Deciding What to Sell in FBA
The Online Seller's News, September 2014 - Volume 14, Issue No. 16
Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
I just returned from Jim Cockrum's CES event in Dallas. It was three days of learning from some of the best in the online selling business with the emphasis on Amazon but many other topics were covered as well. Jim holds CES once a year. He hasn't announced next year's venue yet, but once when he does, I'll post it here too. This is a can't miss event for any online seller. The quality and variety of the speakers was simply astounding.
Just before heading off to CES I was interviewed by Kip Marlow for the Entrepreneurs club. Here is a link to the podcast .
You have all heard the old saying "A picture is worth a thousand words." Well on eBay and Amazon the right picture can be worth a thousand dollars. eBay Photos That Sell: Taking Great Product Shots for eBay and Beyond by Dan Gookin was written for eBay sellers but his techniques apply to Amazon sellers as well. This is a great basic book that will help you take better -more professional looking photos for your eBay and Amazon listings.
John Bullard and Ryan Reger have just completed their long-awaited book - Beyond Arbitrage. This book is a complete treatment of wholesale sourcing from reputable sources. I had the opportunity to get a review copy and can only say that every online seller, new or experienced, should read this book if you want to take your wholesale sourcing to the next level
3-D Sellers is a complete set of apps for eBay sellers. They include a webstore, a Social Media Store, a Feedback reminder tool, and an eBay Store Designer tool. I wish they had one link to all of those programs, but unfortunately you have to click on each of them separately.
An interesting thing happened to one of my readers last week. Actually, two things; the first was he received a notice from Amazon saying one of his listings had been cancelled because it was a bundle. It took several attempts to get to the right person who realized bundled items were OK as long as you follow the Amazon policy. To see the policy, just type the word bundle into the Amazon help search box in Seller Central Help.
This shows that not every Amazon support rep is correct all of the time. If you are ever suspicious that a support rep's answer is wrong, keep asking until you are sure you get the right answer.
The second thing that happened is really infuriating and makes me think a lot less of Amazon. Amazon sent him an email questioning the authenticity of one of his items. They asked him to send a copy of the vendor's invoice to prove the item was legitimate. Then they contacted the vendor and attempted to buy directly from them.
I know Amazon often contacts manufacturers and wholesale sources to attempt to buy goods directly, nothing dishonest about that. But to do it this way was highly unethical and beneath them. I understand Amazon is looking out for themselves first, but to be so underhanded with a seller can do nothing but foster mistrust by a group of people that frankly make Amazon a lot of money.
TeikaMetrics has just put out a great little eBook with Amazon FBA tips. Click here to download the free eBook. There are some great tips in book.
Lets get started with this monthís articles:
One of the best things about Amazon FBA is you get to decide what to sell. But if you want to be profitable there are a lot of things that go into that decision. Let's look at what makes a good product for Amazon FBA.
Price point - Amazon has two fixed FBA fees that total $2.02, plus the variable fees based on weight and size and a commission that is based on what category you sell in. Because of the fixed $2.02 handling fee, if you sell something at a low price point, that represents a fairly high portion of your margin. For example, if you sell something for $10 the fixed fees eat up 20.02% of your margin. But if you sell something for $40 it only represents 5.05% of your margin. So, one of your goals should always be to raise your average selling price.
Category Selection - As I noted above, Amazon charges different sales commission rates by category. Here is a link to the complete fee chart. The page is so long I can only show a portion of it here (see below), but you should look at the entire page. (I am not sure but you might have to be logged into Seller Central to see that page).
As you can see, Amazon device accessories have a fee as high as 25% while Camera and Photo are as low as 8%. Most categories are 15%. But the category you sell in is a central factor in your margin.
Pricing power - Pricing power is the ability to set a price as high as you can to make a profit. Pricing power comes down to three things: Competition, scarcity and demand. The more competitors an item has, the lower your pricing power. If an item is scarce you can easily raise the price. The same goes for demand. If demand is high, even if the item has several competitors you can usually raise the price. You may have to wait until your competitors run out before you get the buy box, but you will get it if demand is high. I have a kitchen item that sells for $124.95, with 6 competitors including Amazon. Typically I will send it a case of 12 and they will sit there for a week or two with no sales, and then one day I move into the buy box and I usually sell the entire case within two or three days.
Product Selection - This is one of the most important things, as an Amazon seller, you can do to increase your profits. First consider the three things mentioned above and use that information as a starting point. Look at your price point, competition and demand and category. The next thing I look at is size and weight. Small, lightweight items cost less to ship from the vendor to you and then from you to Amazon. The Amazon weight based handling fees and oversize fees will be minimized. All of that will increase your margins.
Selling Speed - the faster and the more often a product sells the more money you will make and your cash flow will improve. Ideally all of our products would be rapid sellers, but we all know that isn't possible. But if an item is a slow seller, then it is critical that those items have as high a margin as possible to offset the Amazon storage fees and the cash flow that is tied up in the product.
As careful as you are, you will inevitably select some products that will turn out to be either low margin or slow sellers. The key is to constantly manage your inventory to get rid of any product that has a low margin or is a slow seller and put that money to work on products that are selling faster or put it the money into new products you want to experiment with.
Amazon produces some excellent reports. Be sure and download your inventory performance reports and sales reports monthly and keep them in a file so you can study them and look for trends.
I have written about product bundling on several occasions. The benefit of a product bundle is twofold: You get a higher price point and therefore a better margin (see previous article for why), and you get the buy box because you have a unique item (until someone copies you).
Some sellers struggle trying to decide what products make good bundles; the first requirement is that the bundle makes sense and includes complimentary products. You would not want to bundle a set of kitchen knives with a set of mixing bowls, but you might want to bundle that same knife set with a knife block or knife case.
The easiest way to come up with bundles is just to look on Amazon. I did a search for hand mixers and came up with this product:
I clicked on the listing and scrolled down the page and saw the following information:
And also this:
If you look at those you see several possible bundles. You could bundle the mixer with a set of mixing bowls, that probably makes the most sense, but you could also consider the measuring cups and spoons or the silicon spatulas. I know they also show a set of bakeware but I am not sure that makes a lot of sense.
Another advantage of bundling is your listings get found more easily if one of the products in your bundle has a high sales rank. That Hamilton Beach mixer has a sales rank of 92 in Home and Kitchen. So people are searching for that very often. Since the title of your bundle will also include the words "Hamilton Beach Mixer," when someone searches that term your listing will come up, often on the same page.
Obviously, not all products make sense to bundle, but many do. That is one of the things I look for when I am out sourcing products. For example, I just took on a new line of health and personal care products. They make three different foot-care products that I can make up as a gift set. And they sell hand cream, body lotion and bath and shower gel that I can do the same thing with.
Here is a bundled product I have been selling on Amazon for the past three years.
I first started out selling the mills separately but I had a lot of competitors. Then I started selling the set. That worked for about a year and then a few competitors copied me. So I added the salt and pepper and so far I am still the only seller. Last year during the holiday season I sold over 44 pair of these and should have ordered more, because I ran out of stock about 12 days before Christmas.
So the next time you go sourcing, give some thought to bundling.
Several months ago I wrote an article on using keywords to help get your listings on Amazon found, but it's time to update that because Amazon has changed the rules.
Search is the primary way that customers use to locate products on Amazon.com. Customers search by entering keywords, which are matched against the search
terms you enter for a product.
When you create a listing, getting the right keywords into your title and the listing keyword field is critical to customers finding your listings. Here
are some tips and a tool to help you.
Your keywords should match the terms your potential customers would use to find your products or services.
Here are some tips, direct from Amazon, to increase your chances in Search:
If you aren't getting the sales you expect, keep experimenting with your product names and search terms. To determine if a keyword will be useful for your product, do a search first on Amazon.com using that keyword. If you get a high number of matches, try other keywords to see if you can narrow the results.
Here are some more items to consider:
Now here is the new information. The Amazon search engine used to search the title, the first 100 characters of the description and the keyword field you use when you create a listing. The change is Amazon no longer searches the description or bullets. It only looks at the title and the keyword field (See image below).
This is a listing for a brand new product I created. It is a seven-piece ceramic kitchen knife set. These keywords must be working because we sell on average 5 or 6 sets a week.
Now I told you about a keyword tool that can help you. The company is Merchant Words, and they make an excellent Amazon keyword tool that I have tested and it works. They normally charge $19.95 a month but my readers get it for only $9.00 per month.
One of the most popular topics at this year's CES event was about outsourcing tasks to give yourself more time to do the important things to grow your business. Almost any aspect of your business can be outsourced, but I personally think it's best to look at all the activities and duties of running your business and dividing them up into high-value and low-value tasks. I keep the high value ones for myself and farm out the low-value tasks.
Only you can decide what the difference is, but here is my list:
This is by far not a complete list but just the ones that come to mind first.
There are three ways to outsource some of these activities.
For example the first two on the low value list, creating shipments and packing boxes can easily be done by a part-time or contract employee. Or you can use a service like John Bullard's My Inventory Team (MIT). I can have my wholesale orders delivered to John's warehouse and his folks will label pack and ship my goods direct to Amazon's FBA warehouse.
For product photography I send my goods to Danny Lee who is an excellent photographer and charges a very reasonable fee. ( Danny Lee Photography). You can email Danny at email@example.com. Use my name as he gives a small discount to my readers. (Be sure you tell Danny the photos are for Amazon so he knows to put them on a white background and make them Amazon compliant).
For things like data entry, bank statements, paying bills and so on I use a contract Bookkeeper who comes in one or two days a month that I pay by the hour. For soliciting feedback I use Feedback Genius. Before I started using them, I was averaging about 1% of my buyers leaving feedback. Now I am close to 11% and if I get a neutral or a negative, I get an immediate email so I can take action to remove it.
Lastly, for multi-channel fulfillment orders I use www.AutoMCF.com. What they do is when something you have in FBA sells on eBay, Sears.com, Rakuten or New Egg, they automatically create the fulfillment order and when Amazon releases the tracking info they will automatically enter that too. And, if for example, you run out of a product, they will automatically kill the item on eBay so you don't accidently sell one you don't have.
So sit down with a pad and pencil, start analyzing your tasks and start trying to figure out what you can farm out. Freeing your time to do the high value tasks is the sort of thing that will help you grow your business faster and make it more profitable.
Please remember, many of these websites do not have wholesale info on the site until you register and set up an account with them. If you want to see products and pricing, use the contact us link to request wholesale information.
My Imports USA LLC imports over 3000 general merchandise items - many of them brand name products. They tend to be low cost items that lend themselves to creating multi-packs and product bundles.
The Barrington Company is a manufacturer and importer of a large line of scarves and gloves and other fashion accessories.
Jane Envy is a manufacturer of low to medium cost fashion jewelry including a large line of charms and charm bracelets.
4 Seasons General Merchandise is a manufacturer and importer of a large line of general merchandise. Many of their items are licensed or well known brand names.
M&J Toys is a large wholesale dealer of toy cars and action figures
Cala Products is a wholesale supplier of beauty care products and tools.
Limelight Products is a wholesale seller of handbags, backpacks and other fashion accessories.
KBW Global is a manufacturer of party masks of all types including Mardi Gras, Halloween, Venetian and Wedding masks.
The Everspring Import Company sells a lot of weird stuff - I will let you look for yourself. You will have to register at the website before you can see the products.
The SJT Company manufactures and sells a huge line of metal signs of all types. Mostly funny but lots of decorative signs as well.
Candy Rific sells a large line of specialty candy/toy products and they are a licensed dealer of Disney Frozen Products and other licensed lines including Star Wars, Elvis and Marvel Characters.
Blackjack Beef Jerky sells a complete line of beef jerky products all made here in the USA from USA beef.
Brands Unlimited is a Canadian company that sells a large line of candy products and gift packs that sell really well over the holidays. The only info on their website is a phone number that you have to call to get wholesale information.
Biedermann & Sons sells a very nice line of candles and beautiful candleholders. These are hot products in the upcoming holiday selling season.
Tierra Verde Soy Candle Company , uses only 100% pure soy wax for their fragranced soy candles. Their soft creamy soy wax burns much slower than paraffin wax making the candles last much longer.
I also want to say "Welcome!" to our many new subscribers. It was great to meet and network with so many similarly minded entrepreneurs who attended SCOE and CES II. Creative people; all.
Well, thatís it for this issue.
See you again in a couple of weeks,
P.S. If you missed the last issue, click here to read it.
© 1999- Harry McGrath, Inc., DBA Skip McGrath, Auction Seller's Resource and Vision-One Marketing. All Rights Reserved.
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