substantial discount off of Jenni's guide. 

2. Jordan Malik, who runs FBA Finds has come out with a great shopping guide called: 101 Toys & Games You Can Buy Locally and Sell for BIG Profits on Amazon.  Jordan's 101 Toys & Games…has the following benefits:

• No scouting tools required - readers can 'print and go' with the guide
• Jordan shows screen shots of my ACTUAL sales for various toys and games mentioned in the guide
• He provides 'wanted ad' copy and a photo for EACH game, if they want to place (say) a craigslist 'wanted' ad.
• He offers a 60-day, no-questions asked guarantee (I know Jordan personally – he is very reliable about honoring his guarantee)

So either or both of those resources can help you make money this holiday season –and remember – both come with a money-back guarantee if you are not happy.

And remember –if you need money to buy merchandise to sell over the holidays, you can get some quick cash from Kabbage if you have an Amazon and/or eBay seller account.

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4. My List of Top Selling Used and Vintage Items

 
I have written several articles about the benefits of selling used and vintage items, so I always get the question, “What items should I buy that sell best?”  I have a whole book about selling used and vintage products called The Virtual Peddler.  But if you don't want to buy the book –or even if you do, here is my list of top selling used and vintage items for eBay.

• Used Non Fiction books especially “How to” books
• Used courses on tape, or CD
• Name brand blue jeans (be careful of famous designer jeans as many of them are fakes)  - and selling fakes can get you kicked off of eBay).
• Cowboy boots (and belt buckles)
• Western & Cowboy shirts
• Small electrical appliances (bread machines, ice cream makers, espresso machines, dehydrators, pasta machines, etc.
• Sporting equipment (golf clubs, tennis rackets, lacrosse sticks, baseball gloves, football shoulder pads, etc.)
• Almost anything Tiki (Tiki mugs, masks, etc.)
• Pre-1980 computers especially Apple Inc.
• Vintage stereo (Pre-1990) turntables, tape decks, amplifiers, etc.
• Ham Radio equipment
• Film cameras, lenses and developing enlargers and tools
• Famous designer clothing, shoes and handbags (Be 100% sure they are authentic)
• Movie posters
• Art prints
• Early art prints cut from old magazines and calendars (mostly from the 20s & 30s.)
• Advertisements from pre-1970 magazines (Cars, cigarettes and travel such as Pan Am ads are the best)
• Almost any collectible except the manufactured collectible items such as the Franklin Mint stuff.
• Vintage luggage (in good condition)
• Fast food toys & character drinking glasses
• Most popular toys that have staying power (Legos, Lincoln logs, Barbie dolls, Erector sets, Fisher-Price Little people)
• Small lots of toddler and children's clothing.
• Power tools in good working condition
• Department 56 Village
• Vintage and collectible Christmas ornaments
• Vintage fishing equipment – especially fly fishing rods and reels
• Children's books (only in very good condition) and pop-up books
• Wilton cake pans
• Cast iron frying pans and Dutch ovens

I am sure some of you know lots of other items that could go on this list, but these are mine.  So feel free to print this out and add your own items to it. If you carry this with you to garage sales and thrift shops, it will help you buy the right items.

Here are three important tips for selling used and/or vintage items:

• With any used or vintage item, if you have the original box or packaging that adds considerable value to an item as do instruction manuals for those items that come with them.  Take the time to clean and item and make sure its in working condition before you photograph and describe it.
• Stay away from any damaged or repaired item –especially glassware, china or pottery.
• Always describe your items accurately, honestly and completely.  Be sure to show and describe any flaws, damage, stains, etc.

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5. Amazon Throws a Huge Curve Ball on the Kindle

If you followed my advice and bought Kindle Fires to sell when they run out before Christmas, there may be a problem.  This is a press release Amazon just sent out today.  It looks like they will have the Kindle in retail stores starting next Tuesday.   This isn’t a total disaster, as not everyone will know this, and the product could be so hot that even the stores run out quickly.

But, if you bought several Kindle Fire’s (I bought 10) I would not wait long to list them and sell them.  I am going to list mine for $249 and see what happens. I can always go down.  One thing for sure we should at least break even and not lose any money but there still may be some small profits made –just not what we had hoped.

Here is the press release from Amazon: 

All-New Kindle Family - Kindle, Kindle Touch, Kindle Touch 3G and Kindle Fire - Coming to Over 16,000 Retail Locations Across the U.S.

In addition to Amazon.com, customers will be able to find, discover and purchase the $79 Kindle, $99 Kindle Touch, $149 Kindle Touch 3G, and $199 Kindle Fire at Best Buy, Target, Wal-mart and more.
 

SEATTLE, Nov 08, 2011 (BUSINESS WIRE) --

(NASDAQ:AMZN) - Amazon.com today announced that over 16,000 stores across the U.S. will be selling the new Kindle family starting November 15. Customers will be able to visit any Best Buy, Target, Wal-mart, Staples, Sam's Club, RadioShack, Office Depot, as well as several other retailers, to experience and purchase the $79 Kindle, the $99 Kindle Touch, the $149 Kindle 3G and the $199 Kindle Fire. The all-new $79 Kindle has been available in stores around the world since shortly after it was introduced.

"Kindle Fire is a fully integrated, end-to-end service that gives customers access to over 18 million movies, TV shows, books, magazines, apps and games," said Mike McKenna, Vice President, Amazon Kindle. "We're excited to be working with popular retailers across the country to offer their customers Kindle Fire as well as Kindle, Kindle Touch and Kindle Touch 3G this holiday. Customers can order our new Kindles on Amazon.com or simply go to a store in their neighborhood to pick one up starting next Tuesday." 

The press release talks about all the Kindle models. It's possible that stores will not get that many Kindle Fires and this could still be a good opportunity.  I spoke with a couple other sellers who are not worried and still think the product will be hot as we get close to Christmas. 

But for those of you who bought Kindle Fires to sell, I thought it only fair to warn you what is going on and give you the opportunity to cancel your orders which you can do since they have not shipped yet.  As for me I am going to wait for mine and take a shot.

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6. New Wholesale Sources for eBay & Amazon Sellers

Fortune Products distributor of lava lamps, black lights and various glow-in-the-dark stuff.

Swanson Inc carries over 4000 patriotic and inspirational Christian products. Use the Contact Us link to get Wholesale information.

Trademark Poker sells remanufactured slot machines, and a complete line of Poker chips, tables and supplies.

Pod-T Training sells Infant and toddler apparel and accessories w/extremely unique and patented designs using very high quality fabrics. All designs are embroidered. Throw pillows for kid's rooms and diaper bags for the moms. Minimum Opening Order: $500 is a little high but this is good quality stuff.

The Ruffin Flag Company sells almost all the flags in the world! Gifts & Souvenirs with flags, caps, bikinis, fleece blankets, license plates. Buy Factory Direct from Ruffin Flags from $1.95 and Military Flags $2.75 each.

Siskiyou Gifts is a leading manufacturer of licensed sports merchandise and originally designed gifts. We have over 10,000 products in our extensive catalog.

All About Autographs, Inc. started as an autographed memorabilia business in 2003 and have expanded to include both memorabilia and unsigned collectibles. They currently carry over 4000 items all of which can be shipped directly to your customer. The website is their retail website, so use the Contact Us form to ask for reseller information.

Precision Products sells high quality hobby tools, sport knives and magnifiers. Very easy online ordering.

Sidelines International is a distributor for Victornox (Swiss Army) knives, Zippo lighters and Burago collectible models.

Phoenix Toys sells several lines of collectible and model cars.

Iconeum is a wholesaler of Religious art and jewelry. They offer a broad range of religious products, religious giftware and services at wholesale prices.

Choices Quilts sells a line of manufactured quilts, runners and wall hangings 

Direct RC Toys specializes in remote control toys - specifically RC helicopters, boats and tanks. 

That's all for now – See you right after Thanksgiving.

Skip McGrath
The Online Seller's News

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

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