Sunday, October 26, 2014

The Never Ending Question

Mistakes are the proof that you are trying.

Once or twice a week in every Facebook group that I'm a member, I see the same, never ending question.

Why would a seller drop a price to rock bottom when the item has been selling like hot cakes at the higher price? Example: Item is ranked 2K, sells several times a day, is priced at $20, and another seller comes in and undercuts the price to $9. Why, oh, why, oh, why?

The Answer(s):

  • The seller is new and doesn't understand the fee structure or how to price an item, and believes that they must be the lowest price.
  • The seller bought the item for much cheaper than you bought the item (never question that because it's a complete waste of energy), and can make a healthy profit even with a lower price.
  • The item isn't moving at the current price, so the seller lowers the price trying to find the sweet spot.
  • The seller is willing to take a loss on a product in order to dump it.
  • The seller is a high volume, low margin, fast turner (it's their business model).
  • The seller's model is to always be the low price.
  • The seller is trying to get the competition to give it up, so that they can dominate the listing.
  • The seller doesn't understand the buy box.
  • The seller is only interested in getting it sold fast and making a quick dollar.
  • The seller is determined to dominate the buy box rather than share it.
  • The seller needs to liquidate fast in order to create cash flow.
  • The seller needs to move the item out in order to avoid long term storage fees.
  • The seller is from overseas, and the lower margin is still big dollars for living in their economy.
  • The seller made a pricing mistake.
  • The seller didn't set their repricer up correctly, and caused a race to the bottom.
  • Some sellers use black hat tactics to drive out the competition. They don't care what you think. It's all about the bottom line.
  • New sellers don't always do the math, or they don't understand the math. They end up with a low profit margin, or take a loss because they didn't do their due diligence prior to listing.
  • The seller with the lowest cost of goods wins. They can lower the price and still make a healthy margin. 
  • You may not agree with the mentality of other sellers, but in essence, there really isn't any thing you can do to change other people, so suck it up as part of doing business.
What can you do about it?
  • Wait for the low cost sellers to sell out and for the price to rise back up.
  • Lower your price just enough to share the buy box, but still make a healthy margin.
  • Lower your price to match, sell out, and move on to another product.
  • If the price drops significantly, then buy out the low priced seller, and send it back into FBA with your price (do NOT do this if you have a Prime account, or you will risk losing your Prime and seller account).
  • Find complimentary products and create a new bundle.
What you shouldn't do:
  • Moan, groan, and whine. It's a complete waste of energy.
  • Go so deep on a product that you would lose your shirt if the price bottomed out.
  • Depend on one product. Never. Ever. One product is NOT your bread and butter. It's great while it lasts, but don't ever count on a product to last forever.
  • Use black hat tactics to drive out your competition. Always rise above such and build an ethical business. In the end, you will be glad that you did.
  • Price below the low price and start a race to the bottom effectively killing all profit for all sellers. 

Friday, October 24, 2014

Due Diligence


This business is a living and breathing learning experience. There are always new challenges. Today, I faced a different kind of challenge.

I recently sent in a new product to FBA. They sold the day they hit the warehouse! I was excited, so I immediately sent in more, but before they arrived, the first batch had all been refunded. What is going on? One had been damaged in the warehouse, and yet, it had been sold, so I thought it must have been a mix-up of some kind. Then the others that I sent in were also refunded. This worried me, so I went and looked at the listing again to try and figure out why they were being returned.

148 feedback with 4 1/2 stars, so that wasn't the issue, but I noticed something odd...weight 10 lbs. Wait a minute! This item is ONE pound! Scroll back up. The title shows "6 x 1.1 lbs.". Does this mean that the listing is supposed to be for a quantity of SIX? Apparently so, but how confusing! And it doesn't say 6 pack anywhere on the listing -not the title, not the key features, and not the description. Now that I noticed this (which I must have missed the first time through), I recalled that I've seen multipacks listed this way more than once. You are NOT supposed to list it this way. The title should have said 6 Pack or Pack of 6. It should have also been repeated in the key features and description. Seller Central agreed with me.

One and a half hours, and 3 Seller Central employees later - 1) The listing has been changed to reflect the correct quantity. 2) A pending order was cancelled. 3) My performance metrics was saved from a negative impact.

Lesson of the Day: Do your due diligence before you list an item.

1. Check that the picture matches your item exactly. Same color. Same size. Same packaging. No differences whatsoever. (If it's a bad picture -not a pure white background or blurry -take a new picture and submit it to Seller Central).
2. Read the product title carefully. Make sure the title matches your product exactly. If the title is confusing or incorrectly written (as in my case above), then open a case with Seller Central and get it corrected before you list the item.
3. Check the key features and description to make sure it matches your product, is correctly written, and follows Amazon's guidelines.
4. Check the listed shipping weight to make sure that it's correct.

You can open a case and ask for appropriate corrections, but do NOT ask for a listing to be changed to reflect YOUR product if it is different from the listed product. That will mess up other sellers! For example, if you have a 2 pack, do NOT attempt to change a listing from a quantity of 1 to a quantity of 2. Either find a matching listing, or create a new listing.

It's so easy to get into a hurry and miss important details. SLOW DOWN. Read carefully. Do your due diligence and avoid the headache I had this morning. Fortunately, I was able to solve my problem. Unfortunately (due to the fact that groceries are not returnable), I am out the COGS for this product. Expensive lesson. Learn from my mistake.

Wednesday, October 15, 2014

A Cure for the FBA Blues

Today is a New Day

Yesterday, I had a bad case of FBA blues.

I've had a slow month.

Someone who has been at it as long as I've been at it is making a lot more money than me.

I don't have the money to go buy thousands of dollars worth of stuff as we head into Q4.

Everyone is doing better than me.

My sales suck.

Cry me a river.

Some days are just like that. 

But today is a new new day! 

I spent $125 on toys last night.

Amazon reimbursed be $128 for warehouse damaged products (I love it when Amazon buys my stuff).

I have some pending sales.

Peeps in my Facebook groups threw encouragement at me and made me feel better. THANK YOU.

Sometimes we just need that.

How to Cure the FBA Blues

1. Don't compare yourself to other sellers. Everyone is on a different journey.
2. Keep feeding the beast.
3. Take a break for a day and focus on something else (like yourself and your family).
4. Go sourcing (which = shopping without guilt).
5. Take a step back and reevaluate your progress. How far have you come?
6. Eat chocolate.
7. Find a new product to replenish.
8. Read a good book.
9. Focus on a new category or a new way to source.
10. Make a list of all of your victories.

Sunday, October 12, 2014

How To Get Started On Amazon

Put one foot in front of the other.

I've noticed that a number of new folks are hitting the Facebook groups and asking, "How do I get started on Amazon?" 

Never fear! I'm writing a book on the subject. (Isn't everyone writing a book?)

(It will be available on Kindle for an affordable price.) 

In the meantime, I will help you to get started by taking you through a few basic steps:

Step 1: Go to Amazon Seller Central and sign up for an account.
Step 2: Read / watch EVERYTHING in Seller Central. Bookmark important pages to remember and place them in a folder for easy access.
Step 3: You need to know what you can sell, and what you can't sell. Learn the open categories and their specific requirements. Learn the gated categories, so that you can avoid accidentally buying something that you're not approved to sell. Don't worry about gated categories for now. Get your feet wet with open categories first.
Step 4:Learn everything you can about properly packing your items for FBA.
Step 5: Learn about FBA fees. Bookmark the FBA Calculator, so that you can run your numbers before you buy. A good rule to follow in general is the 3x rule (1/3 cost, 1/3 fees, 1/3 profit).
Step 6: Bookmark FBA Cheat Sheets. The lower the ranking the faster an item is selling. Many sellers try to stay within 10%. You can input the ranking by category to determine the percentage. 
Step 7: Get your free apps! Amazon Seller is available for iPhone and android users. I also like Amazon Mobile (the app for shoppers).
Step 8: Choose a category. Choose a store. Choose a small section. Scan EVERYTHING in that section. Expect to find 1 winner out of 25-30 scans. Check how many FBA sellers are on an item. It depends on the category, but the least number of sellers the better.
Step 9: Start with small, lightweight, fully packaged items that require no more prep than placing the FBA label onto the item. Avoid creating a new listing or bundling for now. Get the basics down first! The other will come. 
Step 10: Go to Inventory>Add a Product. Input the UPC code (the number on the barcode on the product) to bring up the listings. Find the correct listing for your product (it must match exactly). Review the listing and determine your price (Smart pricing 101: Make your price an average of the 5 lowest prices. If there are not any FBA sellers, then do the same, but include the shipping amount that merchant fulfilled sellers charge into your average). Select the listing. Create a SKU (Smart SKUS 101: Make the first three letters of your SKU category specific in order to search for your items by category within your inventory. The rest of what you put into your SKU is up to you. SKUS are simply internal stock keeping units coded by you for your own informational purposes). Add your price. Only put the quantity if it's a multipack (Eg.: There are three of the same widgets in the pack). Click on the button that sends your inventory to FBA. Finish. (You don't need to add anything else).
Step 11: Add your item to a shipment. Each time you add an item, you'll select to add the item to the same shipment until you're done.
Step 12: Print off your FBA labels (you can use Avery 30 ups), and match the label to the product. Use the label to cover the UPC code. If the UPC code is larger than the label, then use a blank label as well. Pack your boxes, print off and attach your shipping labels to your box (I cover mine with clear packing tape to protect them from getting wet and smearing as recommended by UPS), and complete your shipment.

You will probably have a lot of questions the first time around. There are a number of posts on the blog here that will address your questions. You can also ask your questions in The FBA Flip Side Facebook group