Investment Capital and Cash Flow to Grow Your eBay & Amazon Business
The eBay & Amazon Seller's News, October 2014 - Volume 14, Issue No. 18
Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
I mentioned this in the last issue but it's worth repeating. Did you miss attending Jim Cockrum's CES II conference in Dallas? Well if you did, you can now watch the whole conference –including my presentation on Videos. This is a pre-order deal. Click here to learn how to get your set of videos. Don't wait as there is a money saving offer for early birds who pre-order. Once the videos are ready the price will go up by $100.
For those of you who have bought my best-selling book, How To Sell Used Books on eBay and Amazon, take a look at a service I saw at the last Amazon seller's conference. The Art of Books is an inventory and order management system that is flexible and cost-effective. It works on Mac, Windows and Linux, compatible devices.
Sellers can specify which items go to which venues‚ up to 22 venues in total‚ and use the system's flexibility to decide what price to set for each of their venues, item-by-item. Pricing strategies and inventory placement for the venues is easy to change at any time. AOB fully supports Amazon‚ MCF (multi-channel fulfillment), FBA, and merchant fulfilled options.
eBay users will find that AOB's configuration is easy to set up with most options being point & click.
Multiple users are supported so more than one person can list inventory at one time and the seller has control over what areas of their account their employees have access.
The customizable, flexible re-pricer allows for re-pricing to be changed anytime deemed necessary. Shipping is easy with integrated shipping partners: Endicia, IBS, and Best Manifesting. Of course, none of these are required to use AOB.
AOB offers a 30-day free trial period to allow the new user time to set up their account to meet their individual needs. Commissions are based only on the selling price of each item sold. There are no set up fees.
Contact information - www.theartofbooks.com - email@example.com
I also mentioned this a few weeks ago, but there is still time to take advantage of it. Every year Jordan Malik publishes a guide to resell toys for the holidays. This is an excellent resource for finding out what the hot toys are and where to get them. He has updated his book for 2014. Here is a link to that. (If you bought his book last year you can also get the 2014 update for free at that same link).
Despite the government's claim that inflation is low, it is no secret to any of us that prices of all kinds of goods have been rising. That has affected my business as well.
Not only have my printing costs gone up, my shipping costs have risen as well. I have held the price of The Complete eBay Marketing System at $97 including free shipping for the past six years. And The Complete Amazon Marketing System (which is larger) has been at $127 since it came out (also with free domestic shipping). If you want either of these books at those prices, you may want to move quickly because I am shortly going to increase the price of the eBay Marketing System to $127 and the Amazon system to $147. Shipping will still be free.
In addition to the price increases, the increase in the Amazon systems also includes an increase in the value contained in recent bonus reports on importing and private labeling.
To soften the blow to your wallet, I am going to add a $20 off coupon to each of the books that can be used to purchase any of my specialized eBooks including my best selling eBook of all time, How to Sell Used Books on eBay and Amazon. Or even better, if you buy How to Sell Used Books on eBay and Amazon now you get a $20 discount on either the eBay or Amazon marketing system that you can use before or after the price increase.
I have not yet set the date to increase the price but it won't be that long – maybe a week or so – not months. So if you want to take advantage of the current pricing I would suggest you act quickly.
Lets get started with this month's articles:
If you sell on eBay and/or Amazon there is a simple maxim to growing your business: "More product equals more sales." Of course that assumes you have products that sell. If you have a hundred slow selling items and I have 50 hot-selling items, I am going to outsell you. But 90% of the time, the seller with more products will outsell sellers with fewer products.
When I only had about 100 SKUs in FBA I would typically sell about a dozen or so items a week. Now that I have close to 1,000 active SKUs, I sell more than that in one day.
But more products take more capital. The simple truth is, the faster you can grow the number of active SKUs, the faster you can grow your business. Of course that takes money.
If you are starting an eBay or Amazon business with only $500 (or even less) to invest in product to sell, your business will grow very slowly. But if you can afford to invest say $2,000 or $3,000 or more, then your business (and your sales) will ramp up pretty quickly.
Having said that and knowing how tough this economy is, I know many of my readers are in that $500 and under range. So what are some of the strategies you can use to grow your business faster if your funds are limited?
is a great source for funding but the downside is that they base what they lend on how big your eBay and/or Amazon business is. So if your business is small
they won't lend you very much money. There is also the online lending site www.prosper.com, but now you are getting
into a 3-year loan, and again I would not recommend doing that unless you have a stable and prosperous business.
The single most important metric you want to track in this business is your cash flow. If your cash flow is negative there is something seriously wrong with your business. It's normal when you first start up to have negative cash flow. You have to put out money for goods and wait until they sell. But if this goes on for more than a few months then you are really doing something wrong and you want to look long and hard at your entire business and figure it out. There are usually two answers – increase your margins or lower your prices to turn your inventory over faster. Slow moving inventory is usually the culprit.
The best thing about eBay spinning off PayPal is that John Donohoe is stepping down as CEO (he will remain on the board of directors). Devin Wenig, currently president of eBay Marketplaces, will become CEO of the new eBay. (Bob Swan, CFO and eBay money man is also stepping down).
The worst thing is that eBay corporation today has both lots of cash and lots of debt. The deal with spinning off PayPal is being done in such a way that eBay will retain the debt. And, for the past few years PayPal has been responsible for the majority of eBay's profits.
At this point a little PayPal history might be in order for those of you who were not around in the early days. PayPal started out as an independent company founded by Peter Thiel, now a billionaire investor who was subsequently an early backer of Facebook (FB, Tech30) and Elon Musk, who is CEO of electric carmaker Tesla Motors (TSLA) and the private space exploration company Space X.
After trying and failing to start their own payment service in conjunction with Wells Fargo Bank, eBay bought PayPal for $1.5 billion in 2002. It was probably the best acquisition eBay ever made. Last year, PayPal accounted for approximately 40% of eBay's total revenue and their total payment volume grew 26% in the last six months to $203 billion. In the early days of PayPal almost all of their income came from eBay sales, but today PayPal works with thousands of companies with no relation to eBay.
John Donohoe is, in my opinion, one of the worst CEOs in the ecommerce world. I have never heard him state a clear vision of where he wanted to take eBay. He intentionally destroyed the single most valuable asset eBay had which was the eBay community. And since he took over from Meg Whitman, eBay has struggled to grow and suffered from low sales and income (except from PayPal).
As near as I can determine, Donohoe's strategy was to create a seamless ecommerce platform across desktop, mobile and in-store transactions, using PayPal as a linchpin to make the company look more like Amazon and compete with them. Well, the strategy failed.
One of the reasons it failed is that Donohoe never explained it and Amazon kept innovating while eBay was just trying to play catch-up. For a while it seemed that every time a user logged into eBay there was a different look and feel. And seller support went from not so great to really poor. The same thing happened to seller communications. Yes, sellers were told about new policies but rarely told the reasons and never really understood where eBay was headed or what their future plans were.
If you sell on Amazon it's easy to understand their fundamental business strategy. They are highly customer focused and everything starts from that one angle. eBay, on the other hand, never seemed to understand their customers and completely forgot that eBay sellers were also a major part of their customer base.
I don't know anything about the new CEO, Devin Wenig, but since he came from the eBay Marketplace side I am hopeful he has more ideas, vision and learns how to communicate with both eBay buyers and sellers. Frankly this move is a huge risk for eBay. As someone who believes we need them around in the future, I hope it pays off, but as I said it will take some vision, a way to communicate that vision to investors, customers and sellers -and a whole new strategy to attract and keep customers.
If you have been a reader of this newsletter for very long, you know that much of my focus has changed from eBay to Amazon -especially to Amazon FBA. If you are still not using FBA you need to take a hard look at that. I was late making the move. FBA was around for almost two years before I switched. I am happy I made the change. Within just six to eight weeks of moving to FBA my sales increased by a factor of four or five -and our profits soared as well.
FBA is actually pretty easy to learn - My latest training course The Complete Amazon Marketing System starts with the basics and leads to the advanced steps you need to learn to grow your business and profits.
But I even get questions from folks who have the book and don't understand how to do some of the basics. This article should help.
Let's start by looking at a screenshot of the FBA Inventory page in Seller Central. I would like to start my first few FAQs around the drop down action box as that is an area I get a lot of questions about.
Let's start with the first one:
How do you send inventory into Amazon?
Whenever you create a listing it first shows up in your Manage Inventory Page. When you are ready to ship it to Amazon, select the item and use the "Actions" button pull down to select "Convert to Fulfilled by Amazon." Once you do the conversion the item will show up on your FBA Inventory page. Find the item(s) you want to send in and check the box next to it. Now just select the first option Send/Replenish Inventory and click Go. This will bring up a shipment. All you do is add the quantity to the shipment and go back and find any more items you want to add to that shipment.
Once you have started a shipment, the next time you add items, the page you land on after hitting Send/Replenish will ask you if you want to create a new shipment or add to an existing shipment. Just select the one you want from the drop down box and proceed as before.
How do I convert to fulfilled by merchant?
This is pretty self-explanatory. I use this when the last item of a slow moving product sells out and I do not plan to resell it. Instead of archiving the item in FBA, I convert it to merchant fulfilled (MF) and once converted (this takes about 15 minutes), I delete the listing from my MF inventory and it's gone from my system.
Just check the item you want to convert, select convert to fulfilled by merchant and hit the go button.
How do I create a fulfillment order?
First let me explain what a fulfillment order is. Amazon offers this service to their sellers so you can store inventory in FBA and still sell it on other platforms such as eBay, Etsy, Rakuten, Sears.com or your own website. When you sell an item in one of those other places, just find the item in your FBA inventory, check the box and select Create fulfillment order and hit the go button.
This will bring up a page where you enter the quantity you want to fulfill and fill in the buyer's name, address, phone number and email address. There is also a field where you can enter an order number (for example if you sold it on eBay you could put the eBay item number into that field, or the PayPal transaction number) and there is a box where you can add a note to the buyer that Amazon will place in the box. When I first started using Amazon, I used to put in a note that said, "Thank you for your eBay purchase of (name of item). We use Amazon to store all our inventory and they ship it to our customers for us which is why you are getting this in an Amazon box." However I stopped doing that. And, since then have shipped hundreds of items to eBay buyers in Amazon boxes and have not once gotten a question.
Once you fill out the information on that page, hit continue and you will go to a second page that shows the address and the shipping speed and cost. If you were offering expedited shipping to your eBay customer, you just click the button for 2nd Day and you will see the shipping cost change. Whether you select normal ground or expedited shipping you will still be amazed at how cheap the shipping it. This is because Amazon passes their low shipping rates on to you, which can help you be more competitive on eBay. (I usually offer free shipping on eBay and just build that into my price).
How do I create a removal order?
Sometimes you may want to recall inventory from Amazon. This can be inventory that has not sold (Amazon charges extra fees for inventory that stays in FBA too long) or un-fulfillable inventory from a customer return.
Once again, just check the box next to the item you want to remove and select the removal order dropdown. This will bring up a page similar to the fulfillment order page where you first enter the quantity and then enter the name and address of where you want the items shipped. If you look closely at the page you will see an option to dispose of the item. If you select dispose Amazon will usually throw it away but we have heard they sometimes donate the items to local thrift shops (in which case they are getting the tax deduction and not you). Below I have a separate item about whether to dispose or remove items.
How (why) do I archive/un-archive items?
When you archive an item the listing stays in Amazon's files and is not deleted. But if you search for it in your FBA inventory it will not come up. About the only items I ever archive are goods that I plan to sell again in the future but will not be selling for the next few months. Examples of this might be seasonal or holiday items. When I archive an item I can always un-archive it later so when I am ready to start selling it again I won't have to create a new listing and any reviews and the sales rank will still be attached to the listing. If you want to archive an item, just check the box next to it and use the archive drop down and hit the Go button.
To un-archive it's a little different. When you search for an item in FBA and the items come up there are two buttons above the product listings. One says Show ASIN and next to it is a button that says: Show archived items. Select the box that says Show archived items and search for the item again. Items in your archives will come up in a light grey type. Just click in the box to select the item you want to un-archive, select un-archive item and click the Go button. You will get a pop-up on the screen that says it will take 15 minutes for the item to show up in your inventory.
How do I set a replenishment alert?
Replenishment alerts are an excellent idea for items that sell fairly quickly or items that may sell a little slower and you tend to forget about them. When you set replenishment alert, Amazon gives you two choices - weeks of cover or number of items. I tend to use "weeks of cover." For example, if I know that one particular product usually reaches me within 2 weeks of ordering and I know it takes 10 to 12 days for a shipment to get to Amazon and be received into inventory, I would set my weeks of cover at 4 weeks. The Amazon system watches your sales velocity, and when you reach the point where it looks like you will run out in 4 weeks, then Amazon sends you an automated email telling you your replenishment alert was triggered. When I get that email I know it's time to reorder the item.
Any item with a replenishment alert also shows up with a bell symbol next to your quantity on your inventory pages. (See screenshot)
When a replenishment alert is triggered, the color of the bell turns to red.
Print Item Labels
The last item in the drop down is Print Item Labels, but I never use this. I always print my item labels when I am creating my shipments as I find this more convenient.
When do I make the decision to remove item or dispose of them?
This all comes down to the math. You have to decide if it's worth it to pay the return shipping and the shipping back to Amazon and still leave room for profit. In general, on expensive items (cost over $50), I almost always do a removal order. But for lower cost items it may be cheaper to let Amazon dispose of it.
Here is an example of an item I would normally dispose of:
(Sorry this photo is so small). As you can see the item sold for $19.97. My cost on this item is $9.25. This was a customer return so Amazon keeps the selling fees and reimburses me $15.98, which is still more than my cost. So if I decide to dispose of it I am still $6.98 to the good. Now if I fill out a removal order Amazon will charge me about $6.00 to pick and pack and ship to me.
I have no idea what condition the product is in. It could be defective or broken or just the retail packaging broken into. If it's defective or broken I have to throw it away. If the retail packaging is damaged, now if I send it back I have to sell it as used at a lower price. And even if it's still good to send in and sell as new, when it resells I will pay another $3.99 in selling fees bringing my $6.98 profit down to $2.99. If I have to sell it as used, about all I will do is recover my costs. Given the risk this is an item that I will choose to dispose of almost every time.
Now let's look at a more expensive item:
This item sold for $49.97. My cost on this pepper mill is $14.85. So with my refund of $42.47 I am still $27.62 ahead. If I remove the item it will cost about $8.00 to get it back from Amazon. So my cost is now $22.85. If I send it back in and it sells I will net $42.47 or a profit of $27.62 or about the same. So I could dispose of it or decide to resell it. Which means this one is right on the line. But you can see that if an item was more expensive, say a knife set like the ones I sell for $197, I will almost always decide to resell those.
So that is all the FAQs for now. I plan to do more in the future and when they are finished I will make them into a PDF and offer then as an additional bonus item to The Complete Amazon Marketing System.
I have written about this particular niche before but it's such a profitable niche that it bears repeating.
eBay tends to be the better place to sell "How-To" books and courses, but I have also seen some going on Amazon for good prices as well. In general the more "nichey", or the more unusual the book or course is, the more it will sell for. Look at these two books about repairing motorcycles:
Think of how much profit you could make if you found one of those at a garage sale for under $5.00. Of course, not all How-To books go for that much money, but you might be surprised at how many still sell for very nice profits. Look at these examples:
One concern with the more rare and expensive items is that the sell through rate is fairly poor. You might be sitting on some of those items for a long time, but eventually when the right person comes along it will most likely sell. But as you get down around $100 and below the sell through rate improves rather well.
It's not only books. Look for DVD, cassette and VCR courses as well. I once bought a ten-cassette course with a booklet at a garage sale for $12 about how to win atbBlackjack. I listed it as an auction on eBay and it sold for $165.
Where to find "How-To" books and courses?
The single best place is garage sales. And remember, when you go to a garage sale, if you don't see something, ask if they have any. Just say, "Do you happen to have any how-to books or courses on any subject?" A lot of people will have them and they just never think to put them out thinking there is no market for an old book on how to pass a CPA exam.
You will occasionally find them at thrift shops but you want to be there early as a lot of Amazon and eBay sellers scour the thrift shops for books. Another great place is library sales. I once found a DVD titled How to Do Trick Pool Shots that I bought for $2.00 and sold on eBay for over $50.
Just like location-location-location are the three most important things in real estate; condition is the most important single attribute when it comes to getting a high price. This is especially true of older items. But no matter what the condition is, be sure and describe the product's condition accurately. Be brutally honest about any flaws.
Lastly, remember to look at the list again. Remember the more unusual or niche the "How-to" course is the more money it will sell for. My one really big home run was an old book on how to make wigs. I Bought for $1.00 and sold it for $175.00!
Remember, several of these websites are retail so you have to use the contact form to request wholesale reseller information.
CWI Gifts carries a lot of gifts and home and garden items that should sell well over the holidays.
Ohio Wholesale sells a large line country themed gifts.
Ravens Originals carries a line of holiday themed food items that do very well this time of year in the grocery and gourmet food category on both eBay and Amazon.com
North Country Wind Bells sells a very nice line of wind chimes in various themes.
Glass Eye Studio was founded in 1978. Everything sold by Glass Eye Studio is made by hand in Seattle, WA. They offer a full line of handmade art glass - ornaments, paperweights, vases and bowls.
Flirty Aprons sells fun and flattering aprons for everyone. They've got it all from women's aprons, men's aprons, kid's aprons, bibs, gloves and oven mitts.
Branelli Beads, LLC makes handmade clay jewelry crafted in the USA. All done by hand in Grand Rapids, MI. They have earrings, bracelets, necklaces at affordable prices.
Chic Buds are unique earbuds that are specifically and intentionally designed to meet the exclusive needs of women and girls.
Direct Floral is the online wholesale and catalog division of Spring Hill Floral Supply. They're a a floral supply wholesaler with one of the largest selections of wholesale floral supplies and baskets available online.
My Precious Kid sells child safety products and baby gear to protect your family. As seen on the Today Show. They also sell safety products for adults, children, elderly, medically fragile, and special needs children.
Super Wholesaler is a wholesale distributors and direct importer of home and garden accessories.
Kannastor sells a very unique line of spice grinders. There are some really cool kitchen gadgets that would make great Christmas presents.
Flipo is a designer and supplier of flameless candles, sconces, candle holders and solar pathway lights.
Well that is it for this month. See you in a couple of weeks.
P.S. If you missed the last issue, click here to read it.
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