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Managing Risk in Your eBay and/or Amazon Business

The eBay & Amazon Seller's News - June 2016 - Volume 17, Issue No. 11

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. Managing Risk in Your eBay and/or Amazon Business
  2. Is the Retail Industry Telling Us Something About the Upcoming Economy?
  3. Before Lowering Prices, Check Matching Competitorís Feedback Account Metrics and Selling Status
  4. New Wholesale Sources for eBay and Amazon Sellers

"Knowing yourself is the beginning of all wisdom." ~ Aristotle


eCom Engine has a great free webinar on how to improve your reviews. You do have to register to see the webinar which puts you on their mailing list, but they are a pretty good company. I am on their list and they don't spam me. Click here to register.

How do I update my books? If you have purchased one of my books (Such as The Complete Amazon Marketing System) and notice that the print date is a couple of years old, that does not been the book is out of date.

I update my books in two ways. When you buy a book and are sent to the delivery page, you will see a list of free bonus reports under the download link for each book. I am continually adding to those reports and that is one of the ways I keep my books up to date. The other way is this newsletter. Remember - we keep all of our newsletters for the last 3 years. You can read any of my back issues in the newsletter archives.

Its time for ASD again. ASD is one of the largest and most important wholesale trade shows for eBay and Amazon Sellers. ASD is held twice a year in Las Vegas - March and August.

The August show dates are July 31-August 3 at the Las Vegas Convention Center. Click here for information, to register and to find great discounted hotel deals. In addition to thousands of wholesale vendors, there are some great educational seminars. This is one show you do not want to miss - and August is a great month to place orders for the holiday selling season.

Amazon now funds not-received claims on orders shipped via Shipping Services

In effect since May 1, 2016, if you've shipped an order using a label purchased from Shipping Services and your buyer claims they didn't receive their order and files an A-to-z claim, Amazon will cover that claim. In fact, you won't receive a notification about it and your Order Defect Rate will not be affected. Learn more about Order Not Received Claims.

In addition to helping you build feedback quickly, Feedback Five also now helps you ask for reviews (This is legal with Amazon, as long as you ask for an honest review and donít offer anything in return). Here is a link to read all about Feedback Five.

The Veeco Blog has published a great post on 18 ways to clear out slow moving inventory (its free and you don't have to register to read it). Here is a link to the post .

If you live in Canada and sell clothing, there is a huge wholesale apparel trade show coming up in August. Here is a link to read about it and register.

Amazon is creating their own Private Label brand - Amazon Basics. Here is a great free article about that from Jungle Scout - Amazon Basics - a blessing or a curse.

Lets get started with this monthís articles:


1. Managing Risk in Your eBay and/or Amazon Business

All businesses have risk, but there are some special risks that online sellers face on a daily basis.

The biggest risks come when you are first starting out, and these should affect major decisions you make.

The single biggest risk I see new sellers making is putting all their financial eggs in one basket. They spend months trying to find that one or two special products with a good sales rank and high profits and put all their funds into those one or two products. Then they discover that others see how well they are doing, and suddenly they have dozens of competitors jumping on the same item and driving down prices.

If you do online or retail arbitrage, there is a huge risk you might buy a product that you don't know is restricted. Make sure you are familiar with all of the restricted brands on Amazon. Amazon does not publish the full list, but here is an article that list most of the brands.

Amazon also has an extensive list of restricted products - many that are restricted altogether and many that you can sell with permission. Here is the page (you must be logged into Seller Central to see this page) that lists the restricted products.

A list of restricted products on eBay is harder to find, but here is a page where you can start from.

Cash Flow and Credit - The formula for getting more sales on both eBay and Amazon is simply to have more products for sale. Simply put - the greater number of product SKUs you have listed, the more you will sell on a daily, weekly or monthly basis. Recently Karen and I decided to scale back out business to have more personal time. I used to have about 1000 SKUs on Amazon and about 500 on eBay. At that point we were selling about 35 to 40 items a day between the two sites. Recently we scaled back to about ½ of that and just like that, our daily sales dropped exactly in half.

The key to having lots of SKUs is you need the cash to buy product. This is where cash flow and credit come in. If you don't manage your cash flow. You will not have enough money to buy stock to sell. What many sellers in this situation do is borrow money either through Amazon lending or credit cards.

Being too much in debt is dangerous. For example, what would happen if you borrowed a lot of money and then for some reason your account on eBay was restricted, or your Amazon account was suspended. This can happen. There are so many rules and policies on both sites that it is easy to screw up and violate one unintentionally and it can be difficult to get reinstated. Even if you do get reinstated, it can take a long time, and how would you make payments during this time.

Learn and Follow the Rules - That last item I mentioned brings me to this one. As I said, its easy to get your account restricted or suspended. This is why its important to learn and follow the rules. The biggest issue is probably feedback, so make sure you always deliver great service so as not to endanger your feedback score.


2. Is the Retail Industry Telling Us Something About the Upcoming Economy?

We all know that Wall Street is doing well, and even the beaten down oil industry is starting to recover, but consumers are just not spending money, and consumers make up 70% of the US economy. The simple fact is that when consumers stop spending money it can warn of an upcoming recession. Although most of the damage to the retail industry has been confined to traditional brick and mortar stores and big chains -and online sales have actually been increasing, it could just be a matter of time until it spills over into our industry as well.

The big issue is gasoline prices are at a 4-year low which puts a lot more money in consumer's pockets, but consumers are just not spending the money. Look at some of the recent carnage in the retail industry.

Just look at the list of retailers who have missed sales or earnings targets, or warned about future weakness: Kohl's (KSS), Target (TGT), Gap (GPS), Macy's (M), DSW (DSW), Tiffany & Co. (TIF), Fossil Group (FOSL), Nordstrom (JWN), Best Buy (BBY), L Brands (LB), and Express (EXPR).

In addition, Quiksilver, Pacific Sunwear, Aeropostale, and Sports Authority have all filed for bankruptcy. Sports Authority is liquidating its merchandise, and closing all of its 460 locations, over the next few weeks. (This may create some great opportunities for Retail Arbitrage sellers over the next few weeks if you live near one off them).

It seems that consumers are so worried about the economy, they are deciding to save, and sit on their money, rather than spend it on consumer goods.

Although both eBay, Amazon and other online sellers reported higher sales in the last quarter, I have notice my sales were much lower in the second quarter than the first. Of course, part of this is the normal summer slowdown as more people spend time outside and taking vacations -but, when I compare this summer to the same period last year -I am down almost 15% - so its possible the spillover is already affecting us -just not as fast as the big chain stores.

The bottom line (I have always hated that phrase, but it applies here), is we just have to wait and see. In the meantime, the best strategy sellers can apply is to get rid of your underperforming inventory and put your money into products that are selling profitably.

Not all the news is bad however. Personal income and spending data are looking better. Income rose 0.4% in April, while spending increased 1%. That was on of the the strongest rises in spending since August 2009, though it followed lousy figures in the first quarter and was at odds with several retailers.

The news on home prices was also not bad. Prices in 20 top metropolitan areas rose 5.4% from a last year in March. That's down from appreciation rates we were seeing in late 2015, but slightly above forecasts. So maybe things will not get that bad.


3. Before Lowering Prices, Check Matching Competitorís Feedback Account Metrics and Selling Status

I have several products where I have stiff pricing competition from other sellers. But when I looked at the seller's accounts, I noticed that their feedback scores were often as low as 90%. Whereas mine are at 100%.

Amazon usually puts the lowest price seller in the buy box, but not if their account metrics are poor. So I go through my listings and when I see these poor sellers undercutting my pricing, I raise my price -and in almost every case my listing stays in the buy box.

So what you want to do is look at all the competitive sellers and check their feedback scores. If they are much lower than yours (and yours should be at least 98% or higher), then go ahead and raise your price. Wait at least 24 hours and go back and check the buy box and over 90% of the time, you will be there -even with your higher price.

The other factor is FBA. Karen and I are 100% FBA sellers. We no longer sell any Merchant Fulfilled (MF) products. When I look at my competitive listings I usually find it's the MF sellers who are undercutting me. The other thing I tend to notice is that although one or two other FBA sellers may be under pricing me, their prices are usually higher than the MF sellers. So what I do in that case is match the price of the lowest price FBA seller which usually gives me a boost over the MF sellers.

Remember that Amazon has about 60 million Prime members. These are people who get free 2-day shipping on all their orders. Many of these members check the Prime Only box when they search on Amazon. When that happens they only see the prime eligible products which are products that are in FBA, and MF sellers will not even appear in the search.

The other factor I have noticed on Amazon is the search engine tends to favor FBA items regardless of the price. For some reason, I often find myself in the buy box at a slightly higher price just because I am FBA. I honestly don't know why that is, but I see it all the time.

Amazon used to have what they called the "2% rule." If a product's price was within 2% off a competitor -Amazon considered it to be essentially the same price and they would rotate those sellers into and out of the buy box. But, they dropped that rule about 2 years ago. Amazon still has a percent pricing rule but they are keeping it a secret. Nevertheless, I find I can raise my price at least 0.5% above another seller and still share (rotate) the buy box. So I suspect the level is somewhere around there.

This has also been true on products where I compete with Amazon. If I see Amazon selling an item for $17.69 and I set my price at $17.77, this does not seem to make Amazon trigger a lower price and they allow me to rotate into and out of the buy box with them.


4. New Wholesale Sources for eBay and Amazon Sellers

Remember, as always, many of these websites are retail, but when you see that use the contact form to ask for wholesale resale information of look on the website for a link to their wholesale registration.

Hot Leathers Wholesales Motorcycle Apparel. Known for their large selection of motorcycle merchandise for over 30 years, Hot Leathers is one of America's top 50 volume screen printers to do custom work. The website is retail, but if you scroll to the bottom of the page there is a wholesale signup line.

Cowboy Tough sells a large line of cowboy and other western products.

Hanesbrands Inc. offers many brands like Bali, Hanes, Playtex, Champion, and Duofold.

Sock Wholesalers offers a full line of MADE IN THE USA socks including crew, tube, quarter, lowcut, dress, diabetic, designer and more!

Grey Eagle Trader specializes in selling knives and swords in addition to a wide variety of other merchandise. All items will always be discounted as much as 50% or more off of suggested retail. New products and categories added every week.

The Rag Company sells microfiber cleaning products for janitorial, household, auto detailing, spa and personal care.

Vertex Airsoft distributes wholesale Airsoft. Vertex Airsoft offers an extensive line of wholesale Airsoft guns and accessories.

Best Balms Specializes in All Natural Pain Relief Balms & Rubs for all types of Sports and Health Needs.

Couver Corporation sells Wholesale sports headbands, athletic wristbands (terry sweatbands) and socks.

The Jar Store sells beautiful glass jars, waxes and fragrance oils. Great selection by the case, half or full pallet. Good supplies for candles.

Keystone Candle wholesales candles and accessories for home décor, along with many unique gift ideas, candles for baby showers and wedding favors, plus many types of candle holders. They also sell reed diffusers, reed diffuser supplies, and other flameless air fresheners.

O3 USA offers backpacks, luggage and headwear for children.

Pyramid Air Guns sells air guns, BB guns, pellet guns, air rifles, and airsoft guns from Crossman, Gamo, Walther, Beeman, Webley & Scott, Air Arms, Beretta, Daisy, Colt, RWS and many others.

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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