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Patchwork of Sales Questions

patchworkThis week’s post is a bit of this and a bit of that. The picture is in honor of my mother-in-law who was an extraordinary quilter among other creative talents.

Like you, I’m going nuts getting inventory up to Amazon before Thanksgiving weekend.  To be safe, you want your inventory to reach the warehouse by November 22nd. Despite all the extra help they hire around this time of year, Amazon’s warehouses get backed up. In my case, that means I want as much as possible shipped out by Monday the 18th. I have 15 big boxes going out today and I still have inventory to process. Yikes! (But it is a happy yikes!).

Where can I find inventory?

I get this one from new sellers often during this time of year.  They go to a couple of stores and wonder how everyone else is finding inventory when they can’t find much. Because they are new, they don’t have the confidence yet that they are scouting right.  Here are some points to help out. While I’ve said some of this before, it bears repeating:

  • Scan A LOT – People think they are scanning a lot but in reality they are cherry-picking and they aren’t scanning very quickly.  At the end of their shopping trip they have only scanned 50 items (perhaps) and they need to scan a hundreds.  As a newcomer, you have to scan much more than an experienced seller.  They have an advantage that they’ve scanned these stores before.  They have already eliminated many items from their range of possibility in previous sessions. You have to work harder in the beginning.
  • Check everything – We are often unconsciously directed by our own tastes and preferences while scouting. This means we may overlook a great item just because we would never buy it or we think it is stupid (like my highly popular “Frankie Fish” that sings – still makes me laugh).  The longer I’m in the business, the more inventory I find simply because my horizons have been considerably broadened by experience.
  • Have the tools – Many people wait to buy their Bluetooth scanner because it is expensive. They are scanning using their phone camera instead.  This slows you down a lot. When I scan a store, I can go through so much more inventory in the same time, you wouldn’t believe it. If the Bluetooth scanner is out of the question right now, just realize you are going to have to spend more time because you don’t have the tools yet.
  • Focus on items with potential – Buying designer rubber bands for 3 cents and selling them for $4 may be good margin, but there’s not a lot of potential there for big income.  My friend Lynn has a great eye for potential in the toy world.  She can look down an aisle and tell you which toys “look like” they could sell for $30/$40 or more.  If you can get them for $8-$10 then you have a winner. I bought a bunch of remote-control toys this week for $10 each that were originally $40 – and they look it.  They are slick.  I priced them all at $35 (the new Amazon minimum for free shipping).
  • Look for exclusives – Stores like Toys R Us, Target, Wal-mart and others negotiate exclusives with the toy companies for what they believe will be the hottest toys.  This means that you will not be undersold by Amazon on that item and it keeps the prices higher. Everything I bought this week was a Toys R Us exclusive. I had to buy them on sale in order to make my margin which is why it pays to keep an eye on those endless emails. If a popular toy is not an exclusive, there is a much greater chance that Amazon is selling it for a rock bottom price.  You’ll learn pretty quickly which items these are and can skip them in future stores.  I rarely scan Fisher-Price baby toys, for example.  FP has a store on Amazon and even deep discounters can’t beat Amazon’s prices on infant toys.  I will look at FP toys for older kids (action figures, etc.) if they are inexpensive.  Sometimes they work out.
  • Be a joiner – Get on everyone’s email list.  Many stores are having one-day sales and specials just for their reward members and those who’ve signed up for their relentless marketing. This week I took advantage of Toys R Us’ one-day sale on Wednesday and got some great inventory that would have otherwise not been at a good margin point for me. I not only got good prices, I got several $10 gift cards for future shopping trips.
  • Pre-plan – The good thing about all the emails is you can check out the sales items before you go to the store. If you are a ScanPower customer, you can use their “WebScout” product that comes with ScanPower List. Type in the UPC code or the name of the item, and the program will pull up the offers just like your other ScanPower products.  That way you save time at the store.  I was at Toys R Us the minute it opened ready to run to the right section.  Ironically, there was no one else there and I cleaned them out by 9:05.  By the time I was at the second store, there was more competition, but I still got nearly as many units as the first store.
  • Don’t automatically price at the bottom – Another reason newcomers don’t buy potentially good inventory is they are afraid to price higher than the bottom.  They see a price on their screen, the margins are all wrong and they put the item down.  My approach is to decide for how much the product could/should sell.  I’m rarely the lowest price when I’m sending in my merchandise, but I sell my stuff all the same.  If the majority of the prices are higher than the lowest seller and/or the merchant sellers are selling it higher, consider that maybe there are a couple of low-ballers whose prices are wrong.  Their items will sell out and then you can get your price.  My caveat about this is to keep an eye on the rank. If this is a fast-selling toy, then you know it will be very popular and sell a lot of units at Christmas. If this is a high rank (above 75,000 in toys for the purposes of this discussion), and there are a lot of low-ballers, then you probably should put the toy back down.  I bought a doll set this week that was ranked at 888.  I’m pricing my dolls about $15 higher than the lowest price and I’m confident I’ll get it. You won’t completely get it until you go through a holiday season with Amazon, but they sell hundreds of millions (with an M!) of gift items this time of year. You will be lifted by the rising tide.
  • Think outside the toy – We talk about toys a lot this time of year but some of my fastest-selling items are baby, grocery, pets and household items.  I personally love buying toys, there is something so fun about a designer doll…but what’s really important is buying fast-selling inventory at a good margin – regardless of the category.
  • Buy more than one or two – If you find a good deal, you should buy all of them. I’m often surprised when people will only buy one or two.  They may want to see if it will sell before making an investment or they may be afraid of competition and that they can’t unload a lot of units.  If you wait until it is selling, all the units will be gone.  If your rank and pricing are lining up but you are concerned about competition, buy them all but don’t send them all in. That way if they don’t sell or prices drop rapidly or if Amazon undercuts you, you can return them and use your money for something else.  On the other hand, if they DO sell, then you have lots of units to send in and can dance all the way to the bank.

Can I sell toys this year?                                      

I get this question every year because Amazon sends out emails stating that you have to have a certain amount of experience before you are allowed to sell toys during the holiday season.  This notice – even though it goes to everyone – is for merchant sellers only.  Those who are selling using FBA are automatically allowed to sell toys during the holidays.  Why is this? Because Amazon will be fulfilling your orders.  This rule of theirs is designed to make sure that customers have an excellent experience with fast shipping, etc.  They trust themselves. Everyone else needs to prove themselves.  This is yet another terrific benefit of being an FBA seller – you can sell toys all year.

How can I figure out my margin on the fly?

This is a confusing topic for most newcomers.  They hear about the 3X Rule of Thumb or I might talk about doubling your money and they don’t quite understand what it all means.  I’ll try to clarify it here. When I talk about “doubling your money” what I mean is if I spend $5, I want to make $5 when all is said and done.  Here’s how it works while I’m out scouting:

  1. I pick up a $5 toy and scan it.
  2. Scanpower shows me that I can charge $14.99 for this product.
  3. After Amazon’s fees are removed, the net – which Scanpower also shows me – is $11.00 or so.
  4. I assume that it will cost me 25 to 50 cents to mail it to one of Amazon’s warehouses.  I also allocate a few cents for tape, the box and packing materials.
  5. My final number is that I will clear around $10 after it sells. I buy it.
  6. I subtract my cost of buying the toy ($5).  I’ve now taken $5 and doubled it to $10.  My investment of $5 has created another $5 for me.

So what is the 3X Rule of Thumb?  Well, coincidentally, the 3X rule often results in you doubling your money.  Here’s how it works:

  1. I pick up a $5 toy and scan it.
  2. I see that I can sell the toy for $14.99 which is 3X the cost of $5
  3. I buy the item.

The 3X rule is simpler and it works for many items but not always.  It is most accurate for cheaper items like that $5-$15 toy.  If I’m spending $49 to buy a crockpot, it may not work the same.  I mean, it would be great to get $150 for a crockpot, but most of the time I can get my margin without tripling the cost.  Why is this?  For everything you sell on Amazon, there are set fees and variable fees to store and fulfill that item.  The more expensive your item, the more likely that you can make your margin with less than 3X. This is why I focus on doubling my money.  Rules of Thumb like the 3X are very helpful when scanning fast and furiously because it tells me that the item in question is worth a closer look.

Why do you want to double your money?

When I talk to new sellers about doubling your money in my live shopping trips, I explain that doubling (or even better) your money is a goal.  The reason you want a good margin like this is because there will be times when you won’t get it. Competition may come in and drive the price down. Amazon might drive the price down. You may sell an item and then have it returned in poor shape so you can’t resell it. Losses are a part of the business and the only way you can afford them is if your margins are fat on most of your goods.  What about a higher margin?  There are some people who won’t sell something if they can’t make at least $25 on it. They are very selective.  They are also very experienced long-term sellers. Many of them are also selling wholesale.  For people like us shopping in stores to resell, that may be too selective – at least in the beginning.  I find that doubling my money is possible and I’m able to find plenty of inventory that allows me to do that.  You may have different rules for yourself and that’s OK.  What I suggest to new sellers is to first get a handle on how Amazon works and make some money.  Then, experiment from there until you find that right mix for yourself.

What about selling on multiple channels?

I admire people who sell on eBay, Etsy and other platforms.  They are maximizing their capabilities to sell inventory and they are opening themselves up to more inventory possibilities.  So far I’ve not taken the time to learn how to use these other platforms, but I can see the benefits.  Skip McGrath, Chris Green, Kat Simpson, Steve Lindhorst, Lisa Suttora and many other successful online sellers use multiple platforms. For this reason I was interested to read Steve Lindhorst’s new eBook The Multichannel Cookbook: Recipes for a Healthy, Balanced Multi-stream Income.  In it he talks about Amazon, eBay, Craigslist and how he uses them.  In addition, he talks about consignment sales, blogging, affiliate websites and using Google AdSense. Whew! It is a virtual smorgasbord of online opportunities written by a guy who is actually using all of them.

I like that the book is not hype-y. He tells you the downsides of affiliate marketing, Google Adsense, etc., and doesn’t try to convince you to use any of these different channels. His approach is “here’s how I look at it, here’s how I use it, here’s what I learned.” The book is an overview of each option which is helpful if you are not familiar with how these methods work.  Plus he tells you how he uses them as part of his own “cookbook” for success.  While the part on Amazon is old hat to FBA sellers, the rest of the book may trigger some ideas for you. This is NOT a comprehensive book on how to implement each platform. It is an overview to help you understand HOW each channel works so you can decide if you want to pursue it further for yourself. I learned several new things from Steve’s book and recommend it for those who are thinking about expanding their sales channels online.

His experience – learned the hard way – is that he never wants to have his income controlled by any single channel ever again.  That is my experience also. That’s why I still publish books for non-fiction authors, have written my own book, run my PR/marketing agency, sell on Amazon.com and am creating a video.  The bottom fell out of my industry twice in the past 12 years and I never want to go through that sweaty desperation ever again.

If you click on the link and decide to buy the book, I will get a small commission. You can also go directly to his site at: www.multichannelsurfer.com. As regular readers of my blog know, I won’t recommend something that I’ve not read or tried myself. I’m frequently asked to recommend products and books that I turn down because I don’t like them or I don’t think they will be of interest or helpful to my readers.

Have a great week processing inventory!

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{ 25 comments… add one }

  • Kim November 8, 2013, 4:45 PM

    Hi, Cynthia! Have you determined the rank range for grocery and household items that works well for you?

    • Cynthia Stine November 8, 2013, 4:52 PM

      Kim,

      Currently I’m keeping my purchases in grocery under 80,000 which seems to be working fine (stuff is selling). I’ve not experimented higher than that yet. Other household items have been all over the place. 5% of the home and kitchen category is about 350,000 so I’d stay under that.

      Cheers,
      Cynthia

      • Yubi November 9, 2013, 10:17 AM

        Hi Cynthia,

        Thank you for sharing valuable info, but I have been having a hard time figuring out what is a good profit on the lego sets. Even on sale plus additional discounts, it is hard to get even close to their original price. So I am starting to think a $30 or $40 profit is a great deal. Due to the fact that these specific ones rank so low, am I correct? What’s your strategy on this?

        Thanks!
        Yubi

        • Cynthia Stine November 10, 2013, 1:34 PM

          Yubi,

          Ultimately, it is up to you what makes a great deal. If you are happy making $40 on an item, then go for it. Legos are fast-selling which means you are likely to get your money back out quickly to spend on other opportunities. A mistake that I often see with new sellers is that they price their items too low. They don’t realize that they can command a premium being an FBA seller. Also, with fast selling items, those sellers/prices you see on your screen today will be gone by the time your Legos get to the warehouse. I suggest you look at your Legos once they are in stock at Amazon and see if you can reprice upwards. No sense leaving money on the table.

          If there are a lot of other FBA sellers who are driving the price down, then you may not want to sell that item or you may – as you suggested in your question – decide to be happy with $40.

          Good luck to you!

          Cheers,
          Cynthia

  • Gloria November 8, 2013, 6:17 PM

    Kaleidoscope in fabric….how beautiful..

  • gene bregman November 8, 2013, 11:51 PM

    Hi Cynthia,
    Just curious. I generally use 5% of the total numbers of listed items in a category to find the lowest seller ranking that I consider worthy of selling for resale. Using one of your recommended suggestions, I click the empty, Amazon search field in that chosen category and the total number appears underneath the search field. Lately, when I try those numbers don’t seem to show up in many categories (it works in Books and Health and Personal Care). Those numbers must be indicated somewhere. But where? I posted this question on the Amazon seller forums recently. No one seemed to know the answer. I’m sure you do. Thanks.

    Gene

    • Cynthia Stine November 10, 2013, 1:44 PM

      Gene,

      If you scroll down the left-hand side of the main screen for your category, you should see a list of subcategories with check boxes and numbers beside them. The check boxes allow you to search just in that subcategory. The number shows how many items are in that subcategory. If you add the subcategories all up, you’ll get the total number of items in that main category. If you go to the very bottom of this list, you will often (but not always) see a box you can check that says “include out-of-stock items.” This number will actually the be the total of all items in the category including out-of-stock. For some reason, it does not appear in all categories. If it does, however, it saves you time adding up on your calculator so scroll down to the bottom first.

      Hope this helps!

      Cheers,
      Cynthia

      • Phebe November 11, 2013, 1:19 AM

        Gene and Cynthia,

        No need to add up the subcategories. Just select the main category, then type an asterisk (*) in the search box before hitting Go. It works on all categories. I don’t recommend including out-of-stock items. Try the Home & Kitchen category and you’ll see why. It adds an additional 10,000,000 items to the total. Who knows how old some of those out-of-stock product pages are.

        • Cynthia Stine November 11, 2013, 11:08 AM

          Phebe,
          Even better! Thanks for sharing this!
          Cheers,
          Cynthia

  • Heather November 9, 2013, 12:17 AM

    Brava, brava! I appreciate your advice.

  • Lisa November 9, 2013, 7:52 AM

    Hi Cynthia,

    Is there anyway to avoid split shipments to different Amazon warehouses? I’m fairly new to FBA and so far most of my shipment have been split and I’ve had to send them to 2 or 3 different warehouses. I feel that it would save time and shipping cost if everything were sent to one place.

    Thank you,
    Lisa

    • Cynthia Stine November 9, 2013, 11:34 AM

      Lisa,

      Amazon will do this for you, but they charge a per-item fee. In other words, if you have 10 items going to one warehouse and 1 item to another and you want to combine them, they will charge you a fee for all 11 items. What I do instead is simply wait to send in my inventory until I have full boxes going to each warehouse (or close enough). I sent in 15 boxes to 5 warehouses yesterday and all the boxes were full except one which was mostly full. If you think it would still be cheaper even with the fee, then you can change your settings to where all items will be combined to one warehouse. Several of us in the DFW area are waiting for the Dallas warehouse to open with eagerness because we feel it may come out about the same and our goods will get to a warehouse much faster (next day).

      Cheers,
      Cynthia

      • Robert Prince November 10, 2013, 9:14 AM

        Cynthia,
        Very helpful blog, as always. I will be ordering Steve’s book, and since you are honest about getting a small commission, I’m pleased to see you get it and will order it through your link.
        Lisa (and others) need to understand that while you can pay the extra fee to Amazon to be able to send all of one SKU to one fulfillment center, there is no way to get to send all of your items to one FC. So if you have 12 blue widgets, SKU BLU-123, and AZ wants you to send 5 to IND1, 3 to PHX7, and 4 to PHL1, you can pay the fee and all 12 will go to one FC, of AZ’s choice, not yours. And it may be one far away. And, if you then want to send 15 red widgets, SKU RED-321, to one FC, you can pay, but they may go to an entirely different FC than your blue widgets.
        Also, oversized items cannot ship in the same carton as regular, and if you commingle, labeled and commingled items may not be shipped in the same carton. So if you want to play in Amazon’s playground, be prepared to send shipments to several places. There is just no way around it (well, there are some “work-arounds,” but they can get your account suspended, so I won’t even say how. Play by the rules, folks!)
        Furthermore, when you do use this feature, the items are often directed not to a FC, but rather to one of AZs giant holding warehouses, where they will then sit on the dock a couple of days, then go into receiving, then be in a “reserved” state until they are distributed. End result is it may be several days extra before that inventory goes “live.”
        Cynthia, you got it right- the best solution is to send enough inventory in at once to have each shipment large enough to get the lowest per/pound rates.
        Also, as you know, I live in Phoenix, just a dozen miles or so from PHX7. So does AZ have me send the bulk of my inventory there at 20 cents a pound? Only about 20% of it. Most goes to Indiana, Tennessee, or Pennsylvania at 45 or 55 cents a pound. Why? Because AZ needs inventory distributed all over the place so they can fulfill the Prime Member’s expectation of two-day delivery, and reach the eventual goal of same-day delivery. So while I am wishing you the best when the Dallas FC opens, if you think they will direct you to send all your inventory there, well… let me know, I’ll start planning a move to Dallas!

        • Cynthia Stine November 10, 2013, 1:48 PM

          Robert,

          Thank you so much for expanding my answer. You are quite right, we still don’t get to choose our warehouse, just whether or not all of one SKU goes there. I wasn’t aware of how Amazon used its giant holding warehouses for this and I’m totally bummed. I had hoped that I’d be sending a lot more inventory to Dallas than Tennessee and Philadelphia. Sad face.

          Cheers,
          Cynthia

        • Jared December 11, 2013, 9:39 AM

          Heh I am from Pennsylvania and I HATE shipping 25% of my shipments to Arizona! So expensive! LOL. However I understand why they want to disperse my shipments over the country so I don’t mind too much. Besides that total shipment cost in plus the FBA fee’s still makes up for me having to ship an individual item across the country every time.

  • Webster November 11, 2013, 6:08 AM

    Can I open an amazon FBA account using a prepaid ( Visa ) credit card ? Thanks,Webster

    • Cynthia Stine November 11, 2013, 11:07 AM

      Webster,
      I assume that you can. I signed up with a debit card which is similar in concept. If it is a gift card, though, probably not. They want to be able to charge this card in the future if your expenses are higher than your income.
      Cynthia

  • Melvin November 11, 2013, 5:43 PM

    My question is when you say scan everything do you mean clearance items or items that is not even on sale. That’s where I get confuse is because I can’t see a product that is sold retail will get a higher price on Amazon. Thanks.

    • Cynthia Stine November 11, 2013, 6:14 PM

      Melvin,

      I often find items in stores that are regular priced that I can re-sell online for a good profit. Obviously, clearance items hold promise, but don’t forget the regular merchandise. Retail arbitrage is all about finding the items that are underpriced for the marketplace. I buy kids’ bedding at stores like Target, Wal-mart and others that I resell for four or five times as much online. I buy toys at Target for under $10 that I sell for $39.99 on Amazon. I have one fast-selling item I sell regularly that I buy at Wal-mart for $1.99 that I sell for $11.99.

      People don’t like to shop or they are too busy to shop. They are willing to pay a premium for the convenience of buying it online and having it delivered in two days (or less). That’s where we step in. Hope this helps!

      Cheers,
      Cynthia

  • David Meyer November 27, 2013, 3:04 PM

    Great website. Thank you.

    I am just starting out and have been focusing on books. I have been considering your wise advise that we should be doubling our money. And I totally see that if I buy a textbook with a sales rank of 1 million for $2, that I should be looking to pocket a minimum of $2 when it sells. Here is my question though:
    the vast majority of books are technically profitable when I can get them for 15 cents. The problem is that doubling my 15 cents is only 30 cents. Heck, I even find that the prospect of tripling my 0.15 to 0.60 still just seems like something is wrong to me. I still find myself hesitant to do books at that low price. Considering the 0.01 monthly fba storage fee, and the inbound shipping, it seems that for most of these low yield items I should have a minimum margin starting at around 500%.
    I would love to hear your thoughts. I really want to get into a good groove with a solid strategy for these low profit books.
    Thanks.

    • Cynthia Stine November 28, 2013, 12:20 PM

      David,

      My advice is really more towards those who are using retail arbitrage for their inventory – buying new in stores for resale on Amazon. For books, my margins are considerably higher. As you say, 30 cents is hardly worth the work! I’ll often spend 50 cents or a dollar and make $8 or more. Most of my books sell between $8 and $15. My textbooks generally sell between $20 and $150 and I’m usually buying them for under $4. Hope this helps!

      Cheers,
      Cynthia

  • David Meyer November 27, 2013, 3:07 PM

    “tripling my 0.15 to 0.60″ should read “quadrupling”. ;-)

  • Jared December 11, 2013, 9:35 AM

    Sometimes, for hot items, you don’t have to worry about Amazon’s rock bottom prices because they won’t be able to keep them in stock.

    This year, for example, the Nerf Rebelle bow was so hot, Amazon would get stock in throughout the season and sell out in less than an hour. Retail price on the bows was 19.99. Target had them for $15 at one point, and TRU had them for $16 at other times. I bought as many as I could at full retail and price adjusted throughout the season. They sold for $40 to $50 over the course of the holiday.

    Also, some toys Amazon just doesn’t carry because of the costs. Cheap items like individual Hot Wheels cars, particularly hot ones like Batmobiles, Corvettes, Ferarris, etc. can sell for $8 to $10 each. Amazon doesn’t even carry them! I guess the retail price is too low for the cost of shipping?

  • gene December 18, 2013, 8:48 PM

    I’m not sure if you discussed idea this in a previous blog but I’m curious to know how you do it. Specifically, I recently stumbled upon a discontinued item that I listed on FBA and was turned out to be very profitable, to say the least. My question is what ways do you go about finding and sourcing either hard-to-find or discontinued items. I tried the idea of getting friendly with store clerks to inquire about discontinued products. Unfortunately they had no clue and refer me to the store managers who referred me to the main headquarters of these large chains who never answer the phone or return calls. I also tried going through wholesale catalogues item by item which is very time consuming. Any ideas would be appreciated. Thanks.

    • Cynthia Stine December 18, 2013, 10:45 PM

      Gene,

      I source normally and then when I find a discontinued item on Amazon, I try to get more. This may involve going from store to store and buying all I can. Most of the places where I buy have limited quantities. Usually when it is gone it is gone. Store clerks barely know how to operate the register, they can’t really help you.

      One guy I know worked out a deal with a department store to buy up and sell their remainders – the stuff they wanted to get rid of, that wasn’t selling fast enough for them. I don’t know how he did that but I know there are entire businesses that buy and sell goods after they’ve failed to sell at retail. One discount store I go to buys all its inventory from stores like Target. How do I know this? The Target tags are still on the goods! I’ve not explored this channel for myself because I don’t have the savings to buy up large quantities of goods at a time.

      If you are looking for the discount stores that sell goods for much lower than Target, say, then look for stores in neighborhoods where there might also be a lot of thrift stores. A lot of my finds down here in Dallas have been in mostly Hispanic neighborhoods.

      Good luck!
      Cynthia

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