When I was heavily into ebay, I wanted to get my product up and sold with as much profit as I could, in the least amount of time. I wanted quick inventory turn. As I started to dabble with amazon FBA, I started to learn about long tail sales and how I should be using them. So what exactly is a long tail sale, and why would I want to use it? Let's dig a little deeper into this, shall we?
So what is a long tail sale? Long tail refers to an item that you sit on for an extended amount of time. Think of a house or a car, big ticket items. Most generally, these items take time to sell because of their price point. The more expensive something is, the longer it takes to sell it. Conversely, the cheaper something is the quicker it sells. This is a normal sales cycle, and all retailers know it. When they have long tail items that have exceeded their threshold for acceptable time frames, they will run a sale to try and move the inventory. The key is knowing what to buy and how long to hold it.
My strategy for long tail sales is fairly simple. The longer it sits, the more I need to make. Let's take a look at a text book as an example. Text books are generally only going to sell really well twice per year. Text books will generally have a high resale amount. So you look at a text book and see the rank is 3.5 million. Not such a good rank, and most people would pass on it. It indicates a slow moving item. Now let's dig a little deeper on this book. We see that we can purchase this book for $1.99 at a thrift store. We know the rank, and we can see the selling price right now is at $129.95. Now the trick is knowing if this price is going to remain steady, drop or increase as text book season begins. More than likely it will go up. So for a $1.99 investment, and maybe 5 or 6 months of waiting, I get a hefty profit on that buy. Not too shabby considering storage fees on a book is fairly small.
Now take another item you purchase for $1.99. Rank is 1 million, and the current selling price is $14.95. Is this a good long tail candidate? Most likely not. Unless it is a very small, lightweight item you are going to rack up storage fees that will start eating into the profits on this item. FBA fees on this item are going to be at least $4 at a minimum, and probably more like $5. So take out your initial cost, the FBA fee and you are left with $8.96. If your storage fees are $0.60/mo, and it sits for six months, you are now down to $5.36. Take out the cost of FBA stickers and inbound shipping fees and you are down under $4 profit. Go over 6 months and you are going to get hit with long term storage fees and now you are probably under $3 profit. Not so attractive now is it?
You really need to understand your sales funnel as it pertains to your profit/loss. You have to know what your fees are going to be the longer something is going to sit in the warehouse. Amazon is really a numbers game, and with a few exceptions it is also a quick turn game. People who can turn inventory very quickly are the ones who generally do very well. The other segment that does really well are those who can afford to play the long tail game. I know sellers who only buy long tail items and are willing to wait a year or two for a payout. How they manage it is they have a huge inventory. Eventually enough time passes and these items start to hit their sales time frame and they will have huge profits on almost a daily basis.
With ebay, it's a little different ball game. Long tail still works, however you are now dealing with storage limitations. Ebay is another venue where people want in and out with a quick inventory turn. The same rules are going to apply for the most part, it's just a different angle. Ebay is going to charge a fee for listing the item. Even if you have a store, the cost is divided by your monthly store allocation. With a premium store, it is costing you $0.06 each time you list the item. Not a huge cost, but an expense nonetheless. My question is always "can I afford to use the shelf space for this, or can I get more inventory for the same money"? I also look at how much alternate inventory I can buy with the cash I am going to tie up into this item.
An example is a pair of designer shoes. When I sold shoes I would look at a pair of shoes I could buy for $89. Now my normal channel for sourcing would have shoes in the $5 - $10 range. So now I have to figure out if the profits on that $89 pair of shoes was going to exceed the profits I could make on selling 8 - 10 pairs of the lower priced shoes. Let's say my average sale price on the lower end shoes was $24.95. After all fees, I would have a profit of about $10 - $13. Multiply that by say 8 pairs of shoes and I have a profit of between $80 and $104. So now I know I have to sell these $89 shoes for at least $200 in order to make the same amount of profit. Not only that, but the lower end shoes are going to sell in a month or two where the higher end ones may take 6 months. Which is the better deal? For me, the lower end shoes. If I were to buy the higher end shoes, I would want to sell them for at least $275 to make it worth my while.
If you can stomach the wait, and the amount of cash investment you are going to be hanging out for a year or two, then this may be a great strategy for you. If you need to turn inventory to generate income, then this is probably not going to be a good place for you to invest your money. So the next time you are sourcing and you find something with a high rank, or is a slow seller dig a little deeper. See if the return is going to be worth the wait. You may be surprised at what you will find.
Thursday, September 15, 2016
Wednesday, September 14, 2016
Know your numbers!
When I started selling, I gauged my success on whether I had cash left over after a sale. Did I get my original purchase price back as well as covering any fees? If so, then I was good to go. As I started growing my business, things got a little muddled and I knew I had to do something to get things organized. I also knew that I was going to have to up my game to a full fledged business as my income rose. Keeping track of tax information seemed rather daunting. But it really is fairly simple to track all of this with a simple spreadsheet.
There are certain things that have to be tracked for taxes, and some things you don't think about that need tracked as well. Things like mileage, meals while out sourcing, cost of goods, sales tax paid, etc. It doesn't take long to loose control if you're not organized. And the last thing you want is to have to pay more taxes than you should because you got lazy. Paying lower taxes is like getting a raise! So how do you track all of this in an easy to follow format?
First you are going to need a spreadsheet program. Either Microsoft Excel, Open Office spreadsheets, etc. will do the trick. Next you are going to want to make a couple of "books" within the spreadsheet. Books are the tabs along the bottom that allow you to have multiple spreadsheets in one file. One would be named mileage, one expenses, and one for inventory. You are going to want to create formulas to be able to track totals in real time. I use this one for mileage: =SUM(B1*54.5). Put your formula in the D column. Put your date in A1 and mileage in B1. Now, move your mouse over the lower right corner of the D1 column and you will see your courser turn into a + sign. Click and drag down the D column as far as you think you'll need. I normally start with 100 rows.
As you input your mileage, you will see the D row automatically calculate the amount of your mileage deduction. Once the year is finished, you can do a auto-sum on the entire column and get the total of your annual mileage deductions. You can do the same thing for your expenses sheet. There are more calculations you can do to further simplify things, but this will get you started and give you a foundation to build on. But what about inventory? How do you track your purchases and your selling expenses? That is a little more involved, but still fairly simple.
On your third sheet, you are going to want to create several columns. Date, description, purchase price, sale price, ebay fee, paypal fee, shipping fee if you do free shipping and a profit column. I use formulas for most of these columns so I know exactly what my profit is per item. When an item sells, I open this up and enter the sale price. Using my formulas, excel then does the math to deduct my ebay fees and my papal fees in addition to subtracting my purchase price. My profit column now shows what's left. I also have an ROI column that shows my percentage of ROI. So here is an example of what should be in this sheet.
As I add in sales amounts, everything is automated so I know at a glance if I am profitable, and by how much. You can go one step further and add in a sale date and a formula to calculate how long it took an item to sell. This is good info to know how fast certain items are selling. There are a number of ways to manipulate the data. Let's say you want to know if a sale is above a certain ROI level. Simply write a formula to change the color of your ROI number if it is above say 80%. The possibilities are endless. At the end of the year, you can hand a copy over to your CPA and your job is done.
In addition to knowing your numbers, you can use this spreadsheet (or create a new one) and use it to calculate a selling price based on your ROI. Use the following formula based on cost being in the A column, and desired ROI in the ROI column, as a decimal (i.e. .75 for 75%) =SUM(A2/(1-B2)). As an example, I buy an item for $4.95. I want a 75% ROI on that item. I simply input my $4.95 into my A2 cell, and column C2 automatically sets the price to $19.80. Easy way to see what you need to charge for a product based on purchase price. If you have excel on your mobile phone, you can use this while you are sourcing to see if there is enough profit in an item to make it worth buying.
Now you know how to track your business. Having this information is ammunition you need when sourcing products to sell. It does no good to have small profit items, or items that take months to sell...unless that is a strategy. I'll cover that in another post, but for now this will suffice. Stay diligent and keep track of everything. You'll be glad you did.
There are certain things that have to be tracked for taxes, and some things you don't think about that need tracked as well. Things like mileage, meals while out sourcing, cost of goods, sales tax paid, etc. It doesn't take long to loose control if you're not organized. And the last thing you want is to have to pay more taxes than you should because you got lazy. Paying lower taxes is like getting a raise! So how do you track all of this in an easy to follow format?
First you are going to need a spreadsheet program. Either Microsoft Excel, Open Office spreadsheets, etc. will do the trick. Next you are going to want to make a couple of "books" within the spreadsheet. Books are the tabs along the bottom that allow you to have multiple spreadsheets in one file. One would be named mileage, one expenses, and one for inventory. You are going to want to create formulas to be able to track totals in real time. I use this one for mileage: =SUM(B1*54.5). Put your formula in the D column. Put your date in A1 and mileage in B1. Now, move your mouse over the lower right corner of the D1 column and you will see your courser turn into a + sign. Click and drag down the D column as far as you think you'll need. I normally start with 100 rows.
As you input your mileage, you will see the D row automatically calculate the amount of your mileage deduction. Once the year is finished, you can do a auto-sum on the entire column and get the total of your annual mileage deductions. You can do the same thing for your expenses sheet. There are more calculations you can do to further simplify things, but this will get you started and give you a foundation to build on. But what about inventory? How do you track your purchases and your selling expenses? That is a little more involved, but still fairly simple.
On your third sheet, you are going to want to create several columns. Date, description, purchase price, sale price, ebay fee, paypal fee, shipping fee if you do free shipping and a profit column. I use formulas for most of these columns so I know exactly what my profit is per item. When an item sells, I open this up and enter the sale price. Using my formulas, excel then does the math to deduct my ebay fees and my papal fees in addition to subtracting my purchase price. My profit column now shows what's left. I also have an ROI column that shows my percentage of ROI. So here is an example of what should be in this sheet.
As I add in sales amounts, everything is automated so I know at a glance if I am profitable, and by how much. You can go one step further and add in a sale date and a formula to calculate how long it took an item to sell. This is good info to know how fast certain items are selling. There are a number of ways to manipulate the data. Let's say you want to know if a sale is above a certain ROI level. Simply write a formula to change the color of your ROI number if it is above say 80%. The possibilities are endless. At the end of the year, you can hand a copy over to your CPA and your job is done.
In addition to knowing your numbers, you can use this spreadsheet (or create a new one) and use it to calculate a selling price based on your ROI. Use the following formula based on cost being in the A column, and desired ROI in the ROI column, as a decimal (i.e. .75 for 75%) =SUM(A2/(1-B2)). As an example, I buy an item for $4.95. I want a 75% ROI on that item. I simply input my $4.95 into my A2 cell, and column C2 automatically sets the price to $19.80. Easy way to see what you need to charge for a product based on purchase price. If you have excel on your mobile phone, you can use this while you are sourcing to see if there is enough profit in an item to make it worth buying.
Now you know how to track your business. Having this information is ammunition you need when sourcing products to sell. It does no good to have small profit items, or items that take months to sell...unless that is a strategy. I'll cover that in another post, but for now this will suffice. Stay diligent and keep track of everything. You'll be glad you did.
Tuesday, September 13, 2016
Diversity is King!
When I first started selling on ebay, I followed the advice of the so called ebay "gurus". I found a niche and began selling in it. I rarely ventured out of my niche. Over the years I changed niches and finally settled on one that had a ready supply of inventory in just about every thrift store and yard sale around. Life was good. I averaged about $8k a month in sales, and was profiting about $5k. Then I started hearing about amazon. I started seeing these huge sales figures and decided to see if I could pull that off as well. I took a leap of faith and jumped right in.
I took me about a month to get a real grasp of how amazon worked, but once I got it, I was off to the races! I can still remember watching my sales for one day climb by $100 every 30 minutes or so. I hit $1,200 in one day! Life was good, and I was finally on my way. I had found the secret to huge sales on amazon and life was never going to be the same again! At least that's what I thought. Reality was a much bigger bummer.
I cruised along for a year with amazon and kept a comfortable $15k/mo sales flow rolling right along. As my previous post stated, I was not looking at the real data, just the sales figures. I had cash in the bank so I figured I was profitable. I was, but not to the extent I thought. After getting a rude awakening with the assistance of Inventory Labs, I had to completely rethink what I was doing. But that wasn't the only reality check I was to get. No, my next one was the biggest hit yet.
I joined some online selling groups, and started seeing a trend that really picked up steam in Q4 of last year. People were starting these BOLO groups. Be On the Look Out, or BOLO groups were sharing items they had found at a deep discount that were selling for nice profits on amazon. As these lists grew in popularity, they got the attention of the usual suspects who know how to turn anything into a way to make money. Enter in the BOLO paid groups.
These groups charged a monthly fee and provided BOLO's daily. Of course any time you out a deal, the inevitable is going to happen. A ton of people are going to buy it, list it on amazon and then compete for the buy box. If you didn't get your inventory in quick enough, you were caught in the tail end of price wars we call a race to the bottom. There were instances that by the time my inventory hit the warehouse (2 days usually), the prices had already tanked and I was loosing sometimes $5 - $10 an item! That is huge when you are scanning product and find a deal that gives you a $15 gross profit only to see it evaporate in 2 days! But that was not the end of it. It was about to get worse.
The next wave I should have seen coming. People were outing BOLO deals so fast that a lot of the time they were gone before most people could even get to the store. But never underestimate the power of an enterprising mind to find a new way of generating income from an FBA seller. Enter the new wave of Online Arbitrage! The art of retail arbitrage only shopping via online stores. Not to be outdone, these industrious individuals figured out how to hire people from overseas (usually the Philippines) for a few dollars a day to do nothing but scour the internet for deals. They would put together spread sheets and sell these to their subscribers.
I say all of this to show that it was hard enough to find deals only to see your profits evaporate with these people pushing out their finds to hundreds if not thousands of other buyers. Not only does it shrink your profits, but now you have to source from more and more venues just to get enough inventory to keep your sales numbers up. I was getting burned out. I had to start expanding my product sourcing to more and more categories just to keep my sales up. In addition, I was having to travel farther and farther just to get enough inventory of what I was finding. This was not going as well as it had when I had started. I decided to head back to ebay.
When I started ramping ebay back up, I sat back and thought about what I had done with amazon. I had learned that with amazon you want to have as much inventory in as many categories as you can. It's what they refer to as going wide, not deep. I had always done the deep, not wide and have a niche. So what would happen to ebay if I followed the same formula as amazon? Well, it turns out I was getting the same results!
I expanded my inventory to include categories I had never really sold in over the last 15 years. As I expanded, an amazing thing happened. I was increasing my sales once again. I know there were other factors involved, but I fully believe this was the biggest change that affected my sales. I was no longer niched down. By expanding my inventory I was exposing my products to more and more potential buyers. It mad perfect sense. If you think about it, imagine going to Walmart and only finding clothing and shoes. Or going to Kohl's and finding only jewelry and housewares. There is a reason these stores sell such a diverse set of inventory items. They want to appeal to the broadest segment of the purchasing population as they can. And now I was doing the same thing!
It took selling on amazon to teach me that diversity is king. Keep your inventory as wide as possible. Sales are going to come from all sorts of different buyers with different sets of buying habits. The more you can appeal to the more sales you are going to generate. Be adventurous. Don't be afraid to try something new. Get out there and get the sales you have been missing and increase your revenue!
If you want to read my whole story, I have written a kindle book about my journey. I might release an updated version later this year which will include my journey back to ebay, but I haven't decided yet. If you have kindle unlimited, it's free to read. Otherwise it's $.99 cents.
How I sold six figures on amazon in 9 months.
I took me about a month to get a real grasp of how amazon worked, but once I got it, I was off to the races! I can still remember watching my sales for one day climb by $100 every 30 minutes or so. I hit $1,200 in one day! Life was good, and I was finally on my way. I had found the secret to huge sales on amazon and life was never going to be the same again! At least that's what I thought. Reality was a much bigger bummer.
I cruised along for a year with amazon and kept a comfortable $15k/mo sales flow rolling right along. As my previous post stated, I was not looking at the real data, just the sales figures. I had cash in the bank so I figured I was profitable. I was, but not to the extent I thought. After getting a rude awakening with the assistance of Inventory Labs, I had to completely rethink what I was doing. But that wasn't the only reality check I was to get. No, my next one was the biggest hit yet.
I joined some online selling groups, and started seeing a trend that really picked up steam in Q4 of last year. People were starting these BOLO groups. Be On the Look Out, or BOLO groups were sharing items they had found at a deep discount that were selling for nice profits on amazon. As these lists grew in popularity, they got the attention of the usual suspects who know how to turn anything into a way to make money. Enter in the BOLO paid groups.
These groups charged a monthly fee and provided BOLO's daily. Of course any time you out a deal, the inevitable is going to happen. A ton of people are going to buy it, list it on amazon and then compete for the buy box. If you didn't get your inventory in quick enough, you were caught in the tail end of price wars we call a race to the bottom. There were instances that by the time my inventory hit the warehouse (2 days usually), the prices had already tanked and I was loosing sometimes $5 - $10 an item! That is huge when you are scanning product and find a deal that gives you a $15 gross profit only to see it evaporate in 2 days! But that was not the end of it. It was about to get worse.
The next wave I should have seen coming. People were outing BOLO deals so fast that a lot of the time they were gone before most people could even get to the store. But never underestimate the power of an enterprising mind to find a new way of generating income from an FBA seller. Enter the new wave of Online Arbitrage! The art of retail arbitrage only shopping via online stores. Not to be outdone, these industrious individuals figured out how to hire people from overseas (usually the Philippines) for a few dollars a day to do nothing but scour the internet for deals. They would put together spread sheets and sell these to their subscribers.
I say all of this to show that it was hard enough to find deals only to see your profits evaporate with these people pushing out their finds to hundreds if not thousands of other buyers. Not only does it shrink your profits, but now you have to source from more and more venues just to get enough inventory to keep your sales numbers up. I was getting burned out. I had to start expanding my product sourcing to more and more categories just to keep my sales up. In addition, I was having to travel farther and farther just to get enough inventory of what I was finding. This was not going as well as it had when I had started. I decided to head back to ebay.
When I started ramping ebay back up, I sat back and thought about what I had done with amazon. I had learned that with amazon you want to have as much inventory in as many categories as you can. It's what they refer to as going wide, not deep. I had always done the deep, not wide and have a niche. So what would happen to ebay if I followed the same formula as amazon? Well, it turns out I was getting the same results!
I expanded my inventory to include categories I had never really sold in over the last 15 years. As I expanded, an amazing thing happened. I was increasing my sales once again. I know there were other factors involved, but I fully believe this was the biggest change that affected my sales. I was no longer niched down. By expanding my inventory I was exposing my products to more and more potential buyers. It mad perfect sense. If you think about it, imagine going to Walmart and only finding clothing and shoes. Or going to Kohl's and finding only jewelry and housewares. There is a reason these stores sell such a diverse set of inventory items. They want to appeal to the broadest segment of the purchasing population as they can. And now I was doing the same thing!
It took selling on amazon to teach me that diversity is king. Keep your inventory as wide as possible. Sales are going to come from all sorts of different buyers with different sets of buying habits. The more you can appeal to the more sales you are going to generate. Be adventurous. Don't be afraid to try something new. Get out there and get the sales you have been missing and increase your revenue!
If you want to read my whole story, I have written a kindle book about my journey. I might release an updated version later this year which will include my journey back to ebay, but I haven't decided yet. If you have kindle unlimited, it's free to read. Otherwise it's $.99 cents.
How I sold six figures on amazon in 9 months.
Monday, September 12, 2016
Shipping...Free or Not?
Several years ago ebay starting pushing free shipping. They were trying every promotion they could think of to get sellers to offer free shipping. I remember getting coaching calls form ebay, and each and every time they would start off the call with wanting me to switch to free shipping. Fast forward a couple years and Cassini hits. Sales started plummeting and I started experimenting with several different strategies to try and get my sales cranking again. I was willing to try just about anything.
I played with titles, I played with item specifics. I even redesigned my listings in the hopes of triggering something with Cassini to get my sales back up. Nothing seemed to work. So, being adventurous, I decided to try free shipping. I had over 1,500 listings, and I methodically went in and changed every one of them to free shipping. Guess what happened? NOTHING! Not a single change in my sales metrics. So much for free shipping!
This was also a time when I was being introduced to amazon FBA, so I let ebay just run itself without much effort from me to keep things fresh and worked on learning amazon. I saw great increases in sales revenue from amazon and decided to just let ebay sell down and keep it at a minimum. I was convinced amazon was the ticket. As with any perceived good plan, it never quite works out the way you think it does. I sure did have some good sales. I was averaging over $15k a month in sales. But I was only keeping about $4k for myself. Something just didn't seem right.
It was at this point I decided to use a program called Inventory Labs. Provided you put the correct data in, it will show profit/loss not just per item, but per category as well. Here is where the light bulb went off for me. In one particular category, I spent nearly $9k in purchasing inventory, and yet I only had $1,800 in gross profit. Talk about a serious bummer. Especially when a smaller category had cost of goods at $2,500 with gross profits of $1,600. It was at this point I started to realize the disparity between sales figures and actual profit. How I longed for the good profits of ebay.
So now I was facing a dilemma. I could continue down the amazon path and keep getting small returns for a lot of work, or I could pick ebay back up and try to figure out how I could get sales rolling again. I decided on the latter. I started thrifting and yard sales again and gradually started to see my sales pick up. I had gotten rid of free shipping and went with calculated. Some items I did flat rate on, but the majority were calculated shipping. I cleaned up my listings and made them optimized for mobile. So what was really responsible for my increase in sales?
As long as I have been selling, I have had a pessimistic attitude about buyers in general. I figured most, if given the opportunity, would screw you out of your money. For that reason I never went beyond a 14 day return policy. But this time around I figured if I was changing everything, I may as well change that. I opted for a 30 day return policy. And guess what? No buyer has taken advantage of me. I was once again building my revenue stream with ebay. So much for the free shipping!
Now I have been increasing sales by a good amount over the last few months, and as always I keep watching for news/tips just to see if I miss anything that may benefit my sales. During a recent round of research, I stumbled upon a video by a guy who was a part of the Cassini design process. He went into how Cassini worked and how your listings are filtered for searches. Cassini is dynamic and it changes based on what the buyers are demanding and looking for. What they discovered was that buyers really didn't prefer free shipping over tradition shipping. Imagine that! It only took them 2 years to figure it out!
So now I knew that free shipping had nothing to do with my sales. I did however feel that the increase in return time contributed to my increase. I think an increase in return time from 14 to 30 days helped get my sales back on track. There were other factors, but I think this was the start of that upward trend. Never just accept that what ebay is telling you is the gospel. There are a few things that are, such as optimized for mobile, but policies, and business practices are not. Experiment and see what works in your store. You may just find the one item you never really thought about could be the restriction in your sales funnel.
I played with titles, I played with item specifics. I even redesigned my listings in the hopes of triggering something with Cassini to get my sales back up. Nothing seemed to work. So, being adventurous, I decided to try free shipping. I had over 1,500 listings, and I methodically went in and changed every one of them to free shipping. Guess what happened? NOTHING! Not a single change in my sales metrics. So much for free shipping!
This was also a time when I was being introduced to amazon FBA, so I let ebay just run itself without much effort from me to keep things fresh and worked on learning amazon. I saw great increases in sales revenue from amazon and decided to just let ebay sell down and keep it at a minimum. I was convinced amazon was the ticket. As with any perceived good plan, it never quite works out the way you think it does. I sure did have some good sales. I was averaging over $15k a month in sales. But I was only keeping about $4k for myself. Something just didn't seem right.
It was at this point I decided to use a program called Inventory Labs. Provided you put the correct data in, it will show profit/loss not just per item, but per category as well. Here is where the light bulb went off for me. In one particular category, I spent nearly $9k in purchasing inventory, and yet I only had $1,800 in gross profit. Talk about a serious bummer. Especially when a smaller category had cost of goods at $2,500 with gross profits of $1,600. It was at this point I started to realize the disparity between sales figures and actual profit. How I longed for the good profits of ebay.
So now I was facing a dilemma. I could continue down the amazon path and keep getting small returns for a lot of work, or I could pick ebay back up and try to figure out how I could get sales rolling again. I decided on the latter. I started thrifting and yard sales again and gradually started to see my sales pick up. I had gotten rid of free shipping and went with calculated. Some items I did flat rate on, but the majority were calculated shipping. I cleaned up my listings and made them optimized for mobile. So what was really responsible for my increase in sales?
As long as I have been selling, I have had a pessimistic attitude about buyers in general. I figured most, if given the opportunity, would screw you out of your money. For that reason I never went beyond a 14 day return policy. But this time around I figured if I was changing everything, I may as well change that. I opted for a 30 day return policy. And guess what? No buyer has taken advantage of me. I was once again building my revenue stream with ebay. So much for the free shipping!
Now I have been increasing sales by a good amount over the last few months, and as always I keep watching for news/tips just to see if I miss anything that may benefit my sales. During a recent round of research, I stumbled upon a video by a guy who was a part of the Cassini design process. He went into how Cassini worked and how your listings are filtered for searches. Cassini is dynamic and it changes based on what the buyers are demanding and looking for. What they discovered was that buyers really didn't prefer free shipping over tradition shipping. Imagine that! It only took them 2 years to figure it out!
So now I knew that free shipping had nothing to do with my sales. I did however feel that the increase in return time contributed to my increase. I think an increase in return time from 14 to 30 days helped get my sales back on track. There were other factors, but I think this was the start of that upward trend. Never just accept that what ebay is telling you is the gospel. There are a few things that are, such as optimized for mobile, but policies, and business practices are not. Experiment and see what works in your store. You may just find the one item you never really thought about could be the restriction in your sales funnel.
Sunday, September 11, 2016
Amazon vs. Ebay...which is best?
This is an argument that has been raging over the last year or so as amazon selling has gained popularity as an alternative to ebay. Most of this was driven by the Cassini roll-out that caused sales to tank on ebay. But which is the best platform? Well, it turns out that this is not such an easy answer as saying one is better than the other. It really depends on a lot of factors. Each seller has different goals and abilities that can push them to one venue over the other. What I will do here is present the case for both and then you can weight the pros/cons for each and decide which one fits your situation.
Ebay has long been the defacto standard for online selling. But as amazon has matured, and especially after the ebay Cassini roll-out caused sales on ebay to plunge, more and more people have been lured to amazon. Amazon is truly an amazing platform to sell on. Sales are quick, selling prices are higher in most cases and if you are using FBA your job is done once you send your products in. But how much money are you truly making? That has been the topic of some serious debate. Hopefully, I can make some sense of it.
There is a reason why amazon sellers talk about their sales numbers. It is truly impressive to see someone start selling on amazon, and then a month later they have $10k in sales. But what does that really mean? How does that translate into cash you actually get to keep? Ahh...therein lies the heart of what it takes to be a successful amazon seller. You see, sales figures for amazon, especially FBA, are very misleading. Amazon charges a lot to be your fulfillment and customer service company. Most of the time you are going to be lucky to see a 25%- 35% gross profit from your sales. And that is BEFORE you pay taxes!
When I was heavily into FBA, I generally found myself being stuck in the rule of thirds. What that means is, if I buy an item for $5 then I have to sell it for $15 in order to make a $5 gross profit. Of course the higher priced the item is, the less of a third you need. But it is all relative to what you spent on an item. So, if you use the rule of thirds and do the math on our $10k/mo. new seller, even at 35% they kept $3,500 for that month. Now take out taxes at about 30% and you are left with $2,450. Have a margin at 25% and you are left with $1,750. So at the high end, you made just over $600 per week net profit. If it took you 40 hours to get everything purchased and sent into amazon, then you earned about $15/hour. Now this isn't a sexy number and neither is $32k a year, providing these numbers are consistent month to month. But saying you had $120k in sales for the year makes you look impressive.
Now let's move on to ebay. With ebay, you are generally buying thrift store or yard sale items at a very low price, marking them up by as much as 1,000% and selling them. With ebay you are generally making a 55% to 65% gross profit. So let's take that $10k/mo. and apply ebay numbers to it. At the low end of 55%, you will have a gross profit of about $5,500. After taxes, you are left with about $3,850, or about $962 a week and a pay rate of about $24/hour. So now with annual sales of $120k, your net profit is now about $46,200. Much more impressive. It's not hard to see where the higher profit margins are. But most people are impressed by the sales numbers and do not realize the true profit is way lower. As with anything, there are exceptions to evry rule, but this scenario would probably pertain to the average seller.
So why choose amazon over ebay if the profits are much lower? Well, it comes down to a couple of things. First, do you have the storage space to keep ebay items until they sell? Do you want to spend the time dealing with shipping, returns, customer complaints? If the answer is no, then you are probably a candidate for amazon FBA. You have to ask yourself if the trade off in profits is worth the work and hassles. For some it is, for others it's not. I dabble in both, but I try to buy highly profitable items for amazon so I can exceed the rule of thirds and get closer to 40% margins. Those items are not always easy to find, or readily available in large quantities. But when I do find them it's a nice payout for minimal effort.
Ebay is my bread and butter and amazon is my bonus. By doing both I am capitalizing on the best of both worlds. I am fortunate that I have enough space to store inventory for ebay. Not everyone has that luxury. You have to decide what is more important to you. You also have to decide if you can scale either business. It's a lot easier to scale ebay than it is to scale amazon. But if you have the drive to scale amazon then you stand to make a substantial amount of money. Choose what works for you. Maybe try both, you never know which way you will wind up going, but at least you will pick the best fit.
Ebay has long been the defacto standard for online selling. But as amazon has matured, and especially after the ebay Cassini roll-out caused sales on ebay to plunge, more and more people have been lured to amazon. Amazon is truly an amazing platform to sell on. Sales are quick, selling prices are higher in most cases and if you are using FBA your job is done once you send your products in. But how much money are you truly making? That has been the topic of some serious debate. Hopefully, I can make some sense of it.
There is a reason why amazon sellers talk about their sales numbers. It is truly impressive to see someone start selling on amazon, and then a month later they have $10k in sales. But what does that really mean? How does that translate into cash you actually get to keep? Ahh...therein lies the heart of what it takes to be a successful amazon seller. You see, sales figures for amazon, especially FBA, are very misleading. Amazon charges a lot to be your fulfillment and customer service company. Most of the time you are going to be lucky to see a 25%- 35% gross profit from your sales. And that is BEFORE you pay taxes!
When I was heavily into FBA, I generally found myself being stuck in the rule of thirds. What that means is, if I buy an item for $5 then I have to sell it for $15 in order to make a $5 gross profit. Of course the higher priced the item is, the less of a third you need. But it is all relative to what you spent on an item. So, if you use the rule of thirds and do the math on our $10k/mo. new seller, even at 35% they kept $3,500 for that month. Now take out taxes at about 30% and you are left with $2,450. Have a margin at 25% and you are left with $1,750. So at the high end, you made just over $600 per week net profit. If it took you 40 hours to get everything purchased and sent into amazon, then you earned about $15/hour. Now this isn't a sexy number and neither is $32k a year, providing these numbers are consistent month to month. But saying you had $120k in sales for the year makes you look impressive.
Now let's move on to ebay. With ebay, you are generally buying thrift store or yard sale items at a very low price, marking them up by as much as 1,000% and selling them. With ebay you are generally making a 55% to 65% gross profit. So let's take that $10k/mo. and apply ebay numbers to it. At the low end of 55%, you will have a gross profit of about $5,500. After taxes, you are left with about $3,850, or about $962 a week and a pay rate of about $24/hour. So now with annual sales of $120k, your net profit is now about $46,200. Much more impressive. It's not hard to see where the higher profit margins are. But most people are impressed by the sales numbers and do not realize the true profit is way lower. As with anything, there are exceptions to evry rule, but this scenario would probably pertain to the average seller.
So why choose amazon over ebay if the profits are much lower? Well, it comes down to a couple of things. First, do you have the storage space to keep ebay items until they sell? Do you want to spend the time dealing with shipping, returns, customer complaints? If the answer is no, then you are probably a candidate for amazon FBA. You have to ask yourself if the trade off in profits is worth the work and hassles. For some it is, for others it's not. I dabble in both, but I try to buy highly profitable items for amazon so I can exceed the rule of thirds and get closer to 40% margins. Those items are not always easy to find, or readily available in large quantities. But when I do find them it's a nice payout for minimal effort.
Ebay is my bread and butter and amazon is my bonus. By doing both I am capitalizing on the best of both worlds. I am fortunate that I have enough space to store inventory for ebay. Not everyone has that luxury. You have to decide what is more important to you. You also have to decide if you can scale either business. It's a lot easier to scale ebay than it is to scale amazon. But if you have the drive to scale amazon then you stand to make a substantial amount of money. Choose what works for you. Maybe try both, you never know which way you will wind up going, but at least you will pick the best fit.
Friday, September 9, 2016
Are You Keeping It Fresh?
As ebay has evolved over the years, nothing has been more frustrating and upsetting as the Cassini roll-out. Sellers saw their sales take a serious nose dive. Some sellers never recovered and have moved on to other venues. But those who have stuck it out and adapted are starting to see a return to profitability as ebay continues to be a great source of revenue. The problem is, if you don't understand the new playground, you are not going to make it. So what exactly do you need to do?
As with any online selling venue, change is inevitable. How we handle that change is what separates the wheat from the chaff, as they say. Whining and complaining in every online forum and facebook group you can find will do nothing to turn things around for you. It will just frustrate you and make others think you are just a chronic whiner. But there is hope if you can adapt and change. But this will require you to retrain yourself with new selling habits.
Gone are the days of fancy layouts and jazzed up titles. No more of the java script rotating banners, etc. No more wordy business policies at the bottom of your listings. No, what ebay wants now and what Cassini wants is simple, plain and easy to read listings. Ebay is targeting the mobile platform very heavily and if your listings are full of fluff, it's not going to get exposure like your mobile optimized competitor. Your items are going to fall down the search rankings and become relegated to the bottom of the list for eternity. You need to change your listings and make them for the mobile platform. Get rid of the tri-color text, get rid of the rotating banners and anything else that does not pertain to the listing. If it doesn't look good on your phone, then it won't look good to Cassini!
Once you have your listings optimized, this now becomes a game of outsmarting Cassini. And yes, it is possible! Gone are the days of relisting every single item. The ONLY time you should be relisting is if you have a multiple quantity item that has had sales. This is because the item will carry over it's sales stats and keeps your rankings. It does no good to relist an item that has very little traffic. Your listing is going to carry over and Cassini already knows it's not popular, so back to the bottom you go right out of the gate. Instead, use Sell Similar. But don't just sell similar, make sure you change at least one thing in your listing. It can be a word, or adjusting an image contrast by 1 or anything that makes it different than the last time it was listed. Why? Because when you change something on a sell similar, Cassini now thinks it's a brand new listing, and you jump to the top of the search.
It really is that simple! I have been using that strategy for about 6 months now, and have seen my sales increase month over month. I do a lot of experimenting and I track my metrics to see what works and what doesn't. There are other ways to increase your revenue, but that is a topic for another day. In the meantime, try these changes and see if your sales don't start creeping up.
You're welcome!
As with any online selling venue, change is inevitable. How we handle that change is what separates the wheat from the chaff, as they say. Whining and complaining in every online forum and facebook group you can find will do nothing to turn things around for you. It will just frustrate you and make others think you are just a chronic whiner. But there is hope if you can adapt and change. But this will require you to retrain yourself with new selling habits.
Gone are the days of fancy layouts and jazzed up titles. No more of the java script rotating banners, etc. No more wordy business policies at the bottom of your listings. No, what ebay wants now and what Cassini wants is simple, plain and easy to read listings. Ebay is targeting the mobile platform very heavily and if your listings are full of fluff, it's not going to get exposure like your mobile optimized competitor. Your items are going to fall down the search rankings and become relegated to the bottom of the list for eternity. You need to change your listings and make them for the mobile platform. Get rid of the tri-color text, get rid of the rotating banners and anything else that does not pertain to the listing. If it doesn't look good on your phone, then it won't look good to Cassini!
Once you have your listings optimized, this now becomes a game of outsmarting Cassini. And yes, it is possible! Gone are the days of relisting every single item. The ONLY time you should be relisting is if you have a multiple quantity item that has had sales. This is because the item will carry over it's sales stats and keeps your rankings. It does no good to relist an item that has very little traffic. Your listing is going to carry over and Cassini already knows it's not popular, so back to the bottom you go right out of the gate. Instead, use Sell Similar. But don't just sell similar, make sure you change at least one thing in your listing. It can be a word, or adjusting an image contrast by 1 or anything that makes it different than the last time it was listed. Why? Because when you change something on a sell similar, Cassini now thinks it's a brand new listing, and you jump to the top of the search.
It really is that simple! I have been using that strategy for about 6 months now, and have seen my sales increase month over month. I do a lot of experimenting and I track my metrics to see what works and what doesn't. There are other ways to increase your revenue, but that is a topic for another day. In the meantime, try these changes and see if your sales don't start creeping up.
You're welcome!
Thursday, June 23, 2016
I'm back!!!
After a long break, I am back to posting. I took a break while I was working on building my amazon business. I became a full time seller back in June of 2015, and haven't looked back. I have also started a youtube channel as a more creative outlet instead of just writing blog posts. Please check it out:
https://www.youtube.com/channel/UCwmlYlGBE3cXZOW5RZ3nvcA
I have also written a book about my selling experiences. Specifically, what I did to create over six figures in sales in nine months on amazon. It's not a step-by-step how to book, but more of my story and what I did. I also talk about some of the strategies I used and the tools I used. It's a cheap read at $0.99, and if you have kindle unlimited, it's free to read. Here is a link to it:
https://www.amazon.com/dp/B01BLXQ5SA
While I will continue to post to the blog, I will be focusing more on my youtube channel. I hope you'll stop by and leave a comment, like and subscribe. You can also leave comments for topics you would like me to cover. I'll do my best to provide the content you are searching for.
Have a great selling day!
https://www.youtube.com/channel/UCwmlYlGBE3cXZOW5RZ3nvcA
I have also written a book about my selling experiences. Specifically, what I did to create over six figures in sales in nine months on amazon. It's not a step-by-step how to book, but more of my story and what I did. I also talk about some of the strategies I used and the tools I used. It's a cheap read at $0.99, and if you have kindle unlimited, it's free to read. Here is a link to it:
https://www.amazon.com/dp/B01BLXQ5SA
While I will continue to post to the blog, I will be focusing more on my youtube channel. I hope you'll stop by and leave a comment, like and subscribe. You can also leave comments for topics you would like me to cover. I'll do my best to provide the content you are searching for.
Have a great selling day!
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