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Amazon Announces FBA Fee Changes Coming in February

The eBay & Amazon Seller's News, December 2014 - Volume 14, Issue No. 22

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

In This Issue:

Musings from eBay, Amazon and The World Wide Web

  1. Amazon Announces FBA Fee Changes Coming in February
  2. A New Metric To Determine Your Inventory Turnover Rate
  3. Increase Your Sales With the Power Of Storytelling
  4. It's Been a Year Since I Filed Sales Tax Returns. What Do I do?
  5. New Wholesale Sources for eBay and Amazon Sellers

"Screw it, Let’s do it!" ~ Richard Branson


Musings from eBay, Amazon, and beyond

This is our normal December issue. We usually publish twice monthly, but just once a month in December. So first of all let me take a moment to wish everyone Merry Christmas or Happy Hanukkah, or Happy Holidays whichever suits you best.


It looks like online sales have continued to increase as this has been our best November ever, with our sales almost double last November. And everything is selling. We sell in jewelry, sporting goods, gourmet foods, apparel and home and garden -and every single category is seeing strong sales.

As I have pointed out in earlier issues -one of the big factors in growing your business is growing the number of SKUs you have for sale. Last November we had just over 600 SKUs -this year we have slightly less than 1,000.

We ran out of so many items last year that I thought I learned my lesson and ordered greater quantities this year -but again not enough, as I have about 50 top selling SKUs that I am out of and cannot get supply here and into Amazon in time. So next year I will be ordering both earlier and in greater quantities.


eBay is rolling out one of those features that is so basic that it has one wondering what took it so long to implement. The new optional feature eliminates some of the negative consequences sellers face when they run out of stock on a particular item on multi-quantity Good 'Til Cancelled listings (GTC) Read the full story on eCommerceBytes


eCommercebytes reported that The Wall Street Journal said eBay is positioning its Marketplaces business as a takeover target after next year's breakup with PayPal, with thousands of layoffs being contemplated. Read the full story here


In more news from eBay, they have announced that they will soon be replacing the Top Rated Seller standard with a new program but the name of the program and the details have not been announced yet.

And, Amazon sent out a press release 2 days ago announcing they will soon introduce a best offer program. I am studying up on the consequences of this for sellers and will have an article about it in my next issue.


We still have seats available for our Wholesale Sourcing Seminar in Las Vegas in conjunction with the ASD trade show, but the event is selling out fast. I know that money is tight this time of year, so we have a 3-payment plan to help those of you who may be tight on cash.

The seminar is the Saturday and Sunday before the ASD Wholesale Trade show. So this is a chance to learn wholesale sourcing from four experts -and attend one of the largest wholesale trade shows in the world.

Read all about it at www.wholesalesourcingconference.com.


Lets get started with this month’s articles:

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1. Amazon Announces FBA Fee Changes Coming in February

Here is the happy email I got from Amazon a few days ago. Just what I wanted for Christmas – a fee increase!

We're writing to notify you of next year's changes to Fulfillment by Amazon fees in the U.S. To give you time to plan for these fee changes, they will take effect beginning February 18, 2015, after the holiday selling season.

We are introducing the following updates to our fees:

Fulfillment Fee rate adjustments.

Effective February 18, 2015, we will adjust our Pick & Pack and Weight Handling fees to reflect the changing costs of fulfillment, transportation, and customer service. See details (or scroll to Fulfillment Fee schedules below)

Dimensional Weight threshold

To align with announced changes to industry standards, we will adjust when we apply Dimensional Weight-a calculation based on a unit's cubic volume. Currently, if the unit's volume is greater than 5,184 cubic inches, Fulfillment Fees are calculated based on the greater of Dimensional Weight or unit weight. Effective February 18, 2015, we will remove the 5,184 cubic inch threshold. Instead, we will calculate Fulfillment Fees and fees for the optional Inventory Placement Service based on the greater of Dimensional Weight, or unit weight for Large Standard-Size Non-Media units weighing more than 1 lb. and for all Small, Medium, and Large Oversize units.

Monthly Inventory Storage Fee

For inventory storage beginning March 1, 2015, the monthly fee will vary between Standard-Size and Oversize units. Rates for storing Standard-Size units will increase, and rates for storing Oversize units will decrease. This change will first be reflected in April charges for storage in March.

Long-Term Storage Fee.

This fee is currently assessed semi-annually on February 15 and August 15 on units that have been in Amazon fulfillment centers for 12 months or more. On August 15, 2015, units that have been in Amazon fulfillment centers between 6 and 12 months will also be subject to the Long-Term Storage Fee, at a rate of $11.25 per cubic foot. Units that have been in fulfillment centers for 12 months or more will continue to incur the Long-Term Storage Fee of $22.50 per cubic foot. See details

Fees for Order Handling, Zero-Fee Fulfillment, Multi-Channel Fulfillment, and FBA Prep Services are not affected by these changes. For complete details of the fee changes, visit http://www.amazon.com/fba-fee-changes.

We remain dedicated to providing high value to our sellers. Here's a look at some improvements to FBA in 2014:

More Prime benefits.

More Prime members mean more sales opportunities for FBA sellers. Amazon Prime members shop loyally among Amazon-fulfilled offers because they love fast, free shipping. We've grown the ranks of Prime members by offering Sunday delivery and Same-Day delivery in more cities.

New mobile app.

The Amazon Seller mobile app-available for iOS and Android-allows you to conduct elements of your FBA business on the go, with features to help you evaluate the profitability of products you may want to source and monitor the status of inventory shipments to Amazon fulfillment centers.

Global selling opportunities.

FBA is available if you want to list your products in Canada, the U.K., and our other marketplaces. As a U.S. seller, you can use FBA in marketplaces around the globe to provide locally fulfilled, Prime-eligible offers as well as local-language customer service. A list of tax advisors helps you find tax and compliance services to help you manage your Amazon business, and a comprehensive Amazon Global Selling resource site guides you through key decisions if you're considering expanding sales internationally.

For more information on the 2015 FBA fee changes, including fee schedules, definitions, and examples, visit http://www.amazon.com/fba-fee-changes. We welcome your feedback on these announced changes at us-fba-fee-announce-feedback@amazon.com.

Though we cannot respond to feedback sent to this email address, each comment will be reviewed by the FBA business team.

Thank you for using Fulfillment by Amazon.

Regards,
The Fulfillment by Amazon Team

I looked over the fee changes and overall they are not too bad, but every little increase adds to the previous ones and after a few years it starts to become serious money.

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2. A New Metric To Determine Your Inventory Turnover Rate

This is guest article. I first saw this as a Facebook post, by Harvey Spektor and I wrote him and asked him to put this into an article. If you are a long-term reader you know how important I think managing your inventory turnover to profits is and this article gives you a simple way to do that.

Inventory Velocity

By Harvey Spektor

I've been a long time reader of Skip's Newsletter since I began selling Amazon FBA in November of 2013. He recently asked if he could share some information from a recent Facebook group post of mine for his newsletter.

Over the Black Friday weekend we saw some extremely gaudy sales numbers. I think businesses in general are WAY too focused on revenue when it comes to the barometer of a business's health and success. So profit is a better place to focus.

But there are way too many subjective variables to quickly discuss that or provide an accurate comparison among peers. The following is a metric that I use to analyze my business daily, weekly, and monthly. The beauty of it is that it can be successfully applied to an Amazon business of ANY size. I call the metric: Sales Velocity as a Function of Sellable Inventory.

The equation is simple, and the numbers are easily accessible in Amazon Seller Central.

Total Units Sold (per day/week/month) divided by Sellable Inventory (per day/week/month) = % of inventory sold (per day/week/month).

Here is an example:

Total units sold last month - 1025

Sellable inventory - 22,050

1,025/22,050 = 4.6%

This tells you what percentage of your inventory you are turning over in a given or selected time frame. It is influenced by inventory quality, inventory depth, inventory breadth, sales price, and current sales ecosystem, e.g. the Holiday Season makes this number trend up.

For example, in the off-season (June) my number was 1.7%. Meaning that every day I sold an average of 1.7% of my inventory. If I had 1000 sellable items, I was able to hit 17 sales.

In August I began using a repricer (Appeagle) for the first time and my number increased to 2.1%. Note: all my repricing setting are set to trend and adjust up, specifically to capture an available surplus when the market changes to a higher price while I am out of stock.

At the beginning of Thanksgiving week my number came in at 2.8% and has gradually increased and then peaked Cyber Monday at 4.3%, thus on Cyber Monday I sold 4.3% of my sellable inventory.

So what does this number mean? I'm sure nothing to some, but it can be a piece of your puzzle. Businesses of different sizes, ages, and goals can use this number to compare themselves. A higher number isn't always better, as at a certain threshold only adjusting price down, and thus profits down can make your inventory velocity go up.

My pricing strategy is extremely conservative, so I would guess my number is low in comparison to my peers. If anybody is interested in sharing/comparing, I'd be interested for sure.

I can be found on Facebook, Harvey Spektor, I am a member of ScannerMonkey, Scanpower, Aft Social and My Silent Team.

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3. Increase Your Sales With the Power Of Storytelling

I wrote my first book, The eBay Power Sellers Manual (no longer in print) about 14 months after I started selling on eBay in 1999. I remember when I wrote the chapter on writing item descriptions that I gave out the advice that you will sell more if you "romance your item."

Professional marketers have known for years that the power of storytelling can increase product sales. That is why every TV commercial begins with a storyboard.

You are probably thinking something like: "OK Skip - But how do I romance an ink cartridge." Well you probably can't romance an ink cartridge but you can tell a story about it. I am of the opinion you can tell a story about anything. It all begins with your research. If I were selling ink cartridges, the first thing I would do is visit the manufacturer's website to see how they position their cartridges in the market. What do they say about them? What makes them different? Those are the factors a manufacturer would use in a commercial. Then use those elements in your description.

Now let's look at things that are easy to tell a story about. One of the lines of jewelry I sell is designed in the US but made in India by a woman-owned business. Each piece is made by hand -not mass produced in a factory. So that information goes into my description.

Another way to tell a story or romance an item is to create word pictures. Say you are selling a plush toy. I would say something like "Imagine the look in your little girl's eyes when she opens this box and finds this darling teddy bear looking out at her."

One of the items I have been selling this Christmas is a Caterpillar Dump Truck toy. This was an existing listing I had to piggyback on. Here is the total description:

"Caterpillar Construction vehicles are rough and rugged with multiple transformations."

Had I been writing that description I would have said something like this:

"Imagine the fun you little guy can have with this toy at the beach or in the sandbox. The bright yellow Caterpillar signature color makes it easy to spot so it won't get left behind and the dump truck actually dumps so he can fill it up and dump it over and over for hours of fun."

Then I would have followed that with information about the size, construction and the product features.

I hope you get the idea. If you are really stuck coming up with a story line, try looking online for product reviews that have been left by customers. What actual buyers say about a product can be an endless source of ideas.

So no more boring descriptions --OK?

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4. It's Been a Year Since I Filed Sales Tax Returns. What Do I do?

This is another guest article. This one is by Jennifer Dunn from TaxJar. It's that time of year and you want to start thinking about taxes. You can find information about Tax Jar at the end of the article.


A year. The older you get, the shorter it seems, but a year is still plenty of time to forget how to do something. Especially when that something is an unwanted chore like filing sales tax.

For many lucky online sellers, sales tax filing time only comes around once per year. And for sellers in most states, that date falls in January, just in time for the post-holiday hangover.

If a year has been enough time for you to forget what exactly you need to do about sales tax, we're here to help. Here are seven crucial steps you need to remember to square up with the taxman:

  1. Find your sales tax due dates

    - If you are an annual sales tax filer, your sales tax return is most likely due in January. If you don't remember your sales tax due date, check with your state's department of revenue (or equivalent) or check this list of January sales tax deadlines . Give yourself plenty of time to get your sales tax info together!

  2. Determine how much you owe

    - Run a report (or reports) and determine how much you've collected in sales tax in a given state throughout the year. If you calculate your sales tax due manually, you may have to run a report through the various platforms you sell on. (I.e. A separate report from eBay, Amazon, Etsy, etc.)

  3. File Online

    - Filing your sales tax returns online is quicker and easier. In fact, some states now require you to file online. Go to your state's department of revenue to determine how you can file you sales tax return quickly and painlessly.

  4. Figure out how much sales tax you collected in a state's individual taxing districts

    - A majority of U.S. States require you to break up how much sales tax you collected by locality, such as by county, by city or by special taxing district - or all of the above. This is where filing your sales tax returns can turn into a real nightmare. If you choose to do this manually, it may involve looking up the zip codes of individual sales and comparing them to a tax table for you state to determine how to code each sale. Remember when we said to give yourself plenty of time? Some state's sales tax forms can be a real doozy.

  5. Remember to file a zero return

    - Did you take a year off? Or do you have an active sales tax permit in a state but didn't collect any sales tax in that state? Even if you don't have any collected sales tax to remit, states often want what's known as a "zero return" from anyone who has an active sales tax permit. Don't forget to file or you could face a hefty fine!

  6. Pay early

    - Many states will give you a discount if you file and pay your sales tax early or on time. Are you eligible? Check out this list of states that offer discounts .

  7. Rest

    - You're done until next year!

Sales tax is complex. That's why we created TaxJar - to handle the burden of sales tax while you get back to running your business. TaxJar pulls in sales tax collected from all the channels where you sell, compiles your data into return-ready reports, and will even AutoFile your sales tax returns for you in 26 states (and counting!). Sign up for a 30-Day TaxJar free trial today and put a lid on sales tax. To let us take care of your January sales tax filings, be sure to sign up by January 5th!

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5. New Wholesale Sources for eBay and Amazon Sellers

Well the hot Holiday selling season is almost over, so yes sales will slow down a bit in the coming months. That is why product selection becomes so critical. You want to concentrate on inventory that will turn over quickly. First think upcoming sales days - Valentine's Day, Mother's Day and Father's Day. Then think about seasonal products for spring and summer. Be sure and order products for all of these in plenty of time.

You want to source products specifically for those events but make sure you get them into Amazon in plenty of time. Typically you want your product actually hitting the FBA warehouses about 30-days before the day. Forty is even better.

Remember - a lot of these websites do have wholesale information right on the site. Some of them will have a link where you can create an account -and others may be retail sites. On those, you use the contact us link to request wholesale information.

Barn Cat Mercantile - they sell a really neat line of wax dipped LED candles. The wax dipping makes them look like real candles, but they work with LEDs, which last almost forever.

Enrico Products sells a wide range of unusual kitchen products and gadgets including the original Enrico grater. They work with sales reps around the country so just email them from the website, tell them where you are located and ask for the name of your closest rep.

4Black Paws sells a line of really cute designer dog collars.

WholesaleCrafts.com is a website that represents artists and craftspeople who will sell wholesale. There is a link to register online for free. Think of it as an Etsy.com for wholesale sources.

Serenity Tea Sips is a woman-owned Texas company that makes and sells a unique line of loose-leaf teas and tisanes. You can apply online for a wholesale account.

Dermalactives is a new line of skin care products created by a team of scientist, estheticians and dermatologists. Their revolutionary anti-aging treatment utilizes a proprietary technology that delivers protein rich Collagen and Elastin to all layers of the skin without the use of a needle! No website but for information, questions and wholesale price list, please call to Michal 1-747-202-3220

Snowonder sells Instant Snow 1 Gallon Mix. Fast season turnover on the best-selling instant snow. It comes in a one-gallon package. Smaller and larger sizes are available.

Shiny Extras is a leading manufacturer of fashion jewelry worldwide. Shiny Extras designs and creates high-quality Swarovski Crystal products such as earrings, necklaces, bracelets, and rings.

Desden is a family owned and USA Made! They sell trendy totes and aprons in fun designs and other products as well.

ANMEZ makes and sells the Greentest - It is an innovative portable smart device that detects contamination in fresh fruits and veggies in just 3 seconds.

Santa Fe Stoneworks sells a line of really unique designer kitchen knives and other knives.

AT Imports Ltd sells all type of home décor products. They carry over 50,000 different products.

The GlideHanger is a clothing hanger with improvements for narrow necked garments. When using with any narrow necked garment the GlideHanger can be quickly and easily inserted or removed through the neck of the garment, and is still fully functional for all other clothes.

Station 1 Wholesale offers wholesale prices on home decor Products include Jim Shore Hartwood Creek, blue willow glassware, cast iron, kitchen decor, and gifts.

Outdoor Active Gear is a supplier for chairs, coolers, camouflage and other outdoor active gear.

Well that is it for 2014. See you in early January. I hope all of my readers have a wonderful, happy and enjoyable holiday season and get to spend time with family and friends and experience all the joy the holiday season has to give.

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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