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Annual ASD Wholesale Sourcing Issue

The eBay & Amazon Seller's News, March 2015 - Volume 16, Issue No. 5

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. Annual ASD Wholesale Sourcing Issue
  2. When Does It Make Sense to Merchant Fulfill versus FBA?
  3. Trial Balloon – China Sourcing Trip ???
  4. Should You Develop Your Site in Phases?
  5. Incorporating 101: Why You Should Incorporate

"The person who can drive himself further once the effort gets painful is the person who will win." ~ Roger Bannister


Musings

This is our annual wholesale sourcing issue. I do this every year when I return from the ASD Wholesale Trade Show in Las Vegas. Most of my newsletters have about a dozen new wholesale sources - but this issue gives you many more.


Correction - In my last issue in the article about Amazon Sponsored Products Ads, I said that one of the drawbacks was that Amazon might click an ad through when one of your competitors was in the buy box. In fact that was an issue some time ago, but I learned that Amazon has corrected this and they will only serve up your sponsored product ad when you are in the buy box. My mistake -and my apologies.


One of the Sponsors of our Wholesale Sourcing Conference was Merchant Words a company that provides you with keywords for your Amazon listings. They have a discount offer for my readers. Use this link to get 70% off for as long as you stay with the service.

I have been using them for almost a year with excellent results. Since I create a lot of new listings with zero sales rank - the keywords really help me sell. Although Merchant Words is based on keywords for Amazon -I use them in my eBay listings and they work really well there also.


I have just completed the first major update of The Complete eBay Marketing System. I always get the question "If I bought the older book, can I get a deal on the newest one?" Unfortunately, the answer to that is: no. My printing and shipping costs have risen so much that sending out a completely new book at a discount is just not feasible. However, each year I publish an electronic update which is located on the Bonus Items page of your member's website. The 2015 update with be posted there in a few weeks - I am expecting some new eBay announcements and want to include them in the update.

Also remember, if you purchased The Complete Amazon Marketing System then you do not want to also buy the eBay book as there is a lot of duplicate content. Instead go onto Amazon and look for my book - Three Weeks to eBay® Profits, Third Edition: Go From Beginner to Successful Seller in Less than a Month


Credit card comparison website CardHub has reported that Amazon gift cards were the second most popular gift cards of 2014, surpassed only by the Visa gift card, which can also be used on Amazon. That may explain why we had one of our best January sales months ever.


A lot of folks have been confused by exactly what the Amazon 1099 includes. So I asked support and got the following answer:

Unadjusted gross sales equal the amount the buyer paid for the order and includes sales proceeds, sales tax, gift wrap and shipping charges.

When there is a sale, the order total becomes a permanent part of the unadjusted gross sales for the year. Even if (you) the seller later refunds the entire amount a buyer paid for an order, the order total is still included in your unadjusted gross sales calculation. The IRS regulations require that no adjustments to gross transaction amounts be made.

Consult an independent tax advisor if you need further guidance on how to appropriately report these amounts on your tax return.


If you are looking for seller financing, here is an interesting email I received from a reader: Note - I am not endorsing this, nor have I checked it out - just forwarding it in case anyone is interested:

message: Hi-Just purchased Amazon Marketing System and wanted to say thank you. Great Info and I really especially enjoy having all the newsletters to read.

Just like to mention a resource for your seller's looking for credit line, start-up, or inventory financing. Consider 0 percent credit card financing with all the major banks - 12 to18 months. I have a web site for this for energy improvement and travel club financing. mobolocity.com

You don't have to recommend me, just saying you might want to have your seller's consider this. Usual loan is 5k to 10k, and if husband wife, amount can be doubled. No income verification required which helps start-ups, self-employed types without a provable income like Prosper, and The Lending Club require.

There is no fee for my site and I offer free consultation before application, if anyone is interested.

For the past year I have been using Refunds Manager. Initially all they did was track money owned to you by Amazon and get if for you, but in the past year they have added all kinds of research and reports to help you run your business. They email me a daily sales report, which is invaluable as it shows me a much better picture than Amazon does and it includes low inventory warnings to help me make sure I don't run out of fast moving items. Be sure and look over all the products they offer. It is a very interesting service.


Lets get started with this month’s articles:

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1. Annual ASD Wholesale Sourcing Issue

Wholesale trade shows are my absolute favorite place to find new products. The advantages are many. You can see the products - pick them up and examine the quality. Best of all you can meet and speak with the vendor, which is helpful in determining his or her reliability, and you can start building a personal relationship.

This year's show was one of the largest ever with over 2600 wholesale vendors and literally thousands of products in ten different categories. Here are some of the vendors I met with -all of whom are willing to sell to and work with small eBay and Amazon sellers.

NOTE: Most of these web sites are actually retail sites, or they have no pricing or ordering information. The best way to get information is to use the contact form on the web site, send a polite email and mention the ASD Show. None of them drop ship (unless noted in the listing) so don't bother asking.

Also be sure and ask them if they have any show specials that are still in force. Most vendors offer show specials such as free shipping or discounts and they will honor them for up to a week after the show.

So let's get started with some of the more interesting companies I found at ASD.

Lace Locks sells a line of kid's lace locks to keep their laces tied. The individual price is too small to sell one pair at a time - but they really lend themselves to creating a product bundle. And they are about to release licensed lines such as Spider Man and others.

The People's Shoe Company sells men's, women's and children's shoes for all occasions. They have some very stylish designs.

Charles River Apparel sells stylish active wear for men, women and children.

Lagaci is a women's fashion company with some great styles.

Jewels of Jaipur sells some beautiful and unique jewelry hand crafted from an array of rich materials ranging from diamonds to rare semi-precious stones.

The YTC Group sells less expensive fashion jewelry but they have some really unique items I did not see anywhere else.

Body Verde is a line of plant based beauty products featuring extracts, essential oils and anti-oxidants.

Big Love is a company that sells Children's backpacks and other accessories. All their products have a peace and love theme.

My Sweet Doll is another Children's product company. The sell a line of backpacks, toddlers clothing and ultra-soft kid's blankets and diaper bags.

Gamut Distributors distributes a large variety of products from Children's plush animals to jewelry and fashion accessories -and they offer free shipping on everything.

Freedom Flask is a flask that you wear under your shirt for going to games and concerts that don't allow carried-in liquor.

Frost Cutlery sells a large line of hunting, camping and fishing knives but they also have a line of very nice kitchen knives. Some (not all) of their knives are made in the USA.

Catistic sells a wide variety of linens, towels, slipper and wall art for the home.

Arclite sells a really neat product unlike any I have seen before. What they do is create trees and floral arrangements out of colored LED lights.

Penguin Magic offers traditional card tricks, money and coin tricks, levitation effects, close up tricks and magic training videos.

Garden Sunlight sells a large line of solar lights and other solar products. This is one I have posted here before, but I am doing it again because they drop ship and they will also send your goods direct to FBA for Amazon sellers. When I saw them at ASD this year they had a lot of new products.

Compass Industries sells knives and other gear such as binoculars, compasses and some camping gear. They also sell some closeout and surplus items at very good prices.

The Pacific Group USA is a manufacturer and direct importer of plastic bags and they also sell an eclectic group of merchandise from religious candles, to incense to sponges.

Frigibar sells a large and complete line of marine refrigerators, fish boxes and dock and deck boxes.

J. Marcus is a closeout dealer who now has a nice line of Halloween products. You may have to sit on them for a while but the closeout prices are really low which allow you to do that. They also sell toys, pirate items and various holiday themes goods.

Mask US sells a large line of masks and mascot suits.

Party Animal Inc. sells a large line of sports team themed party items and other fan gear.

The Dura-Kleen Company sells a complete line of products for the kitchen, home and bath.

US Hosiery Inc. sells a complete line of mens and women's socks, underwear and other accessories.

The Luyuan Company sells skateboards, exercise equipment, massagers and off road vehicles.

Atlas Goods sells handbags, wallets, fashion jewelry and other women's accessories.

 

Baxbo Gifts sells a complete line of neckties and lady's scarves that are actually liquor flasks. They also sell a line of clever game products.

The Mayhem Company sells a line of designer skateboards in vivid colors and designs. I was told this company would label and ship their products into Amazon for you. The prices you see on the website are retail. Wholesale prices are about ½ of that. Email them at sales@zyclefix.com for wholesale information.

Mukikim sells toys and fun gadgets including the popular line of SpyX Kids toys.

Rising Fashion sells handcrafted clothing from the land of Buddha and Mt. Everest - Nepal, but everything is warehoused and shipped from California.

Bridgecraft USA is a manufacturer, importer and distributor of all type of musical instruments. They sell by the pallet or the case.

Billy's Toys, a division of the Imex Model company sells a large line of military, western, pirate and other themed toys as well as remote controlled vehicles, games and puzzles.

[top]

2. When Does It Make Sense to Merchant Fulfill versus FBA?

This is a question I get a lot. If your items make sense for FBA I see no reason not to do it. When we moved from Merchant Fulfilled (MF) to FBA our sales more than quadrupled almost overnight. Some sellers are put off FBA because of the much higher fees, but I have found that even with the higher fees, I make more money on FBA due to the higher sales volume.

Let's review some of the advantages of FBA

  • Amazon offers free shipping when the items in your shopping cart exceed $35, but only if they are in FBA. (Amazon did recently introduce a way that MF sellers can offer free shipping when combined with FBA items but the shipping cost comes out of your margins - whereas when my products are in FBA and the customer exceeds $35 Amazon pays for the shipping.

  • Amazon Prime - Prime Members get free 2-Day shipping on all purchases. Amazon will not release the number of Prime members, but industry analysts estimate the number to be well in excess of 20 million. If you are a Prime member, when you search, there is a box you can check that says show Prime items only. To get the Prime shipping your products have to be in FBA so when folks check that box they will not even get to see your offers if you are Merchant fulfilling.

  • Greater sales - When we moved into FBA we only had about 400 SKUs. I started moving about 30 SKUs at a time into FBA. By the time I had 90 SKUs received by FBA warehouses, my 90 FBA items were outselling all of my MF items, combined. Once everything was moved to Amazon's FBA, our business increased almost 400%

  • Buy Box Percentage - Amazon does not admit to this but I can tell you from personal experience that I win the buy box more often than MF sellers who are matching me in price.

  • Saving Time - As they say, time is money and FBA is a huge timesaver

  • Better Account Metrics - Once you are in FBA for some time you will see your feedback improve dramatically. You no longer have to worry about A to Z claims and if anything is shipped late, Amazon takes responsibility for the feedback and removes it from your score.

Obviously one of the biggest reasons to sell MF is if you sell large, heavy or oversize items where the extra shipping charges into Amazon plus the oversize handling fees will kill your profits.

Another reason is if you sell against lots of competition and want to cut prices to win the buy box. When you cut prices to the bone, there isn't a lot of room for good margins when you pay the FBA fees.

A really big and important reason is if you sell any type of Hazmat products such as perfume, cologne, or anything flammable or pressurized or any liquid product in glass jars that exceed the 4-ounce rule.

When I posted this question on a FB group, a lot of sellers said it really helps in the 4th quarter, or just before other holidays, when Amazon is really slow getting items into their warehouse. It can give you a few extra selling days.

Another person noted something I totally forgot about. If you sell anything really fragile you will do a much better job packaging it than Amazon. I can't tell you how many times I have received goods from Amazon with very little protection or void filler.

Another seller noted that if you find an item that is a really hot seller you can get it up for sale instantly rather than waiting the week or so it takes to get to an Amazon warehouse.

One seller said they use MF to test new items and another mentioned that it may take a week to get an item off to FBA but some may sell in that period while it is in an MF status.

And lastly if you are selling via Drop Shipping then you must do Merchant Fulfilled.

So there you have it. Although I obviously favor FBA, I am one of those people who believe everyone has to figure out their own business model. So now you know some of the pros and cons of each method of selling on Amazon. And I want to take a moment to thank all the folks on the Silent Team FB group who gave me some advice on this topic. It really opened my eyes to some things I had not considered. I purposely did not mention their names, as I did now want them bombarded by messages and questions. But if you join My Silent Team, you can find the thread and read all the ideas.

[top]

3. Trial Balloon – China Sourcing Trip ???

This is very much in the feasibility planning stage - I have not decided to do this yet, but I would like to gauge the market to see if there is any interest. I always appreciate reader feedback at any time, but this is one of those times I am requesting it.

Once you read the article please use the Contact US form at the end of this article to send me an email. But please read the whole article first.

At our Wholesale Sourcing Conference just concluded, one of the more popular presentations was by Jose Calero, a Million Dollar Plus Amazon seller, who imports and private labels all his products from China. Both Jose and all of the books I have read on importing, recommend that if you want to import from China, you really need to go there.

Now as you can imagine, a trip like this is expensive, so it's obviously not for everyone, which is why we will limit it to just 20 people.

The thinking is to go in early October when there are two big trade shows in Hong Kong that overlap. We would spend two days at each show then two days touring a total of 4 factories - 2 each day.

Jose and I use the same agent in Hong Kong. Both the agent and his leading assistant speak excellent English and would lead the tour and do any translating necessary. In addition we will fit in a total of 3 or 4, one-hour workshops on various subjects related to importing. We will also meet with a freight-forwarder and customs broker so you can learn about those services. One bonus everyone will get is to meet our agent and have the opportunity to take advantage of his services. He takes on very few new clients, but has agreed to work with anyone on the trip.

We are split on whether or not to include airfare. If we do, everyone would have to be on the same flight (leaving from either Los Angeles or San Francisco). Once in Hong Kong the fees would cover all hotels, breakfast and lunch (dinner on your own) and all ground transportation to the shows and the factories as well as paying for any related services.

If we do this, where everyone pays his or her own airfare, the cost will be in the $7,000 to $8,000 range. If we do the group airfare it will be a thousand or so more. That is per person --not couple, although we will probably figure out some discount for couples who share a hotel room, or if we get mostly couples, we may just lower the price somewhat overall.

The hotels will be 4-Star hotels and the ground transportation will be a luxury coach. We will also cover transportation to and from the airport in Hong Kong. And we are going to allow a day and a half for everyone to do some shopping and sightseeing in Hong Kong.

So if you can afford this, and think you might be interested, please use the Contact US form to send me an email with your thoughts, questions and ideas. Note: To prevent spam robots, our contact form only allows text and common punctuation. No web links, or symbols such as :[@#$%^&* ]. I also welcome any suggestions of things you would like to see in addition to what I have mentioned.

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4. Should You Develop Your Site in Phases?

I have been getting a lot of email lately from readers who want to know about setting up websites. This is another guest post by Diana Ratcliff who has quite a bit more expertise in that area than I do, so I think she is better qualified to fill that need.


"Kathy" has big plans for an in-demand online service that will require sophisticated programming and a private login/dashboard for each of her clients. She knows what she wants, has mapped out the work flow, identified existing programs and services that might integrate with what she wants to do, has a pretty good feel for what will need to be developed to automate her processes, and is fairly comfortable with creating websites.

She wants her "innovative technology" to be front-and-center when she launches because it will give her a distinct advantage over her competitors.

It's an ambitious project, she's very excited, she wants it done yesterday - but budget is an issue. Also she's not quite sure how she'll market her new service, outside of a few Facebook groups where her target audience hangs out.

I just got off a conference call with her and my tech partner. Yes, we can do what she wants. Our advice?

Crawl. Walk. Run.

We see a distinct advantage for her to develop her site and roll-out her new service in two phases.

Phase 1: Get the front-end built. Figure out the sales, conversion, and marketing funnels. Build a basic back-end interface for her clients.

Phase 2: Automate! Based on feedback from customers, build and integrate the "innovations" she's itching to deliver.

Why did we suggest these two phases? What are the advantages to her?

It enables her to get up and running - getting clients and making money! - More quickly.

Doing so allows her to spread the costs over time; there's less initial financial outlay. The more time-consuming and expensive work will be done in Phase 2; hopefully she'll have made some money by then.

We can test the basic service; make sure it's solid and working properly, before introducing it to the world. There are inevitably problems with a site launch, no matter how good the developers are. Even if it were easily fixed, we'd rather fix sooner than later.

She can get feedback from her early clients - find out what they like, what they don't, and learn what features are important to them for the future. The latter is especially valuable; she can save a lot of time and money if she builds what they really do want instead of what she thinks they want.

She can give people an incentive to join - give them a deal for being early users and promote future upgrades.

A phased-in system makes it easier for her and her employees as well to learn how everything works, from the business perspective.

A related benefit - which I think is just as important - is that it relieved some of the pressure to figure out everything, right now. At its basic level, it's still a useful service. At its fully-developed level, it will be amazing!

Where I don't want her to skimp right now is the sales/marketing angle. She's tempted to put up a "good enough" site because she's focused on getting the back-end working correctly.

However - if no one tries her service in the first place, the back-end development won't matter. She needs to clearly articulate her service's unique features and benefits and persuade people to give an unknown quantity a try. That means a professional-looking site, with good copywriting and a strategy in mind to market it too.

Launching her new service in stages is not what she originally had in mind, but doing so offers many distinct advantages.

Might such an approach work for you?


Diana Ratliff is a results-oriented online marketer who delivers web strategy, design and marketing solutions that make her clients money. Learn more at http://www.YourFriendontheWeb.com

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5. Incorporating 101: Why You Should Incorporate

In the past I have always recommended MyCorporation.com for those who want to incorporate, form an LLC or get a trademark. They do a good job, but one thing they do not do is give legal advice.

I have recently begun a relationship with Rocket Lawyer. They do everything MyCorporation.com does, but they also have a program where you can ask questions of an attorney, or get legal advice or even legal help. This is a guest post written by Dominic Matteucci of Rocket Lawyer. It's a good overview of why and how to incorporate.


No matter how small or large your business is, incorporation can benefit any business. Whether you're a casual eBay vendor who sells collectible baseball cards as a hobby, or an experienced Amazon retail star who builds custom-made furniture as a full-time gig, incorporating can benefit you now and even later.

In this article, we'll explain what you need to know before you start incorporating, from determining which business type is right for you to giving you the right tools and resources to incorporate in a quick, simple, and affordable way.

What is incorporating anyway?

Incorporating transforms your business into a corporation. In other words, a legal wedge will separate you and your company, creating two different entities. This means you will no longer be responsible for its mistakes and mishandlings. Think of it like this: Let's say you have kids. When they turn 18, in the eyes of the law, they're considered legal and responsible for their own welfare. The same goes for your newly incorporated business.

On the other hand, a sole proprietorship is the default business type if you haven't incorporated. In fact, a sole proprietorship is automatically created when you make your first sale or incur your first business expense. Ultimately, unlike an incorporated business, you and your business are considered one and the same in the eyes of the law. So if your business is hit with a lawsuit or goes bankrupt, it can affect your personal assets.

Which business type is right for me?

First, it's good to note that there are certain entities that are most likely not appropriate for your online business, like non-profits, partnerships, and C-Corporations (C-Corps). Instead, a limited liability company (LLC) or a S-Corporation (S-Corp) is probably the best fit.

What's the difference between an LLC and S-Corp?

Both LLCs and S-Corps are popular among small businesses since they offer legal protection, business legitimacy, and tax benefits (in some cases). But of course, they have their differences:

Unlike a corporation, it's much easier to start and run an LLC. An LLC gives you the ability to create your own management structure through an operating agreement. In this agreement, that same flexibility allows you to decide how your LLC wants to be taxed. Initially, the IRS won't tax your LLC directly so it's important that you make your selection from these tax options: sole proprietorship, partnership, or corporation. Essentially, an LLC provides you some of the benefits of a corporation, without some of the compliance hassles.

An S-Corp does not have the same kind of flexibility, with shareholder restrictions to individuals, estates, and certain trusts. In comparison, an LLC can consist of individuals, corporations, or other LLCs. An S-Corp is actually, in fact, a type of C-Corp (think behemoths, like Apple and Google) that has elected a special tax status to become a pass-through entity and not be taxed on the corporate level.

Why should I incorporate or form an LLC?

A sole proprietorship has limitations and disadvantages in certain situations, like higher rate of taxes and personal liability if something goes awry. But when you incorporate or form an LLC, you can actually gain tax advantages and limited liability protection. There are many more benefits but for the sake of brevity, we'll focus on these two main selling points that make incorporating or forming an LLC a great business choice:

Tax Benefits

You can avoid double taxation, while taking advantage of the legal protection of incorporating. This means S-Corps and LLCs (if you choose to) are not required to file taxes with the IRS on the business level. In fact, S-Corps and LLCs can be treated as pass-through entities, giving you the ability to report some of your business's profits and losses directly on your personal income tax return. Additionally, you can draw a salary, deduct business expenses, and avoid taxes on some profits.

Legal Protection

In our highly litigious society, it's wise to have the legal protection that a limited liability structure affords. And just as the name suggests, S-Corps and LLCs give you just that: limited liability. This means that your personal assets are protected against lawsuits, debts, and other liabilities that your company incurs. Going bankrupt? Your business will handle that. Being sued? Your business will handle that. You get the point. As long as you your company is structured and operated as a separate entity, S-Corps and LLCs can protect you from business liabilities.

If your main concerns are selling stocks, acquiring investors, and receiving the highest level of legal protection, an S-Corp sounds like the right type for you. But if you're looking for less compliance regulations, more flexibility, and additional business partners, you may want to start an LLC.

Ready to incorporate?

Ready to incorporate your business, or to simply start one? Join the thousands of businesses that have incorporated with Rocket Lawyer. All you need to do is tell us a little bit about your business. Then we'll help incorporate, file your paperwork, and follow up with you and the state through the process. Use the resources below to establish your business for success:

Resources

Find out which business structure is best for you with our mini quiz: click here

Incorporate today and we'll help you through the entire process: click here

Discover what you need for your LLC with our state-by-state interactive map: click here


Note: Rocket Lawyer is currently offering a one-week free trial of my readers.

Well, that's it for now. See you again next time.

Skip McGrath
The eBay & Amazon Seller's News

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








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