Tuesday, May 1, 2018

Amazon FBA Prep Centers

Hopefully, at some point you will reach a point in your business where you don't want to receive all your packages and send them out yourself.  That happened for me a few months in when I received mail from my landlord saying that I can't conduct business from my apartment and he will report me to the authorities if I don't stop.  Ok then, it was time to find somewhere else.  Pretty sure he didn't like me overflowing the garbage every week.

Once you have made that decision, you can go in one of two directions.

1) Rent a facility and hire someone part/full time.

Having a facility to yourself is great but most people in this business need to have a facility that's always open for deliveries.  It can be very expensive to have someone there full time just to keep the place open if there isn't enough work to justify a full time employee.  Often, people will rent a place in a facility that already has someone there full time for a different business who can accept your packages and direct carriers to what needs to be picked up.

This also comes with managerial responsibilities of your new employee, hiring and firing and possible implications for retirement accounts like SEP IRA, 401(k)s and benefits.

As your business grows, this will become the financially sound option, but it may not be necessary at first and you may never want to do it because of the extra headaches.  I live overseas, having an employee to manage from Israel is just not something I want to do right now.

2) Outsource

There are businesses dedicated to receiving inventory and shipping them out.  They are called 3PLs (3rd Party Logistics).  These existed before Amazon and there are tons of them that perform services for businesses small and large.  For non Amazon businesses they might be individually fulfilling orders or shipping wholesale for you.  You can use a 3PL for this as well or you can hire an FBA Prep Center whose business model is to handle Amazon packages.  They know the Amazon requirements and there is less, or no, training required from you.

What to look for in a Prep Center

I've used a few different prep centers over the last couple of years so I have an idea of what I am looking for.  Here is an incomplete list of many Prep Centers.

1) Cost

This is obviously the most crucial.  The amount that you pay per unit (or per box - however it is calculated) directly effects how much money you will make and what prices you can set.

There are other important factors to the price as well.  Does it include labeling and entering in box level content or do you have to pay Amazon or the prep center to do this?  It will add another $0.30 per unit to have Amazon manually apply these.  That adds up fast.

Do they make you pay for boxes and polybags?  Is it extra for bundling?

Is there a discount when your volume increases?

Is there a one time account set-up fee?

2) Shipping Cost 

How close is it to an Amazon Fulfillment Center?  That will have a direct affect on the price you will pay for shipping and the speed in which your inventory is checked in and ready for sale.

Also, can they support pallet shipping?  Pallets tend to be a much more cost effective way to ship, especially if you are shipping multiple at a time but not everywhere is set up for them and some charge more.

3) Sales Tax Free State?

There are a few states which have no sales tax and they are referred to as the NOMAD states and they are New Hampshire, Oregon, Montana, Alaska and Delaware.  If you are still paying sales tax on all or some of your purchases, a prep center in a state without sales tax can pay for itself with sales tax savings if the price of the item is high enough.

3) Your involvement

Amazon allows you to give user permissions to 3rd parties to have limited access to your account to make shipments.  Ideally, once you create the shipment in Amazon, the prep center should be able to go into your account and see the shipment you have made and then enter all the information necessary to process the shipment including agreeing to pay the shipping fees.  You shouldn't have to do anything.  That is not always the case

4) Speed/Efficiency

How long does it take for them to add the item to your inventory and how long does it take for them to ship the item out after you have made a plan?

5) Inventory tracking

How does the prep center track inventory?  I've seen proprietary software, shared google spreadsheets to not tracking (meaning you have to track it yourself).  Lost inventory is a problem that can't be ignored so this important in your decision.

Also, if they have software to track, do they notify you when new inventory has come or do you need to constantly check?  This might not really be an issue for vendors that ship items quickly but some manufacturers take their sweet time.  It might be weeks after you order that it arrives, it's nice to know when that happens.

6) Customer Service

How responsive are they to issues and how quickly do they get back to you?  Do you receive a notification when there is a response to your query?

7) Retailer bans?

Many retailers like Target and Kohl's will ban the address of a prep center since so many people are shipping to the same place.  This can be a big bummer and you might not know about it ahead of time.

8) Storage Fees

Are there storage fees for items that stay there for a month or longer?  Are they reasonable?  I've seen places that say they charge storage but don't and I've seen places that actually charge.

9)  Quarter 4

Do they fall behind during Q4 when there is increased volume?

I've seen places go from about 5 business days to 10 for Q4.  That's a big problem when every minute counts.

10)  Returns

Do they handle your returns and grade the item?  How much does that cost?

11)  Monthly fees

Are there monthly fees?
Important if you want to have backups for when things get a little crazy at your main location

12) FBM?

Do they do FBM?  How fast?  What price?

What I've used and What I'm using now

When I moved the business out of my apartment I was exclusively using a local shipping facility near where I lived.  I know the people there, trust them, things got out the same day they came in if I made the plan fast enough and I could drop by check up on it.  It was always a bit more expensive than a regular prep center but it was worth it.

As time went on and my volume increased, the speed of the facility slowed and the prices started increasing so I started to look for other facilities to at least share the load on items that aren't as time sensitive.

Prime Zero Prep (PZP)

I started at Prime Zero Prep a few years ago.  Their pricing model has changed multiple times since then and it's hard to figure out exactly how much you will be paying in 2 months time.  According to their website now it seems like it is $1.20 per unit but their last update had made a difference in price based off the speed in which they work on your shipment.

I found them to be a bit expensive and slow.  During Quarter 4 I really had no idea how long everything would take.  Often it was 3 business days to update inventory and then 5-10 business days to ship it out.  Overall things were fine but I was still looking for somewhere a little more reliable and cheaper.  In one of their price iterations they were charging $1.90 or $1.90 per unit, then they offered $1.60 per unit lifetime and now I think it is based off speed.  Hard to follow them.  I don't use them much but now I'm on the $1.60 lifetime plan.  It's too expensive currently but in 10 years it might be useful and it cost me $3 once to sign up so little risk if they deny it.  I don't think it's available anymore.

Sell Tech Prep (STP)

A few months ago, I started at a place called Sell Tech Prep and I'm reasonably happy there.

The main advantage is the price.  Their prices are subject to your volume within a given 2 week period. If you send 1000 items during that 2 week period you will pay $.85 per unit. If you are over 5000 units in 2 weeks the price goes down again to $.70 a unit.  They frequently run prepayment bonuses of 15-17%.  For example, if you pay $1,000 you will get $1,150 of credit which brings down your price even lower.

They are very responsive to any issues as well, their software is good and they automatically update you when new inventory comes in.  They handle FBM (too expensive for me to consider) and returns.  There are however some serious drawbacks.

1) Location

They are located in Montana.  That's good for sales tax but it's very far from the Amazon fulfillment center in Chicago which is where most things are shipped to. That means that shipping is quite expensive.

To get around that, STP provides full truckloads (FTLs - 26 pallets) that arrive in Chicago in 2-3 days time.  The price is very good to ship that distance but it's still objectively expensive.  It comes out to around the same price as shipping non pallets from New Jersey where I was.  If you are used to shipping pallets for $80 or cheaper a pallet, there will be some sticker shock.  To ship with Amazon provided shipments it will cost about $180+ to start, their price is $165 per pallet but with no discounts for more pallets.  However, you prepayment bonuses will work on outbound shipments which is nice.  The other good thing about this is that you pay STP directly via credit card you get the points instead of Amazon debiting your seller payout.  It's not huge but something.

2)  Speed

They need to have a full truck to make it worthwhile so currently FTLs are only scheduled once a month.  That can be a major problem as you have to estimate how much inventory to send in and speed of sales varies tremendously based off current competition and the way Amazon's search algorithm is going that wee..  Hopefully with more business they will be able to provide more frequent service but right now it is once a month.

I send everything I can to STP, then if I run out mid month I use my old center or I'll send to the old center if I just want something in faster.  I also try to concentrate my orders to the two weeks before shipments to get the best pricing.  So far, this has been working for me and my fees have gone down significantly.

Special Referral Rate

I spoke to STP about a reduced fee for readers if someone signs up for a referral.  They have agreed to waive the account sign up fee (I believe that's $300 - I had to pay that when I signed up) and to provide a reduced rate for the first year.  It breaks down as follows:

Your first month, you will receive a 10% credit of your first month's invoice applied to your account.  For example, if you spend $1,000, they will add $100 credit to your account for future payments.

From month 2 until month 12, you will receive a 5% credit of each month's total invoicing, if the total amount meets or exceeds $1,000, for a period of 1 year from the sign up date.  Months with a total invoice balance of less than $1,000 will be ineligible for a percentage bonus.

If you are interested you can email referrals@selltecprep.com with the subject line "Referred by OMS" and they will get you started.

My disclaimer is that I will be receiving a credit to my account if anyone signs up and uses it.  I asked for the credit to be for readers instead (originally there was only a credit for me) and instead of taking away my bonus, they added a bonus for readers as well so I don't feel too bad about it.

Even though I will be receiving a bonus, my main goal is and was to have shipments every 2 weeks to make it even more useful of a service and to share a good price with readers as well.

There are lots of other places as well and many which I've never researched so do your own research to find the place that works best for you.

If there are other fulfillment centers that you prefer, I would love to hear about them in the comments.

Sunday, March 4, 2018

Radically New Amazon Storage Rules and What They Mean for Me

Amazon has released their new storage fee calculations for this year.  The changes are broken down into three groups, short term storage fees,  long terms fees and inventory management.  The new systems start in April.

Short Term Storage Fees

Short term storage fees (storage fees assessed on your inventory at fulfillment centers the previous month) have been increased across the board.  There is a $0.05 per cubic foot increase.  If you were selling a standard sized item which was exactly 1 cubic foot, rather than paying $0.64 per unit, you now pay $0.69 per unit.  If the item is 1/2 of a cubic foot you are going from $0.32 per unit to $0.345 per unit per month.  It's a 7.8% increase in storage fees for standard sized for 9 months of the year.  The same $0.05 is added for oversized units though the percentage increase is lower.

The October through December extra storage fees continues, again with a $.05 increase in storage fees per cubic foot.

Long Term Storage Fees

Rather than just increasing fees across the board for Long Term Storage Fees (LTSF), Amazon has radically changed the way LTSFs are calculated.

Rather than assessing LTSFs twice a year, they are now assessed monthly.  Every unit that has been there for 6 months or longer will now incur a severely increased monthly storage fee.  This fee is less than the biannual fee, but when you consider that it will have been charged 5 extra times after 6 months, it comes out to significantly more than the previous system.

In addition, any unit that has been there for more than 365 days will incur a minimum of $0.50 per unit monthly charge.

This is an all out assault on long term storage at Amazon Fulfillment Centers.

Storage Limits and Fees

Unit now, everyone was given specific storage limits for standard and oversized units.  Now your storage will be determined by your inventory performance index (must be logged in to access the link).  If you have more than a 350 you will have unlimited storage.  If you have lower than 350 you will be warned and if it continues you will receive inventory limits and cannot create a new shipment until your inventory gets below your limit.  If that hasn't happened by the end of the month you will be charged $10 per cubic foot above your storage limits.  Evaluations are done every 3 months.  You can read more about it here.

You can see that the index is made up of your excess inventory, keeping popular products in stock and how much of your inventory is stranded.


Smaller is better

As usual this affects larger items much more than smaller items. Focusing on smaller items should be much more profitable via FBA.

Faster is Better

Items that are slow moving are going to hurt a lot more.  Cycling through more volume is better for storage than slow (even if profitable items).  Slower moving items will have a far greater chance for LTSFs since it only takes 7 months to get there now.

Sending in Pallets is less beneficial

Shipping with pallets is much cheaper than individual boxes, especially as you said multiple pallets.  That being said, sending multiple pallets of a single items is going to be more difficult while still avoid LTSFs.  Mixed pallets should be unaffected.

Gaming LTSFs is Gone

It used to be that if you sent in an item after mid February or after mid August you could get almost a full year of storage without paying LTSF since your item wasn't at a FC for 6 months when LTSFs came around. That is gone.

Active Inventory Management 

You (at least I will) will need to have a much more active inventory management system in place.  You can't just check twice a year before LTSF to make sure you sell everything.  You will have to check every month.  It makes large catalogs much tougher to work with.  Consider an autopricer to help you.

Prices Will Decrease

There will be a ton of people lowering prices right now.  Previously you could hold onto a video game indefinitely a pay less than $0.20 a unit of storage per year since they were so small.  Now, you will pay a minimum of $0.50 a unit per month every month that it has been there for more than a year.  People will look to dump their bad positions.  The fees start soon so sellers will need to lower now to make sure to avoid these fees.

Long term I think prices will increase as sellers will go out of stock more frequently but short term prices will go down in my opinion.

Store Less at Amazon, Fulfill Less via Amazon

Storing outside of Amazon is more important than ever.  If you buy 300 of something and you only plan on selling 30 a month, don't send all 300 in.  In addition, if you fulfill orders on your own (FBM, Seller Fulfilled Prime or other marketplaces), you will avoid these fees entirely. 

Once you have your own facility and are doing more fulfillment on your own, other marketplaces will start to become more attractive, especially if sellers start to have to raise prices on Amazon to keep their margins within reason.  Customers may start looking elsewhere for better prices.


Amazon has the right to raise their fees.  Sellers can't stay static, they need to react appropriately to remain profitable.  You don't want to turn around months later trying to figure out why you aren't making money any more or why you are making less money.

As always, good luck selling!

Wednesday, February 14, 2018

Rhode Island Enforcement - Collecting and Remitting Sales Tax is a Bummer

I'm sure many sellers received an email notice yesterday from Amazon informing them that Rhode Island passed a new state law requiring Amazon to disclose seller contact information to the RI Tax Authority if they had any sales in RI in 2017.

Before I say anything, I have to tell you that I am not an accountant or a lawyer or any sort of tax adviser.  If you received this email from Amazon you should have a conversation with a professional.

As far as I can tell, there are a few things to be aware of for Rhode Island specifically but again speak to a professional before deciding what to do.

According to the bill, the requirement to collect and remit sales tax in RI seems only to apply if you have sold $100,000+ or if you have 200+ transactions.

Thankfully, RI is a small state so unless you are a very large seller (or you sell Rhode Island state flags), you are unlikely to have more than 200 sales in RI.

You can see a summary of it here.

Update: After reading the bill more carefully it seems that you only have a requirement of notification and reports if you are not collecting sales tax and you are over the 200 transaction or $100,000 revenue threshold.

That being said, it seems that if you sold $100 worth of items to any customers in RI during 2017, RI requires you to send notices in the mail to those customers explaining that they have a requirement to pay sales tax on their own.  You can read about that here.  I'm sure customers will love getting that in the mail.

Normally, small sellers might think they don't need to comply because the cost of states going after small sellers wouldn't be worth the payoff.  That being said, the penalties here can be pretty severe.  If you don't comply with these requirements, there is a penalty of $10 per incident with a minimum of a $10,000 penalty.  Therefore, I would take these notices seriously.

Other States

Recently, other sellers have received a similar email from Amazon about the state of Massachusetts.

There may be a similar requirement in Louisiana, Colorado and Vermont.

Also, Amazon started collecting and remitting sales tax for all sales, including 3rd party sales, in Washington State starting this year.

You can be sure that if states can get more sales tax money, they will begin to write laws requiring Amazon sellers to pay.  This is definitely a sign of things to come.

Compliance to collect and remit sales tax is a pain if you aren't already set up in that state.  It takes time to sign up with each tax authority, calculate sales tax collected each month/quarter and remit each month/quarter.

The implementation by Amazon to collect sales tax in Washington State was done very well.  3rd party sellers didn't have to make any changes, sign up for anything, make calculations.  It was all done by Amazon who was already collecting sales tax for their own sales in Washington State.  I don't mind collecting and remitting sales tax per se, it is the time involved that's the frustrating part.  If Amazon began collecting and remitting sales tax on my behalf in all states, I would be in favor.  For now, we'll see how this shakes out.

Tax Jar may have a lot of money coming its way in the future.  You can read more about it in this NY Times article.

Monday, February 5, 2018

FBA Fulfillment Fee Increases Starting Soon Are Painful - Especially for Large Items

A while back Amazon informed sellers that there will be fee increases beginning on February 22nd.  You can access that statement here

Like many sellers, it was hard for me understand how this would exactly affect my business since I can be pretty thick when it comes to math.  I started crunching the numbers now on individual products and I wasn't thrilled with what I saw.

I'm going to go through some random sized products (not items I sell) to show the difference but I encourage you to do the same with your own big sellers to get an idea of how it will affect your business as well.

FBA Selling Fees Explained

Some background information for those who never realized this.  Amazon takes a fee for every item you sell (obviously).  When you sell FBA, this fee is divided into two main categories for simplicity, the commission (usually 15% but category dependent) and the FBA handling fee.  The commission is a percentage of the sale, if you sell for $10, the fee is $1.50.  If you double the price to $20, the fee doubles to $3.  Price is the only factor.  The FBA handling fee is charged independent of the sale price, it is connected to the dimensions of the item which means you pay more for larger items.  If the FBA handling fee is $5, you will pay $5 whether you sell it for $4 or $100.  The total fee is the FBA handling fee plus the percent commission.  (If you sell FBM, you only pay commission not FBA handling fee.)

Therefore, the overall Amazon fee percentage decreases as price increases.  For example, if you sell an item for $10 with a $5 FBA handling fee, you are paying $6.50 to Amazon or 65%.  If you sell the same item for $20, the $5 portion stays the same and the $1.50 increases to $3 for a total of $8 in fees or 40%.  65% to 40% is a big decrease

The increases coming on February 22nd are only on the FBA handling fee, current commissions will remain.

Some Examples

Here are some random examples of increases so that you have an idea.  Go to the Amazon Revenue Calculator to see for yourself.

Let's start with a small item like a watch.  You want to make sure the box is clicked that says "Current and New Amazon Fulfillment" so that you can see the changes side by side.

The important area in the picture is the one that says "Fulfillment by Amazon Fees".  You can see that the fees are currently $3 and are increasing by $0.20 to $3.20.  That's an increase of 6.666667% in FBA fees.

As the items get larger, the increase per unit gets larger as well.  Here is a 10 pack of soap.

This is an increase of $0.52 a unit from $4.64 to $5.16 or 11.2%

Let's take something really large like diapers

The fee increase on this admittedly giant size of diapers is $1.94 per unit!  From $11.18 to $13.12!  A 17% increase!  And it gets larger as the item gets larger.  Some items I sell are increasing fees by $5 a unit!

Ramifications on your Business

It's hard to estimate exactly how this will affect you since it depends on how large the items you sell are.  I'm estimating for myself that my average unit fee will increase somewhere between $0.30-$0.40.   That is huge and I hope I am overestimating.  Take the estimated number you come up with and multiply it by the number of units sold last year.  With that you will give you an estimate of how much more you would have paid in fees last year with the same rates.   If you sold 10,000 units at an increase of $0.35 a units that's $3,500 more in fees.  20,000 units is $7,000 in fees, etc.  Not pretty.  If you sell larger items, you average per unit will be higher.  If you sell smaller items your average per unit will be lower.

However the problem may be more subtle and dastardly since it doesn't account for sales you won't be making.   There are lots of items that I will no longer be interested in selling unless the price goes up as well with the fees.  Here is a quick calculation for you.  For every dollar increase in fees, you need to raise your price by $1.17647 to earn the same amount of money since you have to account for the increased amount of commission (X-.15x = $1.00 or 0.85x = $1).  If the fee increase is $.50, so then the price has to go up by about $0.59 a unit to earn the same amount.  If the price just doesn't go up it may not be worth it to you anymore to sell this item.  You may not be paying increased fees on that item but you are also not earning as much profit as you used to. 

How it Will Affect My Decision Making

1) Bigger is not better!   

Storage fees have been increasing, especially for Q4.  In the same announced Amazon said "FBA inventory storage fees are not changing at this time. We will announce changes to these fees in early 2018."  You can bet that storage fees will increase and the increase will be hefty because they can.

Now fulfillment fees are massively increasing for larger items.  My first order of business is to focus on smaller items which I've been doing anyways and will continue to do.

2)  Increase Prices on many items unfortunately :(

I will likely raise prices on many items to account for the increased fees.  Consumers will feel this for sure.  There are many items that I just can't afford to continue selling with increased fees.  That will likely lead to decreased sales.  A couple of profitable sales are infinitely better than hundreds of sales that are not profitable.  There are other items that I will keep prices the same and just eat the fees since my margins are better.

As mentioned previously, there are other items that I just won't be able to sell since other sellers have better margins and I can't compete with their prices.  It's always been like that and it always will.  It's a game of readjustment.

3)  Opportunities for Larger Items will Present Themselves.

As people increasingly focus on smaller items, some larger items will fly through the cracks.  Opportunities will exist that I hope to exploit but I assume on a smaller scale because of the increased storage and fulfillment when I'm wrong.

4)  Sell some larger items now?

There are some larger items that are increasing $3-$5 in a couple of weeks that haven't been selling well.  Might be time to drop prices $2-$4 and just get out before the fees increase.

5) Readjust Repricers

If you have a repricer you will need to adjust the lower extreme to make sure you don't sell for too little.

6) More FBM?

Fees are only increasing for FBA.  That means the relative advantage of FBA vs. FBM is decreasing and opportunities for FBM and Seller Fulfilled Prime (SFP) will present.

Just think of it as a new long term storage fee you pay regardless of how long the item has been there!  Happy Selling!

So, how will it affect your strategy going forward?

Tuesday, December 5, 2017

A Lot Has Changed in 6 Months...

Massive Life Change

If you used to follow this site, you definitely would have noticed that I haven't posted in a bit more than 6 months and even then posting has been sporadic.

Just a few brief words of explanation.  There was a major upheaval in my life.  I moved out of America.  It's always been a life goal of mine to move to Israel and I was almost successful 2 summers ago.  It didn't happen then but in August I finally did it.  

Moving to another country is hard.  There was a ton of paperwork to fill out and meetings to go to before we left and getting everything set up once we arrived.  Government bureaucracy is not fun, especially when it is in a language that isn't your mother tongue.  Just ask any immigrant to talk about their first month in America and you'll probably get an ear full.  All the while I've been trying to keep the business afloat and successful.  So that's what's been happening and why I've been radio silent.

The fourth quarter can be stressful so I thought this might be a bit cathartic. 

Business from Out of Town is Different

You Aren't There at the Warehouse

Running an Amazon business when you aren't in the country and you aren't in the warehouse consistently is a big challenge.  You need to have perfect records and people you trust there. I rely on email, What'sApp and phone calls to communicate but I won't pretend that it's the same.  It's not.  It's different.

You are very much relying on your worker's paying attention, that they aren't stealing from you, that they notice if something came that was different from what you ordered and aren't just putting it in a box to send to Amazon because that's easier for them.  If there is something in the corner that hasn't been selling, they may not mention it to me but when I was there I would look around and see if there is product that has been unfairly ignored.  You just care more when it is your own business.

Social engineering is very important and for that reason I plan to somewhat regularly (2x a year?) come in, see what's going on at the warehouse, chat with everyone, take the manager to lunch, etc.  It's critical to keep lines of communication open.  They aren't going to keep doing a good job because they like their job, they are going to keep doing a good job because they like the manager, they like me and the manager likes me.

You Aren't There for Buying Either

I can't do retail arbitrage anymore unless I pay someone which I haven't had time to set up.  While I don't particularly like retail arbitrage, I had come to tolerate it.  It's so annoying that the margins tend to be even better.   I don't miss it at all, I mean at all, but the money was good.  Oh well, it's part of the process and until I get a buyer to go to stores for me it's not happening and I'll still live.

It's not just retail arbitrage.  I was close with a few neighbors and we would help each other out.  If there was a quantity limit on an item, I would have them purchase and it would show up at their door.  I'd go pick it up for them and take care of it.  There was almost nothing they had to do, just an order, and even that was highly profitable since they kept the portal bonuses and loyalty points.  I can't do that anymore.  That means that during my upcoming trip I will be moving things back and forth from friend's overflowing basements to the warehouse.  I've tried to pay them more to bring it themselves but they aren't interested.  Again, it's the new normal and something I knew going in.

The Business Has Changed

I'm amazed at how often the types of deals I'm interested in has changed over time.  I used to sell a lot of expensive electronics and I rarely sell them now (Q4 is a bit of an exception since it is easier to find great margins still).

I haven't had nearly as much time in the last six months to research deals as I would have liked but I've been able to keep everything going.  In fact, both sales and profits are up despite my time output being stagnant and many times less than years past and that's for two main reasons:

  • I have focused on replenishables.  I don't have to really think about those other than paying attention if there is a sale on them.  This allows for minimal time output while continually increasing sales as you increase your repertoire of replenishables.

  • I go bigger than I used to.  While I have always had the mantra of "Go Big or Go Home."  I have decided that I need to go even bigger.  If there is a good deal that earns $5 a unit and 60% ROI but I can only buy 2, guess what, I'm not buying it.  Even if I can buy 5-10 I'm probably not buying it.  Every SKU takes time for accounting and logistics and pricing.  It's not worth it for 2 of them.  My standard purchase is about 20-30 and during the fourth quarter my standard purchase is 50-100 to start.  If an item is a replenishable that has gone on sale, I might buy 400-500 if I can.  There are certainly times I get burned but that's happening less and less thankfully.

Move to Self Fulfillment

I have been trying to do more fulfillment on my own.  I'd like to sell more on Walmart which requires self fulfillment, in addition the more that I can sell on my own, the less reliant I am on Amazon in general.  There is also a lot fewer accounting nightmares trying to get all the product back that Amazon has borrowed permanently from me.  Even more critically, it allows you to sell before other sellers can because they are waiting for Amazon to receive their shipments and the eventual race to the bottom.

This hasn't been quite as linear an experience as I would like but I do think I've been making progress.  Often I buy 50 of something I will leave 10 back at the warehouse for self fulfillment and send in the other 40.  That way I can sell off while prices are high and still be in stock until my FBA stock comes in.

This is a picture from shipstation for the last 30 days of all my self fulfillment but it is mostly from the major shopping days and I don't have too many self fulfillment sales outside of those.  As you can see, even in self fulfillment is by far the most.  Of the six I have to ship today, four of them are Amazon FBM.  Two are items that the FBA units are on their way for the first time and 1 is something that sold too fast for me to restock FBA in time so I will sell FBM until I'm in stock. 

At some point this year I would like to move into Seller Fulfilled Prime.  That will likely really ramp up my self fulfillment operations but you have to make sure you have a good system in place and that your team is ready for it..

Goals for 2018

I have not been happy with the inventory channel softwares available currently that aren't $500+ monthly.  My sales on other channels just can't justify that type of expense, though it might get closer if I had one.  My plan is to work with a developer to create my own that suits my needs.  I hope to have that done early in 2018.

Private labeling.  I haven't done it yet but the plans are already in the works.  I am in the testing phase now.  The thought of getting suspended for an Intellectual Property claim on someone else's product scares me a ton.  I would like to have a full line of my own products on Amazon (and maybe my own site?) at some point but I will start with one :)  In order to not spend a ton of money importing a product that I don't know I can sell I am starting to slowly build a listing from scratch and once I have proven I can do it, it will be time to go the overseas route.

I don't expect to write too often in the future but this was kind of nice.  I hope you enjoyed it too :-)

Monday, May 15, 2017

Using Consumer Arbitration with Amazon

Disclaimer:  Arbitration is not for everyone.  It is possible that Amazon may retaliate against those who file arbitration against them.  While easily identifiable retaliation will cause Amazon legal headaches, retaliation can come in more subtle ways that are hard/impossible to prove. For these reasons, arbitration against Amazon for active sellers may be a last case scenario (For example, someone who has been permanently suspended).

A bit of introduction: Alexender Bachuwa is a lawyer who has experience in consumer arbitration.  He writes a column for Frequent Miler called The Fine Print.  While Alex is a lawyer, the following is not legal advice.  Anyone who requires further information can contact Alex at his website.

As a points enthusiast and travel blogger, I am constantly seeking the most efficient strategies to accrue points. I learned about reselling from this and other blogs and was intrigued. That excitement quickly faded as I realized how much work it takes to be successful in this arena. As readers of this blog know, reselling is often a full-time job that can be both demanding and grueling. It is not for the lazy and it is not for those looking to get rich quick. On the other hand, those successful at mastering the art of reselling can earn a decent living. My appreciation for those engaged in reselling prompted my outrage when I learned of the number of complaints against Amazon, the reseller’s most used marketplace. 


The typical complaints against Amazon include the following:

1) Items lost or damaged in shipment to Amazon.  Resellers send in 10 units but Amazon’s accounting only shows 5. Amazon reimburses the reseller only after the seller asks.

2) Items lost or damaged in Amazon fulfillment centers or damaged via carrier. Most of the time will not reimburse you until you ask. 

3) Reimbursements are less than it should be. Sometimes Amazon will give you something standardized for a category, like $25 for an Apple watch.  Other times it is just less than it should be based on current sales price and/or sales history. You usually will get a higher reimbursement if you appeal

4) Accepting returns that violate return policies. It is one thing when Amazon does this with its own money, but it is entirely another to do it when Amazon is taking away from the seller’s money.  For example, accepting returns after 30 days or when there is no UPC is a typical complaint.

Fighting Back

a.    Audit Companies: Many resellers have no choice but to hire audit companies to hold Amazon accountable for its actions. These companies charge steep monthly fees or a percentage of recovery to remedy problems that should not occur in the first place. For sellers facing significant losses, these fees are chalked up as a necessary business expense. It should not come as a surprise that Amazon is looking to ban resellers who employee the service of these firms.

b.    Consumer arbitration: For those that read The Fine Print on Frequent Miler, you know that I am a big proponent of consumer arbitration. Consumer arbitration was invented by powerful corporations in order to put an end to costly class-action lawsuits. For that reason, many consumers have doubts as to the efficacy of the process. Those doubts are misguided. I have successfully filed claims against Citi, Dell, eBay, among others (see Case Results) using consumer arbitration as the mechanism to seek relief.

The Amazon Consumer Arbitration Clause 

Amazon has a consumer arbitration provision that reads as follows:

Any dispute relating in any way to your use of this or any other Amazon Services will be resolved by binding arbitration as described in this “Disputes” section, rather than in court. An arbitrator can award on an individual basis the same damages and relief as a court (including injunctive and declaratory relief or statutory damages), and must follow the provisions of these Terms of Use as a court would. 

Payment of all filing, administration and arbitrator fees will be governed by the AAA's rules. We will reimburse those fees for claims totaling less than $10,000 unless the arbitrator determines the claims are frivolous. Likewise, Amazon will not seek attorneys' fees and costs from you in arbitration unless the arbitrator determines the claims are frivolous.

The key takeaways from this clause is that Amazon will cover the expenses of the process and that the consumer can seek the same relief as he or she would in court.

The Solution

If you are a consumer whose livelihood depends on your reselling business or if you are consumer who casually resells to earn points, you have a right to hold Amazon accountable. And the way to do so is by filing a complaint in consumer arbitration.


Monday, April 24, 2017

Turn On Two Step Verification for Your Amazon Account

Lately, there have been a rash of hackings on Amazon accounts.  Once the hackers are in, they will change your bank account and siphon the money into their account.  In addition, many times they will start selling items that are bogus, make some quick money, siphon that, and then cause many problems to your account.   It becomes hard to get your money back and get your account reinstated.

Often, these are on dormant account.  An account will have it's last review in 2014 and then 5 bad reviews now saying never received item or item is fake.  That being said, it can happen to an active account too.

Last week I received this message from Amazon.


At Amazon we take your security and privacy very seriously. As part of our routine monitoring, we discovered a list of email addresses and passwords posted online. While the list was not Amazon-related, we know that many customers reuse their passwords on multiple websites. Since we believe your email addresses and passwords were on the list, we have assigned a temporary password to your Amazon.com account out of an abundance of caution.

You will need to reset your password when you return to the Amazon.com site. To reset your password, click "Your Account" at the top of any page on Amazon.com. On the Sign In page, click the "Forgot your password?" link to reach the Amazon.com Password Assistance page. After you enter your email or mobile phone number, you will receive an email containing a personalized link. Click the link from the email and follow the directions provided.

Your new password will be effective immediately. We recommend that you choose a password that you have never used with any website.

You can also enable Amazon's Two-Step Verification, a feature that adds an extra layer of security to your account. In addition to entering your password, Two-Step Verification requires you to enter a unique security code during sign in. To learn more about Two-Step Verification, go to Amazon.com Help, go to Managing Your Account, and click More in Managing Your Account, and then click More under Account Settings.



This e-mail was sent from an address that cannot accept incoming e-mail. To contact us, please visit the Help section of our website.

The solution is simple.  Turn on Two-Step notification.  I had resisted doing it but this email was enough for me.  All you need to do is go to Settings>Log in Settings from with in your account and you will find the instructions there

Once two step notification is on, you will need to receive a text message with a code in order to log in to your account.

You can set it so that on computers you recognize you don't need to keep doing that but it should keep hackers much further away from your account.

As always, stay safe out there!

Tuesday, April 4, 2017

FBA Temperature Sensitive Deadline Coming Up In May

Amazon warehouses can get up to 100 degrees in the summer so Amazon places restrictions on what can be sent to their warehouses from May 1st until September 30th.

If you have a lot temperature sensitive items at fulfillment centers now is the time to sell or place removal orders if you aren't able to sell by the end of the month.

You can't sell FBA from May through September but you can sell FBM and without the competition of FBA sellers, FBM can be extra lucrative during these months as long as you take shipping costs into account.

Doing well on Amazon is often about finding inefficiencies in the marketplace and exploiting them.  Sure this is more annoying and more work than FBA but use it to your advantage and you can sell a lot of chocolate. just make sure it doesn't melt on the way....