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Thursday, March 27, 2014

How to Sell on Amazon and eBay - Part One

It's easier to offer free shipping when you drop ship
I think the best preface for this topic is to say that, like any business, selling products online from home is not all "rainbows and butterflies" like my girls would say. There is actual work involved. The type of work, however, in my opinion, is much more tolerable than...say...working in a tiny cubicle all day for some schmuck who doesn't even know your name.

In my last post I said I made $1200 in one week by selling stuff on Amazon. That part is true. As Paul Harvey would say: "Now, for the REST of the story." I am still having to deal with those sales weeks later. I've had items that were shipped out from a warehouse and mysteriously recalled back to the warehouse for no reason. I found out when the Buyer (the person buying the item FROM me on Amazon) emailed me a polite little "WTF" email. I had an item delivered and it stated so on the UPS website yet the customer swears she never got it and demanded a full refund immediately. And a slew of other issues to deal with long after the item had been sold.

So don't think that you can simply sell something, ship it, collect the money and walk away. Because it (usually) ain't that easy and that is what I am learning...and passing along to you. My goal, however, is to take all that I've learned and hopefully create the aforementioned utopia where I advertise an item, sell it, ship it and be done. The best part is, I'll be able to leapfrog YOU closer to that utopia by teaching you what NOT to do via the mistakes I've made.

So let's get to it!

The Tom Clancy plane from Doba did okay on eBay
For now, I'm not going to explain how to set up an Amazon account to sell with, a PayPal account to accept payment through or how to use an email program to automate the selling process but I will...eventually. It is important that you know these things but I'm betting most of you are interested in where to find things to sell and how to sell them effectively.

Que the dreamy music...

It was the second week of February and I was sitting at the kitchen table surfing the internet on my laptop. One of my favorite sites to visit is a website that posts about things being on sale and therefore, saving money if you catch the item on said sale. The site is called SlickDeals.net and has thousands of members (including me) who proudly attempt to be the first person to post a smoking hot deal on just about any item on the internet. Members gets points and "thumbs" up or down on the deals they post and it can become an honor badge to be a top poster. If your item does extremely well, your "deal" gets promoted to the Front Page where only the slickest of the slick deals get posted (hence the name.) I'll discuss this more in a tips section later but another cool tip is to read the responses (comments) on these deals because the SlickDealers post additional ways to save even more money in the comments like using Cash Back credit cards to make the purchase or coupon codes to lower the price, etc. I typically only look at Front Page deals for reselling purposes.

The Sous Vide oven thingy
On this particular day, I noticed a Sous Vide Supreme Water Oven on sale for $199. What is that? Doesn't matter, just keep reading. It was posted that this item usually sells for $300. Knowing what I know about buying and selling, finding something $100 below retail cost can be a great opportunity to make some money...and that's exactly what popped into my mind. Here's the post so you can see it for yourself. It now says the deal is expired...because like any sale, it eventually ends but it will give you a good idea of what I'm talking about.

Having sold on many platforms, I have learned that you can just about count on the place you are selling your item to take a HUGE chunk of your profit. That's just the nature of the beast. I used to complain when eBay took 10% of my profit. Amazon is MUCH worse. I'll show you numbers in a bit. So seeing an item $100 under retail told me that even if Amazon kept $50 in fees, I could pocket the other $50 which is well above my threshhold.

Now, there's a comfort threshhold which you have to decide on for yourself. This is the margin of profit that you feel makes the whole thing worth your time. 12 years ago (-ish) I used to go to the local Target and buy a bunch of their clearance items when they would mark them down to 75% off. I'd fill a shopping cart, buy it and take it home...then list it all on ebay. A $100 widget, at 75% off, cost me $25 but anyone on the street buying it NOT on sale would  expect a retail price of $100. I would sell it for $50 on eBay, pocket $20-ish (10% fees were $5.00) and the buyer was happy to get it at $50. Everything that didn't sell within 28 days went back to Target for a full refund with my receipt and I'd start all over. But lots of people started catching on so...competition rose.

During this process, I learned that the $5 widgets that only made me a buck or two were NOT worth the hassle. Neither were $10 items. For me, if I didn't make at least $20 in my pocket, it wasn't worth messing with. Everyone will have a different comfort level. I'm sure there are people that will say every penny earned is another penny I didn't have before. But you have to weigh that small profit against the chance that your customer who bought the item may turn against you. If they are unhappy and leave you negative feedback, that affects your online reputation at places like Amazon and eBay. At least on eBay you can leave feedback on buyers too. On Amazon, no luck.

They can wreck your reputation with no repercussions. I had one lady leave me the worst rating she could leave because she figured out I made a profit on the item she bought. The company that shipped the item to her (BestBuy) offers a "gift" option where the package is only supposed to include a "gift receipt." Gift receipts do not show any prices but have a barcode which allow the customer to return the item if unwanted but they will never see what you paid. On this particular occasion, BestBuy sent the regular receipt to my customer which showed that I paid $49.99 for an item that she paid me $84.99 for. Her feedback literally reads: "Seller charged me a total of $85 for this item which he purchased for $49.99. He told me that is how he makses money!!!"

I have no recourse for this lady who clearly needs a basic Economics 101 class and, so, I left that response to her feedback. For every negative feedback you get, it takes scores in the positive to make up ground. Unfortunately, maybe 1 out of 50 leave feedback. What moron thinks that the people selling her widgets AREN'T making money doing it???

But back to the art of picking products. So, seeing this Sous Vide thing, I go to CamelCamelCamel and plug in the name of the product. CCC keeps a database of item prices going back about three years. With their data, you can see highest price, lowest price and average price of any given item. They make money if you click on the item link from their website which takes you to Amazon. If you buy something, they get a percentage for referring you to Amazon.

The Camel chart shows Lowest Price since Dec 2012 is around $259
The top red arrow shows that usually this thing hovers around $329. Only twice has it dipped way down to $259 and that was for a very short period of time. I can get in on this deal for $199 for a few days. Note: sales vary and you have to pay attention to ending dates of the sale.

So I hopped over to Amazon, the mother of all shopping stores, and plugged in the same item name to check out the competition. I find out that Amazon is selling this item for $299.95 with free shipping.

My competition is asking $300 on Amazon for an item I can get for $199.

One of the useful things about selling on Amazon is that you can post up a mock item for sale and once you've plugged in your asking price and shipping options, Amazon will tell you exactly how much of the money they will be sending you (total paid by customer - Amazon fees). We'll deal with shipping fees later.

Now you might be saying to yourself "I don't have the money to buy this stuff up front and then sell it." If this is the case, sell only on eBay. When a customer pays you using PayPal, the cash they paid is instantly available to you. You can then use your PayPal account to go buy the product you sold and not use a penny of your own money. Amazon, on the other hand, should only take a week to get your money to your bank. Sometimes it can take much longer. You have to have your own "business capital" or money-in-hand to sell on Amazon. I used a credit card and could pay off the balance before fees accrued when Amazon transferred the money to me in a timely manner.

 I listed the Sous Vide for sale at an attractive enough discount from the Amazon price that I got immediate attention. Some people only buy what they see in front of them which is usually an item being sold straight from the Mighty Amazon. However, if you look off to the right side of the page, you'll see that this exact same item is sold by more people/companies than just Amazon..and usually much cheaper. So the smart shoppers immediately check this list and see who has the lowest price. Amazon arranges this chart of sellers according to lowest price on top. If I undercut everyone selling this item, I'm the first seller the buyer sees, hence getting first swing at the sale.

I marked this oven at $259 which was a substantial savings to the customer. Amazon, in most circumstances, automatically adds a shipping fee to your item based on weight, size, etc. On this oven, Amazon automatically added $11.49 in shipping fees. I can not change this. Adding it up, this meant I was charging $270.49 for the oven that Amazon (and just about everyone else) was selling for $300. I'm still, with shipping fees, $30 cheaper.

In the first day I sold two. I quickly went to SlickDeals and followed the links to the product. Bought two ovens separately and in the "Ship To" fields, I put the customer's information. This was my first item to sell and also where I discovered the excitement of using the Gift Receipt to hide my purchase price.

Since the oven site was offering free shipping, I paid $199 out the door for what the customer paid me $270.49, hence:

$270.49 paid by the customer
-$40.00 kept by Amazon for fees (ouch!)
------------
$230.49 paid to me by Amazon
-$199.00 my cost for buying oven
-------------
$31.49 profit in my pocket.

It took me maybe five minutes to post the item for sale on Amazon. About the same to buy the item and ship it out. Another couple of minutes here and there to send an "Item being processed" email and a "Here's your tracking number" email to the buyer. All from the comfort of my own home.

Now there's an art to picking items to list for sale. I just gave you some of the criteria.

  1. There has to be a large enough margin of profit to make it worth your time. Find this by checking your purchase price versus Camel AND see what the current asking price is on Amazon.
  2. Unlike eBay, on Amazon if you list and item and it doesn't sell...there is NO fee to you. On eBay, they charge you to list the item for sale AND a percentage of the sales price IF someone buys it from you. So, it doesn't hurt to try out an item and list it on Amazon.
  3. See how many people are offering the item for sale in the section on the right side of the page that we talked about. Are two people offering this item? Maybe not a hot selling item. Are 200 people selling it? There's a reason for that (hint: hot item).
  4. Only pick items that come with free shipping for you. Most items are a good $20+ for shipping. If you find a smoking deal and the site only charges, say, a Flat Fee of $5...just add that into your cost and see if it makes sense.
  5. Most important, it must come with a gift receipt. Take a few minutes and walk through the mock purchase of the item and see if you can find somewhere to tick mark the item as a gift. If you don't find that option, you can call the company like you are making an order over the phone and simply ask them if there is a gift option. I was very disappointed to find that Rakuten does not offer gift receipts. I was routinely finding hot item after hot item super cheap over there but if you can't hide the purchase price, it's not worth it in my book.
  6. When I found a site with prices I couldn't pass up but they only offered an area to "leave instructions" instead of a gift receipt...I found the cheapest item they sold and bought it myself. I had it shipped to my house to see what was in the box if I left instructions to "Only include gift receipt please." To my surprise, it worked. I shipped over 30 items from that place.
Catching things on sale can be tricky and sometimes (weeks) there just isn't anything good on sale. So now that I had the sales bug, I didn't want to stop selling. I began looking for a wholesaler who dropshipped. Dropshipping means you have an account with a company that will ship out products for you and every item is gift receipted (or you send the dropshipper a template receipt with your name on it and they include it in the package for you.)

There are tons of dropshipping companies out there and none are free that I know of. I mixed in dropshipping after I had made the $1200 and use around $300 of that on an annual membership to a reputable dropshipper named Doba (Doba.com).  I now had literally thousands of products to choose from that were reportedly at wholesale prices. Some quick checking using the above methods disclosed to me that not all products were wholesale (some were cheaper on eBay) but there was still a good amount I could use.

While I worked with Doba (and I'll tell you all about it later), I began to search for the next level up the resell ladder which I believed to be a Certified (aka Authorized) Reseller of a particular brand. There were several reasons for this move.

  1. While selling Hoover vacuums on Amazon, I received an email from Hoover's legal team asking if I had a Reseller's license for their product and if not to Cease and Desist. 
  2. I noticed that even though I could find some really great prices on items, there was, on occasion, one or two people offering that same product for much less than my sales price. There could be only a few reasons they could do this: either they were selling counterfeits, selling used or refurbished items as new items, or they were buying their items directly from the manufacturer and as Certified Resellers of that brand could attain those products cheaper than anybody else.
  3. Being able to post the Certified Reseller logo on your auctions gave comfort to buyers and increases sales. 
  4. As a Certified Reseller, you are often times allowed to offer better warranties to customers than people who are not authorized to resell the products. 
After about a month looking at brands and doing some homework, I landed a Certified Reseller's account with a watch company that I really admire. I'm not ready to disclose it because I haven't begun selling it yet but let's just say it's akin to Rolex. I can now buy Rolex watches cheaper than anybody in the retail world and sell them on Amazon, eBay, or my own website and make a profit.

So there are several ways to find products to sell. We'll also discuss the method of reverse engineering this process. If I discover that a widget is a hot seller on Amazon, I use similar methods to google search that widget and see if I can find it cheaper on the internet. This same process is used when you sell an item that was on sale when you posted it but either sold out of stock or went off sale right before you got the SOLD notice.

Plug the item name into a typical Google search and hit enter.

Use the Google Shopping search for your item in question
 The click on the shopping tab at the top. This will bring up a list of people selling this item. At the top of this list is usually states the item's name and how many people/stores are selling the item:

This shows that 10+ stores are selling this item
Click the link to that item (in blue, where is says "SousVide Supreme Demi Water Oven - Red") and this will take you to the next page.

Now you can sort the cost

 Click on the "Compare prices" link and go to the next page.

Cost order is random unless you click "Your Price" to sort
Click on the "Your Price" link and the sellers will be sorted from cheapest to the most expensive. Use this method to see if you can find a seller who has a price low enough for YOU to buy from and ship out. I sold out of a vacuum that I received a sale on . I googled it found it cheap enough to still make a profit so I bought it and had it shipped to my buyer. I asked for a gift receipt and all was well.

It doesn't always turn out this way. I have taken losses of $5-$10 in order to save the deal and prevent the chance for negative feedback. I have also told customers that we simply ran out of stock and refunded the money they paid. I've never had a customer complain about doing that but Amazon keeps track and it is part of your "Seller Score" so don't do it too often. I'd rather take a $5 hit than a ding from Amazon.

I routinely browse BonTon, Kohl's, JCPenneys and Sears for items I'm selling. By using RetailMeNot and searching for your store, you can usually find coupon codes for your items and it knocks the price down to a profitable level. I sold dozens of vacuum cleaners from BonTon during their recent sale becuase:

  1. The item was on sale
  2. There was a 25% off coupon code, like their recent Goodwill sale
  3. There is always a free shipping code
  4. With Kohls, you also earn Kohl's cash for your purchase, which you can turn around (in a few weeks) and use to lower your purhase price even lower.

I'll stop there for now. It's after midnight and I have to be at work in the morning. Leave comments and questions about things you don't understand or want to hear more about. I apologize for the lack of structure in the way I'm laying this out. It's more of a brain dump at this point before I forget the details but I can always go back later and clean it up into a nice little "how to " series.

~OJD

8 comments:

Anonymous said...

In regards to the lady that swore she didn't get it....I recently had a Kindle Fire delivered and left on my porch that I didn't order...I took it to the right address. Also I had a package delivered and we didn't check the name on the package and when we opened it it had garbage disposal parts in it so again I delivered it to the right address and low and behold those people had my package. It does happen,

The Orange Jeep Dad said...

Anon: Perhaps but I think it's odd that when I offered to ship out a second item overnight, she immediately refused and asked for a refund. If you truly didn't get the item, and the seller offers to send another free of charge with expedited shipping, I'm leaning towards most people taking up the offer. But I'll concede that mishandled shipments can happen.

Anonymous said...

Maybe you should include shipping insurance when you set your price. That way when this happens you don't take the hit.

Anonymous said...

Wow, lots of info to absorb here, but, yes, I will be working on absorbing it all. Thank you for all this work on your part!

BTW, I went back and reread the first part -- the story about selling your mom's shoes made me laugh!

DJ

Miss M said...

Okay, back from building a pole barn! I'm paying attention again!

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