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Buying in The Liquidation Closeout Marketplace to Sell on eBay & Amazon

The eBay & Amazon Seller's News - May 2016 - Volume 17, Issue No. 9

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

In This Issue:

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

  1. Buying in The Liquidation Closeout Marketplace to Sell on eBay & Amazon
  2. Amazon and eBay Release Quarterly Results
  3. Always Check Your FBA Shipments
  4. New Wholesale Sources for eBay and Amazon Sellers

"Manís duty is to improve himself; to cultivate his mind; and, when he finds himself going astray, to bring the moral law to bear upon himself." ~ Immanuel Kant


eBay updated its User Agreement. The new agreement takes effect for existing users on May 19, 2016. You can read the changes to the new agreement at this link, and I strongly suggest all sellers do this as there are some important changes that can affect your account.

In the last issue I had a link to Restricted products on Amazon but pointed out that the list is not complete and asked readers to send me any other products they knew of that I could add to the list. Well, several of them did, so we have updated the list and it is far more complete now. You can see the new list here.

Private Label sellers needing UPC codes. As you know, Amazon is moving to requiring all sellers to use official UPC codes from GS1. One thing I wondered is if I could buy the codes under my one company name and use them for different brands, so I asked Amazon and this is the answer I got:

I understand your concern regarding buying the codes from GS1 (the official supplier).

Please note that if you are buying codes from GS1 and as this is the official supplier you can use your general company name for all your brands and you don't need to buy separate GTINs for each brand.

I hope I was able to sufficiently assist with this matter and would appreciate your feedback through the Survey at the bottom of this email.

I have also written a new article for the Free Articles page - Five Business Tips to Improve your Amazon Sales.

Here is a very interesting infographic about what is selling on eBay.

Lets get started with this monthís articles:


1. Buying in The Liquidation Closeout Marketplace to Sell on eBay & Amazon

This article is a guest article by Robert Cyr, author of the 2016 Liquidator's Guide. Robert is a long time expert in sourcing and selling liquidation products.

By Robert Cyr

With all the buzz about wholesale secondary market goods - i.e. liquidations, including shelf pulls, closeouts, and customer-returned merchandise - Amazon and eBay sellers often get overly excited about the prospect of scoring brand-name goods at rock-bottom pricing. Don't get me wrong - there are high profits to be made reselling liquidated goods, but there's also a tremendous learning curve to overcome. From my perspective and experience, too many marketplace sellers are jumping in feet first without fully understanding:

  1. What liquidated goods are
  2. Why merchandise is liquidated
  3. What type/condition of goods are best suited for specific resell channels
  4. Who/where to buy liquidated goods from

According to a recent report, $280 billion worth of retail consumer goods flow through the secondary wholesale market. This "secondary market" gives you and I the opportunity to purchase pallets and trucks of brand-name goods at drastically reduced pricing.

When sourcing goods within the secondary market, bulk buyers need to understand that liquidation merchandise is categorized and sold in the following product conditions:

Customer Returned Merchandise - Customer returns are items that consumers purchased from a store, or e-commerce seller, and then returned. Working percentages on customer return loads depend on multiple factors, including the season purchased and the store the goods originated from.

It's not uncommon to receive goods in new or open-box condition in return loads, but there is no guarantee what you will receive from load to load. The industry average for items in all categories is 65 to 75 percent working and 20 percent repairable. The remainder are throwaway items. Profits come from selling the working and repaired items.

Shelf Pull Merchandise (MOS) - These are overstocked goods that were displayed for sale in a store but never sold. Shelf pull items typically have original retail tags and price stickers. Damage, if any, is usually minimal, mostly due to handling. The average percentage of damaged goods in a shelf pull lot/pallet/load is between 5 and 10 percent.

Closeout Merchandise - New overstocks, also often called closeouts, are goods that have never been displayed for sale in a store. Such goods can come from importers, manufacturers, or distributors who are closing down or have excess goods in their warehouses. Wholesale retailers tend to sell closeouts in bulk lots at low prices.

Most people make the same mistake when purchasing wholesale liquidation merchandise: they buy the wrong type of goods for their resell channel - for example, by purchasing customer-returned pallets for Amazon sales. Even though you can sell used goods on Amazon, sellers who are trying to scale an Amazon FBA business need to source new merchandise in pristine retail packaging. And you won't find goods in such condition on a customer-returned pallet. A better option for Amazon sellers is closeout merchandise sourcing. There are tons of closeout-only wholesalers who specialize in selling undamaged goods.

However, customer returns are great for multi-channel sellers. For example, if you're an eBay seller, and are not opposed to selling a few items locally through Facebook groups or Craigslist, customer returns will work for you. Every pallet and truckload of returns will provide you with a big assortment of goods.

Typically, when sourcing goods through a traditional wholesale company or distributor, you'll pick out the items you want to sell, purchasing by item in case pack quantities. This is not the case with liquidated goods. When you purchase a pallet or truckload of store excess, you'll often buy an unknown assortment of merchandise. Some pallets and trucks come with a manifest (a list of contents), but the manifest may fail to disclose the conditions of the items.

Does this sound a bit overwhelming? Working with liquidation goods can be, but this by no means should discourage you from sourcing within the secondary market- the practice can be highly profitable. The best advice I can offer is take your time. Research the type of merchandise you're thinking of purchasing, start small, and move on from there.

If you are thinking of entering the liquidation market, I strongly suggest you pick up a copy of Robert's 2016 Liquidator's Guide. When you buy the guide you also get membership to a Facebook Group with 2700+ members sharing product sourcing purchases, advice and resellers news.

Note from Skip - One thing to be careful about when buying liquidation products is not purchasing any of the restricted brands on Amazon.


2. Amazon and eBay Release Quarterly Results

Both Amazon and eBay released their quarterly results in the past week.

For the first quarter, which ended March 31, Amazon reported net income of $513 million, or $1.07 a share, up from a loss of $57 million, or 12 cents a share, in the same period a year ago. Revenue at the company rose to $29.13 billion from $22.72 billion a year ago. Those results represent record quarterly results for Amazon and were well beyond Wall Street expectations. ($29 Billion in sales per quarter, represents about $322 Million dollars a day).

eBay also did a little better, but no where near as well as Amazon. eBay reported that gross merchandise volume (GMV) for the quarter ended March 31, 2016 was $20.5 billion, increasing 5% on a foreign exchange (FX) neutral basis and 1% on an as-reported basis, reflecting the continued impact of a strong U.S. dollar.

Revenue for the quarter was $2.1 billion, up 6% on a Foreign exchange neutral basis and 4% on an as-reported basis, driving net income from continuing operations of $550 million, or $0.47 per diluted share, During the quarter, the company generated $641 million of operating cash flow and $483 million of free cash flow from continuing operations while also repurchasing $1.0 billion of its common stock.

As you can see from these results, Amazon continues to dominate eBay in the eCommerce space. It does seem that eBay's new management is doing better than the old team, but they still have a long way to go.

We sell on both eBay and Amazon and Amazon dominates our eBay sales by a wide margin, but I must admit that our eBay sales have been increasing lately, so there are some positive things going on.


3. Always Check Your FBA Shipments

This is a pretty short article, but it deals with a very important issue.

FBA is great. It saves us from shipping individual items and having a garage full of merchandise, but Amazon makes mistakes.

Just a few weeks ago, I sent in a shipment of 24 items to FBA, and when I looked at the shipment received at Amazon, the records showed that they only received 20. So I opened a support ticket. The answer I got from Amazon was to send them a copy of the invoice from my supply vendor to prove that I had purchased 24. Fortunately, I found the invoice quickly and scanned it in and sent it to Amazon. It took them a few days to answer, but they did come back and say they would reimburse me for the items. The reimbursement took about ten days to go through, but they did reimburse me.

I have also had shipments where I sent in say 50 items, but Amazon showed they received 60. In that case, I opened a support ticket and Amazon answered they would send someone to the warehouse to count the items. That time it took almost two weeks for Amazon to do this, but they finally did and got back to me that I was correct and they would correct my FBA inventory (which took another two weeks, but they finally did it).

I have also had Amazon lose an entire shipment where nothing showed up. On the shipment list, it showed that the shipment was received and closed, but no products every showed up in my FBA inventory. This time they reimbursed me, but two weeks later, they got back to me and said they found the products and were returning them to my inventory and reversed the payment.

So, the lesson here is:

  • Check every shipment to verify what you sent was what you received.

  • Check every shipment to make sure it arrived and the inventory made it into your system (Note - this can sometimes take a while because Amazon often sends your goods to a different warehouse. You can determine this on your Reserve Items report under Reports > Fulfillment > Reserved Inventory.

  • File your receipts, so you can find them quickly and easily when you need to prove to Amazon what you purchased.

Missing inventory can get expensive, so follow these tips to make sure everything you send, actually makes it into your sellable inventory.


4. New Wholesale Sources for eBay and Amazon Sellers

Kole Imports sells a wide variety of low cost goods that make great items to bundle or multipack. Also Kole offers the service of sending goods direct to Amazon FBA for you. And here is a great deal. They offer my readers a 6% discount if you use the code SKIP6 at checkout.

Sarinas is a new fashion outlet with a wide range of very nice goods.

Waxing Poetic is a modern-heirloom jewelry line crafted in sterling silver that consists primarily of charms that can be combined in different ways for a custom look.

Bijou Candles offers high quality fragrances in refillable, unbreakable resin bases. Swap scents with Bijou candle refills or repurpose Parisian-inspired bases any way you'd like.

Cityzen by Azin is based on incorporating satellite views of cities from around the world and making 3D wearable art while promoting the 4th Dimension of global Cityzen ship.

Reina Esperanza Company is a Wholesale manufacturer of Pillow form inserts. They also manufacture religious rosaries and other rosary related products.

SPT APPLIANCE INC. is a manufacturer and distributor located in California with 200 SKUs. They also dropship all of their products. ( I do not have any experience with their dropshipping, so do a test buy before listing items to make sure they ship on time and send tracking)

My Inventory Team as an outlet for small business owners and online sellers to acquire inventories for resell. They also offer fulfillment services for Amazon sellers.

Via Trading is a large and well know liquidation company located in California.

Liquidation.com is another large liquidation company well known to eBay and Amazon sellers. One word of caution - always check the shipping cost before bidding on a lot.

1 Stop Wholesale sells RECYCLED JEANS, tee shirts, jackets, more. Full assortment of quality grade Recycled clothes available in small lots for all buyers. Easy on-line ordering, fast delivery.

NOTE: used blue jeans are big sellers on eBay but not so much on Amazon.

Thatís it for now. See you again in about two weeks.

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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