Managing and Controlling Amazon FBA Storage Fees
The eBay & Amazon Seller's News ~ April 2018 ~ Volume 19, Issue No. 7
Tips, Tools, News and Wholesale Resources for eBay and Amazon Sellers
I mentioned my testimonial contest in the last issue, but we learned there may have been a problem with the form. So, here is the information again:
Testimonial Contest: Win a $100 Amazon Gift Card!
The last time I did this was about 3 years ago. I get a lot of positive mentions in my email from those of you who have bought my courses, but many of them are now somewhat out-of-date, so I am looking for some fresh testimonials. Therefore, I have decided to run another testimonial contest. You can refer to a product you purchased or how useful this newsletter is to you.
Here is what I am looking for:
Prizes: The best testimonial (in the judgment of our coaching staff), will win a $100 Amazon Gift Card. Everyone who enters will go into a drawing for a $50 Amazon Gift Card. I will announce the winners in the May 22nd newsletter, and the winners will get an email from me before that.
My friend, Jordan Malik, is having a 50% Off Spring sale on his most popular 3 Amazon/eBay seller tools : Cleer Platinum, Intellizon and Check Permission. And, they all come with Jordan's No-hassle, 30-day guarantee.
I haven't tried his Intellizon Spy tool, but I use Cleer Platinum and Check Permission and they work great. Click hear to read about the sale .
Amazon is closing buyer accounts for review abuse. Now if they would only cancel buyer accounts for abusing the return policy such as returning unopened items as "defective," so us sellers have to pay the return shipping.
In the News: If you have been following the news about Facebook, they you know they are under fire for selling their user data without permission. Well, earlier this week, Facebook announced major changes to its privacy settings. Apparently, they're going to start having some.
And in a TV interview, Facebook Chief Operating Officer, Sheryl Sandberg said that users could opt out of the targeted advertising program, but they would have to pay a fee.
eBay Announced their next Seller Conference. Here is the announcement:
Should I sell on eBay or Amazon?
There are lots of factors that come into play when deciding which Marketplace(s) you should sell your products on. Audience, fees, marketing capabilities… the list goes on.
But what about the most important metric, which one will make you the most PROFIT? Find out in this Amazon vs. Ebay showdown!
A new free report by Jungle Scout - Selling on Amazon vs eBay - Which One Is More Profitable? answers that question
There are dozens of free groups on Facebook related to selling online, or specifically selling on eBay, Etsy or Amazon. In general, many people in these groups are happy to share advice and answers. But, remember: Free advice is worth what you paid for it. So don't take every post as Gospel -take the trouble to check it out. You can learn a lot, and get some really good advice in these groups, but don't assume just because you read it on Facebook, it is 100% true.
To find these groups, simply type the name of the site and the word groups into the Facebook search bar, such as Amazon groups, eBay Groups, Etsy groups and so on.
By the way (or should I say BTW?), I am working on setting up a Facebook Group. Watch this newsletter for an announcement.
Has your account been threatened with suspension or have you received threatening letters from other sellers? If so, you need to read this story in the eCommerceBytes blog.
Letís get started with our in-depth articles:
Starting April 1, 2018, monthly inventory storage fees will be increased by $0.05 per cubic foot for standard-size and oversize items. Let's take a look at the fee changes first (Charts by Amazon®).
This change will first be reflected in May 2018 charges for storage, that occurs in April 2018. Long Term Storage fees will also increase - These are much more dramatic (see chart below).
Regular storage fees can add up quickly and start eating into your margin. So it pays to stay on top of them. It costs 50¢ per item to do a removal order. So when looking at your inventory; If you have excess inventory it pays to calculate the cost of leaving it at Amazon, or performing a removal order. (Of course, since storage fees more than triple from October through December, you have to take the time of year into account).
(TIP: I almost never remove food items (unless we plan to eat them ourselves), because they are difficult to send back. I usually tell Amazon to dispose of them if they are unsellable).
Let's take an example. Say you have a small kitchen gadget in a box that is 4 x 4 x 4 inches. That is 64 cubic inches (.037 cubic feet). So, most of the year, Amazon is charging you 26¢ per month. But in October that jumps up to 89¢ per month.
We tend to sell so much from October thru December (even slow-moving items), that I don't worry that much. So, lets look at the rest of the year.
Assume you sent 10 of those to FBA. They sell -but not that quickly. After 3 months you still have 6 left and the Long Term Storage Fee (LTSF) period is coming up soon. So, you want to reduce your normal storage fee of 26¢/month. (Since you have 6 in stock, that is $1.56/month total). Now you have a decision to make.
The first thing I look at is my margin. If I am only making $2 or $3 on each item, I am going to look at removing them quickly, and will most-likely no longer carry the item. But, if I were making $12 to $15 on each item, I may want to leave them until 31-days before the Long Term Storage Fee (LTSF) kicks in.
Why 31-days? If I remove an item within 30-days of the LTSF date, then I cannot replenish that inventory for at least 6 months. This way, I could remove 4 or 5 to keep both my regular and LTSF low, but as they sold off, I could still replenish my inventory as needed. (Note: There is some disagreement about this. But this reflects my personal experience. Items I removed from FBA less than 30 days before the LTSF date were restricted when I tried to send them in before the 6-month day).
(Tip - One thing I often do is remove all but one each of an item. So, if I had a quantity of 7 at FBA, I would remove 6. Again, I would do that more than 30-days before the LTSF date, so I could replenish products as needed)
Another strategy with slower moving products is to lower the price -or set up a Coupon. Doing this will usually (not always) increase the inventory turnover speed. (This seems to work on about ½ of my products).
Advertising is another way to help turn over slow-moving inventory. As many of you know, I am not a fan of Amazon Sponsored Ads, but I am coming around on that. Stay tuned to this newsletter for more info soon.
If an item is really moving slow, I often just toss it, and write off the cost. However, since Christmas, I tried something different. Usually when I write off merchandise, I donate it to a thrift shop and take a tax deduction. But earlier this year, an indoor flea market opened just on the edge of town.
I pulled about 40 separate items (SKUs) out of FBA before the LTSF date in February. Some of them had quantities of more than one, so I had about 140 items all together. I paid $25 for a table at the flea market and sold about 120 items at slightly over my wholesale cost. That left me with about 20 items to donate to my local thrift shop. OK - I didn't really make any money, but I did recover about $700 in costs that I was able to recycle back into faster-moving inventory.
As I promised earlier, lets look at the changes (increases) in LTSFs.
It used to be you could check your calendar every six months, but now with a rolling progression, you need to be on top of this constantly. And remember, to preserve the ability to replenish items, you need to do a removal order at least 31-days (32 or 33 days is safer) before the item hits the 181-day mark which occurs on the 15th of every month (Starting in September).
Let's Face it: Anyone who tells you that selling online is easy, is full of you know what. You can make a lot of money in this business, but you have to work at it. Over the years, my wife and I have been pretty successful at this, so here are some of the rules, habits and practices we follow:
There are more good habits to get into such as, get enough sleep and exercise, get up early and get to work and surround yourself with people who inspire you or you can learn from. So if you are struggling to start or to grow, try developing these habits and put these techniques in place.
The following article is a guest post by Erin Alexander from BULQ.
I have written about Bulq before. They are a prominent supplier to eBay and Amazon sellers for liquidation and surplus merchandise. What separates them from other Liquidation sellers is their focus on online resellers and ability to supply small lots in reasonable sizes.
Investments and start-up costs
Online reselling, just like any business, requires certain essential upfront costs and investments. Regardless of the scale of your reselling business, certain basic commitments can mean the difference between a thriving business, and one that's dragging behind the competition.
After speaking to successful resellers of all size and scale, we've compiled a list of some of the key investments you'll need to consider when launching your reselling business.
What Investments Are Needed?
One of the most compelling points to online selling is convenience. The majority of resellers work right out of their home. For them, an in-home office means not having to invest in external office space and other pricy overhead costs. However, working from home also means that you'll need to stock up on a few essential supplies.
As you're getting started, it's important to recognize early on that the startup costs of supplies can add up and potentially affect overall profit margins. Because so many of these tools and supplies are one-time purchases, these costs will likely decrease over time. However, for those few ongoing costs, there are always ways to be resourceful and scrappy when sourcing supplies. For instance, consider sourcing packing supplies from offices or retails stores that are throwing excess materials away.
Reselling Time Commitments
In addition to the physical supplies you'll need, reselling can also call for a significant time investment, depending on the scale of your business. Here's a breakdown of how resellers often spend their time:
One of the benefits of being a reseller is that you largely get to craft your own career: you're the one who ultimately decides how much time and money to spend on the job. And while it can take some time to meet your goals, know that success comes in many forms. There are successful resellers out there who do this as a full-time job and others who only dabble on the side. Regardless of your approach, know that with some time and practical know-how, you too can make reselling work for you!
The Bulq Blog is a great resource of information for eBay & Amazon sellers. If you are interested in reading more about souring and liquidation, check out the BULQ blog for helpful resources!
My master Amazon training course, The Complete Amazon Marketing System includes detailed training on creating and selling product bundles. Plus, you get a special free bonus report on the topic. Let's look at the way I use to determine what makes a good bundle.
First, look at one of the products I sell (This item is also carried by Amazon at the same price, but so far they have been rotating me into the buy box):
This item has a sales rank of around 9,400 in Kitchen and Dining which puts it in the top 1% of the category, so it's a quick seller. If you go the the listing page, and scroll down a bit, you will see the following:
Notice where it says: Customers who bought this item also bought you will see several products displayed from left to right: Another RSVP Product, VEG-3 Rotary Food Mill, a set of three vegetable peelers, a Garlic Press, a fat separator cup and a hanging Oven Thermometer. Since buyers who bought the potato ricer, also bought these products, they all have bundle potential. However, there is one more suggestion from Amazon on that page. If you look, you will also see an image that says Frequently bought together.
You might think, this is the one to focus on, and technically you would be correct, but there can be other factors. One of the most important factors is: Do you have a wholesale source for the product? Note, the product you source does not have to be the exact same product and brand, but the product should be very similar and good quality.
In my case, since I already source from RSVP, it would make sense for me to sell the first product in the Customers who bought this item also bought list, which is the RSVP, Veg-3 Rotary Food Mill
Note: Please don't contact RSVP as a source because they were overloaded with online sellers and no longer accept those wholesale accounts.
I also have a source for vegetable peelers and am looking into those as a potential second bundle, but for now it's just easier to go with the Rotary Food Mill. I just placed an order for those and am awaiting shipment.
Other Bundle Issues to be aware of:
I have found that bundling is highly profitable, and out of over 50 bundles I have created, only one of them failed to sell. As I mentioned at the beginning of this article, I give complete training on creating and selling bundles in The Complete Amazon Marketing System .
A few years ago, consignment selling on eBay was all the rage. It used to be that eBay was the only place to sell on consignment, but sellers are now finding success on Amazon as well. In fact, eBay had a special program called eBay Trading Assistants, but like many things at eBay which actually worked, they killed the program a few years ago. Despite that, consignment selling is still very much alive and doing well -not only on eBay, but on other sites, such as Amazon as well.
I like to call consignment selling the perfect online business. One of the biggest problems online sellers face, is finding merchandise to sell at a profit. Consignment selling solves that problem.
People give you things to sell. You sell the goods, take a commission and then pay the consigner for the item. Except for eBay or Amazon fees, there is no payment on your part until the item sells, and you collect the money from the buyer.
My book, How To Start and Run an Online Consignment Business comes with complete instructions including sample letters that show you how to contact lawyers and business people, as well as actual consignment contracts you can simply insert your own name into.
However, there are some pitfalls to the business. One of the largest is, the risk of not delivering the product when it sells. A few months ago a lady sold some vintage stereo viewers for a friend. After they sold, the friend reneged on the deal and refused to hand over the goods. This can really mess up your feedback and endanger your account.
That's why I have a strict policy of never selling an item on consignment unless it is in my possession!!!
Another thing that happens to consignment sellers is they take in items that will not sell for very much. You do all the work and end up making two or three dollars. I don't do that much consignment selling these days, but when I was active, my policy was to only accept items on consignment that would sell for at least $50. Later, I raised that to $100. (An exception to this is if a retailer gave me a large lot of new merchandise to sell).
Even with those high values, I never had trouble finding goods to sell. So one of the lessons you have to learn if you are going to sell on consignment is how to say, "No!" Believe me, trying to sell unsalable or low-value items, is nothing more than a waste of time.
Another risk is taking in stolen merchandise. I once had a teenage boy bring me a Bose stereo that was missing most of the cables. Bose Stereo systems are very high-end and expensive for someone so young to own, so I was suspicious.
I explained the only way I work is, I make a copy of his driver's license, and when the item sells, I mail a check to the name and address on the driver's license. When I told him that, he countered with saying he "didn't want to wait that long, so would I just be willing to give him $100 for the equipment?" Since the set was worth closer to $900, I just said no thank you and he left. As he drove away I wrote down his license plate number, called our local police and reported the incident. I never heard if anything came of it, but the last thing I wanted was the police coming to my home because I sold stolen merchandise.
If you really want to build a big consignment business, then you want to work with businesses instead of individual consumers. Some examples are working with stores to reduce their slow selling merchandise, working with bankruptcy attorneys, and charities that are looking to raise money. The B2B side of the consignment business is far more profitable than working with individual consumers, although a lot of small sellers prefer to do just that as they don't want to get involved in a big business.
I still believe eBay is the best place to sell used or vintage goods, but many consignment sellers who work with bankrupt businesses or stores liquidating merchandise, are listing the new unopened merchandise on Amazon.
Remember, How To Start and Run an Online Consignment Business comes with complete instructions, including sample letters that show you how to contact lawyers and business people, as well as actual consignment contracts you can simply insert your own name into.
Parade Street Products wholesales fashion accessories, home goods, impulse items, and gift items.
Luce Skin Care sells a silicone facial cleansing and anti-aging device.
Welburn Candles Pvt. Ltd. makes and sells all kinds of wax candles including scented and unscented tea lights, votives, pillars, jars, tins, religious candles, floaters and multipurpose candles. They also offer a Private Labeling service for their products.
BugOffScreen sells a very clever magnetic screen door that works almost anywhere and the have a drop ship program and a reseller packaging program.
Unilution Inc. is a direct importer and wholesaler for electronic gadgets including; digital cameras, electronic Sudoku games, Bluetooth headsets, and more.
Hanners Wholesale sells wholesale tools, apparel, ATVs, motorcycles, and more! They sell all over the country, but if you live in the South, they are located in located in Southeast Missouri and welcome dropins.
Koehler Home Décor is a wholesale resource for home decor accessories gifts, bath & body, candles, Christian, collectibles, general merchandise, licensed products, patio & garden, seasonal decor, shabby chic & more! No minimum size order.
Shine Company, Inc . sells solid wood outdoor furniture and garden accessories.
Brighton is a women's fashion accessory company that sells an extensive line of stylish products to accessorize women from head to toe.
Copper Mugs sells a complete line of copper Moscow Mule Mugs in several designs.
Inspire Active Wear sells active wear for women made from recycled plastic bottles. 100% USA Made.
Nashell Jewelry sells a wide line of affordable fashion jewelry and offers free shipping on orders over $150.
Style Asia Inc. is a wholesale distributor for Tailgating accessories, housewares, electronics, gifts, novelties and promotional products.
Artful Animalz sells a wide range of pet-inspired graphics and animal-themed gift items, including greeting cards, stamps, shoes, apparel and more, perfect for passionate pet owners and animal lovers of all kinds, for any occasion.
Thatís all for now. See you again in about two weeks.
P.S. If you missed the last issue, click here to read it.
© 1999- Harry McGrath, Inc., DBA Skip McGrath, Auction Seller's Resource and Vision-One Marketing. All Rights Reserved.
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