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How To Source Bulk Liquidation Products

The eBay & Amazon Seller's News, April 27, 2015 - Volume 15, Issue No. 8

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. How To Source Bulk Liquidation Products
  2. eBay & Amazon Release Sales and Profits
  3. How to Build Better Feedback on Amazon
  4. Niche of The Month – Vintage iPods
  5. New Wholesale Sources for eBay and Amazon Sellers

"Successful entrepreneurs are givers and not takers of positive energy." ~ Anonymous


Musings

Unless you have spent the last couple years wandering around Tibet, you know that one of the hottest business strategies for eBay and Amazon is Private Labelling. Ryan Reger has teamed up with Jenni Hunt and they have recently launched a new private label-mentoring program - "Private Label The Easy Way" Mentoring Program.

Ryan and Jenni have created a complete mentoring program that will not only help you develop your own Private Label product... but will enable you to apply the principles over and over again. There are other PL training programs out there, but with them you are pretty much on your own.

The "Private Label The Easy Way" Mentoring Program opens on May 1st and the lessons start on May 15th.


Here is a link to a great article - 26 Common Thrift Store Finds You Can Flip to Make Money. Many of these are obvious, but some of them will surprise you.


If you are an FBA Seller you probably go through a lot of polybags. I usually buy them from Uline or Bubblefast but I recently came across a wholesale supplier - The P.K. Bagai Co. They don't have a website, but you can call them for details and a price list at 847-679-0024.

They sell their bags in lots of 1000 but that is actually a moneymaking opportunity.

1000 is a lot of bags, so what I do is order 1000 at a time and break them up into lots of 100 bags each. I keep one or two lots for my own use and sell the rest on Amazon at about a 2.5X markup over what I paid for the bags. I make just enough money to end up with free bags and sometimes even a small profit.


I recently uploaded a great article written by the folks at Terapeak. It is entitled - What is Nostalgia Worth? Vintage Goods a $1.1 Billion Market on eBay. I originally intended it to be here in the newsletter but it is just a bit too long so you can read in on our free articles page at this link.


Etsy went public last week at $15 a share. The share price climbed to over $30 a share the first day but has since settled back to the $25 range. It will be interesting to see how Etsy changes now they are public and their corporate decisions are affected by Wall Street Investor pressure.


China Sourcing Trip - We are in the final phase of planning and gathering costs and I expect to have the complete details and announcement ready by the next issue of this newsletter in early May. There has been one change. Originally we were talking about arriving in Hong Kong on October 21st. That is now changed to October 23rd to better accommodate the Canton Fair dates. The trip will last 9 days overall.

The trip will include all hotel expenses, ground transportation, Fair registration, breakfast every day, several dinners, a visit to two factories and one day of educational seminars by the speakers. Both hotels in Hong Kong and Guangzhou (formerly known as Canton and a 2-hour train ride from Hong Kong) will be American style 4-star hotels. So many people will arrive from different locations and others have airline points that we decided against a charter airfare deal which would have required everyone to leave from one city and travel on the same flight.

The trip is limited to 20 people total (Including spouses or partners). There will be a discount for spouses or partners as long as you share the same hotel room.

We will try our best to accommodate any dietary restrictions but realize that is harder to do in China than here in the US. Same with any disabilities; Facilities for disabled people in Hong Kong and China are not as common as here in the United States and Europe.

Several people have emailed us with interest in the trip and those folks will get first crack at signing up. So if you are interested in joining us please use the Contact Us form to email us with the words "China Trip" in the email.

Once we get 20 people signed up we will have a short waiting list in the event anyone cancels.


I have mentioned our membership group WWW.onlinesellingcoach.com in this newsletter several times. One of the benefits of membership is our private Facebook group where members can post questions that are answered by our personal coaches and myself. This group replaced the original forum and has been quite active. So if you are selling on eBay and/or Amazon this can be a great resource. And members get significant on any of the books sold here on SkipMcGrath.com


Lets get started with this month’s articles:

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1. How To Source Bulk Liquidation Products

Today's first article is a guest article by Rob Cyr. Rob publishes the most successful guide to sourcing liquidation products - The 2015 Liquidators Guide. This year's guide is bigger and better than ever and this year's guide includes two new bonus items - Bonus #1 Manifest Analysis Tutorial...Value $19.00 and Bonus #2 Brand Protection Analysis...Value $19.00.

If you want to learn how to source the liquidation marketplace Rob is the go-to guy and I strongly endorse The 2015 Liquidators Guide. And like almost everything I recommend it comes with a money-back guarantee if you are not happy with it.

Sourcing Bulk Liquidations Within the Supply Chain - by Rob Cyr

If you're constantly on the hunt trying to purchase name brand inventory for eBay or Amazon sales, I'd like to pose a question to you: Do you fully understand the retail supply chain?

I'm talking about the life cycle of a retail product from birth (manufacturing process) to death (into your shopping cart). If you thought the end of the line for a retail product was your home, you would be incorrect to some extent.

Let's break this down a bit further. All new retail goods found within Wal-Mart, Costco, Macy's, Sam's Club, Harbor Freight, and so on start out as raw materials brought together during the manufacturing process. Once an item has been assembled it gets carted off to a distributor or distribution center where it might further reach a wholesaler; finally reaching a store shelf after a long process known within the retail supply chain as forward logistics.

Forward logistics describes every step that happens to a retail product before you and I buy it off a store shelf. Creation - distribution - retail merchandising - followed by consumer purchase.

If we stopped with the explanation of forward logistics you wouldn't get a full picture of the retail supply chain because there is another side called Reverse Logistics.

Reverse logistics describes the steps a retail item goes through after it has been brought back to its point of purchase. You know this process all too well: the jeans that didn't fit; or the coffee maker that was too noisy; or the blender that broke after your 24-hour margarita party last weekend. (Hey, by the way, why didn't I get an invite?)

When you and I return merchandise back to the store the process of reverse logistics begins. Big box retailers are flooded with consumer items that have been returned for refund and/or store credit. And, it's not just items that have been returned that go through the reverse cycle because retailers also face another problem with excess, unsold merchandise. This unsold stock is referred to as MOS (marked out of stock) or shelf pull items.

Every big box store in the country is sitting on a mound of retail customer returns, along with merchandise that did not sell. What do they do with all of this inventory? They liquidate it to recoup lost revenue. Let me repeat- they liquidate it for pennies on the original dollar!

Wal-Mart, Shopko, Target, Costco, Sam's Club, JC Penny's, Rite Aid, CVS, Harbor Freight, Big 5, Amazon.com, along with hundreds of other retailers use a third party to assist with the bulk liquidation process. Within the industry these third party companies are known as Reverse Logistics Processors. These large intermediaries take retail un-sellables and liquidate to small and mid-size resellers.

Customer returns, shelf pulls, shelf resets, and overstock goods are now available to the eBay and Amazon reseller, along with flea market vendors, discount store retailers, exporters and anyone else who wants to buy name brand goods in bulk, at drastically reduced pricing.

The reverse logistics industry is one of the few ways for small resellers to get their hands on big name brand products without meeting enormous minimum purchase requirements often in place by manufacturers and distributors. When you're researching competitors on eBay or Amazon trying to figure out how and where they sourced their inventory the pieces of the puzzle should now be falling into place.

Many of your competitors already know about buying liquidation merchandise within the reverse logistics industry (aka: the retail secondary market).

Here are a few considerations to review when looking into the secondary market for name brand bulk inventory purchases:

Closeouts or Overstocks - merchandise condition is new, but only available in limited quantities.

MOS / Shelf Pulls - may exhibit box or packaging damage; In the case of clothing, items may have been tried on within the store. This category of liquidation merchandise is considered a safer bet when compared to potentially damaged customer returned items.

Customer Returns - can be damaged and/or missing pieces. Every load of customer returns will contain various percentages of sellable versus unsellable merchandise. The profit potential from sellable items usually outweighs the throw away portion of each load.

Access to bulk name brand merchandise can provide excellent profit potential for your eBay or Amazon business, so make sure to check out the secondary market as a source for fast selling brand name merchandise!

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2. eBay & Amazon Release Sales and Profits

Let's look at eBay first. It looks like eBay is continuing to struggle. eBay released quarterly financial results a few days ago, and it still shows weakness in the eBay marketplace performance. CEO John Donahoe blames it on the rising dollar, but if you sell on eBay, I am sure you have noticed the reduced performance. So, although the dollar can be blamed for part of it -the real truth is the eBay marketplace is still struggling.

Here is a look at this quarter's performance compared to last year

eBay Marketplace

2015

2014

Gross Merchandise Volume (Sales)

$20.195 Billion

$20.545 Billion

Net Revenue

$ 2.069 Billion

$2.155 Billion

That is a drop of $350 Million in Sales and $86 Million in net revenue. Conversely the PayPal segment of eBay had highly increased revenue and profits. This has been true for the past several years - as PayPal has been responsible for most of eBay, Inc's. profit growth.

Here is what eBay said about Marketplace revenue during the 1st Quarter:

eBay Marketplaces gross merchandise volume (GMV) declined 2%, with the strengthening dollar significantly impacting results. In the U.S., GMV was up 2%, while International volume was down 4%, producing $2.1 billion in revenue. On a fx-neutral basis, International GMV was up 7% and global GMV was up 5%. Marketplaces gained 2.1 million new buyers in the quarter, up 8% to 157 million.

While active buyer growth continued to decline on a rolling 12-month basis, we are seeing signs that our business is stabilizing, with both three-month active buyer growth and FX neutral GMV growth flat at 5% on a sequential basis. Sold item growth improved sequentially to 9%. We are continuing to invest to improve buyer and seller experiences and provide consistency across devices while building platform capability to improve traffic.

As you may know eBay plans to spin PayPal off later this year, so its going to be interesting to see how eBay does without that cash flow.

So how did Amazon do?

Amazon's net sales increased 15% to $22.72 billion in the first quarter, compared with $19.74 billion in first quarter 2014. Excluding the $1.3 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 22% compared to first quarter 2014.

Operating income increased 74% to $255 million in the first quarter, compared with operating income of $146 million in first quarter 2014.

But Amazon still saw a net loss of $57 million in the first quarter. That may seem strange that Amazon had a loss with the excellent growth in sales and income, but there is a reason. Amazon CEO, Jeff Bezos explained two years ago that he expected losses for the next few years because Amazon is investing all their profits into expanding warehouse distribution, which they have been doing. The number of U.S. Amazon warehouses has doubled in the last three years and overseas warehouses have increased by 50%.

It is unclear how long Amazon is going to keep doing this but apparently they are expecting more losses this year. Here is their forecast for the next quarter:

Second Quarter 2015 Guidance

Net sales are expected to be between $20.6 billion and $22.8 billion, or to grow between 7% and 18% compared with second quarter 2014.

Operating income (loss) is expected to be between $(500) million and $50 million, compared to $(15) million in second quarter 2014.

So even with their losses, Amazon continues to outpace eBay in sales and market share.

[top]

3. How to Build Better Feedback on Amazon

If you sell on Amazon and used to sell (or still sell) on eBay then you know that Amazon sellers leave feedback much less often than eBay sellers.

It is not uncommon for sellers to only get feedback on one or two of their transactions out of every one hundred. But it's important to build up your total feedback score. Amazon considers feedback to be a very important metric and those account metrics are one of the factors Amazon used when deciding who gets the buy box.

The buy box normally goes to the lowest price seller but I have seen situations where my competitors are lower priced than me but, because they have a poor feedback score I get the buy box at the higher price.

Also low feedback scores that last a long time can threaten your account. Amazon has cancelled accounts of those with low feedback scores over a period of a year.

The problem with having too few feedbacks is if you do get a negative or neutral and you have a low total score that can really look bad. Just think -if your total feedback score is 20 and you get just one negative feedback you rating is now 95%. But if your total score is 100 and you get a bad feedback, then your score is better at 99%.

There are two things you want to do to build a good feedback score on Amazon:

  1. Increase the total number of feedbacks
  2. Work to erase negative feedbacks when they occur

The best way to increase your feedback on Amazon is to ask for it. If you only have a few sales a day you can do this manually by emailing each customer. But if you are selling dozens or more items a day this can be time consuming. There are several services out there that have an automated system to send an email to each customer. The two I recommend are Feedback Genius and FeedbackFive. I have used both services, but I currently use Feedback Genius. Before I started using an automated service my total feedback on Amazon after 5 years of selling was 80. Here is a look at my feedback score today:

If you look at the last column you will see that I had a lot of negatives over the years (2006 to 2015). Unfortunately I didn't pay much attention to negatives and neutrals in my first few years, but since 2012 I have been paying close attention and working hard to eliminate negative and neutral feedbacks, which brings us to number 2. Work to erase negative feedbacks when they occur.

First of all you should know that Amazon will remove a negative or neutral feedback for several reasons. Here is what Amazon says about removing negative feedback:

  1. The feedback includes words commonly understood to be obscene or profane.
  2. The feedback includes seller-specific personally identifiable information, such as e-mail addresses, full names, telephone numbers, etc.
  3. The entire feedback comment is a product review, such as "The Acme Super-Widget lacks the sharpness and speed of the Acme Ultra Widget." However, if the feedback comment is only partly a product review but ALSO contains feedback about the seller's service, such as " Seller's shipping service was very slow, and the Acme Super-Widget lacks the sharpness and speed of the Acme Ultra Widget," then the feedback would NOT be removed.
  4. The entire feedback comment is regarding fulfillment or customer service for an order fulfilled by Amazon. Feedback reviewed and determined to be relating explicitly to fulfillment and customer service for an order fulfilled by Amazon will not be removed, but a line will appear through the rating and the statement, "This item was fulfilled by Amazon, and we take responsibility for this fulfillment experience" will be added.

That said, Amazon.com customers can remove feedback they have left within 60 days from the date the feedback is created. We encourage you to work with buyers to resolve any issues regarding your transactions. A buyer could then remove the feedback if they feel it would be appropriate. Note that pressuring a buyer to remove feedback is a violation of our policies.

If your feedback falls under one of those criteria you can open a support case and ask Amazon to remove the feedback. In my experience the most common negative feedback sellers get when using FBA is number 3. "The entire feedback comment is a product review." These are quite easy to get removed.

Buyers tend to confuse feedback and product reviews. Feedback is completely about the seller's performance and customer service. Comments about a product belong in a product review. This is why Amazon will readily remove these types of comments.

The most common type of merchant fulfilled feedback usually relates to packaging or shipping times. Amazon will not remove these so you will have to contact the customer and work things out.

So what to do when you get a negative?

The first thing I do is contact the buyer. My email includes two things - a sincere apology and an offer to make things right. A few days ago I got a negative from someone who received the incorrect item. This was obviously my fault. I suspect I somehow mislabeled an item when I sent it into FBA. In this case the item was fairly low cost so I offered to refund the item without asking the buyer to return the item.

That may sound like a costly thing to do and I only do it on low cost items, but think about it. What will Amazon charge you for the return shipping? Then you have to recall the item from your inventory. Then you have the cost of sending it back to FBA. Once you pay for all of that any profit you would have made will be gone. So it's just cheaper to do a full refund.

When the feedback involves something more expensive, I do ask the customer to return it and then I send the customer a $10 Amazon gift card by way of apology.

Now here is what is important. Amazon does not permit you to offer something like a refund or a gift card in exchange for them to remove the feedback. If you offer a quid-pro-quo that is a serious policy violation and it will negatively affect your account. So here is what I do.

After I have made the offer and sent the refund or gift card, I send them the following separate email:

Dear Mr. _____________

Once again I am sorry for the poor buyer experience you had with my product. I have tried my best to make this right for you so I was wondering if you would consider removing or changing your feedback.

We are small sellers and poor feedback can really impact our business. If you agree it only takes a minute to do so. Here are the instructions for removing or changing feedback:

Go to http://www.amazon.com/your-account.

Under "Personalization," in the "Community" column, click "Seller Feedback Submitted By You."

A list of all of the feedback left by you will be displayed. Click the "Remove" link next to the feedback would like to remove or change. The comment will come up and you can either remove it or change it.

My wife and I also shop online a lot and I know how frustrating something like this can be, so we would be highly appreciative if you would consider this request.

I would love to tell you that this works 100% of the time, but it doesn't. However, it does work for me about 80% of the time. And that is good enough to really help improve your scores.

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4. Niche of The Month – Vintage iPods

Remember the iPod - Apple's first portable music machine. I bet some of you even have one sitting around the house somewhere. But I bet you did not know how valuable one of those old iPods are to collectors.

Look at a few completed listing that show what they sold for on eBay.

Where to find them?

The first place to look is around your own house if you ever owned one. Next is asking your friends, relatives and neighbors. And then advertise. You can try Craigslist, free throwaway newspapers like the Little Nickel and put up cards in Laundromats and supermarkets or community bulletin boards.

You are probably wondering how much to pay. I suspect most people would be surprised to be offered $20 or $25 for their old iPod and would jump at it. (If it's working). If not working I would try and buy it for $5 or so.

Which ones sell the best? The older first and second generation will bring the most money. And if you have a box that is in good condition that will add quite a bit of value. And of course condition is everything. If the iPod is old and beat up looking or missing the charging cord, you will be lucky to sell for more than a few dollars

But even non-working units will sell as some folks buy them for parts. But expect to get less than $15 which is OK if you can buy one for a buck or two.

Be sure and take good close up photographs of the iPod and all the cords and connectors - the better the photos the more likely you will get higher bids for units in pristine condition.

How about the iPhone? It is still a little early, but if you have an early generation iPhone, you might want to hang onto it as I expect the same thing will happen with those in a year or two.

[top]

5. New Wholesale Sources for eBay and Amazon Sellers

If you are thinking of buying for Mother's Day forget it. You are way too late. But now is the time to think about spring and summer goods and Father's Day.

I don't really know why but for some reason my lower priced fashion jewelry tends to sell quickly in the Spring and Summer months. So I will start with a few of those suppliers.

Remember - a lot of these websites may be retail websites or if they are wholesale you will have to register first to get access to the wholesale pricing. If the website looks like a retail site, just use the contact form to ask for reseller information.

No Monet makes a beautiful line of hand made earrings based on Fairy designs all made in the USA.

The Rose Lady makes a beautiful line of fashion jewelry based on nature designs.

Whitney Howard Designs makes a beautiful line of fashion jewelry - many of them with inspirational sayings on them.

Cool Jewels sells a large line of inexpensive fashion jewelry much of it aimed at teens. Their minimum order is only $200.

Jewel Pop sells a very nice line of sterling silver jewelry that is not too expensive.

Health and Beauty also does fairly well in the summer months. Here are a few listings for H&B products.

Virginia Gift Brands sells some very nice H&B gift sets under the Mika line and others as well.

Farmhouse Fresh is another line of very nice H&B products - most are all natural

Wood Wick makes a really unusual candle that looks more like a hearth flame that actually crackles while it burns. It's a candle that acts like a small fireplace. It is also sold by Virginia Gift Brands mentioned above.

FragranceNet offers wholesale pricing on more than 11,000 genuine Fragrances, Skincare, Hair care, Make-Up, Aromatherapy, Candles and more. Contact them to learn more about their Wholesale and Drop-Ship programs.

Drugstore Products is a wholesale distributor for Health and Beauty Care, including Colgate, Gillette, Lever, Mennen, Dove, Coppertone, Banana Boat, Old Spice, Listerine mouthwash, Oil of Olay, JJ Johnson and Johnson, Neutrogena, Aveeno, razors, Condoms, Shampoos, Deodorants, All Sunblock brands, body wash, HBC, travel sizes.

Let's look at a few other products.

Global Crafts is a cooperative that imports crafts from all over the world from 40 artisan groups in 20 countries.

Duke Imports sells a large line of licensed products mostly bedroom oriented such as sheet, blankets and throws.

B&H Uniforms sells a large line of medical scrubs and uniforms.

Education 2000 sells a large line of educational DVDs on hundreds of subjects as well as a collection of classic movies and older TV Shows.

Douglas Toys sells a very nice line of unusual toys for smaller children and toddlers.

The US Customs and Border Protection Group holds regular auctions for merchandise, vehicles, boats and jewelry -all of it seized goods from smugglers. They run both live and online auctions on a regular basis.

That’s it for now. See you again in a couple of weeks.

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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