The Quick Start Guide For Profiting On Merch By Amazon

Merch By Amazon is the newest income stream that many FBA sellers have jumped onto but it requires a totally different set of skills. I have decided to put together this little Merch seller start up guide to show people how I personally have done it and hopefully that can help you if you are wondering where to start.

If you are totally new, lost, don’t have a clue, my first advice is to take Chris Green’s Merch By Amazon course.

There are 2 version available and I personally recommend taking the advanced version.

The into version of Merch By Amazon Udmeny

The advanced version of Merch By Amazon

( Here is a little secret. Green sells the advanced  course with 2 other of his courses for $49 on Gumroad as a package. I would go that route myself instead of Udemy. Check out the deal here:  https://gumroad.com/a/790246515 )

It Is Just Paying People $5 On Fiverr, Isn’t it?

Many people will tell you the business model is as simple as paying someone $5 on Fiverr to make the design for you. Well, no it isn’t.

Yes, I personally have done that with some success, but that flizzed out really quickly. I had 1 person out of 4 that was able to actually make the designs but they got out of the business.

Plus there are legal issues with the actual copyright of the designs even though you are paying someone to make them for you.

Here is a little info about copyrights

http://www.aiga.org/copyright-basics-for-graphic-designers/

The work around is to create your own designs. This is where people start to drop off at because it is going to require knowing how to use image software and many have very large learning curves.

Graphic And Image Creation Software Programs For Merch

Most people love Adobe programs and most people that already know how to use the graphic creation programs are using Adobe products.

I am not one of them.

I had no idea how to use Photoshop. If me it was a lot of clicking and cussing without getting any thing to work.

Then there is the fact that you have to pay for Adobe programs. If you buy them outright, they are expensive.

The good news is that they are now on the cloud and you just pay a monthly fee.

I am still too cheap for that.

I am also a fan of open source software. Basically there are free versions of the popular software out there that works almost as good as the paid. ( I am typing this up on OpenOffice, which is the open source version of Word and it works just as good and is free)

So my choice of software to start Merch was GIMP, which is the open source version of Photoshop.

I had no skills at all with GIMP. I couldn’t do the simplest tasks on GIMP.

I tried to watch some Youtube videos on GIMP, but the problem is that they aren’t well laid out and don’t exactly show the beginner step by step how to use GIMP.

Udemy to the rescue!

I really like taking Udemy courses on subjects that I want to get trained on instead of trying to piece together training by watching a 100 different Youtube videos. Time is money and it is worth paying a little to get the training all in one place.

I searched for GIMP training on Udemy and the course I found and took was actually for book cover design with GIMP. It had several hours of training and covered all the basics of using GIMP. Designing a book cover is very similar to designing a tee shirt.

I spent about 4-5 hours of watching videos for the GIMP course. The guy that teaches it is from France and I found it weird that I was learning how to use GIMP on my computer in Indiana from a guy in France.

GIMP For Beginners

I highly recommend taking this course, but with that said, watching and applying the techniques are 2 different things. There is a long learning curve and many people will just quit.

Now I am somewhat proficient in using GIMP but still struggle with it but I have been able to produce a lot of designs that have sold good and I know that there isn’t copyright issues with them.

GIMP has allowed me to create simple designs but there seems to be something missing. I just can’t seem to produce complex graphics.

Then I happened to see this video

This opened my eyes to the fact that there are other programs that can allow you to be more creative. This video uses Adobe Illustrator, which is a paid program.

Well we are in luck because there is an open source version of this called Inkscape.

I found a Udemy course to learn how to use Inkscape.

Udemy

The course is called:   Learn Inkscape now – create vector graphics for free! 

I do recommend this course but not to learn Inkscape exactly. The instructor moves pretty fast through stuff and it is hard to follow along with what tools to use, but the real value is the instructor’s creativity. That makes the course worthwhile. I was amazed on how easy it was to create images with Inkscape.

So while I recommend that you take this course, I also recommend a Youtube course that has 10 videos that show you how to use Inkscape.

Here is the first of the series:

This is going to take several hours of your time to watch. This where people will quit.

Then I would go back and take the course on Udemy

Resources For Merch Tee Shirt Designing

No matter what graphic program you end up using, you are going to need some graphics and fonts to make good designs.

Once again you could pay for images but many have strings attached to them on how many products can be sold with the image on it.

My suggestion is to use public domain images and public domain fonts becasue you can do whatever you want with them.

You just can’t grab any old image off the internet and use it for whatever you want. Most images are copyrighted and you could get into big trouble.

The same goes for fonts. If you use the basic fonts that are on your computer, you designs will probably suck but you can’t just grab any old font from the internet to use. Most are copyrighted or do not allow you to use them for commercial use.

There are several sites that I use but the thing to make sure of before using anything is that you have rights to use it.

http://www.1001fonts.com/free-fonts-for-commercial-use.html

http://www.dafont.com/top.php?l%5B%5D=10

https://pixabay.com/

https://www.wpclipart.com/

http://www.pdclipart.org/

You can also use Google images and click Search Tools and then Usage Rights to find images that you can use.

Making More Creative Designs Quickly

Giving a tee shirt design a vintage, distressed or dirty look seems to sell more shirts. This is suprising easy to do one you figure it out. You can actually double the number of designs you have up by simply doing this.

I made a video on how to do it:

I also made a template to do it that I sell on Gumroad. You don’t need to buy the template since I show how to make it in the video, but the ready made template is easy to use and there is more detail instructions on how to use it that comes with the Gumroad

vintagegumroad

https://gum.co/JTQQe

Merch Business Models

There are several schools of thought to the Merch business model.

Some people think that their designs are worth big bucks. Other like myself think that these are just digital files that are passive income and any money we make on them is good.

One of the biggest problems I see is that people on the 25 shirt tier put up 25 shirts that sell for $25-$30 and make very few sells if any and can’t get tiered up. A great design that never sells because it is priced too high is worth $0.

Shirts that don’t sell stay hidden way down on the Amazon search results. Amazon shows search result of the best selling stuff.

My business model for new sellers on Merch is to create designs that sell fast and sell a lot of even if you make very little off of each one.

Your goal is to get tier up to the 100 or 500 level. At that point you can have a lot of the higher priced, slower selling tee shirts up and have some of them sell every day because you have so many up.

My other business model is to have a ton of designs up that don’t sell very often. I currently am at the 1000 tier level.

Now say that I have 1000 designs up on Merch and they each sell 2 per month.

That is 2000 tees selling in a month. That is a pretty good passive income stream and the bonus is that none of those designs are going to be ranked well. They may be sales ranked 800k to over a million. At that rank, nobody is going to try to copy the design, which is a big problem right now on Merch.

By me designing simple, low priced shirts myself, I can get a ton of designs up on Merch. Even if you were able to get someone to do it on Fiverr, it would cost you $5500 to get the 1000 designs up ( they add $.50 fee to Fiverr for some reason) Not to mention that most likely you won’t find someone that will keep making the designs for $5 ( actually they only get $4 of it) They Fiverr people are only doing the gigs to get you to upgrade to higher levels and high cost services.

Driving Traffic To Your Merch Shirts

Relying on Amazon organic traffic to find your shirt designs is not going to get you fast or great results. With at said, you should try to add keywords and search terms into you tee shirt title, bullets and description.

I am not an expert on that and my best selling shirt actually has no bullets or description.

While I am on that topic, I will say that price is a big fact on selling tee shirts.

Here is a screenshot of a holiday shirt that I priced low and got to 5k sales rank. It took me 5 minutes to make and helped move me to the 1000 tier

30daysales

 

Not every shirt has to be priced like this, but it was a good return for 5 minute of work.

There are lots of ways to drive traffic to you shirts.

One free way is to pin them to a Pinterest board.

The concept is that you create a board for a niche. You post a lot of different things to the board that are not tee shirts and then you randomly add one of your Merch shirts to the board. This looks very natural and once set up, can drive traffic to your Merch shirts.

Here is a video on how it works:

Another thing that many people are doing is running Facebook ads.

This isn’t as easy as you would think because you have to know how to target your ads and it can get expensive.

For this I am going to go back to my old stand by advice, go get some training on Udemy.
With that said, here is the secret.

People were selling t shirts online before Mech came out. They were selling on Teespring and there is a lot of information and courses on how to sell on Teespring.

In these courses they tell how to advertise on Facebook and how to use Pinterest and other social media to drive traffic and make sales.

Here  the Udemy course that I personally took.

Sell T Shirts With Teespring

Here is my advice, don’t be afraid to invest in your knowledge and don’t waste time and money by trying to figure it all out yourself when you came pay a little and fast forward your success.

Here is a quick trick to help your shirts be found in the search engines ( ie Google and Bing) You have to understand that you are trying to be found in Amazon search and Google search.

Take the Amazon url that they send you when your shirt is approved and enter it into both of these.  It will tell the search spiders to come and index the page, which will help send traffic to Amazon when people are searching online,

https://www.google.com/webmasters/tools/submit-url

http://www.bing.com/toolbox/submit-site-url

Conclusion

Merch By Amazon is a good income stream but it takes work. It is also changing daily and the competition is getting stronger everyday, but once you have some success with it, you will find it addictive.

While this article was about Merch By Amazon, I will let you in on the real secret.

People that have been having success on Merch are already moving into another platform that is making them even more money ( they are still on Merch, but just expanding)

What am I talking about?

Shopify!

People are using Shopify to build there own “ Merch” site. They are using print on demand services that print and fulfill and they drive traffic in the same ways they do for Merch and Teespring, but the bonus is that they own the customers ( email lists for example) and they can market to proven buyers.

Yeah here is the catch. This requires work. You have to learn a whole lot more and like I have mentioned several time in this article, that is where people will quit, which thins the herd and is where the profit is.

FBA Taxes: What To Expect And What Your Tax Guy Needs

I have been away for awhile dealing with some family health issues. During that time I was PMed to do a post on what reports are needed/what you need for taxes concerning FBA.

So first, I am not an accountant ( actually I do have a degree in Accounting) so I can’t give tax advice but I can tell you what my experience is dealing with my tax guy.

So the basic thing AZ is going to give you is a report that says the total sales you had, the total fees you paid AZ and how much money they sent you.

From this point let’s say they said you sold $100k, that they charged you $33k and sent you $67k back.

The $67k is the important number. This is what the government thinks you made and wants you to pay taxes on until you take out your cost of goods (COG) and expenses.

So you need to know the value of the inventory you had in stock on Jan. 1 of 2015 and Dec. 31 of 2015. The value is what your cost was, not what it will sell for. Your tax guy needs this.

Now this is a big problem if you aren’t keeping good records or if you aren’t using Inventory Lab. ( this is the #1 reason to use Inventory Lab)

The report that you can run on Dec. 31 from AZ just tells you what you have in stock. It doesn’t give you the value. If you are using IL, it will tell you the COG of that inventory.

So if you aren’t keeping track of this, you need to have a number for the COG. I sure hope at least you coded the cost in the MSKU like I recommend you do on every product.

You would have to go through every single item, take the COG times every unit for every single item you had in stock on Dec 31 to get your ending inventory value ( oh wait, it gets better)

Now we need to know what your COG was for everything you sold for the whole year.

If you are keeping good records, then you would just subtract the ending COG from the total years COG and then you would have that COG for the products you sold through the whole year.

Let’s say that number is $33k. So the tax guy would subtract $33k from the $67k number AZ gives you, so now the government wants to tax you on $34k.

Now if you didn’t keep records, man you are SOL. You are going to have to look at every single sale you made and come up with a COG for each item. This is really hard if you have no record of what each item cost and if you had a lot of sales, you are going to be super busy.

So now that we have $34k left, this is where that tax guy is going to try to take expenses and deductions away to get this number lower. It doesn’t mean that you didn’t really make $34k, it just means that you don’t want to pay taxes on $34k.

Here are some of the things my tax guy wanted.

Mileage. This is big! You get to deduct $.54 a mile for your sourcing trips. So in this case, if you had 1000 miles of deductible mileage, then $540 is coming off of the $34k and you won’t have to pay taxes on the $540. So let’s say you pay 25% tax on the money. You just saved $135 in taxes.

The tax guy will have questions about your car, insurance, usage , etc.

So hopefully you have been keeping a record of mileage. If not, you got some work ahead of you.

Now you can claim mileage even if you don’t find any products while sourcing but I personally want to have a receipt to back up every sourcing trip.

It gets muddy when you mix personal trips with business trips. Think of grocery shopping and you pick up some FBA stuff. Do you get to claim that? Talk to you tax guy.

So my tax guy wants to know other things.

He takes a deduction for me working out of my house. So he needs to know the square footage of my house and the square footage of my work area that is used for FBA. He also needs things like how much my insurance is, the utilities, etc.

So the tax guy is going to come up with a number for what he can take off as a deduction for you working out of your house. Now if you are bigger than that with say a warehouse, the tax guy will need all the cost involved with that.

So the tax guy will take this out off the $34k, making your tax bill lower.

Expenses are another deduction that tax guy will want. Hopefully you have been keeping records of all the boxes, box tape, polybags, etc.

All this stuff is going to come off the $34k.

So how many times you see people in a FB group say ” I am not going to pay for boxes”? Well they don’t realize how little it actually cost them.

Say that you are paying 25% tax. That $1.30 box is going to come off of the $34k, so it is actually costing you $.98.

You are now a business owner and things that you need for your business that make things easier/better you should buy because you are basically getting them as a discount because you take them as expenses.

Your tax guy will be trying to get the $34k down as far as possible because that is what you will be paying taxes on.

There are probably things I forgot to include, but that is the general process of the taxes.

Now if this was your first year selling, now you have a surprise coming your way.

Uncle Sam doesn’t want you to have a free ride and wants the taxes paid before the end of each year.

Most likely your tax guy will talk to you about quarterly estimated taxes.

Basically every 3 months, you are going to start paying taxes and surprise, your first quarterly tax is due on April 15 along with your 2015 taxes.

Now quarterly taxes are a pain. Why? Well you need to pay 90% of what you owe ( which if your business is growing, becomes hard to figure) or you have to a pay a penalty ( actually you are ok if you pay 100% of the last years tax. ie, talk to your tax guy)

So this is a quick overview of the process and this is why you need to pay a tax guy to help you.

You also need to keep good records ( that is why Inventory Lab gets $50 a month)

After Selling On Amazon, What Is Next?

News alert, the competition on Amazon is grow fast. Amazon isn’t exactly the easy money that it was in the past. While this is great for the consumer, it isn’t exactly great for the sellers on Amazon.

We have all seen it, the dreaded “race to the bottom”. Actually if you have studied Economics, it really isn’t a surprise. Markets will hit an equilibrium eventually as competition comes in.

So what are people doing now that haven’t given up?

You have heard the terms Private label, wholesale and bundling tossed around as possible answer to replace RA ( retail arbitrage) and OA ( online arbitrage)

Of the three mentioned, I have personally a fan of the bundling option. ( actually buying wholesale and bundling those products).

While wholesale does eliminate some competition, it really has no barrier to entry and private label does have a really big barrier to entry but there are factories in China that are not interested you being the only seller of their products. I hear many big time PL sellers talking about bundling their on PL products to stand out ( even thought they own the buy box, they still have to convert to sells)

Other people are jumping on the Merch By Amazon train. Right now it is easy money. It is “The Wild West” right now but you know Amazon will be tightening down on it before long. They are going to get rid of 3 pages of the same design that has been copied and copied and copied.

The people that are really making big money on Merch are sending traffic to Amazon. This means that they are paying for ads, have Pinterest boards, etc set up. Most likely these people were already doing t shirts on another platform like Teespring before Merch opened up.

They have learned to send traffic and that is a very valuable skill that can be used for whatever you sell, even your FBA products ( you can send people to your listings on AZ even if you aren’t the only seller)

So what are the experienced sellers doing. Well believe it or not, a lot of them are moving off of the Amazon platform. Yeah you hear me right, they are still selling on AZ but they are moving some of their business off of AZ. ( ever heard of not putting all your eggs in one basket)

Quick story.

There is a guy that I went to school with that was doing this online selling thing before FBA became cool. He was selling on eBay full time. He would buy skids via Liquidation.com, drive there and pick them up and then list them on eBay.

He did pretty good from what I understand. He sold in a niche and started getting repeat customers. Then he decided that he should move off eBay and basically have is own website. He realized that there is extreme value in having a customer base and an email list ( ever hear that the money is in the list?)

Amazon doesn’t let you have access to their customers. You are just a commodity seller on Amazon and as such, you can’t build a customer base or email list.

eBay lets you have some access ( don’t quote, but I think it is 30 days) , so that is a little better. I assume that is what the guy I know did.

So the guy I know moved his business from a eBay platform seller to a website seller. He has a customer base and email list in a specific niche. He doesn’t worry about policy violations and account closing, so he has a higher level of security that most of us FBA sellers.

Many other sellers are starting to see this and are moving to this model. They want to “own” their customer list and keep selling to the same customers.

So how are they doing it?

Many are turning to Shopify. They are using Shopify to build web stores and they are finding companies that will fulfill products for them.

But this isn’t easy.

Putting up a Shopify does nothing for you. You have to get traffic and the traffic has to convert to sales. Way more work than letting Amazon promote for you.

I do know one seller that has had a Shopify store up for a few months and on one sku, they sold over 1000 of them at a profit of $8-$10 in just one month and has a service doing the fulfillment for them. They are paying for traffic and selling products that are selling on Amazon but their customers either don’t know or don’t care.

So some people are going, huh?

Here is a quick example that combines some different ideas.

Say I choose a niche. My niche is the Couch to 5k running training program. I want to market to people that are doing the Couch to 5k.

I could set up my Shopify store to sell t shirts that have to do with running and have a print on demand service fulfill those for me when people buy them from me.

I also want to sell running shorts and running shoes. I will list those on my Shopify store along with the running t shirts and I will actually have them sitting in an Amazon warehouse and when they sell, I will use Amazon fulfillment to ship them for me ( actually they will be for sell on Amazon while in the warehouse and I will also have them for sell on eBay via Joelister)

So now I have a web store that is selling to the running niche. I could be building a customer base and an email list. I am not have to box and ship products to the customer every time I make a sale. I am still having someone else take care of that, but the true power comes from the fact that I can now email my list of customers ( proven buyers) telling them that I am running a sale which is like being able to print money.

How many people are moving into this? I have no idea. The learning curve is steep ( barrier to entry). You have to pay to send traffic and that is not for people that are just getting started selling online.

Honestly most people that are doing this are experimenting right now. They are opening up their Shopify stores for the $29 a month and they know that they won’t be making a profit for the first few months.

They are experimenting with advertising, learning the system, finding suppliers, etc., but they know that if they don’t take the plunge, they won’t and they see the power in moving into this business. model.

They are using the knowledge of what they have sold on Amazon to know what niches to move into with their Shopify stores.

Believe it or not, not everyone buys off of Amazon and the products that sell good on the Amazon platform also can sell good on other sell channels.

Are people totally walking away from Amazon selling? No, but many people are using Q1-Q3 to get their Shopify stores up, learn the ropes, and let the customer lists grow while still running their Amazon businesses.

You can get a 14 day free trial by going through this link Shopify free trial but 14 days is not a good test because this is not an over night business model.

 

 

How To Use The Variation Checker Chrome Extension

This is a new Chrome extension that is not widely available to the general public. It was privately made and not available on the Chrome web store.

You use this extension to find the low priced color/size/variation when you are doing AZ to AZ flips ( Amazon to Amazon flips)

I made a video on how to do it because it is easier to see and explain than reading about.

You can get the extension here: https://gumroad.com/a/852767859