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How to Increase Profits in Your eBay and/or Amazon Business

The Online Seller's News, June 25, 2014, Volume 14, Issue No. 11

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

In This Issue:

Musings from eBay, Amazon and The World Wide Web

  1. How to Increase Profits in Your eBay and/or Amazon Business
  2. How To Write Off Practically Anything in Taxes
  3. Niche of The Month - Selling Arts and Craft for Artists
  4. Coping with The Summer Slowdown
  5. New Wholesale Sources for eBay and Amazon Sellers

"Our greatest weakness lies in giving up. The most certain way to succeed is to try just one more time." ~ Thomas A. Edison


Musings from eBay, Amazon, and beyond

In addition to selling on eBay and Amazon and writing books about online selling, one of my side businesses is buying and selling scrap gold. I haven't been doing much of it for a while, but now that gold prices are climbing again, I am starting up again when I get some free time.

This is one of those businesses that you need some capital to start with - At least $500, but a thousand is even better. What you do is buy what is called scrap gold by the industry, which is mostly 14Kt to 18 Kt gold jewellery pieces that folks no longer want. It might be a piece of broken jewellery, or something no longer in fashion or even something from an earlier husband or boyfriend. Basically you buy it for about 50% of the value and send it to a refiner who gives you up to 96% of the spot price. This is one of those little businesses where you can make several thousand dollars over a weekend and do once in a while part-time -or even go into it full time.

A few years ago I wrote a book about how I do this: How to Make Money Buying and Selling Gold. It was a little out of date so I recently updated it in 2014.

I am not suggesting you give up your eBay or Amazon business, but if this interests you, it's a great way to make some extra money. The last time I did this I made about $3,700 for about 6 to 8 hours work. So it can be pretty lucrative, but as I said above, it's one of those things you need some working capital to start. But if you have that, it's pretty easy to learn how to do this. How to Make Money Buying and Selling Gold.


It pays to check your credit card statements. Earlier this week I was looking at one of my credit card statements before my bookkeeper came and I noticed two charges from www.logoyes.com. Logoyes is a site I use, and recommend, for creating logos for your business or for private labeling products.

The charges were for the month of June, but I had not used Logoyes for over a year. So I called their billing department and they informed me that whenever you buy a logo, you are automatically signed up for their website starter kit. They give it to you free for one year and then start billing you $9.95 a month for it. The problem is I never knew I had it, and certainly didn't want it. It all came out OK in the end. They cancelled my subscription and refunded the payments. But the lesson is: Check your bank and credit card statements frequently.


In the last issue I wrote about sourcing products in the Liquidation marketplace. At the end of the article I mentioned Robert Cyr's book The Liquidator's Guide . This is an excellent resource and includes his Black Book of industry suppliers and direct sources. I got several emails from readers telling me how wonderful the book is that I though I would give it another plug. So if that marketplace interests you, check out The Liquidator's Guide .


If you sell in the health and beauty category, you want to be very careful what you sell. Over the past two or three weeks, dozens of Amazon sellers in this category (including many Million dollar plus sellers) has had their accounts suspended for selling products that require a prescription. Well sort of.

Here is the problem. There are products on the over the counter market such as Afrin nose spray, eye drops, cough medicines and so on that contain minute amounts of compounds that require a prescription in larger amounts. And for some reason Amazon has decided that any products that contain any of these compounds or chemicals are a violation of the policy against selling products that require a medical prescriptions.

What is really interesting is that Amazon themselves has been selling many of these products and these sellers have been selling on the ASINs that Amazon created. This hit many sellers totally out of the blue and when they did not immediately kill their listings, Amazon has been suspending them.

Which reminds me - here is a piece of advice. If you ever get a policy violation, you can appeal it, but ALWAYS delete the product listing while you appeal, or Amazon will think you are ignoring the policy violation. If the item is reinstated you will have to create a new listing, but that only takes a few minutes.

Also very important : When you get a policy violation it comes to your email account. But you also need to log into Seller Central, click on the link that says Account health. Once you are on that page, look towards the right side of the page and you will see a list of items called Notifications. One of those notifications will be the same email you received in the policy violation. You must click on the notification and read it there, or Amazon will assume you are ignoring them. That is the only way they know you got their message and are aware of it.


Amazon Fire Smartphone Opens New Possibilities for Shopping Apps. Rather than reinvent the wheel, Ina Steiner wrote a great article about the Fire in her newsletter. You can read it here. An earlier issue also has a great interview with the president of 11 Main Street, the new selling venue I wrote about a few weeks ago. You can read that story here


Lets get started with this month’s articles:

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1. How to Increase Profits in Your eBay and/or Amazon Business

We all want to make more profit. Whenever I tell my family, friends and neighbors what I do for a living, most of them chuckle and think I just have a hobby that pays. They have no idea how much work it is to sell at a professional level on eBay or Amazon.

Since we all work so hard it easy to get caught up doing all the important stuff and forget about the little things that can creep up on you -and cost you money in the process. So let's look at a few things we can all do to increase our bottom line. After all, isn't that what all this hard work is all about?

Cut unnecessary expenses - This is an easy one. If you are like me you sign up for various services, maybe use them for a while and then forget about them. Take a hard look at things you may have subscribed to, or services you signed up for, and make a decision. Am I using this and is it helping me make money? If the answer is no -then drop it!

Get rid of under-performing inventory - If you have inventory sitting in your garage, warehouse or at FBA that isn't moving, cut the price and get rid of it. You can usually at least recover your cost, but even if you have to take a small loss, it's better to get rid of it and put the money into something that is selling. Remember: One of the secrets to this business is how many times you can turn your inventory over. The faster and more often you turn your inventory -the more money you will make.

Cut Storage Costs - If you sell on Amazon FBA, one of the constant costs is the Amazon FBA Storage fees. They are small, but really add up over time. What I like to do is look at how fast my products are selling and send in just enough to cover the time it takes me to replenish.

For example lets say I have a case of 12 items and they are selling once a week. I will send in 6 and then three or four weeks later I will send in the other six. That way I have just enough to keep my inventory in stock without paying storage on the other 6 for the extra time period. I have over 800 product SKUs in FBA and most of those are multiple items. So cutting a few weeks storage charge for several items can add up even if you are only saving ten or fifteen cents at a time.


The other way to cut storage costs is to source smaller and lighter weight items. I used to sell a lot of oversize items, but when Amazon raised the storage and handling fees on larger items I got away from them. The smaller the product, the less your storage cost -and the lighter the weight, the less you will pay for the weight-based handling fee.

Cut overhead - Overhead are those small costs like telephone, postage, office supplies, Internet service and so on. Look for ways to cut these. Services like Skype and Ooma are a great way to cut your phone bills. Look at what you are paying for Internet service and shop around. The next time you are in that office supply store ask yourself: "Is this is something I really-really need?" before you buy it. The other way I save on office supplies is to buy in bulk. Labels and printing paper are a lot cheaper if you buy in larger quantities. As for Ink cartridges I used to buy them new, but now I go for refills. Yes, I get a bad one every once in a while, but in general it's a lot cheaper.

Find free stuff - Shipping supplies are one of the easiest expenses you can cut by finding them for free. Just visit your local stores and ask if you can take their boxes and other stuff like bubble-pak, Styrofoam peanuts and so on. Most merchants have to pay to have those materials recycled so they are happy to let you have them. I find the best boxes come from kitchen stores, Radio Shack and gift shops. We also keep the boxes and shipping materials we get when we order stuff and reuse those.

Amazon does not permit you to send in goods where you use Styrofoam peanuts as filler. But what we do is put the peanuts into small plastic bags, seal them and then use that as packing and filler. Amazon is fine with that as long as they are not loose.

If you are shipping merchandise direct to customers, then look for boxes in really good condition. But if you are sending stuff off to Amazon FBA, the condition or look or the box doesn't really matter as long as it is strong enough to hold your goods.

Cut your cost of goods sold - the cost of goods is what you pay for the merchandise you resell. I am always looking for ways to cut those costs. Once I have established a relationship with a wholesale supplier, and they know I am a regular customer, I always go back to them and ask for discounts or deals like free shipping.

Lately I have been asking my suppliers to ship the goods I buy directly to Amazon for me and it has worked. I now have 5 suppliers who will label and ship my items. This saves me in two ways. One is that four of the five suppliers are closer to the Amazon warehouse than I am (this cuts my cost to ship to Amazon), and the other way is I save the extra shipping cost to me. That is not to mention what a great time and work saver it is.

Some of my suppliers have agreed to discounts since I am a regular customer. The thing is they will never call you and ask if you want a discount. But when you ask them, you will be amazed at how often they will say yes.

Not all will, of course, but many will. One product I used to buy for $11.90 wholesale I now get for $8.50. When I asked the supplier if he would give me a discount, he said the quantities I buy are close to their distributor level. If I would agree to increase the size of my orders by just a small amount, he would make me a distributor and I would get that pricing. The point is you have to ask. Even if they say no, you are no worse off than before.

Raise your average selling price (ASP) - On both eBay and Amazon the selling fees make up a smaller percentage of the total fee as the price of your item goes up.

Here is an example:

Novobeads Starter Bracelet with 3 Cubic Zirconium Beads, and 3 Sterling Silver Beads - ASIN: B00JGCYTKK - Price $129.99 - Amazon Fees $28.57

The fees represent 21% of my selling price.

Now let's look at a cheaper item that is about the same size.

Hammered Silver Cuff Fashion Bracelet - Brass w/ Silver Plate - 100% Non-allergenic ASIN B00KWMVZ2I - Price $21.99 - Amazon Fees $6.97. That fee represents 31.6% of my selling price. (One of the reasons these fees seem to high is that the Amazon commission in the jewelry category is 20% instead of the normal 15% for most other categories).

So, as you can see, the higher the price of an item, the Amazon fees make up a smaller percentage of your net giving you a larger profit potential.

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2. How To Write Off Practically Anything in Taxes

Diane Kennedy is one of the people I rely on for Tax Advice. Although she is a general CPA, she is also an expert in taxes related to online businesses and has been giving tax advice to eBay and Amazon sellers for years.

This is a guest article by Diane, and in case any of you ever want to take advantage of her services, her contact info is at the end of the article.

How To Write Off Practically Anything

By Diane Kennedy

When it comes to tax deductions, there are a few schools of thoughts. There are the people who want to write off everything, whether it's legal or not, and figure the cost of an IRS audit won't be that bad. Or else they think they can't ever get caught. They are invisible, or so they think. That's group #1.

Group #2 is the group who doesn't want to write anything off. In fact, I've had some clients who tell me at the beginning of a consultation that they want to purposely overpay their taxes. If the tax due is $10,000, they'll write a check for $11,000. They figure that will keep the IRS away. The IRS doesn't take bribes. This plan doesn't work.

Group #3 is comprised of people who want to pay less in tax, but they are cautious. They still want to sleep at night.

Today, I'm going to give you 4 steps for writing off practically anything. If you want to skip the steps and see how you really can write off practically anything (and still sleep at night), scroll down and read the story of the husband who wanted to figure out a way to deduct his wife's expense shoe habit.

Step #1: You must have a real business

If you've been running a tax loss in your business after you take all of your deductions, you could run the risk of the IRS calling your business a hobby. If you have a hobby, you can't take the deductions.

There are actually 9 factors that the IRS uses to determine if you have a business.

These 9 factors break down into 4 categories:

  1. Are you running your business in a business-like manner?

  2. Are you putting in enough time and effort to reasonably expect success in your business?

  3. Do you have past success in a business like this? Or, if not, do you have a mentor, coach or advisor who does have past success?

  4. And finally, the big one, do you have a true profit motive for your business? You might be losing money now, but do you have a plan that will get you to the cash?

Step #2: The expense must have a business purpose

The expense must be ordinary and necessary to the production of income. But, that's about all the guidance you're going to get. And that's the reason why so many people get stuck especially in the beginning. What's deductible? It depends! If you can prove that this expense helps your business, you've covered Step #2.

I'm going to go over the next two steps and then I'll come back with a brand new strategy for writing off anything! (Provided you follow the steps, of course)

Step #3: You have proof you paid the expense

This is pretty much a no brainer. No receipt = no deduction. When you're out and about, use your smart phone to take a picture of receipts. It's a whole lot easier to keep track of pictures than it is loose slips of paper. If you paid for the deduction with cash, check or credit, you've got the deduction.

Step #4: Make sure you properly report on your tax return

There are three steps to a successful tax strategy. Strategy - Implementation - Reporting the tax return is the final part of a strategy. I was speaking at a seminar with some big Rockstars in the Internet marketing world. One man had created a successful business by using websites to find and enroll people in his various MLMs. He knew how to make money, but he didn't know how to take all the deductions he needed. When I asked the audience what is the one expense they really wish they knew how to write off, he shouted out, "My wife's shoes!"

How about you? Do you have something you really wish you could take a write-off for? Well, here's the plan that got him the deduction. His wife was familiar with social media like Twitter and Facebook and had been talking about starting a blog.

Perfect! I talked to her about creating a blog about shoes. She could get set up as an affiliate marketer for a variety of shoe-selling distributors. She highlighted various shoes and talked about things like comfort, price, where to wear them, what to wear them with, all the things that fellow shoe lovers would care about. She now had a business. She made a commission for selling shoes. So she needed to demonstrate shoes. Is that all it took? No, she had to meet the 4 steps above as well.

Sometimes the best way to get the answer is to change your question. If you've been asking, "What can I deduct?" Change it to "How can I deduct THIS?" The answers may surprise you.

Interested in how other people have written off unusual items? Check out the blog at http://www.CashFlowAccounting.com. Now is the time to get your tax strategy together for the year. Give us a call at 888-592-4769 if we can help.

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3. Niche of The Month - Selling Arts and Craft for Artists

Summer is the season for arts and craft shows. They are happening all over the country from now until Labor Day. Many artists are online savvy and sell on eBay, Etsy or Amazon, but many do not.

Just a few weeks ago my wife and I attended a nearby craft show. I was buying Karen a beautiful handcrafted necklace and was chatting up the artist. I asked if she sold online and she said she could barely operate a computer. Then I asked if she would sell some of her creations wholesale and she said she just didn't have enough stock to do that. So then I brought up the issue of consignment. I suggested she consign a few pieces to me and I would sell them online and take a 35% commission.

One thing I realized as I was buying the necklace for my wife was that her goods were way underpriced. One necklace I put on Amazon she was selling for $79. I marked it up to $119 and it sold quickly at that price. She was thrilled to get 65% of $119 ($77.35). Of course I could have kept the difference and just paid her 65% of her asking price, but I wanted her to feel good and give me more products to sell.

So when you at a craft show or fair, talk to the artists and craftspeople and see what kind of deals you can make. One big advantage is you are buying one of a kind products that no one else has. You can either buy the products wholesale or pitch them on selling on consignment. This is also an opportunity to negotiate an exclusive selling arrangement so the artist only sells to you for online sales.

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4. Coping with The Summer Slowdown

For some reason, this summer has been a little worse than the past couple of years. It may be inflation or just the overall economy, but some level of summer slowdown is normal. When the weather is nice, people get out and do things and spend a lot less time in front of their computers. And this is the time of year when folks go on vacation.

But if you are like me, you still have to eat and pay your bills. So, how best to handle this?

Well it's a bit late now, but one thing that helps is to think ahead and find seasonable products to sell. A few weeks ago I found a line of children's sunglasses and they have been the one product that is selling well. Another area I have found that is holding up are gourmet foods and goods in the kitchen category. With a soft economy I think people are saving money are eating and doing more at home.

But short of finding summer products to sell, there are other things you can do. As I pointed out in the first article about cutting costs, this is a good time of year to reduce the price on slow selling items and get that money working for you in goods that are selling.

When business is slow this is also a good time to reduce your buying and conserve your cash for the upcoming Fall selling season. And, use this time to review all your listings. It never fails, but as careful as I am I still find spelling errors in listings, keywords I can tune up, or an image that can be improved. When you have hundreds of SKUs selling online, it is inevitable you will make the occasional mistake. So my plan this time of year is to review at least 25 to 50 listings every week.

I open the listing in Amazon so I see what the buyers see. I read through each listing carefully, looking not only for mistakes -but also is there a benefit I missed stating? Could something be worded better? This does work. Just last week, I started seeing some better sales from a listing I updated and completely rewrote. That was a good thing because it was one of those products I was just about to lower the price on to move out. Now I don't have to.

Lastly, re-read the first article and take steps to cut costs and increase profits. That is something you should do year-round, but there is no better time to do it when sales are slow.

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5. New Wholesale Sources for eBay and Amazon Sellers

Just a reminder - All of these companies sell wholesale, but many of them do not have that information on their website. When you see that, just compose a polite email using their contact form and ask for wholesale or reseller information.

Alice's Cottage sells an extensive line of fabric home accessories, gifts, kitchen textiles and lavender scented products. Click on the link that says Wholesale Registration.

Garden Sunlight is a company I have mentioned before, but it's worth mentioning now because they sell solar garden products and this is the right time of year. If you sell FBA, Garden sunlight is one of those companies that will label and ship the goods to Amazon for you. They also have a drop-shipping program.

Deborah Main Designs sells luxury decorative pillows handcrafted with new and vintage textiles and jewelry Made in the USA in Austin, Texas.

Potting Shed Creations, Ltd ., is a design company with an innovative and award winning internationally recognized brand. All of their garden and plant products are made in Idaho. Click on the Wholesale link and a page comes up with a phone number they want you to call for a wholesale account.

Alexia Foods sells a very nice line of packaged specialty foods that should do very well on eBay and/or Amazon.

International Gourmet Food Distributor is located on the East Coast and service the area from Baltimore South to Atlanta. However, they can ship some of their products too other parts of the country.

My Spice Sage sells wholesale spices and other kitchen products and food related gift items.

Imperial Foods is a Gourmet specialty foods distributor with a wide selection of gift foods includes chocolate, cookies, crackers, and kosher items. All require no refrigeration. Their items are good for gift baskets and sets.

FG Market is another wholesale gourmet food and gift distributor that will ship all over the country.

Epicureanist LLC sells a line of products form wine storage to glasses, products for entertaining and tabletop décor to boxes for storing your heirlooms and watches

Lol le Gaggin sells a nice line of unique handcrafted jewelry.

Warehouse Craft Supplies sells wholesale craft and floral supplies with volume discounts up to 62.5 % on over 3,600 arts and craft items.

That’s it for this month – See you after the 4th of July.

Skip McGrath
The Online Seller's News

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






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