Welcome! On this blog, we talk about our journey towards making FBA our full-time job. We give out free tips and tricks to help you make the most of your time, money, and resources. If you want to subscribe, just fill out the form over on the right side of the screen.
To show you our appreciation, we’d like to give you a free download link to our newest book, Seller Central Tips: Reimbursements, Refunds, and How To Correct Other Possible Amazon Glitches. When you confirm your subscription, the download link will magically show up in your inbox.
By the way, we hate spam as much as you do, so we only send you stuff that will help you make FBA your full-time job! Let us know if you have any questions.
On August 15 and February 15 of each year, Amazon charges long term storage fees for items at their FBA warehouses. If items have been at the warehouse for longer than 6 months as of the fee date, those items are charged $11.25 per cubic foot; items at the warehouse longer than 12 months are charged $22.50 per cubic foot.
In the past, Amazon has granted an exemption from the long term storage fee for one unit per ASIN. Basically, the long term storage fee only applied to items with multiple units at the warehouses. If your item was a one-off, there was no long term storage fee.
This is where the change comes in. Moving forward, Amazon will be charging long term storage fees for all items at FBA warehouses longer than 6 months as of the fee date, regardless of whether you only have one unit of that ASIN. No more exemptions for one-off items. (Note: Amazon is offering a free removal of one unit per ASIN from now until October 14, 2016, as a way to help sellers deal with these changes. For our video about how to create removal orders, click here.)
If you know me at all, you know that my approach to this change is not to panic. Getting freaked out over these types of changes really doesn’t help your business’ bottom line. Instead, here are a few points for you to consider about the changes in long term storage fees:
5 Points to Consider about Changes in Long Term Storage Fees:
Understand that Amazon does not want to be your long term storage solution.
The above statement is nothing new. Amazon has been trying to tell sellers for the past few years that FBA warehouses cannot be their long term storage solution. When I first started selling on Amazon, there were no long term storage fees. More and more sellers began using the Amazon platform, and the warehouses started filling up. So Amazon instituted 12 month long term storage fees. The warehouses continued to fill up. So Amazon instituted 6 month long term storage fees. The warehouses are still filling up. So Amazon put in place steeper monthly storage fees during Q4, and now they’re removing the exemption for one unit per ASIN for long term fees.
Surely we should be getting the picture. Amazon wants us to send inventory to FBA warehouses that will sell relatively fast. Amazon doesn’t want to be a long term storage facility. To find out exactly what your long term storage fees will be, click here.
This change is an opportunity to improve your business model.
As with anything in life, mindset goes a long way towards determining our outcomes. Do you have a growth mindset or a fixed mindset about these policy changes? Do you see the fee changes as a huge blow to your business? Then it will be a huge blow to your business. Do you see the fee changes as a chance to tighten up your inventory and streamline your processes? Then your business will improve as a result.
If you sell a lot of books or shoes, these changes might impact you more because of the long-tail nature of selling in those categories. How can you approach these changes as an opportunity to adjust your business model and continue to achieve success in selling on Amazon? Look for the opportunities to grow and adapt, rather than feeling doomed because things will be different moving forward.
The term “long-tail” is being redefined.
Whether we like it or not, 6 months just became the new long-tail. In the past, long-tail might be as long as 2 or 3 years. But unless you can find items with such a massively high return on investment (ROI) that you can absorb the monthly storage fees and long term storage fees on one-off items, long-tail might need to be no more than 6 months moving forward.
Do we like these changes? Not really. Will it shut down our business? No, because we have a balanced inventory model that depends on fast nickels, slow dimes, and really slow quarters. Fast nickels make a lower ROI, but they do it relatively quickly. Slow dimes take a bit longer to sell, but we get higher ROI. Really slow quarters have fantastic ROI, but who knows how long it will take to sell. Moving forward, we have to make sourcing decisions based on whether or not storage fees will eat into the ROI too much on our slow quarters. For some sellers, this isn’t a huge deal; for others, you might want to redefine your parameters for what types of long-tail items you are willing to source.
Now is the time to be more proactive about repricing.
Whether you choose to manually reprice as we do (see how we do it in this blog post) or subscribe to a repricer, now is the time to make sure your inventory is priced competitively.
Please do not hear me say, “Drop your prices! Sell it all NOW!” What I’m saying is that if you’ve been accustomed in the past to setting your prices when you send in inventory and then never looking at the prices again, you’re going to need to adapt and begin checking your prices on at least a semi-regular basis to make sure they’re still competitive. Be proactive in repricing throughout the year so that you don’t have to be reactive in repricing every August 14 or February 14 to avoid long term storage fees.
Consider tightening your sourcing parameters for the future.
Moving forward you might need to change how you decide whether or not to buy an inventory item. You might need to look for items with a lower sales rank or with fewer competitors, in order to get a faster sales velocity. I highly recommend learning how to read CamelCamelCamel and Keepa graphs so you can make smarter sourcing decisions (click here for a Camel tutorial and here for a Keepa tutorial).
Ultimately, these changes to long term storage fees can have minimal negative effects and actually have positive effects on your Amazon FBA business if you handle them correctly. A few positives I see potentially happening as a result of these changes:
* We can improve our skills as sourcers.
By tightening our sourcing parameters and looking for faster moving inventory, we will expand our abilities as sourcers. It may seem slow going at first, but over time we will be able to find better inventory much faster.
* These changes will likely weed out our competition.
New fees are a hurdle that many sellers won’t want to jump over. Many sellers are likely to give up when the going gets tough and move on to another venture. That’s less competition for us…so stick with it and don’t be one of the ones to move on!
* Finding faster turning inventory will improve your bottom line.
If you improve your sourcing skills and find better inventory, you will get more sales and make more profits. You will have higher disbursements that you can then reinvest more quickly into more inventory…again and again. Thank you, Amazon, for helping us get more sales in the long run!
If you want more from me on this topic, be sure to watch the video below. This blog post is full of the highlights, but in this video, I add even more thoughts, tips, and strategies to handle this recent change.
So how are you going to handle these changes? Are you going to have a growth mindset and leverage these fee changes into an opportunity to improve your business? That’s the course I recommend, along with taking advantage of the free removal of one unit per ASIN through October 14, 2016.
Information about selling on Amazon is everywhere… Blogs, Facebook groups, YouTube, eBooks, video courses, and even live conferences. There is such a vast amount of information available, both free and paid, how can you ever filter through all the noise and decide on your best course of action?
I wish I could just tell you exactly what to do next, but that would not be the best advice to give you. Your situation, your finances, your time, your skills, and your passions are all unique to you, and therefor what you need to do next is also unique to you.
While I can’t give you a simple step by step process on exactly what to do next, here are 5 things you need to think about that will help you see your next steps with much more clarity.
1. TIME – I think the first thing you need to do is to consider how much your time is worth to you… If you have a TON of time available, then it’s not a bad idea to look for as much free information online as you can. If you don’t have a lot of free time, then I recommend purchasing a quality course/book/conference so you can streamline your time and get focused information all in one place.
2. QUALITY – Of course, you want to be sure that the info you learn from (either free or paid) is of top quality. The best way to do this is to put what the person teaches to the test. For paid content, see if the author has a lot of free content to consume first… then if you see the quality of the free content, purchase the paid content, since you know it’ll be good. If you have to pay to find out if the information is high quality, then make sure there is a refund policy, and then get your money back if it’s not up to your standards.
3. TRUST – You want to be sure you can trust the person teaching you. Again, if you can put any author’s teaching into action and get good results, you can trust their other material is good too. Trust can also come from the teacher showing you their results and proving that what they teach has worked for then. For example, here on this blog it’s our goal to help you turn part time hours into a full time income with Amazon FBA… and that’s exactly what we do. I spend about 20 hours a week on Amazon FBA and our disbursements pay our bills. We are full-time FBA sellers and from that I would think you could trust us.
4. FOCUS – This is the big one… I love the acronym for FOCUS: Follow One Course Until Successful. I even have that phrase on a Post It Note on my desk. It’s so easy to think that some new strategy or book will be the answer… but if we have not followed through on strategy #1, then why would we think strategy #2 or #3 will work better? Here’s a question: Who do you think finds success faster? Person A or Person B? Person A works on learning RA on Monday, learning OA on Tuesday, learning Wholesale on Wednesday, learning Private Label on Thursday, and learning Merch on Friday… or Person B who learns ONE STRATEGY on Monday, Tuesday, Wednesday, Thursday, and Friday. Of course the person who FOCUSES will find success faster.
5. PASSION – Passion is the fuel that pushes you forward and helps you avoid burnout. What strategy do you feel passionate about? Which one gets you most excited? Follow that strategy until successful, and then you can look to add another strategy once your first strategy gets put on autopilot. If you’re passionate about the idea of sourcing from home via online arbitrage, then focus on that… if you love the thrill of a retail arbitrage treasure hunt, then focus on that. If you love making T-shirts, then focus on Merch. Pick something you’re passionate about and see it through.
So if you’re wondering what you need to do next in your Amazon business, you can think about the above points and see which strategy/book/blog/course/etc stands out to you… and then follow it through until successful. If you’ve started a book or course and then are tempted to jump ship to some “shiny” new strategy, just calm yourself down and finish that book or course until you can see results. If you find something that you’re passionate about and see it through until the end, you will thank yourself for the results, and you’ll continue on your road toward success that much faster.
I hope these five tips will help you find direction in what you need to do next in your Amazon FBA business. Now, I’d love to hear from you. What methods or strategies have you found to be helpful when deciding what your next step needs to be with your Amazon FBA business?
A while back I saw a super scary video. It was truly horrifying. I still have nightmares when I think about it for too long.
I showed a short clip of this video to my wife. She actually screamed at the TV: “Nooooooo!!!!!!!!” She was just as terrified as I was.
In this video people were walking the aisles of a big box retail store, scanning toys with the Amazon app. Not the Amazon Seller app. The Amazon app. The one you use to buy merchandise from Amazon. These people were looking up toys on Amazon, comparing the price on the retail store shelf, and loading up a shopping cart if the price was even the slightest bit higher on Amazon. They intended to buy this shopping cart full of toys and sell them on Amazon.
As if this scenario weren’t gruesome enough, these people were actually encouraging their viewers to go out and do the same thing. They exuberantly proclaimed that anyone can sell on Amazon, see, look, there’s merchandise everywhere that sells higher on Amazon than in stores. You, too, should go out and buy toys by the shopping cart load, and just send them in to Amazon and wait for your paycheck.
At this point you might be ready to ask me a few questions. “How is this scene any different than what you do in your Amazon FBA business every day? Don’t you use retail arbitrage as one of your strategies for finding FBA inventory? Isn’t that what these folks are doing – and showing others how to do?”
The key difference boils down to one simple factor: I never buy an item for resale without knowing the Amazon FBA fees for that item first. If someone were to actually follow the methods these people were using in this Amazon FBA horror movie, they would be hit with fees they hadn’t calculated beforehand and suffer financial loss.
For anyone who wants to make a profit running an FBA business, you have to know your numbers. You have to know all of your expenses, including inbound shipping, taxes where applicable, prep fees, materials, and the cost of any subscriptions or services you buy. You also have to have a good handle on the FBA fees that apply to any items you intend to have Amazon fulfill for you.
If you aren’t aware, the name of this blog is Full-Time FBA. About 99% of our Amazon business is through the FBA (Fulfillment By Amazon) program. We do choose to Merchant Fulfill items on occasion (check out our YouTube video where we discuss those occasions), but overall we prefer to stick with having Amazon fulfill our inventory when a customer buys it (see also our blog post “Overcoming Your Fear of Selling via FBA versus Merchant Fulfilled or eBay”).
There are 4 easy ways you can calculate the potential Amazon FBA fees before you buy an inventory item. We’ve listed below two options for calculating fees on your smart phone and two for calculating fees on a web browser:
Amazon Seller app – FREE
The Amazon Seller app is free and allows you to scan items either by barcode or using Amazon Flow (the camera of your phone recognizes an item’s image and matches it with the product in the Amazon catalog). The Amazon Seller app allows you to see the fees for an item if you sell it Merchant Fulfilled or through FBA. It allows you to adjust your selling price, your inbound shipping cost, and the cost of purchase. It then subtracts the fees and your cost of purchases, giving you your estimated net proceeds. (See this blog post for more pros and cons on the Amazon Seller app.)
Third party scanning app, like Scoutify, Profit Bandit, or ScanPower – PAID
Similar to the Amazon Seller app, third party scanning apps allow you to scan items by barcode or enter a text search for the item. Third party apps also allow you to adjust selling price, inbound shipping, and cost of purchase before you subtract out the FBA fees and see your estimated net proceeds. We personally use Scoutify most often when sourcing, with Profit Bandit being our back-up on occasion. (For more info on third party scanning apps, check out our blog post about why we use Scoutify.)
The FBA Calculator website – FREE
If you are doing product research on a web browser, Amazon Seller Central has an FBA revenue calculator where you can enter the ASIN, UPC, or product name of an item and do the same calculations as above to find out your potential fees and potential profit. We highly recommend creating a bookmark for the revenue calculator so you can easily reference it when making online purchases, determining prices for your inventory during the listing process, or repricing your inventory after it’s at the warehouse. We’ve also created a quick link for the calculator: www.fulltimefba.com/calculator
To see the FBA revenue calculator in action, I’ve created a screen capture video explaining how it works.
Google Chrome extensions, like Scanalyze – PAID
Another easy way to see FBA fees when doing online arbitrage or product research is by using Google Chrome extensions that show the fees right on the Amazon product page. We use Scanalyze (available through the Cyber Monkey Deals website) and love it. You simply click the “Scanalyze” button and the fee calculator pops up at the bottom of your screen.
Hopefully you’re equipped now to calculate your fees and know up front what your profit potential is before you buy inventory to send to Amazon. Please don’t become another victim in a scary movie! You can make good choices. You can build a profitable Amazon FBA business because you know your numbers.
How have you been handling all the recent changes and rumors of changes in Amazon FBA selling?
That’s not a rhetorical question. I really want to know. How have you been handling all the news about FBA changes? Have you been freaking out? Have you been paralyzed with uncertainty? Have you kept doing business as usual? Have you taken it all in stride? I want to take a minute to check in with the Full-Time FBA community and see how you are faring in the face of so many questions about the future of third party sellers on Amazon.
A couple of things have happened in the past several days to shake up the FBA community. One thing (Amazon no longer accepting retail receipts as proof of authenticity if you have a claim by a customer that your product is counterfeit) isn’t really new news. This trend towards requiring manufacturer or wholesale invoices has been going on for a while, but an article by Cynthia Stine (you can read it here) lent urgency to the situation and caused many folks to consider abandoning retail arbitrage and online arbitrage all together. I admire Cynthia Stine greatly, and while I don’t completely agree with everything in her article, I highly recommend reading her advice/opinions and reflecting on your business in its light.
The other thing that has shaken up the FBA world is a new round of brand restrictions by Amazon. Many popular and profitable brands for third party sellers (including Adidas, Nike, and LEGO, just to name a few) were suddenly restricted without warning, leaving sellers to scramble to know how to deal with inventory already at the FBA warehouses, not to mention how to prepare for the upcoming Q4 season.
In light of these changes, I want to share my opinions and advice for how to handle the ever-evolving situation for FBA sellers. Most of what I have to say here isn’t new; in fact, I have a previous blog post (read it here) that is very similar in tone. Here’s what I recommend for handling these (and so many other!) changes:
Always go to the source. Any time you see an article online, a blog post, a Facebook post (and the accompanying comments), or anything else with Amazon FBA “news,” be sure you don’t just take it at face value without checking out the facts for yourself. Always go to the source, and in this case the source is the Amazon guidelines. If you can’t find the answer to your question within the Amazon guidelines or if you find conflicting information, open a ticket with Amazon Seller Central and see if you can get some answers that way. When you do get an answer through a Seller Central help ticket, be sure you save the email response to refer to later, especially if you run into problems related to your account’s performance.
Don’t dwell in the negativity. It can be so easy to get sucked into the negativity online when difficult situations arise in the FBA selling world, especially on Facebook. You could easily spend (waste?) hours reading and participating in the comments on Facebook posts about how fill-in-the-blank change is going to ruin our existence as third party sellers on Amazon. Don’t fall victim to that temptation! We have to find a balance between being informed about what’s going on and not dwelling in the negativity to the point that it affects our ability to work on our business.
Don’t worry about things out of your control. Worrying about your situation does not change the situation. I love the verse in the Bible that says, “Can any one of you by worrying add a single hour to his life?” (Matthew 6:27). The answer, of course, is no – in fact, numerous studies have shown that worrying too much can actually take hours away from your life! Certain aspects of doing business through Amazon FBA are simply out of our control, and there is absolutely no benefit to worrying about them to the point of losing sleep or not being able to focus on our work during the day.
Adjust your business as needed. There are certain aspects of doing business that are firmly in our control, and those are the areas where we should focus in times of change. We can take the information we get from various sources (most importantly, from Amazon), and we can make any necessary changes to adapt our business and keep finding profits and success. Sometimes we only need to make small adjustments, while other times we need to pivot and go in a completely new direction with our business.
This last point about adjusting your business as needed is where I want to focus the rest of this blog post. How do you go about deciding where and how to make adjustments to your FBA business – or even whether you should make adjustments at all? Here are a few tips for making those decisions:
Assess your risk. Another great article to come out in the past week can be found on Ryan Grant’s blog. In his blog post, Ryan gives an excellent summary of how to assess your risk in your particular FBA business model and how to determine your level of risk tolerance. Certain sellers (those who have a history of counterfeit claims, for example) are more at risk than others if Amazon won’t accept retail receipts as proof of origin, and certain sellers can tolerate more risk than others. Spend some time evaluating where you stand.
Understand business is risky by nature. There is no risk-free business out there, whether you are talking about business in general or Amazon FBA in particular. If you’re going to succeed at doing business, you need to understand the nature of risk and accept it as a part of the process.
Look at the probability of certain outcomes. How likely is it for you in your situation to encounter certain circumstances? In our own personal case, we are asking ourselves what is the likelihood that someone would make an inauthentic claim about our inventory? Are the categories we sell in likely to see inauthentic claims? How likely are the brands we sell to become restricted? How deep in inventory are we in those brands that are most likely to become restricted?
Gain some perspective. Perspective can be a game changer as far as your business mindset is concerned. Lately here in Texas we’ve had a lot of thunderstorms. I often hear thunder from my office and look out the window to see ominous clouds and pouring rain. But that’s just the view from my office. From plenty of other places in the world, the view is sunny and bright. The same is true about our FBA business: Don’t settle into a gloomy, cloudy, negative view, but regain perspective about all the areas that are going right in FBA selling. Spend some time talking with others in the FBA community (like in our Full-Time FBA Facebook group) about positive steps you can take to advance your business.
Identify areas where you can make practical changes to your business. Do you need to focus less on retail arbitrage and focus more on finding wholesale sources? Then do that. Is abandoning retail arbitrage the answer across the board for everyone in FBA? Probably not. Is it the answer for your business? I don’t know; only you can evaluate your situation and come to that determination. But spend some time evaluating your own business and identifying how you can take practical steps to make any necessary changes, and see how much you can accomplish once those changes are made.
Realize there are no guarantees. There is no 100% fool-proof way to protect yourself and your business against every possible eventuality. Amazon is going to continue to change the way things work for third party sellers. New categories and brands might become restricted at any moment, and new difficulties can arise in the process of sending in shipments to FBA warehouses. But there are always adjustments you can make to adapt to the new regulations and processes. There are always ways to adjust your business and continue to find profits, on Amazon and elsewhere (check out our recent post with the top reasons why you should keep an active eBay account).
Like I said at the beginning of this post, I truly want to know how you’re doing with all of the news and the changes. Please let us hear from you in the comments.
It is my honest desire that you are able to succeed if you have the goal of earning a full-time income through Amazon FBA – or if you have the goal of earning a partial income, putting away a vacation fund, or paying down debt. No matter where you are in your FBA journey and no matter where you intend to go, I hope you are able to focus on the helpful aspects of recent changes in Amazon selling and make the most of the abundant opportunities that are out there.
We all know the old saying, “Don’t put all your eggs in one basket.” If you drop the basket, the basket spills, or Amazon suspends your basket (wait, what?) you risk losing all of your eggs.
Spread those eggs out in a few different baskets, and you protect yourself from a number of unforeseen circumstances. One of the baskets can be larger than the others, but you should still have multiple places to keep your precious eggs.
Of course we’re not really talking about baskets and eggs today; we’re talking about how we spend our time and money on our business ventures. This blog is about using Amazon FBA to work part-time hours and make a full-time income. So, if we’re only working part-time hours to make a full-time income, what do we do with the rest of our time? Well, we put that time (and some of our business’ financial capital) into other business ventures to make more income on top of our Amazon FBA income.
Perhaps the most complementary “basket” to keep on the side of our Amazon FBA business is selling on eBay. Many of us who run an e-commerce business started out selling on eBay before we got into Amazon, but there may be those of you out there who started selling on Amazon FBA first. Today we want to share with you the reasons why it’s important to keep an active eBay selling account – or to start one if you’ve never sold on eBay.
Some items are restricted on Amazon, but they can still be profitable to sell on eBay. You might not be ungated in certain categories on Amazon, or you might not be approved to sell items from certain brand manufacturers. Some manufacturers might only restrict a certain product line within their brand (think Disney Frozen or Star Wars Episode VII). Also, you never know when an item will suddenly become restricted on Amazon after you already have it in stock at an FBA warehouse. In each of these cases, do the research and see if you can sell the item for a profit on eBay instead.
Sometimes we receive online arbitrage (OA) items that are damaged in shipment, and it’s easier to sell them on eBay than deal with returning to online store. We do a significant portion of our FBA sourcing online, which means we receive a large number of shipments throughout each week. It’s inevitable that a small percentage of those will be damaged in shipment. If the item can easily be returned to a brick-and-mortar store in our area, we’ll consider returning it. If it’s an online-only store or one we don’t have in our area, we sometimes sell the damaged item on eBay with thorough condition notes and pictures for full disclosure, rather than dealing with the hassle of calling to arrange for return shipping, an exchange, or refund.
Sometimes we have items returned from Amazon FBA sales that cannot be listed again on Amazon, but we can still sell it on eBay.If an item is returned with a damaged box or with wear-and-tear that keeps us from relisting it in new, used, or collectible condition on Amazon, we can easily list it on eBay with thorough condition notes and pictures for full disclosure of any defects, missing parts, or damage to the packaging. This has been especially useful as we’ve transitioned to selling more in the shoes and clothing categories.
Some items require detailed descriptions and multiple pictures because of their rarity or because they are missing parts; these types of listings belong on eBay, not Amazon.If an item is an antique or collectible, we sell it on eBay. If an item is missing parts or has a part that doesn’t work, we sell it on eBay. If for any other reason an item needs a detailed description of its condition or photos of the actual item showing its condition, we sell it on eBay. We’ve found that eBay buyers are more accustomed to reading the entire description and looking at all the photos so they know the condition of what they’re buying. Amazon buyers usually do not read the condition notes as thoroughly, and you’re more likely to have an Amazon buyer complain that you didn’t disclose an item’s condition (even though you did disclose it thoroughly!) than an eBay buyer would.
Sometimes we sell unique, one-off items that we don’t want to create an Amazon listing for. We’ve found certain one-off items have a much better market on eBay than Amazon, and we would rather create a one-time eBay listing than try to create an Amazon product page and keep our fingers crossed that a buyer finds it. These one-off items might include individual board game pieces, Lego minifigures, collectible coins, and sports memorabilia.
Some items sell well through multi-channel fulfillment. We don’t have much experience with multi-channel fulfillment yet, but it’s an area that we are hoping to learn in the near future. Whether you create your own individual listings on eBay or use a listing service, you can send items to an Amazon FBA warehouse, list them on both Amazon and eBay, and see which platform brings you the sale first.
If your Amazon FBA account becomes suspended, you can transition to selling on eBay more easily if you already have an account. If you’re making a full-time income from Amazon FBA, perhaps the biggest reason you should keep an eBay seller account active and in good standing is so that you have a platform ready to go to keep getting sales if for some reason your Amazon account is suspended. Your Amazon account can be suspended, rightly or wrongly, for any number of reasons, and sometimes it can take weeks or months to get it reinstated. You must (repeat, must) have a back-up plan in place before you experience account suspension, so that you and your family don’t suffer unnecessarily from a lack of income while you go through the reinstatement process. Having an active eBay account with good feedback and good metrics will allow you to continue selling online if your Amazon account is suspended.
To read more about protecting your Amazon account from suspensions we highly recommend the book Suspension Preventionby CynthiaStine. I know if we ever got suspended from Amazon Cynthia and her reinstatement program would be the very the first place I’d reach out to.
Now, if you’re just getting started on Amazon FBA and you’ve never sold on eBay, we recommend waiting a while before you rush out to get an eBay seller account. We firmly believe that you should FOCUS while you’re learning. FOCUS = follow one course until successful. Learn Amazon FBA first, get some sales under your belt, start to feel confident in what you’re doing with FBA, and then look into starting an eBay seller account.
As a general rule, we prefer the convenience and ease of sourcing items to sell through Amazon FBA. But if for any of the above reasons we find ourselves with inventory that we can’t sell on Amazon, it’s reassuring to know that we can open up the eBay app, check completed listings for profitability, and do what it takes to list the inventory on eBay instead of Amazon.
Do you sell on eBay? Are there other types of items you would rather sell on eBay than on Amazon? Let us know in the comments!
When Amazon loses or damages one of your inventory items, it is their policy to either 1) find a replacement for your lost/damaged inventory, or 2) reimburse you the replacement value of your lost inventory (less any applicable FBA and selling on Amazon fees, of course).
This is how most people imagine this reimbursement policy being lived out in real life:
“You find a great item to resell, price it competitively at $24.99, and send it to an Amazon FBA warehouse. Amazon accidentally drops and breaks your item, so they now owe you a reimbursement. Amazon takes your $24.99 selling price, takes out the fees as if you had sold the item, and then reimburses you $18.42.”
Unfortunately, this is not how many Amazon reimbursements work out. Did you know that when Amazon reimburses you for lost or damaged items, they have specific rules they are supposed to follow when coming up with the amount they are to reimburse you? It might surprise you to know that Amazon sometimes (not all the time) fails to follow their own reimbursement rules.
Here are the set of factors Amazon is supposed to consider when calculating the reimbursement amount:
Your sales history – Is this an item you sell often, and what is the price you usually sell it for?
The current average FBA selling price – What is the average of the most recent (no number is given) sales prices for that item.
Other factors (Amazon doesn’t explain what these “other” factors are).
If Amazon doesn’t have enough information to establish a reasonable value for an item, then the replacement value is determined based on a default replacement value from the table pictured to the right.
Here’s the deal… I have never ever seen a reimbursement that has followed the above table, so in my experience, Amazon comes up with their own reimbursement amounts based on something other than this table, something a bit more subjective.
In reality, this is how Amazon’s reimbursement policy is lived out more times than not:
“You find a great item to resell, price it competitively at $24.99, and send it to an Amazon FBA warehouse. Amazon accidentally drops and breaks your item, so they now owe you a reimbursement. Amazon takes your $24.99 selling price, and somehow decides to reimburse you only $10.54.”
Did you notice that? If Amazon took your FBA selling price, and took out the correct fees, then they should have reimbursed you $18.42, not $10.54. What’s going on? The truth is, I’m not sure what’s going on, but I do know what to do to get the reimbursement you think you deserve.
How to know if you received a fair reimbursement:
When you get a reimbursement, do some quick research.
Research Part 1:
Take the ASIN and put it in the Amazon.com search bar and find the product page.
Click on the link to view the current FBA offers.
Take 3-5 of the current lowest FBA sales prices and find an average. This number will be your current FBA average selling price.
Input the current FBA average selling price (that you calculated above) on the Item Price line under the Amazon Fulfillment column.
Click the yellow Calculate button.
Write down two numbers: the Cost (Amazon fees) and the Margin Impact (your profits after fees)
Research Part 3:
Repeat Research Part 2, but instead of the current FBA average selling price, use your original selling price you had priced for that item.
Compare your Margin Impact number of the current FBA average selling price (found in Research Part 1) with your reimbursement amount. Also, compare your Margin Impact with your original selling price with the actual reimbursement amount.
If the difference is big, then it’s time to open up a ticket with Amazon and request an additional reimbursement (more on that in a minute).
If the difference is small, then just let it go and move on with your business. Opening up a ticket with Amazon and dealing with getting a higher reimbursement amount can take some time. So, for most cases, it’s not worth your time to fight a reimbursement that is only a few dollars difference. Value your time and only fight a low reimbursement when you think it’s worth the time to dispute it.
When contacting Amazon, choose the option to open a ticket about Fulfillment By Amazon, and then click FBA Issue. Yes, it’s redundant, but it’s how Amazon has things set up right now.
Click on the Something Else button.
Choose your method of communication. Personally, I like to use email because there is a written record of the communication, and I can communicate without being interrupted.
Enter the ASIN in question for the reimbursement in the proper field.
In the “Please Describe your Issue” field, write this: “I received a reimbursement for ASIN __________, but it was not a fair reimbursement amount. I was reimbursed $$10.54, when I should have been reimbursed $18.42. I have calculated the correct reimbursement number using my sales history (My average selling price is $24.99) as well as the current FBA sales prices (the current FBA average selling price is $24.76). Here is the math: $24.99 (my sales price) – $6.57 (applicable fees) = $18.42 (correct reimbursement amount. Would you please approve an additional reimbursement of $7.88 ($18.42 – $10.54 = $7.88)? I would really appreciate it. Thank you for your time.”
Click Send and a new case will be opened.
When you go to the trouble to show the Amazon representative that you’ve done the math and spell it out for them, they are much more likely to approve your additional reimbursement request than if you only complained about your reimbursement amount. You’ve basically done all the work for them and they don’t have much to argue with.
When you open up a new case for an additional reimbursement, someone who works for Amazon will review your case and will reply. When you get a reply, one of three things will happen:
You will get the reimbursement that you deserve. (YAY!)
You will be requested to provide more information such as a receipt or invoice of that item.
You will get a form letter from an Amazon employee that probably didn’t read your entire message and is just responding with a “copy and paste” reply that basically states back Amazon’s current reimbursement policies. They will then close the case.
If Amazon asks for more information (like a receipt):
I don’t know why Amazon asks for a receipt or invoice in order to get a proper reimbursement of a lost or damaged item. It might be in case you never really sent Amazon the item, and Amazon says they lost it, but in reality you never sent it, so Amazon wants proof you actually purchased it to sell on Amazon. No matter the case, I have never sent Amazon a receipt in reply to this response. Here is how I reply:
“I’m not sure why you are asking for a receipt or invoice in order to determine the proper reimbursement amount for this item. The reimbursement amount is supposed to be calculated by looking at my sales history, as well as the current FBA selling prices.”
I would then copy and paste the math I provided earlier so that all the information is in one place for the Amazon rep to make a decision.
If your request for an additional reimbursement was declined and the case was closed:
If you didn’t get the additional reimbursement you expected, the next step is to re-open the case. When you re-open the case, be sure to ask that the case be “escalated” and for that Amazon rep to hand the case off to one of their supervisors. Be sure you use the word “escalate” because the Amazon employees know and understand that word and that you mean business. You can re-open the case and communicate something like this:
“Thank you for your response, but it did not solve the issue. I would like to escalate this case to your supervisor. Please have your supervisor read through our previous communications and reply to me at their earliest convenience. Thanks and have a great day.”
Usually when you escalate a case, your request will be forwarded to the Amazon rep’s supervisor who will more than likely approve your request.
If, after all this, Amazon still doesn’t reimburse you any more, then it’s time to let it go and move on with your business, but the majority of the time you will end up with an additional reimbursement.
For more information about Amazon’s FBA Lost and Damaged Inventory Reimbursement Policy, just click here.
Want more? Two fantastic resources to make sure you’re getting all the reimbursements you deserve are The Amazon Refund Guide (a do-it-yourself book for all things reimbursements) and AMZSuite (a really affordable service that does most of your reimbursement work for you). We have personally used both of these resources and found great success at getting reimbursements!
So how about you? This is how I handle unfair reimbursements, but do you have any more ideas on how to get the reimbursement amount you deserve? I’d love to hear from you in the comments below.
Because the item has become restricted and you can no longer sell it
To lower your monthly storage fees on larger items
Before August 2016, there were only two options if you wanted to remove your inventory: You could have it returned to you or have it destroyed. This month, Amazon has added a new option called Amazon Liquidate. If you choose to liquidate some of the items in your inventory, then it’s possible that you will actually get paid for “selling” your items to a liquidator via Amazon. I’ll give you the details of how much money you could get later on in this post.
The Amazon Inventory Liquidation Program is still in beta, so it might not be available to every Amazon seller, but Amazon plans on trying out this program to see if it can help both Amazon and Amazon sellers make some money from sellers liquidating some of their inventory. Here’s how the program works:
You chose the specific items you want to be removed from your inventory.
You are given the option to return, dispose, or liquidate your items. Note: If the liquidate option is not available, then either that option has not rolled out to your account yet or that item has already been deemed ineligible for liquidation.
Once you submit your items for liquidation, Amazon will spend up to 60 days looking for a liquidator who is interested in buying your chosen liquidation inventory.
During the 60 days, Amazon will not charge you any Long Term Storage Fees (THIS IS HUGE).
During the 60 days, Amazon also will not charge you any Monthly Storage Fees for items successfully liquidated.
If Amazon finds a buyer for the items you submitted for liquidation, Amazon will keep 10% of the liquidation payment and will give you the remaining 90%. Note: It’s pretty normal for a liquidator to only offer to buy liquidation items for around 10% of the average selling price, so basic math tells me you can expect to receive around 9% of the average selling price as a liquidation payment.
If Amazon does not find a buyer in 60 days, then once again you are left with 2 options to remove your inventory: return or dispose.
Once an inventory item has been selected to be liquidated, there are no options for you to cancel this process.
Payments for all liquidated items will appear in the “Miscellaneous adjustments” section of your Payments Report in Seller Central. You should receive the payment within 60 days from the date you submitted the liquidation.
If you don’t get the liquidation payment, then it’s a good idea to open up a ticket with Seller Central and have them investigate.
So when are the best times to use the Amazon Inventory Liquidation Program?
If you think you can get more from the liquidation program than from any other method of selling that item (like on eBay, at a garage sale, through Craigslist, etc)
If you would have originally paid to dispose of that inventory, then liquidate it and possibly get paid for it instead.
If you don’t want to deal with returning items to your house/business.
The Amazon Inventory Liquidation Program is still brand new, and even Amazon says there is no guarantee they won’t suddenly pull it without warning. It’s an interesting option, however, to think about when you’re faced with removing items from your inventory.
If you’re curious how to set up a removal order (either to return, dispose, or liquidate) on Amazon via Seller Central, check out this quick video:
So what do you think about the new Amazon Inventory Liquidation Program? Do you think you’ll try it out? If you do, be sure to check back here and share your experience with the rest of us.
Retail arbitrage can be very profitable. The feeling of anticipation when you walk into a retail store is extremely motivating. I always advise other resellers to grab a shopping cart when they first enter a store because they need to be mentally ready for a big haul. Now, the big haul doesn’t always happen, but it’s still good to be prepared in case you do find tons of potentially profitable inventory.
Retail arbitrage is a method of sourcing inventory from retail stores in order to sell it through Amazon. When you’re doing retail arbitrage (or RA, as it’s often abbreviated), you are looking for items you can buy at a low price in retail stores and sell high on Amazon. “Buy low, sell high” is the definition of arbitrage in a nutshell, and retail sources for arbitrage are a staple for many Amazon FBA sellers.
I got my start on Amazon FBA by sourcing at mostly garage sales and thrift stores, and I was able to build up my Amazon disbursements by buying inventory at a ridiculously low price (e.g. books for 25 cents or a dime) and selling it for 1000% return on investment (ROI). After a while, my disbursements were sufficiently large that I didn’t have enough time to spend the entire amount of the disbursement at garage sales and thrift stores – I was starting to have more money than time.
The next step for me was to scale my Amazon FBA business by transitioning to retail arbitrage. Garage sales and thrift stores can provide amazing ROI, but you typically can only buy one-off products at these sources. You can have a great day of sourcing and find 50 items, but you have to enter 50 MSKUs into your inventory as a result.
Retail arbitrage provides the ability to scale the business by buying multiples. It’s possible to find 50 items at one RA stop, and it’s possible to have a much smaller number of MSKUs because of multiples. Fewer MSKUs means less hassle down the road in maintaining your inventory in Seller Central – fewer times to reprice, fewer chances for listing issues, etc.
And the even better thing about finding multiples at a retail source? The potential for replenishing. If you can find a replenishable item through RA sourcing, you automatically know how you can spend part of your capital the next time you have it available. The more replens you can find, the less time it takes you to source each disbursement cycle. Buy a replen, send it in, sell it, get a disbursement, buy that replen again. Lather, rinse, repeat.
Every seller likes to do RA a little differently, and it’s really a matter of trying out different things to see what you prefer. Everyone also has a different schedule, different family commitments, different number of stores available within driving distance. Some sellers like to go out to do RA for a couple of hours every day while their kids are in school. Others can only go on the weekends or evenings when they’re off work from their 9-to-5 job.
For me, I typically spend one full day doing RA every 1 to 2 weeks. I would rather spend all day driving to different stores and get all my sourcing done in one day, instead of breaking it up and doing a little here and there each day.
When I spend a day doing RA, I have two main strategies for how I spend my time:
1. Source all the stores in one area
One strategy I use is to choose an area of town where I will focus for the day. The benefit of using this method is that I can hit a large amount of stores in a small amount of time with minimal driving. I use this strategy when I don’t have very much time to spend driving, and I don’t have any good leads on items that I already know I want to buy.
After I decide on the neighborhood, I plan out a route on Google Maps where I go to that neighborhood’s WalMart, Target, Kohl’s, TJMaxx, Marshalls, Walgreens, etc, one after the other. The next time I’m doing RA, I’ll pick a different neighborhood and plan a similar route.
2. Source multiple locations of one store
The second strategy I use for RA is when I have a good lead on some items to source at one particular retail store. Maybe there’s a big sale going on at a chain of stores, or maybe I have some replens that I need to restock.
In these instances I plan my driving route for the day to cover a larger radius from my home, but I only put one or two stores in the route. For example, I might go to every Target in a 30 mile radius in one day. Depending on where you live, a 30 mile radius might be too many Targets for one day – in that case, using this RA strategy could give you several days worth of work.
I also use this method when I know a chain is doing a big seasonal clearance. I’ll even call ahead to the store branches to make sure that each one in the chain is already doing the clearance before I drive all the way out there.
Building relationships with managers is a helpful way to plan for sourcing days in this second strategy. I have the names and phone numbers of managers at certain stores in my area, and I give them a call from time to time to see if they know anything about the timing for upcoming sales. If I can be one of the first to know about a clearance event, I can plan my sourcing schedule so that I’m one of the first shoppers to see the clearanced products. I even have managers in some stores who know that I buy a lot of items at a time, and they text me to come clear out their inventory for them!
Using these two strategies doesn’t have to mean that you choose one over the other on any given day. More than once I’ve set out for the day with the goal of using the first strategy, but I found a couple of really awesome deals early on in the day at one store. At that point I rerouted my day to only go to that one chain for the rest of the day. Sometimes you gotta ride the wave and go where the deals take you!
Do you have any retail arbitrage strategies you use that are different from these two? Do you prefer to go to many stores in one area of town for RA or to go to one store in multiple parts of town? Please share your experiences with us in the comments!
I would prefer to save a lot of time and money, but hey, every little bit counts when we’re trying to make a profit at Amazon FBA. Any time I can save money on shipping supplies or other areas of my business, I can use that saved money to buy more inventory – and buying more inventory is how I would prefer to spend my money in my business!
All of the tips I’m going to share with you in this post should be either free or next to free. I hope you find these tips super practical and easy to implement right away in your Amazon FBA business, no matter what stage of business you’re in.
Before I get into my tips, I want to invite others to add their advice to the comments at the bottom. Let’s make this post our most-commented post ever! We all have knowledge and experience that others can benefit from, so please share your wisdom and be a blessing to others in the Amazon FBA community today.
Also, if you want to see these tips in action, scroll to the bottom of this post to watch a video of Stephen demonstrating them.
Now…here we go…my top Amazon FBA hacks to save money:
1. Use free boxes from grocery stores for Amazon FBA shipments.
Especially in the early stages of your FBA business, there’s no need to pay for shipping boxes when you can get them free from grocery stores, friends who have recently moved, or other places who are just going to recycle their old boxes. Find out from store employees when they’ll be restocking the shelves, and stores are generally happy for you to come take the empty boxes out of the aisles for them.
2. On a similar note, use the boxes from online arbitrage purchases to send in Amazon FBA shipments.
We do a significant amount of our sourcing through online arbitrage, so we just turn around and send our shipments to Amazon in the online stores’ boxes. Just make sure you remove or cover up any previous barcodes before putting on the Amazon and UPS label.
3. Use free dunnage for your Amazon FBA shipments.
Dunnage (isn’t that a weird word?!) is the stuff you put in a shipment to pad the items and keep them from touching the sides of your shipping box. Here are a few ideas for things to use for dunnage:
air pillows from online arbitrage purchases
plastic grocery bags filled with printed newspaper and tied off (do not let newsprint come into contact with your inventory in the shipment)
small cardboard boxes
4. Use lighter fluid to remove residue from price stickers.
I usually recommend using Goo Gone for removing price sticker residue, but if you don’t want to rush out and buy a new bottle of Goo Gone, you can use lighter fluid if you already have it at your house. (If you want to see how I remove price stickers, check out this video.)
5. Get FREE inventory from around your house.
We all have items sitting around our house that are brand new or barely used – prime candidates for sending to Amazon and turning into profits. Check out your bookshelves, your kitchen cabinets, your game closet, and your kids’ rooms (with their permission), and you might be surprised what you can find that you don’t use and would actually turn a profit on Amazon.
You can join a group for your area of town on the Freecycle Network and keep an eye out for items that people are giving away for free. I’ve been able to source free board games (new and used), boxes of books, and other items. If you claim an item on Freecycle, the person will leave it on the porch or sidewalk for you to drop by and pick up on your own time. It’s way easier to coordinate than Craigslist purchases, but please still use safety practices and don’t make pick-ups alone.
7. Join Amazon FBA Facebook groups to get tons of free FBA business information.
One of the easiest ways to absorb free information from the FBA community is to join Facebook groups, search and read the archived posts, and ask questions. We have a Full-Time FBA Facebook group that we would love for you to join, and there’s tons of other groups you can search for on Facebook as well.
Those are my top tips for getting FREE items so that you can use the money you save on buying inventory instead. Let me know in the comments if you know of any other awesome ways to save money on supplies for your business.
You’ve likely heard us mention that we use the Inventory Lab software package to streamline our process of listing inventory on Amazon FBA and for sourcing inventory through the Scoutify app. Today we want to share with you another feature of Inventory Lab that we’ve come to depend on: the ability to track supplier profitability through Inventory Lab reports.
Sometimes it’s easy as a reseller to get caught up in the rush of sourcing for inventory, sending it in to the FBA warehouse, and seeing the pending sales in Seller Central. Honestly, isn’t the thrill of the hunt and the excitement of the sales one reason we all do this business?
But if we stop and dig a little deeper into those sales, would we still be as excited about the raw numbers? Sales numbers can be deceiving at times, and if we don’t take the time to look at and think about our actual profit, then we don’t really know if our business is as successful as we want it to be.
Inventory Lab allows you to enter the total cost of an item when you list it on Amazon. Inventory Lab then takes that cost, your sales price, and associated fees to calculate profit and return on investment (ROI). You can see the projected profit and ROI for a batch when you’re listing through Inventory Lab, but you can also run reports to show you the actual profit and ROI based on payments from Amazon for your inventory items.
The circled area is where you input the data to help Inventory Lab calculate supplier profitability. Some areas of the screen shot have been blurred out for business privacy.
Prices may change from the time you enter a batch to when the item actually sells – it’s fun to think about a batch having 150% ROI when you send it to the warehouse, but it’s more useful to look at the ROI when you are actually paid for the sale of those items. From time to time we need to stop and analyze our numbers and ask ourselves, “Am I making the ROI I want/need on my inventory? How do I need to tweak my business to get the ROI I want?”
You can take the profitability question a step further by entering not just your total cost for each inventory item, but also the supplier. Then the question becomes, “How do I need to tweak my sourcing from each supplier to get the ROI I want?”
We currently use the supplier profitability report in several ways:
To track how much commission on sales we need to pay our helper who sources for us
To track the profitability of our online arbitrage subscription services
To track the profitability of our wholesale sources
In order to run the supplier profitability report, you will first need to enter a supplier at the time of listing an item. Inventory Lab comes with many retail sources already listed as options for supplier, but you can easily add your own. For instance, we use our helper’s initials as the supplier when we’re listing items she has sourced for us. We use other abbreviations for tracking each of the OA subscription services we use (e.g. Cyber Monkey Deals is CMD, Gated List is GL, Your Sourced Inventory is YSI, OAXray is OAX, etc).
After this info is entered and enough time has passed to have generated some sales, you can run the supplier profitability report by following these steps:
Go to the top menu on Inventory Lab.
Click on Reports.
Choose Supplier Profitability.
(Note: You will see there are several other useful reports you can run to analyze your inventory’s profitability.)
The default selection will be for the last month, but you can click Advanced Search to choose more date range options. You can choose within the last 1, 3, or 6 months or the entire date range since you started tracking. You can also choose a specific date range from a drop down calendar.
Once you’ve pulled up your report, you can sort by supplier, units sold, revenue, % of revenue, profit, ROI %, and on hand (number of units currently on hand in your inventory).
Depending on the circumstances, each of the fields might carry a different weight for you as a seller in your decisions for how to adapt your business to improve those numbers. Some sellers like to have 100% ROI on everything they sell; others have a business model that supports 50% or even 30% ROI. The point of running these reports isn’t to compare your numbers to someone else, but to look at your own results and see if they meet your own business model’s criteria.
Let’s look now at two practical ways that we use our supplier profitability report.
To track how much commission on sales we need to pay our helper who sources for us
At the beginning of each month, we run the supplier profitability report and look at the line with our helper as the supplier. We look at the dollar amount for the previous month under the Profit column, and we pay her commission out of that amount.
To track the profitability of our online arbitrage subscription services
We also look once a month at the lines for each of our subscription services as the supplier. First, I look at the profit and make sure it’s more than the amount we’re paying for the subscription. This is an easy way to put solid numbers together to show yourself whether or not it’s worth it to pay for that particular subscription.
I also will look at trends as far as profit and ROI go. I don’t rush to cancel a long-standing subscription if I randomly have an off month, but I do look at whether a service seems to be deteriorating for me over time and make my decision whether to keep subscribing or not.
I also don’t rush to cancel a subscription if I think that I’m the problem rather than the service. For example, a while back I saw in my monthly report that my units sold and ROI for OAXray were not what I would prefer. A quick look back over my schedule for the previous weeks reminded me that I hadn’t been spending the same amount of time using OAXray each day as I had in the past. Of course those numbers are going to go down! If I’m not prioritizing my time to use the product as often as I should and actually send in items I sourced with it, the problem is me, not the product. So I made some adjustments to my schedule, made more time each day to use OAXray, and the numbers the following month were back up where I wanted them.
We’ve also started using Inventory Lab to track supplier profitability for wholesale sources, and many people use it to track their retail arbitrage sources. Are there other ways you use the supplier profitability report in Inventory Lab? We would love to hear your ideas and experiences in the comments!
At times, I might include affiliate links of items that I endorse. If you click through and decide to purchase the item linked, I will make a small commission on the sale. I promise to never endorse a product only because I have an affiliate link to it. I only want to post links when it is helpful to you and your business. ~Stephen