Oren's Money Saver

North American Remote Fulfillment (NARF) - Sign Up if You Haven't Already!

2020-12-27T09:35:00.003-05:00

This year, Amazon started a program called NARF (North American Remote Fulfillment). NARF allows you to sell your items on Amazon Canada and Mexico via your FBA inventory without having to send any inventory to Amazon and Canada.

Advantages

I'm a little late to this party but in case anyone isn't on it, as far as I can tell it is very worthwhile to participate in NARF.

Once you are set up, there is no extra work to continue selling. Amazon takes whatever listings you have that are eligible and automatically adds your inventory to Amazon.ca and Amazon.com.mx
Amazon automatically calculates how much money you would make via selling on Amazon.com and sets your prices including the current conversion rates on the other marketplaces so that you earn the same amount for each sale. Distributions go into your amazon.com banking option. Nothing changes!
As you change your price on Amazon.com, your price will automatically change on other marketplaces as well.
Customers pay import fees and buyers take ownership of the item while still in the US so you don't need to deal with any extra international bureaucracy and taxes.
Seller Fulfilled listings are automatically removed so you don't end up paying shipping to Mexico and Canada
You might sell items that just aren't selling on Amazon.com (happened on a few items for me).

I've even had to raise my price on some items on Amazon.com that weren't selling on Amazon.com but were selling very well on other marketplaces.

Disadvantages

There are some disadvantages to the program but not too many that I have noticed:

Inventory Lab - If you use Inventory Lab, like I do, IL only supports sales o Amazon.com and therefore you have to add in your profit separately for NARF sales. Hopefully this becomes a big problem because that would mean my sales are significant :)

I already deal with this for eBay and Walmart and the time investment is minimal. I download all my sales at the end of the year, put it into excel and add a column for my COGS (and shipping costs for eBay and Walmart) and sum up all my profit and add manually to IL. Accounting for FBA is very difficult because of all the fees associated with shipping in and keeping your inventory at a fulfillment center. If you are just accounting for sales it is a much simpler process.

Your inventory often stays in your account for longer. Amazon offers free shipping to prime customers in Mexico of 5-9 days and in Canada for 7-12 days, so your items sometimes stay in your inventory (presumably while paying storage) for longer so it takes longer to get paid
I have yet to experience the return rate or lost item rate so I can't comment on that. Returns come back to America so that is not an issue.
You need to get ungated separately on each platform. Just because you are ungated for a brand on Amazon.com does not mean you will be ungated for a brand on Mexico or Canada. In fact, for some brands I was ungated on Mexico but not Canada. 🤷

How it is going so far

I am posting my sales here on both marketplaces based off units. You can see that I am not going to get rich doing this but the investment is so minimal that it was definitely worth the small effort for me.

You can see that I am selling many more units on Mexico than on Canada. This could be because the population of mexico is significantly larger than Canada, but just as important, I am gated for a large toy company in Canada but not Mexico and during December that was probably just as important, if not more so.

I am working on getting ungated on Amazon.ca as well to increase my sales there

You can see more details on the NARF Program here

How to Sign Up

To Start you need a North American Unified account, enable FBA export and you need to apply to sell on Amazon Canada and Amazon Mexico. Make sure your application goes through fully. I was delayed about 10 days or so (really important December days) because I thought I was signed up for Canada but my application needed to be verified.

You also need to be signed up for FBA in those locations. Try to make a shipment and it will tell you that you need to apply for FBA. You don't actually have to go through with creating the shipment but need to apply for FBA.

Then you need to enable NARF which is found under the "Inventory" dropdown menu. You will see Remote Fulfillment with FBA

Once there, follow the prompts to enable the program (you may have to click "program settings" in upper right), international listings will be generated and you can usually start selling same day or the next!

If things go really well, you can consider to start sending actual inventory to FBA fulfillment centers in Canada or Mexico, which I'm sure is part of Amazon's goal.

How has NARF been going for you? Is there any downsides I am missing? Would love to hear your thoughts!

Be Flexible - Amazon FBA in the Age of Covid 19

2020-07-17T03:28:00.000-04:00

It's time for my annual post!

As in most sectors, selling on Amazon with Coronavirus around has been different and has presented its problems and challenges. Thankfully, as opposed to many sectors, there has also been a push for more online shopping so while the challenges are there, opportunity abounds for those who are able to take advantage.

In my business I have seen both the challenges and the opportunities. I want to walk you through them and how I've tried to deal with them and hopefully that is helpful for you.

FBA Inventory Limits

Problems:

1) In March, Amazon started falling behind on FBA orders. Prime shipments for non essential items were delayed a month or more and amazon started severely limiting how much of any particular non essential item you could send in.

2) There were lots of suspensions for price gouging on essential items as they came under short supply. There wasn't a lot of logic to what caused a price gouging warning or suspension but it caused a lot of fear among sellers.

Solutions:

1) More FBM - This is not a solution that I was able to implement in my business (for reasons I'll explain) but if you switched to fulfilling items from your warehouse you could take advantage of the lack of supply of prime and you could even deliver the items significantly faster than prime. Many times, Amazon gave the buybox to a more expensive FBM over FBA because FBA delivery was so slow.

2) This was the time I was able to get rid of a ton of excess inventory at Amazon. Items that been a problem with way too much inventory, all of a sudden, I didn't have enough. The speed of sales of some specific items switched extremely fast and you knew that other sellers couldn't send in very much to meet the demand.

3) Switch to essential items. I've had to pivot my business many times over the years so this is pretty natural to me. Instead of the usual items that I sell, I started switching to other items temporarily like food, feminine hygiene products, etc. Inventory of these items were not limited and if you could somehow find them prices were excellent and you couldn't buy enough to meet the demand.

On the other hand, once things got back to normal, a lot of these items got overbought by everyone and now the prices have unsurprisingly plummeted.

4) Avoid Personal Protective Equipment (PPE) during a crisis. I had many, many opportunities to buy various types of masks and gowns and gloves in the height of the crisis. I've been around long enough in the selling community to know I didn't want to get anywhere near them.

I would recommend avoiding them always unless your supplier is 100% legit. The last thing you want is for someone to buy a faulty mask from you and you are responsible for that person's health. Besides that, during a crisis Amazon has, is and will continue to crack down on items needed for that crisis (think water during a hurricane). It's just not worth it. Yes, you can make thousands or tens of thousands of dollars, but you can lose your business and have the attorney generals's office going after you..

Local Business and Warehouse Shutdowns

Problems

1) During the crisis, many local business voluntary shutdown or were forced to shutdown. This meant that your warehouse may no longer be available to you. That could completely shut you down. This happened to my local warehouse until they got an exemption because they were considered an "essential business."

2) People got sick. In one of the warehouses that I used, quite a few employees got sick, some even had to go to the hospital and this was during the thick of the pandemic in NY/NJ. It was a really scare time. The warehouse, which normally had 1.5 employees per day working on just my stuff, now had 1 person 1x a week sometimes and sometimes no one was available at all. I complete understood but it doesn't change the fact that it basically shut me down for a while, at least from them. This is essentially the reason I could not pivot to FBM, see above.

3) Need for Social distancing. Even after people returned to work and were healthy again, the employees needed to socially distance. You couldn't have as many people working at the same time so again I went from 1.5 employees per day to 1 employee 2x a week. This lasted for a couple of months and they are still limited in how many people work with my stuff and it is thankfully unrelated to anyone actively being sick.

Solutions

1) Be understanding with your warehouse, it is a pandemic after all, but be flexible and get access to more warehouses. I don't use just one warehouse. I have 2 that I often use and 1 that I rarely use. I was able to pivot from 90% at my main warehouse to almost 100% at my secondary warehouse for a while. This allowed my business to continue functioning. We are now back to about 60% primary and 40% secondary.

2) Pay your employees better. During Covid, the same job took a lot longer and couldn't be shared among employees. In addition, prices on Amazon went higher on my products. I temporarily increased the commission I paid to my buyers (who certainly needed the money) to reflect how much longer to took to do literally the same thing. This was especially important for those who lost significant income from their regular jobs.

Conclusion

The challenges of Covid have been real and numerous but if you are able to be flexible in your product choice and your warehouse choice, the demand for online shopping can more than make up for the challenges. These can be some of the most profitable months you will see for a while so take advantage if you can.

What challenges did your business go through? How did you overcome them? I would love to hear from you in the comments

2018 Amazon Small Business Impact

2019-02-27T04:08:00.001-05:00

Amazon has released their numbers from 2018 and the impact that has had for small businesses and it is pretty staggering and I'm proud and thankful to be part of that movement.

You can see the details here from Business Wire

Some of the highlights:

More than 200,000 small and medium sized businesses have sales of $100,000 or more
More than 50,000 small and medium sized businesses have sales of $500,000 or more
20% increase in small and medium sized businesses have sales of $1,000,000 or ore

In 2017, Amazon had more than 20,000 sellers with 1 million in sales or more so an increase of 20% puts that number around 25,000 sellers.

Amazon claims that their small and medium sized businesses have helped create 900,000 jobs. I really have no idea how this was calculated so I have no way of knowing its accuracy.

In 2018 I thankfully became a member of the 25,000ish small and medium sized sellers who have $1 million in sales. Here is my personal job impact.

I have zero official employees but my business helps sustain a number of employees for other business. Businesses need a lot of other businesses to help them succeed.

My prep service has someone employed who spends about half a day or more on my inventory during the months that aren't busy and full time during the busy months. During the busy months someone else from the service is often also helping that employee.

I pay for many services. I know I am not responsible for any jobs on my own at any other places but maybe together it will equal a full time employee or two but really don't know

More Obvious

Inventory Suppliers - everyone who helps make the inventory that I sell or performs customer service.

Amazon - amazon has to have employees to handle all of my inventory and sales

UPS/Fedex/Postal Service - Items are shipped to me from suppliers, inventory is then shipped to amazon and then from amazon consumers. That's a lot of shipping. Obviously they are serving others at the same time but more packages = more jobs.

My programmer - I am probably responsible for a couple weeks of the year for his job

Inventory Lab

Shipstation/stamps.com -

Keepa

Joe Lister

Inventory reconciling service - only one of his clients but every little bit helps

BQool - repricing services for those who don't know

Not obvious

Supplies - whoever is making the boxes, labels, tape, etc.

Landlord - I pay rent every month for storing my inventory. That is another company involved besides my prep service.

Credit card companies - this actually might be a full time employee for them ;). That being said, they aren't making money off me.

Accountant - again, they have tons of clients but each one helps.

The list can go on and on (utilities, internet company, etc.). The point is that almost all businesses are great at creating more jobs within their own business or someone else's business. It legitimately makes me happy knowing that other people are employed because of me even if it is indirect. If I can hit 2 or 3 million in sales which will take some time, the prep service will probably need to employee more than one person just to handle my volume. That is wonderful.

I Took a Loan from Amazon and It Was Exactly What I Needed

2019-02-20T10:00:00.000-05:00

This past Quarter 4, my available cash reserves were running seriously low. I was faced with a situation where I would either have to borrow money or stop purchasing items in late October or early November. Considering how much I was planning on purchasing in November and December this was not tenable. I looked into a lot of different funding options but decided that an Amazon loan was my best option currently. At the end, I will go through some other options that are available that might fit better for your personal situations.

My Requirements

I needed short term financing. My plan was to borrow the money in October and pay it back in January after my first payment (that didn't happen because of a tax situation requiring me to start a new company due to living overseas which is a post for another time). Had I needed long term financing I would not have taken an Amazon loan as I will show.

I wanted at least $100,000 and I wanted to do it as cheaply as possible.

Advantages for an Amazon Loan (Amazon Capital Services)

No origination fee - that means that Amazon has no one time fees for approving the loan. This is not available through every lender

No annual fee - as opposed to many small business lines of credit there is no annual fee which is helpful if you think there are years that you might not need to take a loan at all. Bank of America and Chase lines of credit had lower rates but they came with a $150 annual fee which is the cost of having access to the money whenever you would like. Considering I was hoping that I wouldn't need a new loan long time this was a significant factor for me.

No prepayment penalties - This was probably the most important factor for me. The interest rate was high but I was only going to pay the entire interest rate if I kept the loan for the duration of the 12 month term. If I paid it back early I would end up paying much less in interest.

Ease of approval - amazon has your inventory as collateral for the loan so the approval process was very quick. The whole thing only took a few minutes and I never had to talk to anyone on the phone. They also automatically take loan payments out of the payments that they owe you so they have a very easy way to collect.

Ease of Payment - it is quite easy to make extra payments. You just click a few buttons from within your Amazon account and you can make extra payments besides the monthly (or bi-monthly) payments you have to make.

Disadvantages

Amazon loans are not perfect and they shouldn't be the first choice for every situation. Here are some of the reasons why.

Interest fees - The interest rate was 10.22%. That's quite high compared to other loans. For this reason it is not a great long term financing option for me.

Technical Difficulties - There were multiple times that I tried to make payments and I was not able due to a glitch on Amazon's side. That cost me a little bit in terms of interest but nothing significant.

New approval every time - since it isn't a line of credit, if you ever need a new loan you will have to be approved every time but to be honest that's not a big process at all.

Alternatives

Line of credit - Most traditional banks offer small business lines of credit that allow you to access that money. This usually comes with either an origination fee, an annual fee, or both. However, the interest rate is usually lower. Here is a link to Bank of America for reference.

Small Business Loan - rather than a line of credit which you don't paid interest on unless you use it, you can get a traditional small business loan from a bank. Usually the biggest issue here is a prepayment penalty. If you have to pay the full interest of the loan regardless of whether you are able to pay it off early you might be paying a lot more in interest in the end than a higher interest loan without a prepayment penalty.

Financing via Credit Card - Many credit cards like Chase Slate and others offer 0% financing for a limited time. This can be a good way to finance a short term loan but can have a negative effect on your credit to hold a balance.

401(k) lending - this can be a great option. You can borrow from your 401(k). The biggest issues are that there are limits to the funding. You can borrow up to $50,000 or 50% of your vested amount, whichever is greater so if you need more than $50k you have a problem. The nice benefit is that the interest payments go to your retirement. I believe as well that this can't be used every year even if paid back but not positive about that. Whenever you are dealing with your 401(k) it's best to seek some professional help before you mess with it.

Outside investment - You can seek funds from investors which can be a way to earn money on other people's risk. For example, if something costs $10,000, you can invest $5,000 and your investor invests $5,000 and you get 75% of the profit for doing all the work and you only risk $5,000 and not $10,000. Obviously, exact details of how to break up the profits are up to you and your investors.

My Loan Results

I borrowed $151,000 on October 20, 2018 and I ended up using only about $100,000 of it but I couldn't have been comfortable spending that much on current deals I knew that if something else comes across I have enough money to jump on it. I paid back a total of $154,271.64 on February 5th. That's a total of $3271.64. That's 2.167% of the original $151,000 loan and an APR of 7.53% (Click here to learn how to calculate APR) but I don't think I could have gotten a better rate on something without an annual fee. If I kept the money for the full 12 months, I would have paid a total of $8,489.48 which is 5.62% of the original loan which had an APR of 10.22%.

If I need short term money again, I will certainly consider another Amazon Loan. What have others used for financing? Am I missing something?

Taking Chase Sapphire Reserve Into Account

2019-01-31T12:01:00.002-05:00

In a previous post, I came out in favor of the American Express Business Gold and Platinum Schwab (Personal) over the Chase Ink Business card for my particular spending habits.

I spend about $35,000 a year on shipping. The business gold earns 4x and the Schwab makes that worth 5% cash back. Chase Ink earns 3x on shipping which turns into 3.75% towards travel but it's annual fee is far lower.

Well, it turns out that I neglected to take the Chase Sapphire Reserve into account. 🤦

The Chase Sapphire Reserve has a very high annual fee of $450 but it means the 3x earned from INK turns into 4.5% towards travel and it comes with a very generous $300 airline reimbursement which many people consider to be almost as good as cash since it is pretty easy to activate.

Summary of Last Post Calculation

Here is how the original math shook out

American Express combo:

Annual fees - $295 and $550 = -$845
Travel reimbursement - ~$160
$35,000 of shipping expenses = 140,000 Membership Rewards Points = $1,750
Tax deduction at marginal rate of 30% of annual fee = $253.50

That's $1318.50 of value (3.767% on $35k of spending).

It's another $70 if you have $250k with Schwab ($100 off annual fee but lose the 30% tax deduction so only gain $70) and another $70 if you have $1 million+ with Schwab.

Chase INK

Annual fee = -$95
Travel reimbursement = $0
$35,000 of shipping expenses = 105,000 Ultimate Rewards points = $1,312.50 towards travel.
Tax deduction at marginal rate of 30% of annual fee = $28.50

That's $1246 of value towards travel (3.56%)

I pointed out that as I continue to spend more money on shipping, the benefit of the amex combination would increase and I also get the extra benefits of platinum like lounge access and credit to Saks Fifth Avenue, Uber Credits and Status at certain hotels and rents a cars so it made sense to go with American Express.

$1318.50 cash vs. $1246 for travel and Platinum has more benefits. It was easy to choose American Express over Chase

The problem is that I completely ignored the Chase Sapphire Reserve in this calculation.

Adding in Chase Sapphire Reserve

Here is the Calculation of the Chase Ink and Sapphire Reserve combo

Annual fee = -$545
Travel Reimbursement = $300, let's give it full value for simplicity sake since most people can get full value out of it
$35,000 of shipping expenses = $105,000 Ultimate Rewards = $1,575 towards travel.
Tax deduction at marginal rate of 30% of annual fee = $163.50

That's $1493.50 of value towards travel (4.267%) vs. the $1318.50 of cash

Conclusion

The Chase combination actually provides more value for me. I had already applies for the Schwab Platinum which I don't regret since it will unlock all my Membership Rewards but going forward I am considering going the Chase route instead of American Express. My only question is whether Chase will approve me for multiple cards.

I want 3 Chase cards in total. The Sapphire Reserve, Ink Business Preferred and Ink Business Cash (5x office supplies with no annual fee - limit of $25k of spending for 5x). We will see what I can get!

Waited to be Under 5/24 but I'm Applying for More American Express Instead of Chase

2019-01-24T17:23:00.000-05:00

Forgive me here, this is a bit of a ramble, I'm out of the blogging habits!

In general I'm a big cashback person for my needs since I don't travel a ton. I earn 250,000 points from spending on my Chase INK yearly and that is usually enough for my families needs for the whole year. Occasionally it is not and then I need to dip into other points balances that I have which I earn through sign up bonuses and promotions (shopping portal or retention spending bonuses, etc.). I do a lot of spending for the business besides that so instead of bulking up my points reserves more I usually look for cashback. If will receive more points than cash (assuming I value the points at 1 cent per points) I will take the points but everything being equal I prefer cash.

The other caveat is that if I can turn my points into cash at 1 cent per point, I will value those points exactly as cash (as a minimum). I can turn every Ultimate Rewards point into 1 cent so I value them at 1 cent and consider it like earning cash. I can then use them for travel at 1.25 cents (don't have a reserve) so it's even better than cash but it is at least as good as cash.

5/24

For years, I have never been anywhere close to applying for Chase cards since I was way over 5/24. The last couple of years I have mostly been applying for business cards that don't affect 5/24 and a very small number of personal cards that were worth more to me than any Chase cards would be (Discover with Discover Deals - RIP! - and cashback match). I am finally at the point where next month I will be under 5/24. Crazy!!

Chase INK to the Rescue?

I've been eyeing the Chase INK Business Preferred card for quite some time. I spend a lot of money on shipping since my prep service is considered a shipping purchase and I've started to do a lot of merchant fulfillment which requires me to purchase shipping. Last year the two combined came out to almost $35,000. My default until now was the American Express Business Rewards Gold card (can't apply for it anymore). It earns 3x Membership Rewards points with an annual fee of $195. I've been trying to replace this card with the Chase INK Business Preferred since it earns 3x Ultimate Rewards points with an annual fee of $95. I also value the points more since I should be able to get 1.25 cents per point so it's like $.0375 per dollar spent for a lower annual fee.

Before I fully decided to switch over I looked into other options. I found out that a new version of the American Express Business Gold card came out and it's very interesting for me. Instead of 3x MR on shipping, it now earns 4x on shipping (doesn't have to be shipping - can be airfare, advertising, certain technology purchases, restaurants or gas - those are not relevant to me but may be relevant to you). It also costs an extra $100 a year. There are other benefits as well like 25% of your points back when you use the points to book airfare but it's pretty restrictive and I'm not likely to use it.

Is it worth the extra $100 compared to the old business gold card? For me, for sure. If I'm spending $35,000+ on shipping that means that I'm earning an extra 35,000+ MR points so that's without a doubt. Is it worth an extra $200 compared to the Chase INK? On it's own, no.

Here is the math:

Chase INK earns 105,000 points on $35,000 of shipping purchases. That's $1,050 of cash or $1,312.50 of cash towards airfare. Take away $95 for the annual fee and the card is worth $1,217.50 per year, to me. Just for comparison, a 2% cashback card would earn $700 on the same $35,000 of purchases, a huge difference).

American Express Gold earns 140,000 points for the same $35,000 of shipping purchases. That's $1,400 towards airfare but when you take away the $295 annual fee it's only $1105 of value. That's $112.50 less than Chase even though it earns an extra point!

You can and should make the argument that the annual fee is a business expense and is tax deductible so if your marginal tax rate is 30% you are really only paying 70% of the annual fee. That's fair. Even still, 30% off of the Chase card saves you $28.50 and 30% of AmEx saves you $88.50. Give another $60 of value to the AmEx and you still fall and Chase still wins by $52.50.

But wait, there's more to this equation!!!!

Bring in the American Express Platinum Charles Schwab (Personal Platinum)!

I theoretically knew about the Charles Schwab American Express Platinum card but I made myself forget about it because I already had a platinum card (business) and the fee is $550. I hate paying $550 for a credit card but hear me out, at least for my situation.

There are two huge benefits in getting the Charles Schwab card which both come from the same rewards payout structure. When you have the Charles Schwab American Express Platinum every Membership Rewards point is now worth $.0125 to be deposited into a Charles Schwab account.

1) I have a few hundred thousand Membership Rewards points that can now be cashed out at $.0125 per point instead of waiting for an opportunity that may not arrive. There have been times when I was tempted to use Membership Rewards points at a rate of $0.01 for travel just to use them up since they were in the account doing nothing for me. This puts more cash in my account and frees me up to exclusively use Ultimate Rewards points for travel expenses at the higher $0.0125 rate.

That is worth about $660 to me since I have 267,000 points besides the $2,600 which I can immediately put in my Schwab account. The $660 is a one time benefit so it covers the annual fee and more for the first year but wouldn't be a reason to keep the card.

2) The rewards from the Business Gold are now worth more. The 140,000 points turns into $1,750 cash. $350 more than previously and it's cash now instead of something that can only be used for travel expenses. Before this, Chase won out by $52.50. Now the Membership Rewards points from American Express are ahead by $297.50. While true, we have to account for the extra $550 annual fee so American Express is actually behind by $252.50 per year.

Other Benefits of the Charles Schwab Platinum

1) $200 airline incidental credit. The american express $200 credit is not as expansive as other credits but you can still buy certain gift cards for it and I've always been able to get at least 80% of value by selling those gift cards. That makes this $200 credit worth $160 to me. Sometimes I've gotten 85% but let's stick with 80% for now. American Express is now down $92.50 instead of $252.50

2) If you have $250,000 with Charles Schwab they will take $100 off the annual fee. I don't have that but I hope to at some point. That would already make the combination better. If you have $1million or more at Schwab you get $200 off the annual fee. For most people that will forever be out of reach but for some that is a possible added benefit in the short or long term horizons.

3) Annual fee might be tax deductible. Again, if your marginal tax rate is 30% that will save you $165 in taxes so annual fee effectively went down to $385. (You should consult with a tax professional to make sure you can deduct an annual fee of a personal credit card that is used for your business.) American Express is now beating Chase on a tax benefit!

4) I didn't even realize this until Frequent Miler posted about it. You get $100 a year towards Saks 5th avenue (in 2 $50 chunks). I have never bought anything there but there is a chance it will make my wife happy if she finds something. That's worth at least $10, right?

5) $200 worth of Uber credits. I don't ever use Uber currently but I'm sure I will now whenever possible. I'd be surprised if I can't get $30 of value out of that but not sure, I might get nothing.
Edit: as pointed out in the comments, can use the credits for Uber eats as well. I live out of the USA and there is no Uber here for now so will only help me the months I come to visit but will make it easier to use the credits.

6) Lounge access - I wouldn't pay for lounge access but if the card comes with it and I want the card for other reasons, I'm happy to use the lounge. It comes with Priority Pass for you and two guests, Delta Sky lounges when you are flying Delta, Centurion, Escape Lounges and Airspace lounges.

7) Status at hotel brands and rent a cars. Same deal, not going to pay for it but happy to use it once I have it.

8) Boingo and Gogo internet passes - see 6 and 7.

9) 60k Membership rewards sign up bonus. That's worth $750 into your Schwab account. That's a lot of money but obviously it's only a one time benefit.
Edit: Chase INK has an 80k ultimate rewards sign up bonus so this is less significant relative to Chase both are very good sign up bonuses.

Conclusion

It turns out that for my situation, sticking with American Express is the way to go. I also get the added benefit of lounge access and status. The short term benefits are off the charts (sign up bonus and cashing out existing MR balance) to the point that I would go for the card without the long term spending structure but the long term benefits mean that I will be using the American Expression business gold and Charles Schwab platinum as a nice combination. If my business continues to grow, the benefits will only increase with time!

John Bogle, Founder of Vanguard, Died Yesterday

2019-01-17T04:32:00.000-05:00

John Bogle died yesterday This is not an investment blog but he was the most influential investor to me personally and if you don't follow the markets, John Bogle was the most important innovator in the market in recent memory that you never heard of. Everyone has heard of Warren Buffet and Bill Gates and Jeff Bezos, but most people don't know who John Bogle is and what he accomplished. If you trade on the stock market in mutual funds, whether through indexing or not, you owe John Bogle a debt of gratitude and he has almost definitely saved you a bit of money so I thought it would be worth it to talk about him accomplishments.

John Bogle had a couple of radical ideas that were extremely simple.

1) Almost nobody is smart enough to consistently beat the average stock market return long term.

2) Fees, taxes and inflation matter a great deal.

3) Don't try to time the market

Being Better than Average Consistently is Not Common

Bogle argued that psychologically we tend to throw money at the latest money manager who has beaten the market because we don't want to miss out on the great returns they are about to dole out. The problem is that by definition there is always someone who is doing better than average. The more likely outcome after they beat market short term is regression to the mean which is below average returns. Everyone who invests in the stock market will always receive 100% of the stock market returns. You are paying someone to hopefully get better than average which is a rare feat.

There are almost no fund managers out there who have consistently beaten the average return long term. Warren Buffet of Berkshire Hathaway (BRK.A though you are more likely purchasing BRK.B) is a notable exception to this and I would argue that Thomas Gayner of Markel (MKL) is another exception. I'm sure there are others and I don't consider myself an expert here but the point is that even those have done it in the past have no guarantee for the future.

Fees and Taxes Matter a Great Deal

As I said before, all investors will by definition receive the return of the entire market. The entire market minus fees, that is. You see if the entire market return was $10 and 5% of that was paid out in fees to brokerage houses for advice and commissions that means that there is only $9.50 for everyone to share.

5% is more than your average fund manager takes (though hedge funds typically 2% of funds under management and 20% of profits) but even at 1% which is pretty common, fees tends to cripple your return long term because of compounding returns.

I'll give you some examples so you can see how bad it is.

If you start with $10,000 and you invest it for 30 years and got a 7% return and paid 1% in fees, your balance would be $56,4891 which is a 460% return but you would have paid $19,641 in fees over those 30 years. That means you are sacrificing another 200% of your initial investment.

Get that down to 0.50% in fees and your same 7% gains change to a balance to $65,573. It's a difference of more than $10,000 in fees! 100% of your initial investment.

The more you invest the bigger impact of the fees and the longer you invest the bigger the impact of the fees.

You can play around with the numbers here.

Taxes matter because the only way that a fund manager can beat the market is either to purchase better stocks and hold onto them or to continually weave in and out of stocks to buy low and sell high. This leads to large tax liabilities (hopefully!) even though you are putting the money back in the market.

Inflation matters because you are paying a premium in risk by putting your money into equities and if inflation is going to eat at the real value of your gains is it really worth the risk.

Don't Time the Market

If you read books on behavioral economics you will found out that Humans don't always do the most logical things. I'd recommend either The Undoing Project by Michael Lewis or Predictably Irrational by Dan Ariely if you are interested in general (both affiliate links). The point is that when we see the stock market go up, we get greedy and don't want to miss out and we buy stocks. It's based off recency bias and FOMO. When the stock market is crashing we get scared and sell. This is the literal opposite of what you should be doing. As things crash you should be buying stocks and as stocks are heating up that's the time to sell. As Warren Buffet says, "Be greedy when others are fearful and fearful when others are greedy."

The other problem is that it is usually impossible to know when the market has topped and when the market has bottomed so even if you wanted to follow Buffet's advice, most people wouldn't know when to execute.

Bogle's Solution - Index Funds

Bogle championed the idea of an index fund to solve these problems and he founded Vanguard to do it. As opposied to picking a few stocks, you pick all the stocks in the S&P 500 (or whatever else you are indexing). That means that you are going to buy a piece of the entire economy. Who is going to win between apple and microsoft? Who cares!!!??? One of them will or a newcomer will and you will own a piece of that so as long as the economy keeps chugging forward you will get the gains of the entire market.

Index funds also allow for very very low fees. You don't have to pick stocks, you are buying everything so you don't have to pay a manager for his "brilliance," anyone can do it. You see I can buy an index fund that is set up the same way as any other index fund. Every brokerage house has them now so they compete on low fees because for the most part that's the only thing you can compete on for index funds.

Index fees got so popular because of their low fees and the average investor started caring and talking about fees that even active funds had to slash their fees to compete so if you own any funds, even active ones, you have John Bogle to thank for their relatively low fees and all the money you get to keep instead of lining the pocket of the fund manager.

You should also not time the market. Try not to even look at the market. Consistently add to your index funds over time. You will sometimes add when the market is high and sometimes when it is low but as long as you don't panic and sell when it is low or get greedy and throw in extra when it is high, your purchase price risk is gone. The market can have wild swings short term but long term (horizon of decades) you are almost guaranteed to make good money in the stock market.

If you want to know more about his method, you can read one of his books. The one I read is called "Common Sense Investing" (also an affiliate link). It is short and well worth the read.

Using credit card points to invest in the market

Getting back to regularly scheduled programming:

I have mentioned this a few times before but besides my regular investing, I use my credit card points (the cashback ones at least) to invest in the market following the "Boglehead" method. The cashback gets transferred to Fidelity. Doesn't have to be Fidelity but I will explain why I do that.

Every time I earn enough for at least one share of ITOT I purchase more. ITOT is an index fund that is the S&P top 1500. I used to invest in IVV which was the S&P 500 but it costs over $250 per share which makes it harder to buy with small amounts of money since you need at least $250 to purchase even one share. The advantage for them is both in fees and commissions. If you have a Fidelity account it is commission free to trade any iShares ETF like ITOT so buying 1 share at a time doesn't cost anything extra. Their management fee is 0.03% which is one of the best on the market. Going with that same initial $10,000 investment, you would save another $10,000 of fees over 30 years a 0.03% compared to 0.5%. That's a big difference!

2018 Recap and Looking Ahead to 2019

2019-01-14T08:00:00.000-05:00

Every once in a while it is important to cover the big picture to clarify my goals, think ahead and hopefully help others in the process.

Before I delve into how 2018 went, here were my stated goals from last year.

Goals for 2018

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

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

I have also stated:

Store Less at Amazon, Fulfill Less via Amazon

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

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

Part of doing more fulfillment on my own was to bulk up on my eBay and Walmart sales (I don't even consider Jet to be a marketplace on my radar at this point) and I'll break those down for you.

2018 Goals

Develop my own Software for other selling channels

This has not happened as quickly as I would like. It is still in the development stage. At this point I do have an inventory management software. As items come in, my staff can scan what comes in and scan it as it goes out so I have an accurate count of what I have at the warehouse (as long as everyone is using it properly of course).

I am in the process of adding Amazon FBM (and prime) so that inventory numbers on Amazon are automatically synced with the warehouse and adding my product to a particular ASIN can be done from within the software in bulk. I am hoping to be do some live testing this week which is the last step unless there are bugs.

We are also adding the Walmart API currently so that listings can be created and inventory synced to the warehouse.

eBay will come after Walmart and once eBay is added I hope to add automated multi channel fulfillment as well. Bye bye Joelister, eventually.

Private Labeling

I had a few conversations with companies about private labeling products but I am honestly no closer now to actually having a product than at the beginning of 2018 but that doesn't mean I haven't done anything.

I have been working with 2 companies as a consultant to build their companies own products on Amazon using their Amazon seller accounts (I have user permission for my regular login - similar to what you would set up before you give access to a 3rd party for shipping or email reviews, etc.). It has been a wonderful opportunity for me to see if I can build a product without the risk of purchasing large amounts of inventory.

I've already learned a few tricks with creating listings (multipacks, bundles, GTIN exemptions), optimizing listings, optimizing advertising campaigns along the way so even if neither of them explode (I am on a commission basis), it has been a good learning experience for me and the plan is to continually learn the process while getting paid. If all the products work out I can then feel comfortable doing it for my own product as well.

Store Less at Amazon, Fulfill Less via Amazon

This was my last stated goal for 2018. Building out my fulfillment by merchant operation.

How did I do?

Here are my 2017 stats from Shipstation.

My eBay sales were mostly not existent, my Walmart stats were ok and my Amazon stats (just FBM) were decently solid and 544 orders overall between everything.

Here are my 2018 stats:

You can see that the number of orders fulfilled directly by me doubled this year compared to last year. My Amazon sales went up about 47%. My Walmart sales just about doubled. My eBay sales went up by more than ten times and Jet is dead to me.

In addition to that, I started doing seller fulfilled prime on Amazon which was a significant reason for the increase on Amazon but hopefully I can do a lot more with that this year.

Only 12 days through January and I already have more than 100 orders and over $1000 of sales on both Walmart and eBay but January is often a good month for me as I am selling off my leftovers from Quarter 4 and stores haven't replenished yet.

Website

I also said I wanted to start my own eCommerce site in 2018. That did not happen but the process has already begun for 2019. I hope to have that finished by June or July of this year.

Overall sales in 2018 on Amazon

I had an almost 60% increase in overall sales from 2017 to 2018 on Amazon and had more than $1,000,000 in sales for the first time which is great! I'm very proud of that. That being said, it is not all good. My profits barely increased. I only had a 4.1% profit increase from 2017 to 2018.

What the heck happened?

Shipping Credit - I prepaid $5,000 to a prep facility which is a credit I will use over 2019 but it took $5,000 off my profit numbers for 2018. This is more of an accounting issue than anything else since I still have access to the credit.

Jewelry - I decided to enter the jewelry category on Amazon. Amazon has a $5,000 non refundable fee for laboratory testing when you enter this category. This so far has been a spectacular fail but to be honest I haven't given it the focus it deserves.

Software and eCommerce development - I spent about $7,000 on this in 2018 and $0 on this in 2017. As opposed to the first two, these expenses will likely continue in 2019 but hopefully less but when comparing 2018 profitability to 2017 it made a huge difference.

Reimbursements way down - reimbursements went from 4.3% of my sales to 2.4% of my sales. My understanding is that this is a problem for sellers across the board as Amazon has been much more stingy in granting reimbursements. Please let me know your experiences in the comments. I actually had less money in reimbursements in 2018 despite the 60% increase in sales.

Inventory Writeoffs - I overbought on some groceries and they expired. This is a poor purchasing choice and ended up costing me a couple thousand dollars. Until I have a better inventory process for items that can expire I will hold off on larger purchases of those items.

Transitioning to an out of country seller - since I live outside the US I rely on prep services more than I used to. I spent a lot more money on prep services but that is not changing anytime soon although I have a new deal with my current service. I will pay less per unit and a larger per month fee. As long as my volume stays as high as it is now or higher it will be cheaper for me and more predictable fees for them.

Amazon loan interest - I took an Amazon loan (I'll write up a post about my experience when it is fully paid off) to increase my purchasing ability in the 4th quarter and I paid a bit more than $2,500 in interest on it in 2018. I've already paid 2/3rds of the loan and I would have fully paid it off if not for a tax quirk related to having to start a new company. A new loan may or may not happen in 2019 as well.

Goals for 2019

As I showed, 2018 was a mixed bag for me. I made more money but I should have made a lot more money than I did so what are my goals for 2019 and how will I make more money??!!

Storage Fees - I spent 1.6% of sales on monthly storage fees and long term storage fees. Last year I actually spent 1.7% so that is a slight improvement. I have a lot of room for improvement on storage. Things were getting much much better after the summer but I am now in a bad storage place because of the 4th quarter. I have made a conscious effort to send less in and allow myself to go out of stock more. I have found that I get in trouble when sales are great for a short period of time and I send in more assuming that will continue for the next month or two. I can always send in more every couple of days if sales continue or use SFP if I am out of stock.

Even though my percentages of revenue were lower this year, I consider my storage fees a fail for 2018 since I know I could and should be doing much better. With a concerted effort I hope to get that number closer to 1.25%.

In addition, Amazon rules for storage fees have changed for the better of sellers starting in mid February. Long term fees will not apply until items have been at fulfillment centers for more than 1 year. I paid an extra $1,000 in long term storage fees in 2018 compared to 2017 and I hope to have that mostly eliminated after February 2019.

Refunds - Last year I lost 4.3% of my sales to refunds. In 2018 it was 3.9% but this can still be improved. Picking the right products is the most important factor here. As I have moved further and further away from electronics and into lower price point items my refund percentage has come down with it.

Even More Self Fulfillment -Walmart has been a real revelation for me. There have been items that have not sold well on Amazon and have sold nicely on Walmart or have sold well on both but the price on Walmart has been much better. The only problem is that I really have no idea of how to tell before I purchase so I still can't make purchases for Walmart until I test it. It allows me to leave more inventory at my warehouse set aside for Walmart and lower my storage fees or to increase my price on Amazon if it is selling well on Walmart. My goal for Walmart in 2019 is $50,000 in sales.

I've also removed unsubscribed from Geekseller which saves me about $20 a month and 1% of revenue from Walmart. You can apply for Walmart as well but my understanding is that they need proof of about $1 million in sales to be accepted which is a big hurdle for most sellers.

eBay has been great as well. I don't make a ton of money on eBay but it has really helped my frequency of sales and lowered my storage fees on items that weren't selling well on Amazon. When I can finally get rid of JoeLister my monthly fees will come done as well. My goal for eBay in 2019 is $35,000 in sales.

My own site - once this is built out hopefully my margins will be better since I won't be giving commissions out and I can have another place to sell which can lower my storage fees as well. My goal for my own site in 2019 is $1.

Avoid Loan Interest - I am happy I took the loan and so far it has worked out but hopefully I do a better job of not having so much money stuck in inventory and I don't need a loan for 2019. A full post about the loan will be forthcoming.

What are your goals for 2019? I would love to hear them.

Discover Deals Removes Walmart - What's the Next Best Shopping Portal to Use?

2018-10-17T05:08:00.002-04:00

I logged into my Discover account this morning in order to make a purchase at Walmart and I noticed that Walmart.com was removed from Discover Deals. This is a big hit to me. If you are a big Walmart.com shopper, the combination of Discover Deals and a new Discover card meant 5% cashback on all your walmart.com purchases and another 1% cashback just like any other purchase. This would get doubled at the end of the year to 12% cashback. Not only can you not beat that, you can't really come close!

It's worth it to note that Discover Deals was shutting down entirely at the end of the month so I needed to find a replacement anyways for walmart but I was really ramping up my purchases this month and cycling through my credit limit (Discover gives notoriously low limits on new cards) to maximize my cashback.

I'm pretty sure I was partly responsible for the shutting down of Discover Deals so it becomes incumbent on me to find an alternative solution that we can break together ;)

Alternatives to Discover Deals

Gift Cards

I haven't been a big fan of gift cards lately for reselling. Yes, it's a lot of money potentially but it's also a lot of tracking and frankly I tend to lose some cards (I only realize later when I find the balance - I can't quantify the ones I've lost but haven't found). When you take that into consideration it really knocks down the savings. You also lose out on purchase protections and when you have returns, sometimes they put it back on the original gift card which may be gone since you used it up. Then the fraud on second hard cards. The accounting and tracking is enough for me to just give it up. It was also not relevant to me for Walmart since I was going to use my Discover card for purchasing through Discover Deals (shlit"a, soon to be a"h).

Either way, if you like the gift card route, you can purchase gift cards from any of the reputable sites to increase your savings. Check out Gift Card Wiki for the current rates but be aware that Walmart gift cards are very popular so you won't get much of a discount, think less than 1%.

Alternatively, you can purchase gift cards from office supply stores like Staples with Chase Ink or Amex Simply Cash to earn 5x Ultimate Rewards or 5% cashback.

Shopping Portals

Whether you are paying via credit card or gift card, you need to find the best shopping portal to use. As always, you should be checking Cashback Monitor for the current rates.

Here is what you see for Walmart (I didn't put in the points column because they are woeful currently):

There are a couple of things to note.

1) Discover Deals is still on there as of writing this post so it isn't updated immediately, not a shocker, you should always double check as it isn't perfect.

2) The current #1 overall is not on there either

3) You need to check the "up to x%" ones individually. Usually means that different categories within the same store have different earning rates.

Upromise

Upromise has a shopping portal. It currently earns 5% cashback for all purchases at Walmart. In general don't recommend Upromise. I have not had good success on tracking with them and speaking to others, I am not the only one but others have had consistent success as well so might be worth a try to you. Be aware that they can be very slow to track so you likely won't get confirmation for a while even if it does track. I have earned close to $3,000 from Upromise in the past but I stopped using them completely after hundreds of dollars of cashback stopped tracking. It just wasn't worth it considering the alternatives.

Active Junky

I recently started using Active Junky (Referral Link - we both get $10 if you sign up spend more than $25). From speaking to others, their tracking is excellent and I have experienced that so far as well on my first couple of transactions. Transactions tracked in a couple of days.

Active Junky earns 4% at Walmart across the board. Not bad but it wasn't what I used today.

LeMoney is on there as well. Every time I've used them for Walmart it has tracked but the purchase earns $0.00! Avoid, avoid!

Top Cashback/Ebates

When you look at Top Cashback and Ebates, they both say up to 10% cashback. When you look at the categories, there probably isn't much a reseller is going to buy in the 10% range besides maybe baby gear (only at Ebates, not Top Cashback). However, Toys and Home are 5% cashback from both Top Cashback and Ebates. Keep in mind that the Toy category is going to change in 4 days on Top Cashback (and probably Ebates too). Right now it is only 1% at Be Frugal.

Personally I prefer Top Cashback as I find their rates are better in general and they track very well. Ebates is good at tracking but the rates aren't usually quite as good.

If you don't have an Ebates or Top Cashback account please sign up with my link and I'll get some extra money as well along with you getting something.

Don't Be Lazy Like Me!

2018-10-03T10:33:00.000-04:00

Shipstation

I have a shipstation account (affiliate link) which I use to coordinate all my self fulfillment orders. All my Amazon FBM, eBay, Walmart and Jet orders are automatically populated into shipstation. It's a tool that my team uses at least once daily.

I have a separate login for my employees and I can assign specific shipments to them (the ones that I'm self fulfilling) and I don't assign them anything that will be fulfilled via Amazon Multi Channel Fulfillment. This last extra feature costs an extra $5 a month but it saves a lot of confusion and stress. It used to be that everything was under one login and they would fulfill all the orders even ones I didn't want them to fulfill. Good problems that they are responsible but a big fail.

The first 50 shipments a month are $9 and then after that it goes up to $29 a month. I rarely get to the $29 a month range because most of my self fulfillment are through Amazon multi channel and those don't count towards your allotted 50 even though you can add the tracking to shipstation and it will update to the marketplace.

Stamps.com

Either way, one of the best features of shipstation is free access to stamps.com Stamps.com gives you access to USPS first class shipping rates on anything less than a 1 lb and under specific dimensions. This is a big deal, shipping can be as low as $2.66 so if you have really light items, you need to have to access to first class mail rates. The rates are also the same to anywhere in the US.

Keep in mind that if you purchase shipping through Amazon (and I think eBay) they will also provide you with first class mail rates for no extra charge (not available for seller fulfilled prime) but that won't help for non Amazon (or eBay) orders and shipstation just puts everything in one place. Also if you purchase directly through Amazon it usually helps you win any A to Z cases.

Me Being Super Lazy!!!

You have to connect your shipstation account to stamps.com and then you can replenish funds directly from within shipstation.com. The problem was that I put the wrong credit card in stamps.com. I was charging my American express business platinum instead of business Gold so I was getting 1x Membership Rewards when for the same purchase I could have gotten 3x. It's only a few thousand in spending a year but why not!? I tried to log in to stamps.com and I couldn't remember my password. Then I couldn't remember my security answers! Then I got lazy, I left it on auto pilot since I'm allergic to phone calls. This was true even though I was keeping that card open just to pay for stamps.com replenishments! I couldn't get in to stamps.com and it was just easier to keep things the way they were. That's a $450 annual fee. That's criminally lazy.

Fast forward about a year later, I finally called up stamps.com today, and got my password reset and changed the credit card. About time!

Lesson of the story: Don't be lazy! Now, if I can just get myself to cancel the AMEX platinum...

My eBay Sales Have Started to Increase

2018-09-25T12:30:00.001-04:00

I really like selling on Amazon. It is by far and away my favorite place to sell. The main reason is because people love buying on Amazon so the customers are there but Amazon also makes it very easy and lucrative with FBA. For the most part, when I am fulfilling something on my own, my prices just can't compete with what I can offer on Amazon FBA. I often have to sell for more with self fulfillment and still make less!

Let me first point out that my eBay business is still very, very small. It is pitiful compared to Amazon but that's ok.

When you consider that I have $5,600 of sales on eBay in the last 12 months, it doesn't seem so bad that $4,700 of them are within the last 60 days. You need to start somewhere!

Despite that, I am now finding myself increasingly interested in selling more on eBay (and other sites but so far I've had the most success with eBay) and here's why:

Amazon FBA storage prices have gone through the roof!

I have many items at Amazon that I can't afford to keep at Amazon and the price on Amazon is either too cheap for me to sell or I can't sell it fast enough just at Amazon.

The monthly storage fees are bad but this is mostly a worry about Long Term Storage fees. If I didn't radically change the way I did business I would have fees that would get out of control!

My merchant fulfillment business on Amazon (mostly Seller Fulfilled Prime but not entirely) has started to increase.

This is pretty much for the same reason. I don't pay extra storage on anything in my warehouse. Previously if I bought 50 of something I would send all 50 in immediately. I now send in only 5-18 and put a few up with Merchant Fulfillment immediately so that I am in stock even earlier. If the FBA items sell I'll send in more but if they don't I wont send any more in. That means that I'll hopefully never pay storage and LTSF on more than the original 5-18 I sent in. I might end up being out of stock more which makes it important again to have self fulfillment available.

All this means I have more inventory in my warehouse available to use to fulfill orders for eBay.
Busy seasons like Q4 are exceptions. I will send a lot more in late November even if I don't know exactly how many will sell.

Why the heck not!

More profitable sales are good, right!?

Credit Card Rewards for shipping and purchases are kind of nice but this is very much a side benefit.

You can use the Amex Business Gold for 3x Membership Rewards or the Chase Ink Business Preferred for 3x UR for shipping.

If you are doing Seller Fulfilled Prime you have to purchase shipping through Amazon so no credit card rewards for that.

If I'm selling more that means I have to buy more which means more credit card points.

There has been one large revelation to me that has really driven my eBay sales.

It's ok if I don't make as much money per sale on eBay as I do on Amazon! This is for a couple of reasons:

eBay has a lot fewer returns than Amazon. You can even choose to not allow for returns but even allowing for returns the return rate is lower. You have to bake in your return rate into Amazon margins.
eBay can't lose your stuff like Amazon FBA does. Amazon loses a lot of stuff! There is a certain percentage of shrinkage that you have to compensate for when you sell on Amazon. Unless your workers are stealing from you or losing items as well, if it is in your warehouse, it isn't getting lost.
My primary objective is to make money on eBay but a close second is mitigation of Amazon storage fees. Even if I just breakeven after fees on all of my eBay sales (I have been making a small amount of money), I am still saving a lot of money in Amazon fees from all the storage I'm no longer paying!

Lack of Time Investment - Automation to the Rescue!

Automation may make me an irrelevant sack of potatoies in the economy at some point (Read Yuval Harari's book Home Deus: A Brief History of Tomorrow if you want to be scared about this stuff. Before that you should probably first read his original book Sapiens: A Brief History of Humankind which is one of the greatest books I've ever read - both affiliate links) but for now it's really nice!

Either way, I use automation for 90%+ of my eBay selling through Joe Lister (affiliate link). I've talked about Joe Lister before. Joe Lister automatically turns your Amazon listings into eBay listings in less than an hour. You can tell Joe Lister to price on eBay to earn the same amount of money as on Amazon and they will automatically calculate eBay fees and fulfillment fees for you to arrive at the correct price. You can also ask them to make more or less money per sale compared to your Amazon price. They constantly monitor your Amazon inventory so that you don't sell something on eBay you don't have in stock and when an eBay sale comes in they initiate a Multi Channel Fulfillment order from your Amazon inventory to fulfill this order. They will then update the tracking on eBay once available. You need to literally do nothing, except pay them of course.

At a certain point, I quit Joe Lister because it just wasn't working out as well as I would like and I was paying a lot of money in listing fees. I hate listing fees! eBay charges $.30 a listing if you don't have a store or a promotion.

So what changed?

1) My prices. Instead of telling Joe Lister to price at the same profit levels on Amazon and eBay (making my eBay prices higher) I am willing to sell for 2% lower margins. I might even lower that at some point. You can always change individual listings if you think it is selling for too little.

2) I increased my Joe Lister plan to 250 listings. That means that I just have more listings on eBay which might sell. I used to pick my top 50 and 46 of them didn't sell at all. Now I can pick 95% of my active listings on Amazon.

3) I opened an eBay Store. I started with a basic store. It comes with 250 free listings which means that I am no longer getting dinged with listing fees. I've had months where I've paid over $50 in just listing fees which was awful.

Also, eBay's commission goes down from 10% to 9.15% with a basic store (remember there is still the 2.7% paypal commission). If I can sell $2,500 worth of merchandise on eBay every month (I've been doing about that the last 2 months), that .85% savings will equal a savings of $21.25 monthly, which is exactly equal to the $21.25 monthly fee for the store (when you sign up for a year at a time). So I'm saving on listings and hopefully the commission savings is breakeven or better for the store fee.

If I can make $60 a month in profit on top of that I can mitigate the Joe Lister fee and every sale is one less item I pay storage on. If I am selling $2,500 a month, $60 is a margin of 2.4%. Hopefully that's sustainable.

My fixed fees are set so if I can increase it to $5,000 a month of sales, the extra sales will only be profit and not paying for any listing fees or Joe Lister fees so I can actually make some money besides just lowering storage fees.

At some point if sales increase I will probably pay a developer to do something similar to Joe Lister for a one time fee and make my money back over time.

Conclusion

My expectations for eBay are minimal (at least breakeven on $2,500 a month of sales on average) and then I consider this a win. My time input is very low since almost everything is automated. So far eBay has surprised me with how many orders I've been receiving. I hope to continue to be surprised with increased orders!

Amazon FBA Prep Centers

2018-05-01T08:21:00.001-04:00

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

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

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

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

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

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

2) Outsource

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

What to look for in a Prep Center

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

1) Cost

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

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

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

Is there a discount when your volume increases?

Is there a one time account set-up fee?

2) Shipping Cost

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

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

3) Sales Tax Free State?

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

3) Your involvement

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

4) Speed/Efficiency

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

5) Inventory tracking

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

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

6) Customer Service

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

7) Retailer bans?

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

8) Storage Fees

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

9) Quarter 4

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

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

10) Returns

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

11) Monthly fees

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

12) FBM?

Do they do FBM? How fast? What price?

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

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

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

Prime Zero Prep (PZP)

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

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

Sell Tech Prep (STP)

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

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

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

1) Location

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

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

2) Speed

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

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

Special Referral Rate

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

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

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

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

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

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

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

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

Radically New Amazon Storage Rules and What They Mean for Me

2018-03-04T13:00:00.000-05:00

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

Short Term Storage Fees

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

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

Long Term Storage Fees

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

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

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

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

Storage Limits and Fees

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

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

Ramifications

Smaller is better

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

Faster is Better

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

Sending in Pallets is less beneficial

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

Gaming LTSFs is Gone

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

Active Inventory Management

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

Prices Will Decrease

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

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

Store Less at Amazon, Fulfill Less via Amazon

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

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

Conclusion

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

As always, good luck selling!

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

2018-02-14T11:15:00.002-05:00

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

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

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

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

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

You can see a summary of it here.

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

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

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

Other States

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

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

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

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

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

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

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

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

2018-02-05T09:00:00.000-05:00

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

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

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

FBA Selling Fees Explained

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

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

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

Some Examples

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

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

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

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

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

Let's take something really large like diapers

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

Ramifications on your Business

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

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

How it Will Affect My Decision Making

1) Bigger is not better!

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

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

2) Increase Prices on many items unfortunately :(

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

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

3) Opportunities for Larger Items will Present Themselves.

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

4) Sell some larger items now?

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

5) Readjust Repricers

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

6) More FBM?

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

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

So, how will it affect your strategy going forward?

A Lot Has Changed in 6 Months...

2017-12-05T14:25:00.000-05:00

Massive Life Change

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

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

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

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

Business from Out of Town is Different

You Aren't There at the Warehouse

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

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

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

You Aren't There for Buying Either

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

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

The Business Has Changed

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

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

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

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

Move to Self Fulfillment

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

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

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

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

Goals for 2018

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

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

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

Using Consumer Arbitration with Amazon

2017-05-15T09:00:00.000-04:00

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

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

Overview

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

Complaints

The typical complaints against Amazon include the following:

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

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

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

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

Fighting Back

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

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

The Amazon Consumer Arbitration Clause

Amazon has a consumer arbitration provision that reads as follows:

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

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

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

The Solution

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

Turn On Two Step Verification for Your Amazon Account

2017-04-24T08:39:00.001-04:00

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

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

Last week I received this message from Amazon.

Hello,

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

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

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

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

Sincerely,

Amazon.com

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

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

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

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

As always, stay safe out there!

FBA Temperature Sensitive Deadline Coming Up In May

2017-04-04T10:28:00.001-04:00

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

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

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

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

Where Have I Been?

2017-03-31T09:17:00.000-04:00

It's been about 4 weeks since I posted anything. That's a really long time for me. I went almost 90 weeks straight with at least a Turnover Tuesdays post. What happened?

I don't want this blog to be a job.

I have been blogging for a long time, since the end of 2011. Until recently I enjoyed blogging a lot. It was a great outlet for me. Instead of boring all the people around me I could bore everyone in cyberspace and no one had to offend me when they stopped reading. Win, win.

That changed with my Turnover Tuesdays series at some point. I had to put out a post on Tuesday and I wanted it to be a more substantive post. Many times I would only think of topic on Tuesday afternoon or Tuesday night and frantically put something (mildly) entertaining and substantive out there. I also pretty much stopped posting any other idea because I thought I was wasting a Turnover Tuesdays opportunity.

I was starting to dread Tuesday and they don't pay me enough to be dreading my hobby so one Tuesday night I was about to write a post and then a business meeting happened suddenly and I didn't have time to put anything out there.

I feel liberated

I thought I would be disappointed to lose my streak but I didn't. I felt great about it. It was such a load off my back. It started to hit me that I stopped loving blogging and that was the biggest disappointment for me.

I'm a lot more busy than I used to be

As my Amazon business grows (and other parts of life grow too), I've had less time for non essential activities. I would much rather have my blog fall by the wayside than my family.

I don't plan on stopping, at least not yet, but it has been great to take some time off. Going forward, I hope to post randomly on stuff I enjoy. Hopefully you enjoy it too. Time to get back to basics!

Turnover Tuesdays - Walmart and eBay Are Not Going As Smoothly as I Would LIke

2017-02-28T23:50:00.002-05:00

For those who are not familiar, I started a series a while back called Turnover Tuesdays. Every Tuesday I like to highlight one item that I have resold. This will include profitable and non profitable sales. I hope that there is always something to learn.

The previous posts in the series can be found at the bottom of this post.

Walmart Was Going Great

If you've been playing along at home, I was hoping to use eBay and Walmart (mostly Walmart) to increase my sales and at a minimum mitigate the increased rent that I've begun to pay to allow for more merchant fulfillment and decreased Amazon storage fees. Walmart does not allow for multi channel fulfillment from Amazon so you must fulfill outside of your Amazon inventory. That requires space and a team to fulfill orders (or more time from you).

For a while, I was very excited about Walmart. For the first couple of months I was getting a lot of orders on Walmart's platform. Not all were very profitable, in fact some were actually losses but at least I was selling old inventory that was much less profitable on Amazon at that point (I wish I had been willing to lower some of them more as the price on some have continued to tank).

I was also selling some items that had great profits.

I was sure that the future was bright.

eBay Never Really Did Great

Turnover Tuesdays - Why I Sell on Amazon

2017-02-21T12:29:00.003-05:00

The previous posts in the series can be found at the bottom of this post.

Let's Reflect Together

Every once in a while you need to take a step back and reflect on why you started the path you chose and whether it is still meeting your needs. I find it both interesting to write about, important to keep you motivated or pivot and hopefully others will share their stories in the comments too.

Turnover Tuesdays - Manage Inventory vs. Manage FBA Inventory

2017-02-14T11:34:00.001-05:00

The previous posts in the series can be found at the bottom of this post.

Deciding Which Inventory Management Page to Use

There are two pages to choose from within Seller Central on how to manage your inventory. One is Manage Inventory and the other is Manage FBA Inventory. They both have pros and cons. Amazon is also rolling out a new beta Manage FBA Inventory with some "enhancements". I'll also throw in one tip at the end to improve your Manage Inventory screen. I've used Manage FBA Inventory since I've started but I'm now questioning that.

There are some things you can only see in one or the other so it's a bit of a mixed bag but it's good to know what each has so you can decide which one to use primarily and whether you need to go back and forth.

Turnover Tuesdays - Business Expenses

2017-02-07T15:37:00.001-05:00

The previous posts in the series can be found at the bottom of this post.

Disclaimers

Now that it is 2017, it's time to talk about taxes a bit. I'm not a tax expert and I'm certainly not an accountant. My goal is not to create a comprehensive list of business expenses you may have. Hopefully I can mention some things that others hadn't thought of, maybe others can come up with ones I didn't think of.

Please talk to your accountant before you decide to take any deductions. I have an accountant and I've asked about all of these but not every accountant is as aggressive about deductions as other accountants.

Hopefully this is the beginning of a conversation that is beneficial to everyone.

I'm Using More Bank Points Than Airline Miles These Days

2017-02-02T15:14:00.000-05:00

A few weeks ago I saw this tweet by Robert Dwyer about how bank points were more important for him to collect than airlines miles in 2017 for everything except international premium cabins and it got me thinking about my own usage for flights recently.

I've Been Travelling More than Usual

I've kind of always been the person in the points/miles blogging (when I used to do that kind of stuff) who didn't travel much which was a little bit of an anomaly. I didn't have much use for manufactured spending for the miles so I usually did it for the cash. I don't do that anymore since I make more cash selling on Amazon than I would manufactured spending. There are some low hanging fruit I make exception for but I'm mostly out.

In a one year span I have flown internationally twice (one with my whole family, one just with my wife) and I have another one planned in that same 12 month time period. I also have a domestic flight planned in March. I know Trevor is hyperventilating thinking of how few times that is but that's a lot for me.

All of these flights were entirely paid for in miles/points (besides mandatory fees) so I do earn enough miles for my needs. The vast majority of the miles I earn and use are via sign up bonuses since I don't have to forgo cash to earn them. I also will earn an equivalent amount of miles as cash. For example if I can earn 3x Thank You Points via ATT, I'll take that over 2% or ever 2.625% cashback since I won't redeem my miles for less than $0.01 each. Makes things more simple.

I Paid For All My Trips with Bank Points, Not Miles (or At Least I Should Have)

With each reservation I would have needed to use the fewest miles had I used bank points. When I say bank points I mean Ultimate Rewards, Membership Rewards and Thank You Points. They have always been great because they could be converted into so many different types of miles (and sometimes allow you to pool miles from different sources like with Singapore Airlines), but for this post I mean using these points directly to book tickets instead of transferring. For most this is old news but it's the trend that I'm using for travel redemption so I thought others might be interested as well.

With the American Express Business Platinum, they have a promotion where they will redeposit 50% of the miles used to purchase a ticket for any business and first class redemption or for economy. The difference is that for economy it only works on one airline, the one that you choose for the $200 airline incidental. You can only change that once a year in January so it isn't the most useful promotion but I was able to book 3 tickets with it this year on 2 airlines (I just changed it). Normally you can book travel directly through American Express Membership Rewards for a value of 1 point per penny. With this promotion, any miles you use will be doubled in value.

With the Chase Sapphire Reserve, any Ultimate Rewards points you have can be booked for a cash ticket at a value of 1 UR to $.015. While the value is slightly less than American Express, it is far more useful for those who fly economy since you aren't restricted to one airline.

With the Citibank Prestige, you can use Thank You Points on American Airlines flights at a value of $.016 per mile. This is only on AA and the value is even less than American Express however you don't need as many miles to book. On American Express you need to have the equivalent of $0.01 per mile available to book and then they give you half the points back. Here, you don't need to have as many miles available in order to book. This benefit is going away in June though.

Bank Points are Better than Airline Points!

Not only is the value per point that you use often better with bank points as opposed to miles (on economy) but they are even more valuable than that for a couple of reasons.

1) There are no blackouts. You are buying revenue tickets so they let you book anything.

2) You earn miles/status for the trip. When you book with frequent flyer miles you don't earn miles or status. For these trips you do.

3) The fees are built in. Sometimes you see a great mileage redemption but there are a lot of mandatory fees (and not mandatory fees - I'm giving you the stinkeye fuel surcharges!) that are added. You can't use miles for those, only cash and if they are significant they can seriously dilute the value of your miles. Those fees are already built into the cash price and you can pay the entire ticket price with bank points.

4) No Federal Excise tax. I don't know if all the banks pass this fee onto you but American Express charges you a Federal Excise Tax when transferring miles to domestic carriers. If you aren't transferring, you don't have to pay this fee.

Just as an example, I booked this flight recently. I moved over 70,000 American Express Membership Rewards points over to Delta for a $900 ticket. I also had to pay $144 in fees.

Had I paid for it directly with American Express MRs, I would have only paid 45,000 miles after the promotion with no $144 in fees. That's a no brainer. I would have saved 25,000 miles and $144. That's quite a savings for one trip. That's per person.

These Credit Cards Come With a Price

Yeah, they do. A whopping $450 each in annual fees so in order for these cards to make sense you have to start finding value in the card benefits for everything to start paying for itself.

Each one comes with an air travel credit. $200 for AmEx, $250 for Citi and $300 for Chase. Chase seems to be the easiest to use. If you are getting $300 off the price of the annual fee, you only need to find another $150 of value before you bank the extra points (pun intended).

If you would pay for lounges, great. I wouldn't so I get no value there (maybe $1 for the soda). If you would pay $100 for Global Entry, great, that's another $100 you saved. I wouldn't so I see $0 in value on those. I don't even take advantage of it when it's free!

There are lots of other extras they throw in there. Recently, I used a free access to GoGo Hotspot from American Express Platinum. Again, that's not something I would have paid for so I'm not discounting the price of the annual fee for that. It's nice to have but $450 in my pocket is nicer.

It's a personal decision what you would have paid for and what you wouldn't and no one can make that decision for you.

Personally, I don't have a Prestige or a Sapphire Reserve but that's only because of 5/24, otherwise I would have gotten a Sapphire Reserve for the sign up bonus. The only reason I have the American Express is for the sign up bonus and I'm going to need to decide whether it is worthwhile to keep it once the annual fees come due in about 6 months.

If I had my druthers, I would probably get the Chase Sapphire Reserve and keep it. With the $300 credit and the ability to get 1.5 cents on a redemption, I can see how the value can easily get past $450, even for me. The AmEx on the other hand, I'm not sure. If I see a lot of travel in my future, maybe, otherwise probably not.

Have you been using more bank points instead of airlines miles too?