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Should I Set Up My Own Online Store?

The eBay & Amazon Seller's News, February 23, 2015, Volume 16, Issue No. 4

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

In This Issue:

Musings from and about eBay, Amazon and The World Wide Web

  1. Should I Set Up My Own Online Store?
  2. ASD is Right Around The Corner
  3. Amazon Ads Ė Are They a Worthwhile Investment?
  4. Stop Making Bad Inventory Purchasing Decisions
  5. New Wholesale Sources for eBay and Amazon Sellers

"Success is simple. Do what's right, the right way, at the right time." ~ Arnold H. Glasgow


Very Important - I just learned a couple of days ago that Amazon was hacked and the hackers sold the passwords. So everyone go into your Amazon accounts immediately and change your password

Time is running out and we are quickly filling up our Wholesale Sourcing Conference in Las Vegas Feb 28 to March 1st. Go to www.wholesalesourcingconference.com for information and registration.

Seating is very limited as we are trying to keep this to a small group and there are only a few spots left. There are some great airfare deals to Vegas this time of year. I have seen ads as cheap as $129 RT from the East Coast.

SnagShout is a new service from Seller labs that helps Amazon sellers in several ways. First they help you optimize your listings and keywords to get more traffic, they actually help drive traffic to your listings and then they help you get product reviews. They have an excellent 2-minute introductory video at this link that explains what they do and how it works.

Seller Insurance Requirement

- If you are a Pro Seller on Amazon then there is a situation where you may be required to purchase liability insurance that names Amazon as one of the insured parties. The threshold is if you sell over $10,000 per month for three consecutive months. So if you are under that, don't worry about it.

Here is the Amazon policy language:

If the gross proceeds from Your Transactions exceed the applicable Insurance Threshold (Currently $10,000) during each month over any period of three (3) consecutive months, or otherwise if requested by us, then within thirty (30) days thereafter, you will maintain at your expense throughout the remainder of the Term for each applicable Elected Country commercial general, umbrella or excess liability insurance with the Insurance Limits per occurrence and in aggregate covering liabilities caused by or occurring in conjunction with the operation of your business, including products, products/completed operations and bodily injury, with policy(ies) naming Amazon and its assignees as additional insured's. At our request, you will provide to us certificates of insurance for the coverage to the following address: c/o Amazon, P.O. Box 81226, Seattle, WA 98108-1226, Attention: Risk Management.

If this does apply to you, then you are selling over $10,000 per month. Business liability insurance is not that expensive and you should be able to afford it.

One of the members of a Facebook group I am a member of who had bought my training program - The Complete Amazon Marketing System, pointed out to me that I did not mention this in the book. After smacking myself upside the head - I had to agree with her and I apologize to all my readers for this oversight. Since this newsletter is one of the ways I update information in my books, this is a good place to admit and correct this oversight and I will be sure and correct it in the book itself when I do the update and revision.

Since I mentioned The Complete Amazon Marketing System, I wanted to add some extra information. I completed the training system in late 2013 so I often get questions asking me if it is still up to date. Since it is a printed book it can be expensive to update often. Therefore what I do is create special bonus reports on subjects that have come up and changes to Amazon that you can download from the delivery page. The bonus reports and articles in this newsletter are the best way to stay up to date on all the changes. Having said that, the changes to selling on Amazon have been pretty minor since the book came out in 2013.

So far it has been one of my most successful books. The really neat thing is that although I give a no-questions-asked money back guarantee, the return rate on The Complete Amazon Marketing System is the lowest of any of my books - well under 1% since I began selling the book.

My other book, The Complete eBay Marketing System has just been revised and updated for 2015. It is not quite ready - I am waiting for proofs from the printer, but it should be ready for sale and delivery by March 1st. I want to make sure you get the most accurate information possible so Iíve stopped selling the older version of the book. When the new version is ready Iíll metion it here as well as on my Facebook and Twitter pages.

Once big change - the book is no longer in one large ring binder. We switched over to a two -volume set in spiral binding. I have kept the price of the Complete eBay System the same for the last 7 years, but am now forced to raise it. The current edition sells for $97 but the new edition will go up to $127. Sorry for that but prices have been going up steadily for several years and they just got to the point where I had no choice.

Both PayPal and Amazon 1099s are available for download now. If you sold over $20,000 on either eBay or Amazon then both sites will generate a 1099 that shows how much they paid you during 2014. They send a copy of this to the IRS so it's important you download your copy and include it when you file your taxes.

Remember you do not own taxes on the amount of your 1099. After subtracting your product cost, fees and expenses, the amount left is your profit and that is what you own taxes on.

One of my readers pointed out a great tool to me last week. It is an FBA bulk fee calculator. Unlike the Amazon FBA fee calculator , which allows you to look at one item at a time, this calculator allows you to look at the fees for hundreds of items at a time. Here is a link to the information .

Amazon FBA Long-Term Storage Fee Changes

This fee is currently assessed semi-annually on February 15 and August 15 on units that have been in Amazon fulfillment centers for 12 months or more. On August 15, 2015, units that have been in Amazon fulfillment centers between 6 and 12 months also will be subject to the Long-Term Storage Fee, at a rate of $11.25 per cubic foot. Units that have been in fulfillment centers for 12 months or more will continue to incur the Long-Term Storage Fee of $22.50 per cubic foot. So basically Amazon is now charging this twice a year but at half the rate for the 6-month period.

Lets get started with this monthís articles:


1. Should I Set Up My Own Online Store?

This article is a guest article by Diana Ratliff who is a very successful online marketer.

Should I Set Up My Own Online Store?

By Diana Ratliff

Many successful marketplace sellers wonder if, and why, and when to consider opening their own online store.

When you sell on existing marketplaces (especially Amazon), you get enormous advantages - traffic, credibility, and the fact that most of the decisions relating to the sales platform itself have been done for you. You don't have to create listings, determine price, shipping and return policies, manage payment or design the site.

However what you gain in ease, traffic and credibility you lose in control. You're told if you can sell, what you can sell, and how you can sell it. You are not allowed to promote your products as you please.

This can be a scary proposition, especially for sellers who rely on their online ventures for a good portion of their income.

So how do you decide when it's time to start your own e-commerce site, and what is involved?

Success in e-commerce lies in getting three things right. You absolutely, positively must have:

  1. a quality product/product line;
  2. a user-friendly selling platform; and
  3. a solid marketing plan.

Product Line: By this I mean products that are unique, of good quality, for which there is a demand, and an audience that is easy to identify and easy to reach. Are your products better, different or cheaper? Prospective customers need a reason to buy from you instead of your competitors; you need to be able to articulate why they should do so.

Selling Platform: This is much more than a decision of what shopping cart software to use. Building a profitable online store means getting a lot of thing right, from the copywriting to the SEO (search engine optimization) to the site layout to the About page to the shipping policies.

While many sellers try to build their own storefronts, I do not recommend it. Today's technology makes it (relatively) easy to do. However, making sales is less about technology than about understanding how people buy, and how your site can make it easy for them to do so.

It's a false economy to try to save money on the exact process that has the most potential to grow your business and increase your bottom line. Save your pennies and hire an expert.

Marketing Plan: Arguably the most important aspect of building your own store is getting people to buy. Two factors are involved here.

First, traffic. "If you build it they will come" is not true. You need a way to get prospective customers to your store - it will not magically show up in Google when people search for your products. The fastest, surest way to get immediate traffic is to pay for it using Google AdWords.

Second, conversions: "If they come they will buy" is also not true. Given the sheer number of choices people have, they need a reason to buy from your store rather than a competitor. Also, approximately 98% of site visitors do not buy on the first visit; you need to convince them to return to your site.

Capturing email addresses, getting people to Like you on Facebook, and setting retargeting cookies are all good ways to remind people of your products until they buy.

Many would-be e-commerce seriously underestimate the amount of time, effort and money it takes to market a website. Don't build your site without a marketing plan in mind, and a marketing budget as well.

So when is it time?

  • When you know the product or product line can be sold profitably.
  • When you know there's a large enough market, with enough demand to justify the time and expense of running a site.
  • When you know it stands out in the marketplace - that there's something unique enough, different enough, to persuade people to buy your product over your competitor's product.
  • When you're sure you can get enough inventory.
  • When there's a coherent market that's easy to reach and identify.
  • When you have the resources (time, money, energy) to build it properly.
  • When you have the resources (time, money, energy) to market it properly.

There is never a "perfect" time to start an online store, nor is there a "perfect" way to do it. This brief article cannot possibly describe all the factors involved, but I hope you've gotten helpful, preliminary information. Good luck to you!

Diana Ratliff is an experienced online marketing consultant whose company, YourFriendontheWeb.com, specializes in e-commerce strategy, design and marketing. She's also an Amazon and eBay seller.


2. ASD is Right Around The Corner

The ASD Wholesale Trade Show is one of the largest and most variety filled trade shows in the country. It is held three times a year. Once in March and August in Las Vegas and in the fall in New York City. I have never been to the one in New York, but friends who have tell me that it is much smaller than the ones in Las Vegas.

Of the two shows in Las Vegas, I usually always attend the March show because it's just so darn hot in Las Vegas in August.

What is so unique about the ASD show, is the variety of merchandise available - Housewares, clothing, fashion accessories, jewelry, Sporting Goods, Toys, Beauty Products, Home and Garden, Tools and Liquidation products make up just some of the categories available. This year there will be over 2600 vendors showing -all of them eager to sell you merchandise for resale. And I got a newsletter last week that of the 2600, over 300 of them are new vendors who have never shown before.

I usually put on a one-hour seminar during the show, but this year I am doing something different. I have joined forces with Jim Cockrum, Jose Calero and John Bullard and we are putting on a 2-Day conference on wholesale sourcing. You can read about it and sign up here.

The dates of the ASD show are Sunday March 1st through Wednesday March 4th. Our conference starts on Saturday February 28 th to Sunday March 1st. So if you attend you can do our conference on Saturday and Sunday and attend the show on Monday and Tuesday.

Whether you attend our conference or not, if you do go to the show, here are some tips to get the most out of it:

  • Register online before you go at http://www.asdonline.com/lv/index.shtml . This will keep you from having to stand in long lines to register at the show

  • The show is huge - it takes up both halls and both floors of the Las Vegas convention center. So allow at least two full days to see the show.

  • Bring at least 250 business cards and get a Yahoo or Gmail address for your cards. Otherwise you will get email from thousands of vendors after the show.

  • Dress is casual - but not too casual. You don't need to wear a tie, but you want to look neat and professional

  • Wear comfortable shoes - you will do a lot of walking. If any of you have bad hips or problems walking, they do rent those electric scooters at the show.

  • Bring a rolling bag. You will collect dozens of catalogs and sales sheets and they get really heavy after a while.

  • Photography is discouraged so if you are taking any photos be discreet.

  • Almost all the vendors offer show specials such as 10% off your first order or free shipping. Be careful taking advantage of these until you have time to research what you are buying. When I see something I like, I take a catalog or sales sheet and write the booth number on it. Then when I am back in my room I research the product and decide if I want to buy it.

    Also, if you ask, most of the vendors will extend the date of the show special up to a week after the show. So you can actually wait until you get home to make a decision.

  • If you are selling on Amazon make sure you have a list of all the restricted categories. You can get in to most of them by applying, but you don't want to buy things until you get approved.

  • Lastly if you sell in FBA be careful about buying any items that might be considered Hazmat. This is generally anything flammable or with contents under pressure and some batteries.

If you want to attend our wholesale sourcing conference, decide quickly. We have limited the size to keep it small and we are almost full. Beside the conference during the day, Jim and Jose and I plan to make ourselves available in the early evening for networking. www.wholesalesourcingconference.com.


3. Amazon Ads Ė Are They a Worthwhile Investment?

Amazon calls their pay-per-click advertising program Sponsored Products, which is an advertising program that helps you promote the products you list on Amazon.com.

You choose which products you want to advertise, assign keywords to those products, and enter a cost-per-click bid.

When an Amazon shopper searches for one of your keywords, your ad is eligible for display alongside the search results. You pay a fee for this program only when an Amazon shopper clicks your ad, at which point the shopper is taken to the detail page where your offer is listed.

The program is Pay-per-click (PPC), which means every time a shopper on Amazon clicks on your ad and is taken to your page, Amazon will charge you for that click.

And the clicks work on a bid system where you bid on keywords. For example, if I picked the keyword Peppermill there may be several other sellers also paying for that word. The one who pays the most will get the most clicks. Everyone will get some clicks even if you are the lowest bidder for that word. But the highest bidder will get the most clicks by far.

When you create your ad campaign, you set the amount you want to pay for each click and a daily budget. If you are getting a lot of clicks and your daily budget is hit, Amazon will stop serving up your ads until the next day.

One disadvantage of the program is that you can often help your competitors. Taking my peppermill example, if I am selling the same peppermill as other sellers and a different seller has the buy box when that click happens, there is a risk that the other seller will get the sale. Therefore you want to use sponsored products primarily on unique products where you own the buy box, or those with little or no competition.

Here is what sponsored products ads look like. You have to scroll down the page about two-thirds of the way to see them. This came up when I typed silver bracelet into the search box and clicked on the first bracelet that came up.

Notice that only one of the products shown is actually a silver bracelet. The others all have the word silver in them, but they are all different. Let me explain how and why this happens.

When you create a campaign, Amazon has two types of targeting - manual and automatic. With a manual campaign you select the keywords and your ad only comes up when someone types in that exact keyword. With automatic targeting, Amazon selects the keywords related to your product based on their information and records.

With automatic targeting you might not get the exact impressions you want, but you will get more impressions. An impression is how many times your ad is seen. There is no charge for impressions -you are only charged when a buyer clicks on your ad. After you log into Seller Central, here is a link to two short videos that explain how automatic and manual targeting work and how to set up the campaign.

That is a very basic overview of how the program works. It would take me several more pages to explain all the details of the program. If you decide to try the program, Amazon provides excellent training materials and explanations and if you want help there are several support specialists who can help you if you call into support. Tell them your questions are about Sponsored Products and they will transfer you to a specialist. You should know that if you decide to go this route, it will take at least a couple of hours of study to really get this right.

Now back to the central question I posed at the beginning of this article: Are the Amazon ads a worthwhile investment?

In some cases the answer is yes and in others - No.

Two years ago I launched a new line of jewelry on Amazon where I was the only seller. I had over 200 SKUs, and none of the products had a sales rank because they were unique and brand new to Amazon.

I set up a daily budget of $15 for 30 days ($450). The plan did work in that I got sales and my products started to get sales ranking. However, if I look strictly at the Return on Investment (ROI), I calculated that the profit I made from the sales driven by the ads, only came to about $300. But that was OK, because now these particular products sell very well and over the longer term I have made over Fifty- thousand dollars on this line. So that is one good example of why it makes sense to use them.

Another would be if you are creating a new private label product and you want to get some first sales. I also did this with a ceramic knife set that I sell. In this case I only spent $10 a day for ten days. And it worked. I only got a few sales from the ads, but that was enough to give my product a sales rank and since I introduced that product (about 18 months ago) I have sold over 1000 sets at $89 a set. My experience with the ROI on the knives was totally different than the jewelry. In this case my $100 investment returned about $180 in profits.

But if you plan to promote products that have competition, especially if there is price competition, then you want to be very careful; Or if you are just promoting products that are slow sellers.

If you are using the ads as I did, then the short term ROI is not that important. But if you are using the ads just to increase your sales overall, then you want to be very careful setting your budget and tracking your ROI to make sure you are really making enough money to justify the investment. Any positive ROI is good -even if it's as low as five or ten percent. But make sure you don't have a negative ROI.

Another good use of Sponsored Products is to run special promotions during holiday seasons. I did not do it this year, but last year I ran some ads for my jewelry right before Valentine's Day. The reason I didn't do it this year is my products now have a higher sales rank so I don't really need to. My pre-Valentine's Day sales this year generated about $14,000 in profits - just in fashion jewelry.


4. Stop Making Bad Inventory Purchasing Decisions

This is a guest article by Nate McAllister of FBA Today.com where Nate explains how to avoid mistakes when purchasing inventory to resell.

Making poor sourcing decisions ties up our purchasing power, and therefore restricts our earning power. Even worse, poor sourcing decisions can lead to negative feedback and harm our reputations as sellers on Amazon. Here are just some of the basic tips on how to avoid these types of mistakes:

  • Know your buying parameters and stick to them.

    Reassess these parameters regularly as purchasing power changes and as you learn and gain experience.

  • Check quality first.

    Negative reviews and customer returns outweigh quick profits every time.

  • If in doubt, make sure the item can be sold by pressing "sell it' on the Amazon seller app or with a similar program before you purchase it.

    This is by far not a perfect system and it is best to familiarize yourself with what you can and cannot sell. In addition to gated categories, beware of restricted brands. Megan Williford has a great list of prohibited brands here.

  • Make sure the item you are considering purchasing matches the item on your scouting program.

    Little differences are huge differences.

  • Be able to walk away and don't get too excited about any single deal.

  • Don't buy items that don't match your parameters just because you are in a slump.

    "Sure we are losing money on each sale, but we'll make up for it in volume!"

  • Base your purchasing decisions on realistic selling prices

    Use the tools available to you like Keepa.com and camelcamelcamel.com. Avoid items with little sales history in favor of ones with a proven track record whenever possible.

  • Consider seasonal changes and the effect that they will have on your products.

  • Check your expiration dates carefully on perishables.

  • Consider the visibility of the product and the deal and how much competition you will have.

    How many other sellers can you tolerate?

  • Do you have "wiggle room" to lower the price and still meet your margins?

  • Bonus Tip: Watch the check out employee as they scan your items to make sure that you get the clearance prices as marked. If you aren't already doing this, you will wish you had been.

Thanks and good luck!


5. New Wholesale Sources for eBay and Amazon Sellers

NOTE: As usual, many (but not all) of these websites are retail websites. Look the website over carefully as some of them have a link that will say something like wholesale info. If not, just use the contact form to send a polite professional-sounding email requesting wholesale information.

Andrea Bocchio makes and sells textile based jewelry and accessories inspired by travel and traditional craft. Items include: woven bracelets, crochet necklaces and embroidered clutches.

The Green Bottle Candle Company repurposes used wine bottles from local restaurants and creates natural soy candles. Hand poured in small batches.

Zoku is known for their funky and fun housewares. Their products put the fun in functional with innovative, easy-to-use, well-designed products.

Alicia Klein co-created an original little wallet she named the Taxi Wallet® -and in less than a quarter of a century, Taxi Wallet® has grown into a standard American brand, winning the affections and the following of men and women alike.

Premier Wholesaler carries all types of overstock merchandise from a wide variety of Department Stores and Manufacturers in the USA, from Brand Name Sneaker Overstocks and Apparel Closeouts to Surplus Electronics and Liquidation Furniture. They sell by the pallet, bin, skid, lot, or by the truckload.

Virisanki The Viranski clothing and fashion brand is designed for the young and young at heart. Viranski designs deliver a strong and independent apparel brand for the new era.

Seven Wholesale clothing apparel for men, women and kids - street wear, urban wear, Sean John, Rocawear, Makaveli, Enyce, Akademiks, Ecko, and Baby Phat.

Backstage Fashion sells licensed music merchandise. Their products include wholesale tee shirts; tour jackets, infant wear, caps, and licensed merchandise of all kinds.

CIS Associates in California is a large supplier of Remote Control boats, cars trucks and helicopters. They also sell the Sluban blocks (compatible with Lego).

Wholesale Crafts is a website where crafters and artists put up their items to sell wholesale. I have mentioned this site before but new artists are added frequently so it pays to visit the site often.

Mountain Mamas sells a wide variety of fashion accessories and some jewelry. Very unique items that you won't see anywhere else.

If you sell in the grocery and gourmet foods category, here is the exhibitor list of the Sweets and Snack expo with links to the vendors.

My Favorite Beads sells a wide range of jewelry including Pandora compatible charm beads.

CHH Inc. Sells a wide variety of classic games including chess, checkers and backgammon boards.

Thatís it for now Ė See you in March when I get back from the ASD show.

Skip McGrath
The eBay & Amazon Seller's News

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

 The Online Seller's News is the oldest & largest newsletter for eBay, Amazon & Online Sellers. Get news, tips, tricks & learn online selling strategies.
New Wholesale Sources in every issue.


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