FBABlog - Tips and Tricks for Fulfillment By Amazon

The Verizon iPad HD: A Scouter’s Dream

FBAPower — Tue, 20 Mar 2012 02:50:52 +0000

The new iPad HD was announced on March 7, 2012 and it included some great updates including a higher-resolution screen, faster processor, better camera, and 4G speeds. The Verizon version of the new iPad HD has an interesting twist that many people may have overlooked.

Many of you know that I have Sprint for my cell phone provider and chose to get an iPad 2 on Verizon specifically to use in places where I get no Sprint service. For this purpose, it works great; I have yet to go to a place where neither Sprint nor Verizon had service.

The new Verizon iPad HD takes this to a whole new level. According to BGR.com:

Even though the Verizon iPad supports LTE and CDMA, it’s also a global device, and it supports all standard WCDMA and GSM bands as well. This means you can put an AT&T microSIM card in the Verizon iPad, and use AT&T’s 3G network without a problem since all iPads are unlocked. Additionally, the Verizon iPad lets you connect up to five Wi-Fi devices to it so you can share that insanely fast LTE connection.
http://www.bgr.com/2012/03/19/a-new-ipad-review/

Remember, iPad data is MONTH-TO-MONTH so there are no contracts to get into. You can get a Verizon iPad HD and turn on the data just for the months that you are scouting in an area where you need carrier-specific service.

Sprint not working? Use Verizon 4G. Verison 4G not working? Use Verizon 3G. Verizon 3G not working? Use AT&T 3G. It would almost be a challenge to find somewhere where Sprint, Verizon, and AT&T had absolutely no service.

In addition to having backup services in the event of dead-zones, the Verizon iPad HD includes free mobile hotspot so you can share your data with up to five additional devices! You can go scouting with friends or family using iPod Touches, iPads, or Android tablets that don’t need their own data plans since you are sharing the Verizon iPad HD’s connection.

And you can have all of this backup and still just carry one cell phone and one iPad HD. It is an absolute WEAPON of a device for scouters.

(click for larger image)

FBA Book Club – Blue Ocean Strategy: Chapter 1

FBAPower — Tue, 13 Mar 2012 05:31:30 +0000

Blue Ocean Strategy: Chapter 1

So why is this book called Blue Ocean Strategy? The authors are representing different markets as oceans. Different companies ‘swim’ in different oceans. The oceans where there is a lot of competition where companies fight for marketshare become bloody, or become red oceans. The authors describe the opposite of this as a blue ocean where companies chart new businesses and competition is irrelevant because you are creating new markets. These oceans are nice and blue and they represent all if the businesses and industries that do not exist today.

Think of the business ‘oceans’ that did not exist as little as thirty years ago. Cell phones, minivans, snowboards, and home videos to name a few examples from the book. What will the next thirty years bring? Even the next five years?

Some telling statistics from the book:

From a study of 108 companies launching products, 86% were launched in existing markets (red). They accounted for 62% of revenues and 39% of profits.

The other 14% were launched in new markets (blue). They accounted for 38% of revenues and 61% of profits.

It’s easy for companies to compete in red oceans because the rules are known. The customers are known; the prices are known. You know what you have to do to compete for marketshare. Blue oceans are uncharted where the rules are yet to be set.

The example used in Chapter 1 is how Cirque Du Soleil realized that the only way to beat the competition was to stop trying to beat the competition. They differentiated themselves and created new market space that did not exist before. They appealed to a different customer base than the traditional circus (adults vs. kids). Their timing was in line with increased public sentiment against the use of animals in circuses. They reduced costs by being simple.

Value Innovation

The rest of the chapter deals with what the authors call ‘value innovation’. Emphasis needs to be on both value and on innovation. Just value will just be incremental but not make you stand out against competitors. Just innovation can be too futuristic and beyond what customers are able to grasp.

From the book: Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made by eliminating and reducing factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in due to high sales volumes that superior value generates.

In a way, when FBAPower started, we created our own blue ocean. The existing companies can be seen as competing in a red ocean where competition had made products commodities. ScoutPal, MediaScouter, ASellerTool, & Neatoscan all had similar programs (database scouting services) that ran on similar hardware (Windows Mobile PDAs) and were designed for similar sellers (books & media) on one primary marketplace (Amazon). We came along at the right time with the advent of FBA and outlined the resale business that went far beyond just books and media. When FBAScout came out, there was nothing like it on the market. We enjoyed this position for a long time, but our nice, clean, blue ocean is starting to become red as new services enter the market.

So how do apply this info to selling on Amazon? Consider how you’ve been competing. Have you been the one listing a “me too!” listing and competing with a bunch of other sellers basically selling a commodity type item differentiated only by price? Or are you creating new listings? New bundles? Using Multi-Channel Fulfillment? Are you doing the things that other sellers are not doing in order to find that next blue ocean? There are profits to be made with both types of business models. No one should turn away an easy profits by flipping commodities, but make sure that your actions will keep you in the game for the long term.

Join the FBA Book Club! First Up: Blue Ocean Strategy

FBAPower — Mon, 05 Mar 2012 04:52:45 +0000

The first book for the FBA Book Club is Blue Ocean Strategy by W. Chan Kim & Renee Mauborgne.

Subsequent FBABlog posts will discuss each chapter with a dedicated Facebook comment thread right here to keep the discussion focused and easy to find. Maybe I’ll even make a video series to go along with it.

From Publishers Weekly

Kim and Mauborgne’s blue ocean metaphor elegantly summarizes their vision of the kind of expanding, competitor-free markets that innovative companies can navigate. Unlike “red oceans,” which are well explored and crowded with competitors, “blue oceans” represent “untapped market space” and the “opportunity for highly profitable growth.” The only reason more big companies don’t set sail for them, they suggest, is that “the dominant focus of strategy work over the past twenty-five years has been on competition-based red ocean strategies”-i.e., finding new ways to cut costs and grow revenue by taking away market share from the competition. With this groundbreaking book, Kim and Mauborgne-both professors at France’s INSEAD, the second largest business school in the world-aim to repair that bias. Using dozens of examples-from Southwest Airlines and the Cirque du Soleil to Curves and Starbucks-they present the tools and frameworks they’ve developed specifically for the task of analyzing blue oceans. They urge companies to “value innovation” that focuses on “utility, price, and cost positions,” to “create and capture new demand” and to “focus on the big picture, not the numbers.” And while their heavyweight analytical tools may be of real use only to serious strategy planners, their overall vision will inspire entrepreneurs of all stripes, and most of their ideas are presented in a direct, jargon-free manner. Theirs is not the typical business management book’s vague call to action; it is a precise, actionable plan for changing the way companies do business with one resounding piece of advice: swim for open waters.

Amazon and the Penny Books – Who’s Making Any Money?

FBAPower — Sun, 19 Feb 2012 03:52:47 +0000

This is an article that I wrote for Skip McGrath. You can view it here and view Skip’s site here.

Amazon’s New Fee Structure and Penny Book Sellers

‘Penny books’ (books that sell for $0.01 + shipping) have been around on Amazon for a long time. They are the result of a competitive marketplace and a downward spiral of ruthless competition trying to complete on price alone. Sellers dropping price again and again as they look to be the ‘best price’ and get that next sale. It a common practice in all markets, but you may start to wonder, “At these prices, is anyone making any money?” It’s a great question! Let’s look at the numbers.

First off, remember that when a penny book sells on Amazon from a merchant fulfilled seller (a seller that ships their own orders), the buyer is actually paying $4.00 ($0.01 + $3.99 shipping). The $3.99 shipping is fixed for all books. A seller who uses Amazon’s Fulfillment By Amazon (FBA) program would price that same book at $4.00 in order to ‘match’ the merchant fulfilled seller’s price. So when comparing fees structures on penny book sales from merchant fulfilled sellers and FBA sellers, we are using slightly different prices to find our net profit.

With the advent of FBA, penny books turned into essentially sub-penny books, because now sellers could price their books lower than the $4.00 total price. The merchant fulfilled seller has an absolute price floor of $4.00 because of the $3.99 shipping credit on all book orders; they simply cannot price any lower than the $0.01. The FBA seller can go below $4.00; they can go all the way down to $0.01 as an FBA price if the want to (want to lose money that is). So FBA sellers are able to push the prices on penny books down even further. They will often push the prices down so low that they are literally working for pennies per book and sometimes even set prices where they lose money on every sale. Hopefully, by understanding the Amazon fee structures for both merchant fulfilled and FBA, you can avoid ever losing money on a sale.

All fees can be checked on the Amazon website and by using the Amazon fee calculator.
https://www.amazon.com/gp/seller-account/mm-product-page.html?topic=200274770
http://www.amazonservices.com/content/fulfillment-by-amazon.htm#!pricing
https://sellercentral.amazon.com/gp/fbacalc/fba-calculator.html

Merchant Fulfilled Penny Books

Take this book for example: The Long Tail

This is a small, lightweight book. If it was sold for $0.01, the buyer would pay $4.00 total with shipping. Amazon would take 15% of $0.01 (which is zero), as well as a $1.35 Variable Closing Fee (VCF). So the seller would end up with $2.65 in their Amazon account. They would then have to ship the book to the customer. The most inexpensive shipping rate is USPS Media Mail.

T rate for up to one pound is $2.47. This leaves the seller with $0.18 left to pay for packaging/envelopes, labels, tape, and their time and effort to pack the order and make sure it gets to the Post Office. Not exactly how I would suggest sellers spend their time, especially new sellers! So are all of these sellers making just a few cents each on their sales? Some are, but there are ways to get even better USPS Media Mail rates and that is to do some heavy volume. We’re talking about 300 orders per day and on top of the volume requirement, you also have to presort your shipments. Can money be made this way? Sure; but it is a lot of work and it is not exactly a scalable option for most new sellers.

FBA Penny Books

So, is FBA the answer to being profitable selling penny books? Well, it was, but not as much anymore. A few years ago, not as many sellers had figured out how lucrative FBA was (and still is) so there was not as much competition from FBA book sellers. This meant that FBA prices were still at levels where sellers were making a nice profit per sale.

Here is how FBA penny books used to work. An FBA seller would list their books that normally sold for $0.01, but they would list for $4.00. They would get the sale easily because the net price to the buyer was the same and the buyer actually received much faster shipping from the FBA seller than from a merchant fulfilled seller who used Media Mail.

Take this same book: The Long Tail

If it was sold for $4.00 from an FBA seller, the OLD fee structure would look like this:
15% commission: $0.60
Pick and Pack fee: $0.60
Variable Closing Fee: $1.35
Weight Based Fee: $0.22 (.55 lb x $0.40/lb)

So after all fees, the FBA seller gets $1.23 using the OLD fee structure. This was a dream come true compared to packing up hundreds of penny books a day for less than a quarter profit each! So as more and more sellers realized this, more and more sellers adopted the FBA model. As a natural progression, prices began to be pushed downward again.

FBA Competition Heats Up

With more and more sellers using FBA, sellers naturally looked for ways to compete further. This led to sellers pricing their items BELOW $4.00 which was actually lower than any merchant fulfilled book seller could even go. With each seller dropping price by $0.01 to try to attract the next sale, another seller would then drop price below them. The same downward spiral that led to books being sold for a penny was now looking for a new price floor with FBA. So how low could they go? Well, they ended up going as low (and sometimes lower) then the absolute break even point of profit. Sellers would sell books for prices where, after fees, they made $0.00. While this may seen silly to most sellers, you may have also forgotten that this wasn’t just giving a book away for free; that seller actually paid inbound shipping charges to get that book to an Amazon FBA warehouse as well as put in the time and effort to sort, list, label, and pack up that book in an FBA shipment.

The prices were being pushed down to their theoretical break even points. This book could be sold through FBA for $2.77 and the seller would net out zero. The sellers had a new price floor for each item instead of $0.01.

FBA Penny Book with the NEW Fee Structure

This month (2/2012), Amazon introduced a new fee structure for FBA sellers that affected low priced, light-weight media items. Media items under $25: Pick & Pack Fee going UP from $.60 per unit to $1.00 per unit. Weight Based Handling Fee (per pound) going DOWN from $.40 to $.37 but ROUNDING UP to the nearest pound.

So look at the same book sold through FBA today:
15% commission: $0.60
Pick and Pack fee: $1.00
Variable Closing Fee: $1.35
Weight Based Fee: $0.37 (.55 lb rounded up to 1 lb x $0.37/lb)

So after all fees, the FBA seller gets $0.68 using the NEW fee structure. This is a big change from the $1.23 that the sellers were getting before. What this does is increase the theoretical price floor that sellers should not be pricing under (unless the choose to lose money on purpose). This book should now have a minimum base price of $3.32.

How Will Sellers Adapt?

Time will tell how sellers will adapt to the ever-changing marketplace. In theory, all low priced, light-weight media items sold through FBA should go up in price to reflect the $0.40 increase in the Pick & Pack fee as well the weight based fee being rounded up. Time will tell if sellers paid attention to these changes properly or not.

Sellers Priced Below the Break-Even Point

You’ll see items on Amazon that you know are being sold at a loss. While your curiosity may pique as to what’s going on, don’t let your curiosity lead you to believe that this is some magic business model that you need to be a part of. You have limited time in each day, so spend it wisely selling profitable items and not chasing pennies around. When a seller realizes that they have inventory at Amazon that will likely never sell, they have three options; sell it at a low price (possibly at a loss), pay to have it returned to them, or pay to have it destroyed (thrown out). Removing the item from Amazon would cost the seller $0.50, destroying the item would cost them $0.15, or they could try to sell the item for less than a $0.15 loss and try to come out a few cents ahead compared to destroying the item. This entire scenario can be avoided by not sending in items that won’t sell. If you do find yourself in this situation, take steps to remedy it efficiently. I would not spend too much time trying to reprice items to try to lose only $0.10 instead of losing $0.15 because time is money. Spend it wisely on profitable items. Sometimes you just gotta get rid of the junk. So when you see prices this low, this could be what is happening.

So Who’s Making The Money Here?

It’s no secret; Amazon

Amazon has openly said that they will not enforce how sellers price their items. The Amazon marketplace fees are set and known ahead of time so if a seller chooses to sell at a price that does not make them any money, that is their choice. However they price their items, when they sell, Amazon knows they will making money on that order.

It’s that time again: FBA Long Term Storage Fees: February 15, 2012

FBAPower — Tue, 07 Feb 2012 06:28:39 +0000

http://www.amazon.com/gp/help/customer/display.html/?nodeId=200684570

On February 15 and August 15 of every year FBA conducts an inventory cleanup, at which time inventory Units that have been in our fulfillment centers for 365 days or longer will be assessed an upfront, semi-annual Long-Term Storage Fee of $22.50 per cubic foot.

To provide additional flexibility to maintain your unique selection, one Unit of each applicable product ASIN will be exempted from the semi-annual Long-Term Storage Fee if none of your Units of that ASIN have been in our fulfillment centers for less than 365 days. Please note, FBA accounts for inventory on a first-in-first-out (FIFO) basis.

Inventory cleanup dates	Affected inventory	Long-Term Storage Fee (per cubic foot)
August 15 February 15	Units in fulfillment centers 365 days or longer	$22.50

Units in our fulfillment centers for 365 days or longer are charged the Long-Term Storage Fee semi-annually on August 15 and February 15.
One Unit of each applicable product ASIN will be exempted from the annual Long-Term Storage Fee if none of your Units of that ASIN have been in our fulfillment centers for less than 365 days.

In advance of each Inventory Cleanup, we will notify you of any Units in your FBA inventory that will have been in our fulfillment centers for 365 days or longer as of that date.

Use the Recommended Removal report and the Inventory Health report to identify your inventory that is likely to be included in the Long-Term Storage program during the next inventory cleanup event. Products will appear in the Recommended Removals Report six weeks prior to the cleanup date.

Below is the blog post that I did about the August 15th cleanup date. I hope it helps you evaluate your inventory and make the necessary adjustments.

REPOST from August 10, 2011:

Have you received an email like this?

Dear Seller,

The FBA Long-Term Storage Fee will take effect on August 15, 2011, less than one week away. Be sure to submit your removal request before midnight PDT on this date to avoid incurring Long-Term Storage Fees.

I received it TWICE; once on my books & media account, and again for my ‘everything else’ account where I sell toys, tools, and, well, everything else.

What is the Long Term Storage Fee?

FBA Long-Term Storage

The Long Term Storage Fee is $45/cubic foot that is charged on items stored in FBA warehouses for more than one year. This does not mean that every item that you send to FBA has to sell within 12 months. There is an exemption for single units of an ASIN. This means that Amazon still wants your Long Tail items (items that sell, they simply don’t sell very often), they just don’t want three copies of a book that sells once every three years. This would be nine years supply of inventory and it is not how Amazon envisioned the FBA program.

Item	Dimensions	1 unit	2nd unit	10 units
Book	8″ X 6″ X 1″	$0.00	$1.10	$9.90
Toy	11″ X 8″ X 2″	$0.00	$4.58	$41.22

Believe me, Amazon does NOT want to charge you the Long Term Storage Fee. This is not a profit center for them. They want FBA warehouses humming with inventory coming in and orders going out. This is what they are good at. They do not want to be in the storage business.

Want to know my numbers? I’ll show you:

Books & Media:

As of August 8, 2011, you have 2,060 Units of inventory that will have been in our fulfillment centers for 365 days or more on August 15^th for which you will be charged $2,384,unless you submit a request to remove them (or they sell) before that date.

Everything Else:

As of August 8, 2011, you have 181 Units of inventory that will have been in our fulfillment centers for 365 days or more on August 15^th for which you will be charged $4,071,unless you submit a request to remove them (or they sell) before that date.

I’m pretty sure that most sellers are not looking at such high numbers. When I started with books, I’ll admit I was a dummy. I thought I was a genius and happily bought ex-library books on tape sets that were listed for $70+ on Amazon. Too bad I didn’t know the difference between ‘listed for’ and ‘selling for’ (I’m better now, thanks). Learned a few things about Sales Rank is the past three years as well

From Amazon:

Return and Disposal of FBA Inventory – Fees

Through August 15, 2011 the per-unit fee to have inventory over 270 days old returned to you is $0.20 per-Unit including shipping ($0.40 including shipping for Oversize Units), or you can have Amazon dispose of the inventory Units for no charge.

After August 15, 2011, the per-unit fee to have inventory returned to you is $0.50 per-Unit including shipping ($0.60 including shipping for Oversize Units), or you can have Amazon dispose of the inventory for $0.15 per-Unit ($0.30 for Oversize Units).

I have some oversize items on my Everything Else account that is pushing the Long Term Storage Fees way up. I sent Amazon all of my oversize items because the monthly fees were so low. Amazon admits that they did not expect this behavior when they implemented the FBA program and defined the fee structure. This behavior (myself included) is in part what prompted the Long Term Storage Fees. This post has two parts; first, how to analyze and remove/dispose of your older inventory to avoid the Long Term Storage Fees, and second, what these rules are for and how to optimally send inventory to Amazon’s FBA warehouses.

Analyzing Your Aging Inventory

Log into your Amazon Seller Account: https://sellercentral.amazon.com/gp/homepage.html (seller account required)

Look under Reports, then click on Fulfillment.

Under Inventory, you’ll see two reports. One called Inventory Health, and the other called Recommended Removal.

Request both of these reports to be downloaded. Save, and open in Excel. Familiarize yourself with these reports; they are very helpful. Right now you want to look at the columns that relate to Inventory Age (270-365 days & 365+ days) as this will show you the items on which Amazon will charge you the Long Term Storage Fee.

Creating a Removal Order

FBA Manual 6.4 Create Removal Orders

Amazon has actually made this process fairly easy. Here’s how I did it on my accounts:

Go to your Seller Account, Reports, Fulfillment, choose Recommended Removal, View Online, click on Generate Report.

You’ll now see the first 150 items from your Recommended Removal Report. These are all items that will be charged the Long Term Removal Fee or that have single quantities of inventory that have been in stock for 365+ days. Click on Begin Removal Process.

Most of these items you will want to remove or destroy. The ones to double check are the ones that have a Fulfillable Quantity of one and Available Quantity of one (even if at FBA for 365+ days). These may be Long Tail items that you want to keep in inventory. Remember, single inventory units per ASIN are exempt from the Long Term Storage Fee. I copied and pasted the ASIN into Amazon to check the prices and Sales Rank for these items to decide if I wanted to keep them at FBA or remove/destroy. If you want to keep them, check the box in the Delete column to remove the item from the removal order. Once you have reviewed the items, click the Continue button at the bottom of the screen and complete the process. If you have more than 150 items to review, repeat the process for the additional items.

You have to have your removal order PLACED by AUGUST 15, 2011 to avoid the Long Term Storage Fees. Don’t wait until the last minute.

Note: you may be able to get a tax deduction by shipping a Removal Order to a thrift store or non-profit for an amount great than $0.20/unit. Correction: Business inventory cannot be donated for a tax write off like this. You can go through the steps to convert business inventory to personal use and then make a donation, but I doubt that it is worth the trouble in this case. (Thanks Karin!)

Creating a Disposal Order

Follow the same steps as above for creating a Removal Order, but instead of clicking Ship To Address and entering an address, you’ll click on Destroy. Trust me, when Amazon says they will destroy the items, they will be destroyed.

What’s Really Going On?

As mentioned above, Amazon does NOT want to charge you the Long Term Storage Fee. If they did, they would not make so many reports available to you and make it easy to identify and dispose of this type of inventory. They even reduced the removal and disposal fees to help sellers adjust to this new rule. It’s only $0.20 to get Amazon to pick, pack, and SHIP an item back to you. I don’t know about you, but i can’t even buy a box for twenty cents, let alone pack and and ship it somewhere. And if your inventory is scrap or junk, Amazon will toss it for you FOR FREE.

This fee is designed to encourage FBA sellers to manage their FBA inventory better and to not simply use FBA warehouses as a cheap storage unit for all of their inventory. The FBA storage fees were so low that many sellers (myself included) simply sent Amazon everything because it was so cheap to store it at FBA that it made sense.

Who remembers fourth quarter last year (2010) when Amazon halted inbound FBA shipments because FBA warehouses were full? I sure do. This fee will prevent this from happening again. Amazon wanted nothing but to receive inbound shipments and get stuff listed and sold, but too many sellers filled up the warehouses with slow moving inventory. The new Long Term Storage Fee will discourage this practice and keep FBA warehouses able to receive products without any delays.

Summary:

Think of it this way: only send Amazon a maximum of ONE YEAR SUPPLY of any product and you will never be charged the Long Term Storage Fee. Single quantity items are excluded to you can still send in Long Tail items without worry. Periodically check the Inventory Health Report and the Recommended Removal Report. Most FBA sellers who sell books and media items with quantity of one will be largely unaffected by this new fee. If you need any help having your inventory returned to you or disposed of, please contact Amazon’s Seller Support team using the Contact Us link in your Seller Account.

Join us every Monday & Friday at 3 PM EST for FBARadio!

FBAPower — Fri, 03 Feb 2012 03:02:40 +0000

What started on September 16, 2011, has grown into an amazing destination for live FBA discussion from some of the best minds in the FBA business!

You can catch FBARadio LIVE every Monday & Friday at 3 PM EST on TalkShoe. Replays are available on iTunes.

FBARadio is hosted by four amazing individuals who each bring a unique perpective to the discussion. This diversity and commitment to excellence is the reason why FBARadio has become such a great source of FBA information. Each person enjoys sharing, teaching, and has a mindset of abundance!

In addition to the live radio show and interactive chatroom, there is also a very active Facebook Group discussing all things FBA.

	Chris Green is the Director of FBAPower, the FBA-centric suite of tools designed specifically for FBA sellers. These tools include FBAPower to list, price, and label FBA inventory, FBAScout for mobile product sourcing on iPhone and Android, FBARepricer to keep FBA items priced competitively, and FBAEvaluator for efficiently evaluating lists of items for FBA suitability. Chris is also the author of the best-selling book Retail Arbitrage: The BLUEPRINT for Buying Retail Products to Sell Online for BIG PROFITS. It’s available on Amazon.com in both paperback and Kindle.
	Lisa Suttora is a noted Ecommerce Expert, Product Trendologist, author, speaker and the Founder/CEO of WhatDoISell.com. One of 34 eBay Certified Providers worldwide, Lisa specializes in helping independent entrepreneurs start, run and expand their eCommerce business. With more than 15 years in online & offline retail merchandising, Lisa brings a unique approach and a wealth of experience to the question of “What to sell and how to sell it?”
	Bob Willey has been selling on Amazon using FBA since June of 2008, and on Amazon since 2005. He is mostly FBA and uses FBA to sell practically anything! When it comes to selling on Amazon using FBA, Bob doesn’t discriminate; the only requirement is that the items are profitable! Bob has also been selling on eBay since 1998 with over 11,000 feedbacks (100% Positive). He has been an eBay Trading Assistant for over 5 years.You can find Bob online at http://FBAForum.FBARocks.com
	Kat Simpson is the producer of FBARadio and Director of ThatKat: http://thatkat.com/ Kat is also a social media fiend. She has not one but two Twitter accounts, one for her online store and another for her social media blog, ThatKatSimpson. Her blog posts deal with everything involving online businesses, including selling on eBay and Amazon plus recent news and rumors in the eCommerce world.

You can catch all past episodes as podcasts in iTunes!

Join FBARadio every Monday & Friday at 3 PM EST and join us in our LIVE chatroom!

You can also read the FBARadio blog on your Kindle!

FBA 2012: New Year’s Challenge, TIME TO TEST: Who are you following? Who are your mentors?

FBAPower — Mon, 02 Jan 2012 05:01:48 +0000

Happy New Year!

2011 was another record setting year for Amazon! You can read all about it in their recent PRESS RELEASE.

What will 2012 hold for Amazon and FBA? Well, for starters, FBA is really starting to catch on! It’s such a new and innovative program that many people were hesitant at first but they have now taken the plunge and only wish they had done so sooner. I’ve been personally mentoring people for years on FBA so I am a little surprised that it took so long for everyone to come to the party!

Whether you are new to FBA or a seasoned FBA vet, one of THE BEST places to get great FBA information is my book, Retail Arbitrage. Only $9.99 on Kindle and if you are an Amazon Prime member and have a Kindle device, you can ‘borrow’ it for free with no return due date!

www.amazon.com/Retail-Arbitrage-ebook/dp/B005Z2CYQ6/

This isn’t a short, little book that you can read in one sitting. It’s 348 pages of powerful FBA content from someone who speaks on each topic from personal experience.

New Sellers, Students, Teachers, Mentors, and Gurus

With the growth of FBA, there has been a huge increase in the number of people who want to learn about Amazon, FBA, and how to really take their businesses to the next level. This also means that there are a lot of teachers, mentors, and ‘gurus’ who have sprung up to try to teach this stuff. I’ve been teaching FBA for over three years and I assure you that it is difficult to teach PROPERLY and improper teaching will mean that the student WILL FAIL. There are a lot of eBay sellers making the switch and thinking that Amazon is like eBay when nothing could be further form the truth. Treating Amazon like eBay and not LEARNING Amazon and FBA properly is a recipe for disaster.

Believe me; I’ve taught people with zero online selling experience to advanced sellers. You cannot become an FBA mentor overnight.

Here is my 2012 CHALLENGE to all the FBA teachers, mentors, and ‘gurus’:

I’m calling on all mentors to BE BETTER; to put the MEMBERS FIRST. It is on the MENTORS (myself included) to be GOOD MENTORS! Mentors will stand or fall based on their CONTENT and based on if they continue to provide quality, useful, and accurate information to their members.

Here is a test for any mentor, guru, or teacher: are they putting YOU, the MEMBER, first? Are they teaching you everything they know? Are they encouraging you to be independent? Or are they making you dependent upon them? Are they teaching you all of the available resources that you can use to grow your business? Or are they selectively withholding information that could be helping you?

There are GOOD mentors out there! Do your homework and learn from mentors who TRULY want to see you and your business succeed! So how how do you tell who the GOOD MENTORS are? EASY! In 2012 and moving forward, it will become easier for members to tell who the real gurus are by TESTING anything that is said. So TEST what they say and TEST what they teach.

FIRST TEST: There are amazing places to get REAL, SOLID, and USEFUL information from FBA sellers who speak from experience.

FBAForum Yahoo Group: http://finance.groups.yahoo.com/group/FBAForum/
FBARadio Facebook Group: http://www.facebook.com/groups/230629463659139/
FBARadio.com: http://www.talkshoe.com/talkshoe/web/talkCast.jsp?masterId=112441
WSRadio: http://wsradio.com/radio_showspage.aspx?id=7 (every 2nd and 4th Tuesdays at 6 PM EST I co-host this FREE radio show about Amazon and FBA)

Easy test: do your mentors tell you about these sites? Or do they keep you in their own system? It’s possible that you could be getting MORE and BETTER FBA information FOR FREE in these groups than by paying for the privilege of being in another group. I would question why any mentor who teaches FBA would NOT share these powerful, useful, and best of all FREE resources with their members. Mentors who put their members FIRST would share these sites in a heartbeat because they would HELP THEIR MEMBERS!

Here’s a few more TESTS:

Online product sourcing:

Are you being taught about the Amazon Browser Bar to see Amazon’s prices as you browse other sites?
VIDEO DEMO

Are you being taught how to use InvisibleHand to see the prices on other sites as you browse Amazon.com?

Apps:

Are you being told about Amazon Price Check for iPhone and Android?

Deal sharing sites:

Are you being taught how to use FatWallet.com where they have:

Hot Deals Forum, Today’s Best Deals, and Most Popular Deals?

They even have Topic Alerts so you can have deals sent directly to your email as soon as they are posted! (Must be a member to set up Topic Alerts)

How about SlickDeals.net where they have:

Are you being taught to track an item’s historic price using sites like CamelCamelCamel.com and TheTracktor.com?

Are they telling you about Retail Arbitrage on Kindle for only $9.99? (Free to borrow if you have Amazon Prime and a Kindle device). Easily the best source on the HOW and the WHY behind the success of using the FBA program. Reading this book will take months off of your learning curve. $9.99 to save MONTHS OF TIME and avoid many costly mistakes? Easy decision if you ask me

If your mentors fail these tests, then STOP and THINK about what that means.

Are they putting YOU, the USERS, the MEMBERS, first?

Or are your mentors funneling you into a ‘one size fits all’ business model?

There is a good way to test who the leaders are and who the followers are. If no one is following someone, they are not a leader.

A true mentor, teacher, or guru, especially one that you are paying money to, should be looking to HELP you.

HELP you grow your business.
HELP you find what you are good at.
HELP you monetize your strengths.
A true mentor relationship should be win-win.

How does selectively sharing information and withholding useful information help YOU, the member? Answer: it doesn’t

BONUS TEST: As you can see, I am more than happy to teach and share FBA information for free. I am also happy to participate in forums, groups, and answer any questions. I’m a member of many online forums and I’m happy to join more. Those who know me know that I don’t just post about and promote FBAPower and FBAScout; they know that I post QUALITY information and ACCURATE answers. Am I in your groups? Or are you in a closed group where only specific, ‘Guru-Approved’ information is shared?

But you just want everyone to use FBAPower and FBAScout! (insert whiny voice here)

Do I want everyone to use FBAPower and FBAScout? Of course I do! But here’s the difference: I teach FBA. I don’t teach just FBAPower and FBAScout. I teach FBA and it is ON ME as the Director of FBAPower and FBAScout to EARN your business by providing AWESOME programs and apps. You can read everything that I’ve written and participate in the FREE groups and not use FBAPower or FBAScout. If they don’t save you more money and more time than they cost you, then you should not use them. If you can do it better your own way, or if you’ve found a better way, go for it!

We are fairly unique as a company. I have a hard time thinking of another company that does things similar to the way we do things. We make the programs, we support the programs, but we also teach you the business model related to our programs whether you use our programs or not. That puts the CHALLENGE ON US as software providers to make programs that are so awesome that you WANT to use them because they MAKE YOU MONEY and SAVE YOU TIME. It’s ON US to be GREAT and EARN your business.

Sure, Bill Gates will teach you how to use Microsoft Word, but will he teach you how to make money with it?

Rubber meets the road challenge. 214-298-6866: This is my cell phone number. It rings in my pocket.

You don’t have to use FBAPower or FBAScout to call me.
This number is PUBLISHED in my book, Retail Arbitrage.
Do your mentors offer this level of contact?
Only restrictions: I am EST. Call when the sun is up. Text anytime

Recap: Want to learn more about FBA? Think you need fancy subscriptions to membership sites to get started? Think you need to pay an FBA mentor to help you get started? You can if you want; I can’t stop you. Or you can call me. FOR FREE.

It’s 2012; time to check your mentors.

Is this post controversial? It shouldn’t be. It is simply a call to all mentors to PUT THE MEMBER FIRST. Good mentors WILL STAND.

UPDATE:

Let me update this manifesto with this:

While calling on all mentors to BE BETTER is a point that I am happy to make every day of the week, in this post I’m talking specifically about FBA-centric teaching and the withholding of information by mentors from their members. I teach and promote FBA and it is difficult to do properly. Mentors who teach Amazon and FBA improperly are doing a huge disservice to their members. Mentors who claim to put their users first but withhold information are doing a huge disservice to their members. Both of these things need to stop.

Honor your mentors.

I have no problem with GOOD, SOLID mentors and I believe that people should HONOR THEIR MENTORS. I have no problem with paying someone for information, for mentoring, or for any kind of help, but the relationship should be based on trust and have an honest approach to helping people. Mentors should help their members and TRUST that it will be paid forward.

There is GREAT INFORMATION available FOR FREE, but not all free information is great. Same goes for ‘paid-for’ information and paid membership sites. Some of them are great, and some of them are not.

You can learn a lot online FOR FREE, and for some people, that’s all they need. Some people need help, hand-holding, and mentoring. There are times where paid membership sites are a great help! They can reduce the learning curve for starting a business and they can prevent you from making costly mistakes.The sites listed in this post are great, but they are not all-inclusive.

Running a business is about a lot more than just FBA and I can’t teach you everything, and certainly not for free. There is only so much time in each day and I use this business to make a living and put food on the table. Can I teach you to have an entrepreneurial mindset? I suppose I could, but I do not have a class (or the time) for that. Some mentors (good mentors!) do and they can help you with many of the additional aspects of running a business. When you choose a mentor, do your homework. Are they doing what they teach, or just teaching it? Do they have experience? A solid track record? Don’t be shy about asking for references!

My issues are these: where mentors, teachers, and gurus are ‘just not good enough’ when they withhold information from their members that they know would help the members. This needs to stop. As we move forward in 2012, if this challenge is taken up, good mentors will get better and bad mentors will fall aside. Both of these things are GOOD FOR THE MEMBERS.

We know that we are in a unique position with FBAPower and that’s one reason why we teach and promote GOOD FBA information. When Amazon sellers know how to use FBA PROPERLY, then they see why the features of our programs are important. Does anyone HAVE to use our programs? Of course not. It is ON US as software providers to make AWESOME programs that MAKE PEOPLE MONEY. That is our challenge and we gladly accept it.

Amazon FBA Fee Increase – What’s Really Happening?

FBAPower — Fri, 04 Nov 2011 02:25:13 +0000

Amazon has raised some of their fees related to FBA. The new fees can be seen here:

http://www.amazon.com/gp/help/customer/display.html?nodeId=200789180

First thing to keep in mind is that these fees do not go into effect until February 1, 2012, so all sellers have plenty of time to react and adjust their business models in the event that the fee increases turn once profitable items into non-profitable items.

Fee Increase Summary

Media items under $25: Pick & Pack Fee going UP from $.60 per unit to $1.00 per unit
Non-media items under $25: Pick & Pack Fee going UP from $.75 to $1.00 per unit
Oversize Items; Pick & Pack Fee going UP from $3 to $6 per unit
Weight Based Handling Fee (per pound) going DOWN from $.40 to $.37 but ROUNDING UP to the nearest pound

Whenever Amazon implements new rules or policies, it’s important to try to see what the changes will bring to the marketplace. These fees undoubtedly have a desired outcome. It will affect some sellers more than others and it will affect certain products and categories more than others. You can be certain that Amazon is expecting certain changes in the marketplace as a reaction to these fee increases.

My deductions are that Amazon wants less of the sub-penny type items like $2.26 books being shipped UPS 2-Day Air and that their fulfillment costs on Oversize Items needed to be readjusted. These fees will force sellers to raise their prices on these types of items, meaning that Amazon will make more per sale to cover the fulfillment costs of these items. Or sellers will stop sending these items in. Either way, it works for Amazon.

As sellers, let’s not sugarcoat who ultimately pays fees. The buyer, or end-user, pays fees, not us. My costs go up, so do my prices. I protect my margins. If I don’t, I’ll work too hard and possibly go out of business. Any fee or cost that you have involved in each transaction should be accounted for and is ultimately paid for by the buyer. If you want to pay fees yourself, the buyer, and your competition, won’t stop you.

Let’s take a look at who it affects the most as well as the types of products that will be most affected to see if we can discern what Amazon is doing.

Who will be affected the most by these changes and what types of items will be most affected?

Sellers who sell low price, light weight items, and sellers who sell Oversize Items.

How do I know? Run the numbers on various items and see for yourself.

Let’s run the numbers on a 4 oz. media item:

$4 book
OLD: Pick & Pack Fee of $.60 + Weight-Based Fee of $.10 + Fixed $1.35 fee for books = $2.05
NEW: Pick & Pack Fee of $1.00 + Weight-Based Fee of $.37 + Fixed $1.35 fee for books =$2.72
Increase: $.67, Percentage increase vs. sales price: 16.75%

$24 book
OLD: Pick & Pack Fee of $.60 + Weight-Based Fee of $.10 + Fixed $1.35 fee for books = $2.05
NEW: Pick & Pack Fee of $1.00 + Weight-Based Fee of $.37 + Fixed $1.35 fee for books =$2.72
Increase: $.67, Percentage increase vs. sales price: 2.79%

$40 book
OLD: Pick & Pack Fee of $1.00 + Weight-Based Fee of $.10 + Fixed $1.35 fee for books = $2.42
NEW: Pick & Pack Fee of $1.00 + Weight-Based Fee of $.37 + Fixed $1.35 fee for books =$2.72
Increase: $.30. Percentage increase vs. sales price: 0.75%

So you can see that this fee increase affects lower-priced merchandise much more than higher-priced merchandise. It’s all relative and will correlate with a seller’s margins. The lower the price, the less room for margin. Any type of fee increase will have a greater affect on lower-priced, lower-margin items.

These percentage increases will be felt less for non-media items where the new fees is the addition Pick & Pack Fee increase of $.25 per item instead of the $.40 per item used in the examples above.

Remember, this fee increase is only on sub-$25 items. The Pick & Pack Fee increase of $.40 for media items and $.25 for non-media items is fixed so it hurts more if you sell items for $4 ($.25 is a 6% increase and $.40 is a 10% increase) than if you sell items for $24 ($.25 is a 6% increase and $.40 is a 10% increase). The Weight-Based Fee on items can be seen as an adjustment rather than an increase as it affects all items form all sellers.

The weight based fees are also going up on the light-weight items because now instead of using fractions of a pound to calculate weight-based fees, they are paying for the full pound. So a 4 oz. item would have been $.40 * 4/16 = $.10 and now it is $.37. An increase of $.27. $.27 is a big jump percentage-wise compared to $.10 (+270%). Compare this to the new Weight-Based Fee on a 4.5 pound item: OLD: $1.80 (4.5 * $.40). NEW: $1.85 (5 * $.37). Increase of $.05 or 2.8%.

When it comes to Oversize Items, the fee is increasing from $3 to $6. This new fee does not go into effect on February 1, 2012 so if this fee changes the profitability of your inventory, take steps now to adjust price or decide if you want to keep selling the item.

Compare Apples to Apples.

When evaluating if and how these fee changes will affect your business, you should consider all of the costs involved with fulfilling orders yourself. Storage space, boxes, packing material, labels, tape, not to mention your time to process orders and get them to UPS or USPS. Don’t forget that you are now handling your own customer service. Did you remember to add that you have to be present to ship orders? No more going out of town or spending the whole day sourcing because you have to be home shipping your orders. Then compare that total cost to using FBA. I just don’t see how it’s even close.

Don’t Forget the ORANGES!

What oranges? Outsourcing your shipping department by using FBA is so much more than just comparing fulfillment costs. You get so much more as an FBA seller. You are able to sell to the 50% of Amazon customers who simply do not purchase from third-party merchants who do not use FBA. Are you really going to go back to storing, picking, packing and expect to make more money by saving a few quarters on your orders than by increasing your sales by selling to Amazon’s best customers? This doesn’t even consider the premium pricing that FBA sellers enjoy over their merchant fulfilled counterparts.

Protect Your Margins!

This is what really gets me. If you have healthy margins, these fee increases should really not be turning your FBA business upside down. If you run a business on low margins, then these fees will affect you more. This is why I always recommend understanding margins. if you don’t understand margin, you will eventually go out of business. Maybe this fee increase will put some sellers out of business. If so, then I would be confident that they did not understand margin which means that their going out of business was inevitable.

Consider the $.25 increase on media items. If you do 100 orders a day, that’s $25 a day in additional fees. In a month, that is $750. Now $750 dollars is a lot of money, but you have to look at this is relative terms. If you sell 100 items a day at $5 profit per item, then you are doing $15,000 profit per month and that $750 is 5%. Take a $20 profit item and you are now at $60,000 profit per month and that $750 is down to 1.25%.

When you apply these numbers to the ‘oranges affect’ discussed earlier, surely you see that you can charge 1.25% to 5% more as an FBA seller than as a merchant fulfilled seller. If, as an FBA seller, you’ve been matching merchant fulfilled offers and not charging a premium as an FBA seller, I encourage you to try raising your prices.

Evaluate Your Products.

It’s possible that this fee increase makes items that were once profitable into non-profitable ones. If so, accept it and either raise price to profitable status or stop selling the item. Tough-love time here: you cannot force profitability on an item. It is either profitable or not. use the Amazon FBA calculator if you have any doubts. Remember that these fees will affect all sellers, including your competition. If not profitable for you, likely not profitable for them. If they choose to continue to sell at a non-profitable level, LET THEM

https://sellercentral.amazon.com/gp/fbacalc/fba-calculator.html

There is a possibility that many sellers will not be affected at all other than some minor differences in weight-based fees. The Pick & Pack Fee increase only applies to sub-$25 items and the Oversize Item Fee only applies if you sell Oversize Items.

Amazon has to make money through the FBA program. If they don’t, then FBA as a whole may go away. It would be unrealistic to expect that FBA fees would never increase and that ten years form now, the fees are exactly the same despite inflation, the price of gas, UPS surcharges, labor costs, etc.

Am I making a one-sided argument about these fees? Run the numbers and see for yourself. Evaluate the pros and cons. Compare your own fulfillment costs with using FBA. Consider the customers that you can reach with FBA that you simply cannot reach on your own. Don’t take my word for it; come to your own conclusions about using the FBA program for your business.

As a seller, I don’t mind when I see my competition get all bent out of shape and consider leaving FBA. Less competition means less supply in the FBA warehouse. The demand is the same which means prices will go up. But, as a mentor, I want sellers to learn to understand their business more, to understand the importance of margin, to be discerning when changes are implemented, and to adapt to changes in a way that maintains the profitability of the businesses and allows them to stay ahead of their competition.

Does this video ring true or what?

Retail Arbitrage is now available!

FBAPower — Mon, 26 Sep 2011 21:22:07 +0000

This is the first book of it’s kind. It outlines the emerging business model of Retail Arbitrage. This is the business that involves purchases items at retail (including used books and media) and selling them online. This works because of market inefficiencies and buyer preferences. Actually, the reasons that Retail Arbitrage works are too many to even get into; that’s what the book is for!

Action Required – Avoid Long Term Storage Fees

FBAPower — Thu, 11 Aug 2011 03:41:50 +0000