Tag Archives: Pricing Strategy

How to Capitalize on Amazon’s Super Saver Shipping Price Change

Amazon just quietly changed the price for non-Prime members to qualify for Free Super Saver Shipping, a decrease from purchases of $35 down to $25. In other words, non-Prime members now have to buy only a minimum of $25 worth of Prime-eligible items in their shopping cart in order to qualify for free shipping. This can be an order containing a combination of items from every category.

This is not the first time Amazon has changed the price to qualify for free super saver shipping. In October of 2013, the price for free super saver shipping increased from $25 to $35 and remained $35 for almost 2 years. In early 2016, the minimum price increased from $35 to $49. In the middle of 2016, Amazon started to feel the impact of Walmart.com’s $25 free shipping threshold and responded by lowering super saver shipping from $49 back to $35. This week, Amazon has again lowered the minimum price back down to $25.

If you react correctly, then this change by Amazon will actually help your business. Here are some reasons to celebrate this change:

Amazon-Prime-Streaming-Video-Service-Bundles1. With this change, more people will be buying items that are Prime-eligible (this means items stored at FBA warehouses). With more people buying Prime-eligible items, there will be more people to buy your FBA products.

2. The more people who decide to use Prime shipping as a non-Prime member means that more people will be testing out Prime shipping benefits. More customers will fall in love with the free Prime 2-day shipping, and that will cause more people to sign up for Amazon Prime. The more Prime buyers, the more customers to buy your inventory.

It will take a little work, but those that react the fastest will win. I recommend doing some price changes quickly. Here is what I plan on doing with my inventory:

Price-Increase1. Price many items at $25. Search and see which inventory items I have priced between $22 and $25 to see if I should raise the price to $25. Based on my competition, this might be a great idea. This strategy will cause non-Prime shoppers to get free shipping on your items and they will choose your $25 item instead of a competitor’s item priced at $22 + $5 shipping.

2. Another “magic” price point will be $12.50. If the item you have could possibly be bought in multiple quantities, then this is a great price point for people who want to buy two. Two items at $12.50 total $25 and will qualify for Free Super Saver Shipping!

Of course there will be some exceptions to the above rules. Exceptions come into play when you look at other current FBA prices, how many items are being sold of that item, how the particular product category works, and more… but most of my prices will be updated with this thought process in mind! For more from Amazon on the Super Saver price change, click here.

So what do you think about the new $25 price point? How do you plan to react to these changes? I’d love to hear your thoughts in the comments below.

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Why You Should Consider Raising Your ASP (Average Selling Price)

Did you see that we recently released a PDF of Amazon acronyms you can print out and refer to in your FBA business? If not, you can grab a copy of the acronym list here as a handy reference.

One of the acronyms at the top of that list is ASP: average selling price. Over the next couple of blog posts, we’re going to discuss ASP and how it impacts your business.

Your ASP is the average amount of money you make in sales per item you sell on Amazon. ASP is calculated by dividing the dollar amount of sales by the number of items sold. To find your ASP, follow these steps:

  • Log in to Seller Central.
  • Hover over Reports.
  • Click on Business Reports.
  • Check out your Sales Snapshot – your ASP is the amount listed for “Avg. sales/order item.”

Why is it important for you to know your ASP and why is it important to increase your ASP?

I really believe that an Amazon FBA business needs a higher ASP in order to make it long-term in this business. If selling on Amazon is a business for you and not a hobby, you want to make sure you’re getting paid like a business would pay you. One way to increase your ability to pay yourself out of your business is to increase your ASP.

Sure, there are plenty of people who are able to make good money on Amazon with a lower ASP, for example book sellers or sellers in other categories that depend on high volume at low prices. Depending on your business model, you can really make a lot of money at high volume and low prices. But along with that type of business model also comes more work because you’re having to find and sell more items in order to make that volume. That type of business model also might require more outsourcing if you want to scale even larger, more sourcers to find your inventory, more listers and preppers, etc. I’m not saying this isn’t a viable business model; I’m saying that selling at a low ASP comes with a price.

In my experience, my business has seen more growth when I have focused on finding items to resell at a higher ASP, rather than trying to increase my volume on low ASP items. I’ll share with you a few reasons why I believe this has been the case:

1. You can save a lot of money on FBA fees when you raise your ASP.

Let’s think about an example using two FBA sellers, Bob and Sally. Bob typically sells lower priced items on Amazon. Today so far he has sold 10 items at $10 each, so he’s made $100 in sales. Sally, on the other hand, has sold one item today, but it was priced at $100. Both sellers have the same dollar amount in sales, but their FBA fees are taken out of those sales differently. Sally only has the one sale, so she only has to take care of the referral and FBA pick & pack fees for just the one item ordered. Meanwhile, Bob has to pay the referral and FBA pick & pack fees 10 times for 10 items. All those fees on low priced items add up over time.

In the end, Sally’s $100 of sales allows her to take home about $80 of profit. Bob’s $100 of sales leads to closer to $60 of profit. If you increase your ASP, you reduce your fees and increase your profit.

2. You can save a lot of time, money, and effort on prepping and shipping items when you raise your ASP.

Think about Bob and Sally again. With Sally’s one $100 item, she only had to expend the time, money, and effort to put one FBA label on her item, put one poly bag on her item, and pack that one item in her FBA shipment. But Bob with his $10 items…he (or someone he has hired) has to put on 10 FBA labels, seal 10 poly bags, and pack 10 items for shipment to get that $100 in sales. All of those costs add up over time, and you can save money and increase profits by reducing the amount of prep work required in your business. Increasing your ASP is a great way to reduce your necessary prep work.

3. You can give yourself more wiggle room for price fluctuations when you raise your ASP.

Back to Bob and Sally…

For sellers like Bob who have items priced mostly in the $10-$15 range, if the going price of their items begins to drop, they don’t have much room to lower their price and stay competitive without losing all their profit. If they lower the price even a couple of dollars, it drastically changes their return on investment (ROI). But if Sally’s $100 item lowers in price by $1, $2, or even $5-$10, she still has wiggle room to lower her price and stay competitive, without sacrificing her ROI.

Note: In general I don’t recommend always lowering your price whenever your competition does, which can start a race to the bottom. But in those instances where for some reason you need to keep your price competitive, having that wiggle room to lower your price without sacrificing profit and ROI is a nice feature of increasing your ASP.

4. You can increase your Amazon disbursements if you raise your ASP.

When you have fewer fees removed from your FBA sales and you sell more items with higher ASP, the natural result will be higher disbursements from Amazon. More profits, more money to reinvest in your business, and more money to take out of your business in the form of income for yourself and your family. That’s the progress we personally have seen over the past few years – the number of items we have sold via FBA has decreased each year, but our ASP has increased, and as a result our Amazon disbursements have increased.

Like I said earlier, some business models work very well by selling a high volume of items at a lower ASP. But for the amount of time, effort, and money that I want to invest in my business, I have found that sourcing and selling higher ASP items has given my business tremendous growth. My goal is to continue making a full-time income with only part-time hours through Amazon FBA, and increasing my ASP has been a vital component of achieving that goal each year.

Here’s one strategy I suggest for anyone who might struggle with having enough money in their sourcing budget to make it from one Amazon disbursement to the next: Start setting aside a portion of your budget solely dedicated to higher ASP items. Make sure you are gradually working at finding items that will increase your sales without increasing your work. In my next blog post, I’ll go into more detail about how to raise your ASP and start getting more bang for your buck with your sourcing budget, time, efforts, and energy.

Keep an eye out for that next blog post soon, but in the meantime we would love to hear from you in the comments. Have you had success increasing your ASP over time? Are you actively trying to increase your ASP? Or is your business model built on lower ASP items?

The 2 Best Retail Arbitrage Sourcing Strategies

RA Sourcing StrategiesRetail 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.

targetstoreThe 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.

walmart-superEvery 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:

Store Signs1. 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.

Target Route2. 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.

Walmart ManagerBuilding 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!

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If you’re looking to learn more about how to make smart sourcing decisions while doing retail arbitrage, be sure to watch my free tutorials on how to understand Keepa, and how to understand CamelCamelCamel or check out my book/video course, The Reseller’s Guide to How to Keepa Camel: Using Amazon Sales History to Make Smart Sourcing Decisions

Why I’m Not Worried About the Post-Christmas Amazon Price Drops

price-drop-alert-resizedA quick question: Did you sell out of your entire inventory before Christmas? Neither did I. During Q4, many Amazon sellers get used to the abundance of  sales that come with the Christmas season. Actually, we get spoiled with so many sales per day that when January arrives, we get scared. All of a sudden the sales seem to stop, and for some sellers panic sets in. Some sellers think that the answer is to lower their prices ASAP in hopes of getting more sales, but is that really the answer?

One of the things I always try to remind people is patience brings profit. It’s true that sales in January are usually not as good as December, but they still can be outstanding. The question I want to ask you is this: What is your business model when it comes to selling on Amazon? If you have a model that is focused on fast turns (items that sell very quickly once they arrive at a FBA warehouse) then you will price items much differently than if you have a business model based on patience.

I sometimes hear about Amazon sellers stating they lost money on an item they purchased in the fall and were hoping to sell during the Christmas selling season. The items didn’t sell out and now the price has tanked. Sometimes the price has fallen so far that the current price on Amazon is lower than the price they paid for it back in the fall. This can be frustrating for any seller. So what is the answer?

If your business model is based on fast turns, then you might want to lower your price (even if you lose most of your money) so that you can get some of that capital back to reinvest in items that you think will bring a better and faster return. On the other hand, if you are patient, you might just see the price you want return to equilibrium and wind up making a profit. Since monthly FBA storage fees are usually around a few pennies per month per item, it would seem to me that patience could possibly pay off in the end.

CCC Q4I’ve seen it happen often: An item is selling for a great price in December, but then falls drastically in January. A few months later, the price begins to rise again, and in December the price is back up where the profit margins are the best. Does this happen 100% of the time? No, but it happens enough that the few cents per month to pay for the item to sit in an Amazon FBA warehouse might be worth the gamble. Look at the image above. Almost all year long, the prices are low, but when Q4 approaches, the prices shoot up.

ROISometimes, it’s better to have $50 five months from now than $5 today. Why? Because I adhere to the balanced business model. I try to stock my inventory with slow dimes, fast nickels, and super slow quarters. What does this mean? It means that my inventory is loaded with items that will sell fast, sell slow, and sell super slow. I’m ok with making a 30-50% ROI (Return On Investment) on the items that sell fast. On items that sell slower, I want to get at least 100% ROI, and for the items that sell super slowly (think long tail items), I want the ROI to be well above 200%. The waiting game isn’t always fun, but in this balanced business model, patience brings profit. 

I don’t want to wait 11 months if the ROI isn’t high enough. It all comes down to opportunity costs. The longer I have to wait to sell an item at a higher price, the higher the potential ROI needs to be.

20465.picIf I hold my higher price, I could sell it later and get more for my item… but if I lower the price and sell sooner, I could reinvest that capital into items that will sell much faster. Each item is different and will require a different pricing strategy. Sometimes it’s good to hold at your higher price, because you’ve seen on CamelCamelCamel that in a few months, that item will probably be selling at the higher price you have it listed at. On the other hand, if you’ve seen the CamelCamelCamel data and it looks like the price will not recover soon enough, then it’s a better idea to lower your price so you can get that capital back to invest in better inventory.

Bonus Tip: If you have multiple quantities of a particular product that hasn’t been selling and suddenly begins to sell, check to see if you need to raise the price. You don’t want to raise it so high that it won’t sell again, but raise it up enough to match everyone else’s price. If the items stop selling, you can always lower the price back to where it was.

So what about you? What works best for your business? Would you rather get your capital back to reinvest, or do you wait for the prices to return to what you’d like them to be?

*This article was originally written in 2014 but has been updated for January 2016

Overcoming Your Fear of “Tanking” Prices

It seems to happen far too frequently. You buy an item (or multiples of an item), price it just right, send it to Amazon… and your competition starts to lower their prices. What once was selling for $29.99 is now selling for $15.99 only a week or so later. What happened? Why would someone want to sell it for $15.99 when it was selling just as fast at $29.99? It can be maddening if you let it consume you. With experiences like this, it’s easy to see why so many people have the fear of their competition tanking the prices of their inventory. 

Just like other articles on our series on Overcoming Your Amazon FBA Fears, this one will be aimed at replacing your fears with truth so you can not only move past your fears, but move forward in your Amazon FBA business. In our previous blog posts about overcoming fears, we replaced each individual fear with a specific truth, but in today’s post, one simple truth will replace all of your fears concerning your competitors tanking the prices.  

falling-pricesFEAR #1 – I’m afraid if I buy an expensive item to sell, the price will tank. 

FEAR #2 – I’m afraid if I go too deep with inventory, prices will tank and I’ll be stuck with a lot of “dead” inventory. 

FEAR #3 – I’m afraid to buy almost anything now. The price of every item seems to tank one it’s finally at Amazon. 

THE TRUTHPrices are always going to be fluid, but making better sourcing decisions will lower the chance that your competition will lower their prices, and could increase your chances that the prices will go up. 

Supply-demand-equilibrium.svgYes, it’s true that some of your competitors will change their prices on the same items you are selling. Sometime the prices will go up, and sometimes they will go down. It’s a natural process of supply and demand. When demand for an item outweighs the supply, then prices usually go up. The opposite of this is true as well. Think about how this applies to your sourcing strategies. 

It really surprises me how often I hear other online sellers say something like, “I bought this item for $10, and at the time it was selling for $30… now, it’s selling for only $15. Looks like I need to lower my price to try and break even.” Here are a few of my thoughts about this mindset:

  1. If prices have gone down, then it’s most likely that the supply is now outweighing the demand.
  2. It’s very likely that if you exercise some patience, prices will recover. 
  3. If you lower your price to get the sale today, then you’re just adding to the problem.

BlogGraphic_ArrowsI’m not suggesting that you should never lower your price in order to sell your inventory. There are times when this is necessary (when the cost of long term storage fees are too much, or when CamelCamelCamel shows that the price history of the item is usually lower than when you first sourced it, etc.), but many online sellers might be surprised just how fast the price of an item can recover, and maybe even be higher than when they first sourced it. 

Chris Green says in Online Arbitrage, “More competition? Prices never ‘tank.’ Prices normalize as supply moves to meet demand. I have never seen an item tank and never recover. The market bears what it will bear. Sales rank can never tank unless demand is non-existent, and in that case, items won’t sell at any price (high or low).” I completely agree. 

toy-clearance1So, as long as sales rank remains consistent, it’s feasible to conclude that the prices will recover. Think about it this way. You go to Target and notice that there is a huge clearance sale on toys. You fill up a cart full of toys at 30%, 50%, and even 75% off. You’re elated because you know that you’ll at least double, triple, or maybe even quadruple your investment.

The only problem with this situation is that hundreds of other online sellers across the nation are also sourcing at the big Target clearance event. After the Target sale is over, you begin to realize that most of what you sent in from Target to Amazon is no longer selling. Why is that? Because Amazon was flooded with an increase of supply while the demand has remained the same. With more supply than demand, other online sellers begin to panic and assume they need to be the lowest price in order to get the sale (read The Buy Box Bible sometime and learn why the lowest price doesn’t automatically give you the Buy Box). With dozens and dozens of sellers seeking the next sale by lowering their prices by a penny or, worse, a few dollars, it’s easy to see how the prices fall quickly.

everything-will-be-ok-in-the-end-if-it-s-not-ok-it-s-not-the-end-368781-475-559_largeBUT, this is not the end of the story. As other Amazon sellers sell out, those who are patient eventually get the sale at the price they want. It’s only the end of the story if you decide to lower the price and break even or take a loss. Show some patience and the prices, most likely, will recover. 

As with all situations, there are exceptions to what I suggest. Sometimes your business is in a place where you need the capital back as soon as possible in order to take advantage of better selling inventory, and therefore lowering your price to get the next sale might be what you need to do, but complaining about others lowering their prices is not a profitable use of time. 

How to avoid buying items with tanking prices:

While it’s impossible to only source items that are “tank proof,” you can make better decisions to insure that you won’t be faced with an onslaught of tanking prices. The short answer to how to avoid buying items with tanking prices is this: Make smarter sourcing decisions. Here’s how: 

  1. Tank and RecoverWhen you are out sourcing for inventory, don’t just look at the current price, but look at the price history. You can do this by using CamelCamelCamel on your desktop or smartphone. If you see that in the past the item has had a constantly good price, then it’s likely that the price, if temporarily lowered, will recover sometime soon. 
  2. When you are sourcing for inventory at a big sale at a major retail store, understand that probably hundreds of other online sellers are doing the same thing. The best plan is to source quickly and send your items in as soon as possible. That way you’ll get some sales before the prices begin to fall. Then, just be aware that prices will fall, most likely temporarily, but will return to market value once the supply falls. The return of the price will happen even faster the closer you are to Q4.
  3. Unless you are willing to wait it out, don’t go too deep on an item at one of the major retail store clearance sales. You might sell one or two before the prices fall, but you don’t want to be stuck with too many while you’re waiting for prices to recover. The prices might recover in time for you to sell out and avoid any long term storage fees, but you don’t want to risk it by buying too deep.
  4. Create your own bundles. When you create a quality bundle, you can usually avoid competition all together. It’s harder, but not impossible, for other Amazon sellers to find each of the items in your bundle, so you’ll have much less competition and better control over the selling price. 

patience-god-give-meOverall, the key is smarter sourcing, and being a patient seller. Don’t be a self-fulfilling prophesy by complaining about prices tanking, and then responding by lowering your own prices by a large amount. Again, there are exceptions to everything I suggest, but overall this balanced approach to selling both fast nickels and slow dimes provides you with a well-balanced inventory that should consistently give you sales throughout the year. If you’re interested in learning how to source smarter, then check out my coaching page for information about personalized one-on-one coaching. 

How do you best handle prices when they begin to fall? What do you do to avoid sourcing items where the price seems to fall soon after? I’d love to hear your ideas and strategies.

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If you’re looking to learn more about how to know exactly how long it might take for an item to sell on Amazon, be sure to watch my free tutorials on how to understand Keepa and how to understand CamelCamelCamel or check out my book/video course, The Reseller’s Guide to How to Keepa Camel: Using Amazon Sales History to Make Smart Sourcing Decisions.

10 Things You Need to Know For A Profitable Q4

Q4_logo_on blackQ4. For an online seller, it’s the most wonderful time of the year. Sales and profits seem to go through the roof as more and more people buy stuff online for the holidays. If you’re just assuming that Q4 is going to be great for you but you’re not doing anything differently, then you might miss out on some amazing opportunities to increase your Q4 profits. The following are 10 things you need to know about Q4.

1. For those of you experiencing your first Q4, you might be worrying that your sales have not yet really increased as much as you thought. This is because while the business world sees Q4 as October to December, Q4 for the Profit-graph-260x259Amazon sales world is actually November to January. Don’t worry… Amazon Q4 really starts to gear up in November and will go absolutely crazy in December.

2. While the bulk of Q4 sales happen in December, many sellers (including myself) have found that January can be almost as profitable as December is. As long as you still have lots of inventory, you will still sell a lot in January. Why? Because people are finally going to Amazon and getting what they actually wanted for Christmas. Not only that, but everyone will be using their Amazon gift cards they received on Christmas day. Be sure your inventory is still well stocked for January, so you don’t miss out on the last month of the Amazon Q4.

Screen Shot 2014-10-27 at 5.41.50 PM3. What I deem as acceptable sales ranks for inventory purchases changes a lot during Q4. While I might shy away from a toy ranked 200,000  to 300,000 during the summer, I’ll almost always buy that item as Q4 is approaching. Why? During Q4, the sales velocity increases exponentially. So while a toy consistently ranked 250,000 might sell only twice a month… come December of Q4, that same toy might sell once a day.

4. Many Amazon sellers start to freak out a bit when they get an email from Amazon about their “Holiday Selling Guidelines for the Toys & Games category.” For those who don’t know, Amazon decides which sellers are eligible to sell in Toys & Games category during the holiday season. Sellers worry that they might not be approved to sell toys during the holidays and begin to stress out. One thing that Amazon needs to do a better job of is communicating that these guidelines only pertain to Amazon sellers who are selling MERCHANT FULFILLED toys. If you are selling toys via FBA, then you are automatically approved to sell toys during the holiday sales season. Again, these guidelines only apply if you are mailing your inventory directly to the buyer (merchant fulfilled).

ID-10044546-resize-380x3005. If you reprice your inventory on a regular basis (either manually or with an online repricer) then I might suggest stopping, or at least slowing down. Sales start to increase during Q4 so much that an item that sells for $14 today (early October) might potentially sell for $30 a month from now. Take a moment and research your item on CamelCamelCamel and see if the price of that item tends to go up during Q4. If it does, leave your price alone and make more profits than if you lowered your price. You might even want to raise some of your prices.

6. Many of you wonder if you should try to focus on reselling the toys from each store’s “Holiday Hot Toy” list. My personal plan of attack is to avoid most of these toys. My reasoning is this: If a store tells you what toy will be the “hot” toy this holiday season, then it’s reason enough to assume that the store will be heavily stocked with those particular toys. The toys that you want to find to resell during Q4 are the toys that will be harder to find come December. If you’re interested in learning more about the Q4 strategy that I’m learning and implementing this year, then check out Jim Cockrum’s Proven Q4 Plan.

images-37. Want to save even more money on the stuff you want to sell in Q4? Buy discounted gift cards. I personally love raise.com and cardpool.com, but there are other sites out there that do the same thing. I’ve bought $100 Walgreens gift cards for $75… that’s $25 in free sourcing money! Find other great gift cards from stores like Target, TJMaxx, Tuesday Morning, Big Lots, Walmart, and more! If a store offers gift cards, then most likely you can get some free money to source with by purchasing discounted gift cards.

8. Stock up on supplies! When everyone is in the thick of Q4 madness, you don’t want to suddenly discover that you have run out of 3-inch packing tape, Dymo labels, suffocation warning labels, or any other supply that is necessary to run your business. Stock up today while you have the time.

returns.jpg9. Nobody likes returns, but just remember this: With increased sales come increased returns. There is no avoiding it. There will also be an increase in warehouse and distributor damaged items, as well as warehouse lost items. It’s ok. For most situations, Amazon will reimburse you for the items they lose or damage. Important: Don’t just assume that these reimbursements will be automatic. Make sure that Amazon not only reimburses you for items they lose, but that they also reimburse you for items your customer never actually returns.

10. When Q4 hits, some resellers go into overdrive and spend every waking hour sourcing, buying, prepping, and shipping. They sometimes forget about what’s really important: family. Don’t let the dollar signs blind you. Look around and spend quality time with your family. Remember what the Thanksgiving and Christmas seasons are truly about and reflect upon God’s great gift to us all. When we remember what’s truly important, it gives us the right perspective. And that’s more important than any Amazon payout could ever be.

I hope these ten tips will help you have a profitable and meaningful Q4. If you’d like to share more tips about this most wonderful time of the year, please feel free to comment below. I’d love to hear how you make the most of Q4.

How to Find Out Exactly Which Items Will Be Charged Long Term Storage Fees

LTSFUPDATE: Amazon has recently updated their Inventory Age report, and this post is now outdated. What I teach below still works, but there is now a much easier way to find what you’re looking for. 

Click here see my latest training report on how to find out exactly which items will be charged a Long Term Storage Fee

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If you’ve been selling on Amazon at least 6 months, then it’s possible you have recently received a FBA Aged Inventory Notification email from Amazon. This notification from Amazon is to warn you about upcoming Long Term Storage Fees (LTSF). To read more about what the LTSF are, why Amazon charges them twice a year, and some timely tips on how to avoid these fees, then click here

Most Amazon sellers would be wise to find out which items in their inventory will be charged the LTSF and how much they’ll be charged. Unfortunately, Amazon does not give you this information directly, but there is a way to find out using one of Amazon’s reports found in Seller Central. 

Here is exactly how you can find out which items in your inventory are going to be charged a LTSF on August 15th (and how much you’ll be charged per item):

1. Log in to Seller Central.

2. Hover over Reports and click on Fulfillment.

3. On the left side of the screen, under the Inventory heading, click on Show More.

4. Click on Inventory Health.

Screen Shot 2015-07-06 at 1.56.16 PM5. Click on the Download tab.

6. Click on the Request Download button. 

7. After about 60 seconds (or possibly longer) the report will be generated, and you’ll be able to download it.

Screen Shot 2015-07-06 at 12.22.10 PM

This is the text file version of the report. I copy this data and paste it into a spreadsheet so it’s much easier to understand.

8. After the report downloads, open up the file in a spreadsheet. My download automatically opens up a Text file, so I just copy and paste it into Excel. Based on your computer’s available programs, you should be able to open up the file (or at least copy/paste the text) in your computer’s spreadsheet program. 

9. The text in the file contains many columns of information that you really don’t need in order to assess your long term storage fees. You can keep the ones you want, but I delete all of the columns in the file except the following:

sku
asin
product-name
qty-to-be-charged-ltsf-12-mo
projected-ltsf-12-mo
qty-to-be-charged-ltsf-6-mo
projected-ltsf-6-mo

10. To make the chart easier to read, I change the names of the last 4 columns to:

12mo
12mo$
6mo
6mo$

11. To make the data easier to read, I also do the following (this is just a personal preference, so you may want to skip this step):

Change the document page setup to landscape.
Center align the last 4 columns.
Change the size of the last 4 columns to be smaller.
Change the size of the product name column to be bigger.

12. Select all of the text (CTL-A for PCs or Command-A for Macs)

Now, its’ time to sort. In Excel, you can sort by clicking on Data from the top menu bar, and then select Sort

13. Sort the 12 mo column and choose descending

14. Sort the 6 mo column and choose descending

15. When I’m done, my spreadsheet looks more like this:

The image is blurry on purpose. It’s so you have an idea what the spreadsheet looks like after the changes above.

Now, your spreadsheet will show you on the first pages which items will be charged a LTSF, how many will be charged, and how much the charge will be. My next step is to print out the document, but I only print out the pages that contain the information about LTSF. If I printed the whole document, then I’d waste a lot of paper as most of my inventory is not affected by the LTSF. 

Now, it’s important to know how to read and understand the data in the spreadsheet. Under the 12mo and 6mo columns, you’ll see how many items will be charged in the upcoming LTSF on August 15th. In the 12mo$ and 6mo$ columns, you’ll see the total amount that will be charged if that item is not sold or removed from your inventory. 

For example, your chart might read something like this for an item:

Screen Shot 2015-07-06 at 1.39.18 PMThe above example shows that the My First Pad item will not be charged a 12 month LTSF, but will be charged a 6 month LTSF of $8.32. Since you have 7 of these items that will be charged a LTSF, you can do the math and see that it will be a charge of about $1.19 per My First Pad. (Remember: one unit of each SKU is exempt from LTSF, so you actually have 8 of this item in stock, not 7.)

The next step is to decide what you want to do with the inventory that is affected by LTSF. In a previous blog post, I’ve discussed all the ways you can avoid Long Term Storage Fees, but for the rest of this post, I’ll only discuss the most popular method of avoiding the fee: lowering your price to get the next sale. 

LC_OFF_Body_NLPLowering the price might indeed get you the next sale, but there are more important aspects to consider. Remember, in our example above, you’ll be charged $1.19 for each item for the LTSF, so if you lower the price by over $1.19, just be sure you don’t think you’ll ever sell the item for the price you want over the next 6 months. If you do some CamelCamelCamel (CCC) research and see that you’ll probably get your original price come Q4, then maybe pay the fee, and then wait for the sale to come during Q4. On the other hand, if you don’t think you can sell this item for the price you want, then it might be a good idea to lower the price and avoid this fee. 

Again, with our example, say you have the item priced at $19.95, but the current low FBA price is $11.95. If you  lower your price by $8.00 to $11.95 to share the Buy Box, you might indeed get the next sale… but lowering 7 items by $8 each, you’ll be losing out on $56.00 in order to avoid a $8.32 fee. Is this worth it? Well, we’ll need to check CamelCamelCamel to see if we think the price will go back up during Q4. If CCC shows that the price will probably go back up in Q4, then maybe it’s a good idea to pay the $8.32 fee in order to make the profits come Q4. On the other hand, if CCC shows that the price will probably never again go up, then maybe it’ll be a good idea to lower your price in order to sell out before August 15th. As always, different items will require different actions, so do your research and make the best decision for your inventory.

amazon-warehouse-5

Note: Amazon does not want to be your long term storage solution.

You might be thinking that this requires a lot of work and thought, but the LTSF is something to take seriously, as it’s currently $11.25 per cubit foot for items stored over 6 months, and $22.50 per cubic foot for items stored over 12 months. Currently, my LTSF would be over $100, but I’ve been keeping track of my potential LTSF for over a month now. If I didn’t use these tactics to avoid long term store fees, then the fee would be even higher.

So how about you? What are some of your strategies for dealing with these Long Term Store Fees? I’d love to read them in the comments below. 

My Top 7 Holiday Season Pricing & Sourcing Strategies for FBA Sellers

top-pricing-sourcing-decisions-holidayQ4. It’s one of the best letter/number combinations for an FBA seller. Q4 stands for the Fourth Quarter of sales for the year. In the business world, Q4 indicates the months of October, November, and December, but for the Amazon world, our biggest sales come in November, December, and January.

Traditionally, when it comes to sales, Q4 brings a huge increase. It’s not a stretch to say that a person selling on Amazon could potentially triple or quadruple their payouts in Q4.  I’ve experienced Q4 five times as an Amazon seller, and I can testify to this. In fact in 2012, I was awarded by Amazon as a Top Holiday Seller. This meant that my sales ranked in the top 25% of all Amazon sellers and my customer satisfaction ratings were excellent (A+) during that period. (Note: 2012 was the last time Amazon handed out this distinction).

Here are some thoughts I have as we are currently in Q4. These are suggestions that helped me get awarded Top Holiday Seller in 2012, and have caused me to increase my profits in every following Q4 since then. As always, there are exceptions to every suggestion, but overall, these are the strategies I put in place as we get closer and closer to Christmastime.

1. Don’t lower all your prices to match the lowest price.

e-commerce-402822_1280Like many resellers, I reprice from time to time. With the number of sales on Amazon dramatically increasing in Q4, I know that the lower priced competition will eventually sell out and my higher priced item will be there for the willing buyer. During Q4 of 2015, Fulfillment by Amazon shipped over 1 billion items (yes, that’s billion with a B). That equates to 126 items sold per second, 7548 items sold per minute, 452,899 items sold an hour, and almost 11 million items sold per day via FBA. This is the absolutely best time to wait and get the price you want. The only exception to this guideline is if your inventory happens to have a higher sales rank (say, above 300,000 for Toys & Games) AND you have a lot of competition that is priced much lower than you. In this case, I might price match the lowest priced competitor, especially if they have a lot in stock.

2. Raise prices on some items.

Price-IncreaseUsing the same thought process from above, I’ll raise my prices on some items that have really good and sustainable sales ranks. Also, when I’m first listing a product during Q4, I’ll price some of my items much higher than usual since I know the lower priced competition will sell out soon. It sometimes surprises me, but when I take some time to raise the prices of some of my inventory, many of those items end up selling later that day. Click here to read how to reprice your inventory.

3. Keep an eye on your most recent shipment of inventory.

Profit-graph-260x259When I’m looking at my pending sales, I’m not just looking to see all of the awesome items I’ll be getting paid for, but I’m also looking for new sales of items that I just sent in to FBA. If something sells the day it hits the warehouse, then I might need to look at my price and make sure I’m priced competitively. Many times during Q4, you might price an item on Monday when you ship it to Amazon, but when it gets checked in on Friday, there have been so many sales that the prices are now higher. If you get immediate sales, then check your prices… If you see that you are priced too low, raise your prices!

4. Keep an eye on multiple sales of the same item.

Again, when looking at your pending orders, if you notice that all of a sudden you have many sales of the same item, you might need to check the prices on those items too. It’s the same thought process from the tip above… If you are getting multiple sales of the same item, then you might be priced too low. Check your competition and then reprice if necessary.

5. BUY! BUY! BUY!

keep-calm-and-buy-more-inventoryIt’s simple math: You will only sell a lot of items if you have a lot of items to sell. During Q4, I’m out buying a lot more often than I usually do. It’s a fun cycle: I send more items to FBA, more items sell, and I get paid more… I take that money and send even more items to FBA, more items sell, and I get paid more. It’s a Q4 snowball effect that causes massive increases to my Amazon payment disbursements.

6. Expand your sales rank limits. 

Amazon Sales Rank ChartWhen sourcing, it’s always a good idea to look at sales rank history when you’re making your buying decisions. When Q4 comes, I always buy items with a higher sales rank than I usually do. If my sales rank limit for the Toys & Games category was 150,000, then I may raise that limit to 250,000 in preparation for Q4. Many items completely sell out on Amazon during Q4, so buyers start looking for other items that might not be as popular. Each category will be treated differently, but I always raise my sales rank limits for Q4. Be sure to click here to download your free sales rank chart.

7. Send inventory to Amazon ASAP!

brownbox2If you have product sitting around your house that you haven’t sent to Amazon yet, send it in now! What are you waiting for? Check everywhere for products that you might have forgotten about. Look in your closets, your garage, in boxes, under your work table, etc. Products sitting around your house are not ever going to sell via FBA. Some people worry about Q4 storage fees, but honestly if you expect an item to sell during November or December, send it in today!

amazon_gift_cardBONUS TIP – January is one of the best times to sell on Amazon. People are returning the Christmas gifts they don’t want and will use that money to spend on what they really wanted. People also have Amazon gift cards that are burning a hole in their pockets. Because of these factors, sales in January are amazing. I’ve heard some sellers say that their January sales are almost as good as their December sales, though I have not experienced this yet. So continue to send inventory in to Amazon!

How about you? What Q4 tips would you like to offer the group here? I’d love to hear your thoughts on this very exciting time of the year.

FBA Aged Inventory Notification (or How to Avoid Long-Term Storage Fees)

amazon-warehouse-5If you’ve been selling on Amazon at least 6 months, then it’s possible you will receive a FBA Aged Inventory Notification email from Amazon. Twice a year, (February 15th and August 15th), Amazon charges a long-term storage fee for all items that have been stored in a FBA warehouse for 6 months or longer.

This fee is something to take seriously, as it’s currently $11.25 per cubic foot for items stored at Amazon over 6 months and $22.50 per cubic foot for items stored over 12 months. As an example, I currently have many aged units of inventory which (if none of them sell or are removed) will cost me $520.82 in long-term storage fees. That’s a charge of over $3.51 per item. These are just my numbers and yours will vary. You may be paying less per item, but you could also be paying more.

ifOUVAvNfA60Amazon charges this fee to make sure of two things: 1) to encourage sellers to keep our inventory priced competitively, and 2) to ensure their FBA warehouses aren’t used as a dumping ground for products that might never sell.

Before long-term storage fees, you could send in 100 of a $50 book ranked at 5 million, and only pay pennies a month for storage per book. Maybe you sell one book a year, but what do you care? You’re making a profit and FBA stores all the books for you. Meanwhile, Amazon is seeing thousands of other sellers doing the same thing. FBA warehouses don’t want to be a long-term storage solution for you. They want to be a short-term storage facility that holds your item for a short time until it sells. To make sure that Amazon sellers are motivated to get all of these multiples sold, they have instituted the long-term storage fee.

How do we find out what items are going to possibly be charged this fee? In the email Amazon sent you, there was a link to their recommended removal page. This page will tell you what Amazon thinks you should remove in order to avoid this fee.

But what if it’s actually worth the long-term storage fee to keep the items at FBA longer than 6 months or a year? By running a simple report, you can find out exactly which items will be charged the fee and how much the fee will be for each individual item.

So what are our options to avoid this fee?

LC_OFF_Body_NLP1. Reprice – Update the price for the items affected by this fee. Depending on the rank, you’ll want to either match the current low price or beat it. If the rank tells you this item sells often, just price-match the lowest price, but if it looks like this item only sells once a month, then you’ll probably want to be the lowest price of all your competition.

2. Amazon Promotions – Offer your potential buyers an incentive to buy your item. Maybe a discount if they buy more than one.

3. Amazon Sponsored Products – Advertise your item. This will cost you, but may cost less than the long term storage fee if done correctly. My friend, Cynthia Stine, has a great post about advertising on Amazon you should check out.

4. Multi-channel fulfillment – See if you can sell these items on eBay (or other sites) and then use Amazon to ship the item to your buyer. You can use JoeLister to sell your Amazon items directly on eBay. We use JoeLister and love how it helps more customers find our items. JoeLister is set up that if an item sells on eBay, not only does it automatically set up a shipping order for Amazon to ship your eBay customer their item, but it also automatically updates your inventory on Amazon so your inventory levels will be correct.

5. Improve Product Keywords, Titles, and/or Images – Maybe your not selling some of your items because customers are not finding them in the search results. Check on the product pages of your items and see if they need better pictures, a stronger title, or more descriptive keywords. I’ve found this strategy to be helpful for all of my inventory items, but especially the ones that are going to be charged a long-term storage fee. To get some excellent help on improving a product listing, I recommend the ebook, Amazon Advantage.

6. Reprice Again – Don’t just reprice your item once. Go back often and make sure the item is still priced competitively. Remember, you might not be the only seller of that item who may be hit with long-term storage fees. Other seller are going to be lowering their prices too.

7. Remove Items From Inventory – When all else fails and your item is still not sold before February 15th or August 15th, then you could set up a removal order to have your inventory returned to you. Removal orders are super cheap as they are only $0.50 for standard sized items and $0.60 for oversized. You can even arrange with Amazon to automatically remove all items that are affected by this fee.

After those items are returned, you could try to sell them on Amazon via Merchant Fulfilled, on eBay, on Craigslist, or perhaps sell them in a future garage sale. If that doesn’t work, donate them to a worthy cause.

NOTE: Amazon usually sends out an email about 6 weeks before LTSF are calculated letting all sellers know that any ASINS removed before the LTSF is charged cannot be sent back to Amazon until after a certain date. For the August 2017 LTSF, Amazon said if you set up a removal order before August 15, 2017, to have this inventory returned to you, you will be unable to send in additional units of these ASINs until January 1, 2018.

8. Destroy Items – If you don’t think that returning the items to you is worth the hassle of selling them on another platform or at a garage sale, or even donating them, then you could set up a removal order and have Amazon dispose it.

Screen Shot 2014-07-14 at 11.53.12 AMRemember, many things I tell you have exceptions. If the item you are selling is a rare, high-priced item, perhaps you are fine with being charged a long term storage fee. Perhaps you have a rare toy that is ranked 1 million, but you are certain that you’ll get $250 for it… then maybe paying around $3 for long-term storage fees don’t matter to you. Also, you might have a situation where you’d prefer to pay a $3 long term storage fee rather than lowering your price by $10. Each product will require you to decide what is best and what will maximize your profits.

But for 95% to 98% of items in our inventory, you’ll probably want to choose some of the options above in order to avoid these fees.

If you did not get this FBA Aged Inventory Notification from Amazon, then congratulations! You don’t have any items subject to this upcoming fee. But just to be sure, you can go to Amazon and see your recommended removal report (sign-in required).

And again, here is the link where I’ll show you how to see which items are going to be charged a long-term storage fee.

So what are your plans to avoid long-term storage fees? I’d love to hear how you handle Amazon’s FBA Aged Inventory Notification and make the most of this situation.

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Imagine knowing exactly what to expect in your Amazon FBA business every month of the year.

Imagine what it would feel like knowing you were not missing out on any of the opportunities that will come your way this year. 

Imagine working on your Amazon business knowing exactly what your priorities are, what you need to avoid, and what you need to accomplish during each month to make progress toward making this year your best sales year ever.

Find out more about The Reseller’s Guide to a Year in FBA: A Month by Month Guide to a Profitable Amazon Business today. The package includes a 200-page ebook, monthly live webinars, and 4 special bonuses.