FBA Wholesale, Cheap Beer and How Brick & Mortar Sellers Ruined Amazon

With RA and OA getting hard, massive Amazon restrictions, counterfeit claims galore and no invoices to save you, many Amazon FBA sellers are trying to move to sourcing wholesale ASAP.

I personally thought it would be a piece of cake to switch over but then I learned that the brick and mortar sellers that are now flocking to Amazon have a different way of doing stuff and I want to cover what I have been learning in this post.

I have seen Amazon FBA get crowded.  Really crowded in the last year or so. It is very obvious in the price action of products. The “rush to the bottom”  is extremely fast due to more people trying to supply products to Amazon.

This was/is to be expected. It is basic economics.

While I understand it, I don’t have to like it.

I like me some high ROIs and have pretty much lived and died by the 3 x 1 rule  ( sell at 3 times the buy price and that usual makes 100% profit. Buy at $10, sell at $30.  AZ takes $10 and I make $10 profit) when sourcing. I have found that it is very hard to do that anymore.

I always joke around that RA is dead ( or OA is dead) but it will never die because people will always be able to find arbitrage opportunities. With all the software that is constantly scanning websites, people will find that RA gives the best chance of finding arbitrage opportunities.

Basically you never know what someone’s local store will price clearance products at or what discontinued item you will find locally, so RA will never die.

The problem is that while you can still find stuff like this, you may not be able to sell on Amazon because so much stuff is becoming restricted. ( hint, hint: list that stuff on eBay. Despite what many Amazon sellers think, eBay profit spend just as good as Amazon profits. Actually I am doing this a lot more when I find good deals and am restricted from selling or the packaging is not in “new” shape)

The second problem is that there has been a rash of counterfeit claims and Amazon suspensions.

Some may be natural ( honestly I don’t even know how people make the claims. I have never seen that check box on my options when I have returned stuff to Amazon) but it seems that brand owners are filing claims and other Amazon sellers are doing this to get rid of competition ( while some say that it isn’t happening, trust me, it is)

The problem is that Amazon wants sellers to be sourcing from legit sources. While sometimes a Walmart receipt will work to save a seller, Amazon really wants invoices. They are moving to a total invoice system and nobody knows when the Walmart receipts will no longer work.  

So RA is sort of a Russian Roulette type of thing. You may never have an issue but then again, you could be put out of business in an instance.  This is why many Amazon sellers are looking at wholesale ( or private label).

Enter The Traditional Brick & Mortar  ( and cheap beer)

The word is out that Amazon is a good place to sell products on. Tons and tons of retail stores ( brick and mortars) have opened up Amazon seller accounts. They want a piece of the action.  They know people are buying online and they need to make more sales to add to their bottom lines.

Big deal. So what?

Well they play by a different set of rules than I ( or you ) do.

Hold on, here come that cheap beer reference.

The cheapest beer that a college student can buy is Keystone ( think canned piss) . You know beer is cheap when it comes in a 30 pack.

Well in the retail world ( the brick and mortar) there is a term called ‘keystone pricing”.

Simply stated, keystoning is selling at double the wholesale price.

So they buy at $5 wholesale and sell at $10 retail.

Keystoning is what retailers strive to achieve. ( and most fail at it).

If they keystone, that are making a great profit after overhead.

This works great for selling locally in a store. It is actually my 3 x 1 rule that I like to follow. They are getting close to 100% profit this way.

Like I say, they rarely do this good on all products.

Ok, but where is this going?

Well this is the issue.  They generally don’t change how they do business regardless if it is local or online.

So this is the issue. They aren’t playing by my rule of making as much money as possible on every Amazon sell. They list products, keystone the wholesale price and that is what they sell the product for on Amazon.  

They are happy campers. They also don’t understand Amazon and the fees.

So as long as I have sold on Amazon, I have used the amount of $4 as the minimum fees that Amazon charges on every product that I sell.  With the recent changes in Amazon fees,  it would probably be safer to use $5 as the figure. As I say, there is a $4 nut to bust on every product.

For example, I find something on clearance at Walmart for $1,  I probably need to sell it for at least $5 on Amazon to just break even ( more like $6 now).  This is probably something that most sellers know ( if not, now you know why you are losing money)

So let’s run an example.

Joe Blow Brick & Mortar decides to open an Amazon seller account.  They are selling XYZ widget in their local store. They are paying $5 for these wholesale. So they decide to send some into Amazon.

If they follow their normal way of doing business, they will keystone these widgets.

They will price them at $10 ( double the $5 wholesale price)

Now they don’t understand that there is a $4 (or probably $5) nut to bust with the Amazon seller fees.

So if you are following along at home, $10-$5, is $5.  Then you take out $4 or $5 for the Amazon selling fees which leaves either $1 profit ( not counting the inbound shipping fees that need to come off this) or $0.

Joe Blow Brick & Mortar is selling these left and right and pretty happy because they are keystoning them and think this Amazon thing is the best thing since sliced bread.

They aren’t making anything off of these!  If they were doing this locally, they would be killing it.

You or I am on this listing and we are just shaking our head and trying to figure out how to get rid of our stock because they keep sending in stock and we can’t get ours sold at a profit.

So what use is this information?

Well it is about ASP ( average selling price). FBA sellers love to get a high ASP. The higher the selling price, the lower % the Amazon fees are compared to the selling price.

So say the wholesale price is $20.  Joe Blow Brick & Mortar will price at $40. Now the Amazon fees might be $10, so the profit is $10 ( $40-$20-$10= $10)

Now there is a chance to profit on this product if you are selling against Joe Blow Brick & Mortar.

Here is the issue.  Most FBA sellers hate to invest a lot per unit.  I am not a fan of paying $20+ per unit because of Amazon’s return policy.

If I pay $20 per unit and make $10 profit and get a return, I have to sell 2 units to cover it. Actually the $20 isn’t my issue, the low ROI is. The lower the ROI, the more units I have to sell to cover the loss of a return.  

If you make 20% ROI, you have to sell 5 units to cover 1 return. This is no big deal on some products that rarely have returns but some categories have lots of returns.

So now we know how Joe Blow Brick & Mortar is going to price against us. How do we deal with it?

Before we look at that, let’s look at the other big facts.

It is hard to get wholesale accounts if you are an Amazon seller compared to a brick and mortar.

Joe Blow Brick & Mortar can pretty much open a wholesale account at will.  You and I will have problems getting approved.

So I find these widgets at Walmart. They are on clearance. I list them and can make a good profit below Joe Blow Brick & Mortar price because I got them even cheaper than wholesale.

Now Joe Blow Brick & Mortar is used to MAP ( minimum advertised pricing).  They get pissed that I am selling these for less than MAP and they contact the wholesaler or Amazon.

Now I am not an authorized seller of this and get knocked off the listing or a counterfeit claim against my account. Now my account is in limbo and I am hoping my Walmart receipt will get my account out of hot water.

Now if I have a wholesale account for these widgets, I have to play by the wholesale rules ( like MAP). Depending on the wholesale price, map might not even be profitable after fees and Joe Blow Brick & Mortar might not price over that.

Then here is the biggy. Joe Blow Brick & Mortar probably has a relationship with the wholesaler and probably orders more than just this widget. They may be able to get way better pricing than me and if they get it cheaper, they can keystone cheaper (if there is no MAP) and I can’t ever get close to making money on these widgets.

Dealing With Joe Blow Brick & Mortar

First, I want to avoid Joe Blow Brick & Mortar at all possible.  There are ways to detect these type of sellers.

Sometimes they have a sellers name that screams brick and mortar.

Some only sell MF ( merchant fulfilled). Normally we like to get on listings with no FBA sellers until they contact the wholesaler or AZ and get us shut down.

Sellers with massive feedback is a sign of sellers that operate on low margins and while they may not be brick and mortars, they get better wholesale pricing and will under price you 99% of the time. It is also very hard to get the buy box from these sellers even if you price the same.

Second, you need to focus on ASP. Source products that have a higher cost per unit. That gives you more wiggle room and also eliminates most normal 3rd party sellers.  You can still profit is a seller that keystones jumps in the listing.

Third, think about doing something different like bundling  or multipacking your wholesale products.  Most of the time Joe Blow Brick & Mortar won’t mess with you.  They are too busy and probably only scan the UPC code and will never see your listings.

Summary

More and more traditional brick and mortar seller are bring their wholesale to Amazon at the same time many of us RA/OA sellers are trying to get into wholesale to save our business.  They are literally killing  the Amazon as we have known in the past and Amazon wants this. 

Realize that Joe Blow Brick & Mortar plays by a different set of rules and has easier access to products. They can sell safer on Amazon because they are doing what Amazon wants. We are not doing what Amazon wants.

Use your knowledge of how Amazon works, which Joe Blow Brick & Mortar probably has no clue on, to help keep him from ruining your listings.
Finally, it you will have the most success bringing products to Amazon with no other sellers on your listings.  I you do chose to get on a listing with other sellers of wholesale products, you should only get on listings with 1 maybe 2 other sellers ( seller without massive feedback numbers).  If you get on a listing  with 25 other sellers, you general will be toast.

Many people are doing well with wholesale but the high ROI that many of us are used to is not usually possible with wholesale and most of the reason is due to new sellers coming to the platform that play by different rules and has different goals than most old school RA scanners.

Using And Making Money With Tactical Arbitrage Library Search Bulk Lists

In less than 1 year, Tactical Arbitrage has become THE software to do online arbitrage

Tactical Arbitrage ( TA) has more features than most people are actually using and the cool thing is that you can use multiple features at once.

Example: You can run a product search and run a library search at the same time.

This is huge!

In this blog post, I want to focus on the library search feature.

Why?

Well first of all most people aren’t using this feature.

Second, books are one of the last products that still have massive ROI’s

Third, you can use MF ( merchant fulfilled seller) to do the sourcing for you. Basically MF to FBA flips. There are 1000’s of MF sellers that don’t understand or care that FBA books sell for a lot more than MF books. They are constantly sourcing and adding books to the catalog. You just have to be lucky to be scanning the book listings as they pop up ( this is the magic part. Nobody can constantly see all the changes as books pop up. So there is a luck part to this but you can’t get lucky unless you are constantly scanning and that is what this post is going to be about)

And finally, with all the recent restrictions and intellectual property / counterfeit claims, books are by far one of the safest products to sell ( *** used books that is. I would suggest never listing a books as NEW even with the new policy of Amazon sharing the NEW buy box)

Add all that up, I personally love to sell books and THE tool to use is TA for finding books to flip. While you can try to do this manually, you may randomly get lucky but you will find that you can’t compete with the software and you are basically wasting your time/will get a low return for the time invested in searching.

While my examples for this post will be just for flipping from Amazon MF sellers to FBA, there are currently 9 sites that are built into the library search.

**** Before we start. If you don’t have Tactical Arbitrage, click here to get a free trial

( note it does shutdown sometimes to new sign ups and may not be accepting new member right now)

The Basic Plan

In the simple nut shell, you can and should be letting the library search run constantly in the background. Go ahead and use the other searches on TA for more specific sourcing, but let the library search run through your bulk lists ( oh what was that?)

Bulk lists are the magic sauce that make this work. Bulks list sound complicated but they are actually very easy to put together yourself. They are simple Excel files that require 4 columns and you save them as CSV files.

They only actual info you need to search for is the first column, which is basically an Amazon link to a category or as I do it, an Amazon search.

You want to niche this down to the smallest level of search possible because you are limited on how many pages you can search on each search of on the bulk list, ( in the video I had it searching 300 pages which I believe currently you can only do 100 pages.  I set the default to 100 on each search even if it has only 5 pages. It doesn’t mess TA up)  but more specifically Amazon’s search is screwy and doesn’t always show everything. You have better chance of Amazon showing more if the search has fewer possible results. There is no way to prove this, but it doesn’t hurt to make the bulk list this way.

For example instead of trying to do the whole “Math” category you would copy the link for the Algebra category, then the Geometry category , etc.

You may find that only certain niches are good to scan and this would be the way to scan instead of the massive main category.

Be careful to not make the bulk list too big. It will only run for about 48 hours before it times out.

In theory you could have a 200 row list and it times out on row 100 and if you keep starting it over, you would never get to rows 101 to 200. You can choose to start on any row, which in this case, you could start up on row 101.

If I am in the Mathematics category of books, the AZ link for it is

https://www.amazon.com/s/ref=sr_nr_n_3?fst=p90x%3A1%2Cas%3Aoff&rh=n%3A283155%2Cn%3A13884%2Ck%3Amath&keywords=math&ie=UTF8&qid=1489274975&rnid=1000

But the problem is that there are 300,000 books in this search. Way too big.

A sub category is “Study and Teaching”, which has 6000 results, which is more manageable.

https://www.amazon.com/s/ref=sr_nr_n_0?fst=p90x%3A1%2Cas%3Aoff&rh=n%3A283155%2Cn%3A75%2Cn%3A13884%2Cn%3A13985%2Ck%3Amath&keywords=math&ie=UTF8&qid=1489274988&rnid=1000

I would then click back on the browser and click on the next sub category, “History” and grab that link

https://www.amazon.com/s/ref=sr_nr_n_1?fst=p90x%3A1%2Cas%3Aoff&rh=n%3A283155%2Cn%3A75%2Cn%3A13884%2Cn%3A13942%2Ck%3Amath&keywords=math&ie=UTF8&qid=1489274988&rnid=1000

And so on and so on. ( BTW, this is the same way you build a bulk list for other products)

While this works, it doesn’t work great. The issue is that Amazon doesn’t show you everything. It is more hit or miss. This is what most people are doing.

I have made my own lists ( I actually sell these lists on Gumroad) that I break it down differently.

You will have much better luck if you can do a search that is more specific.

Say there is a publisher called XYZ Books. If you type XYZ Books into AZ search, you can copy that link and have a much better chance of AZ showing you probably all the result for XYZ Books.

Now if you could come up with a list of 100’s of say textbook publishers, you will do much better than just choosing a bulk textbook search.

This is how I made my lists.

****  Here are my lists

Textbook https://gum.co/lsQn

Scholarly books https://gum.co/SJhRG

The massive combo of the 2 lists https://gum.co/hCGcV

The other issue people have is that they don’t exactly know which kinds of books sell at best and are searching the wrong kinds of books.

I personally subscribe to the teachings of the book guru , Peter Valley. I apply the same principles that I use sourcing locally for books on my TA searches.

Actually I have list I use that is for Scholarly books ( basically non textbook, textbooks.) I would rather source these kinds of books over textbooks ( but I still love to source textbooks) because most people overlook these books and totally focus on textbooks.

This is the magic of bulk lists. You can customize it for yourself and there may not be anyone else that has what you are using.

You can have multiple bulk lists to choose from and add or subtract to them.

For example, I love to source textbooks and scholarly books, but it would be worthless for me to try to source them in late August .

At that time, I would be off running a different bulk list that didn’t focus on textbooks.

Things to Consider

Keep the search running. You never know what will be listed and when. Remember that you don’t have to buy every deal but it is nice to have options.

Some deals will be gone before you get a chance to buy them. There are lots of people running Tactical Arbitrage library searches and who know how many other softwares are running searches ( like Zen Arbitrage) .

Some of the finds on the library search are just wrong. Someone will have a book listed at $600 FBA and there is a $4 MF offer. TA can’t tell that that is a bad results because of some crazy FBA seller. Basically you will have a lot of false positives so to speak.

A few buys of the results of the library search can actually cover the cost of TA ( it isn’t exactly a cheap software). You should be using every available search to help cover the cost.

While you don’t have to be a bookseller to get lucky finding some books, you will have better luck if you understand how flipping from MF to FBA works and how money is made on people paying a premium for FBA books.

It also is helpful if you understand what kind of books are valuable. Yes textbooks are good but everyone knows that. You will make more on other kinds of books that other people over look.

Make sure you change your starting points on the bulk lists if they are too big and time out before you can run the whole thing.

Don’t source textbooks during textbook season. You need to source prior to textbook season and after textbook season which is prior to the next textbook season.

Be cautious of some MF sellers. Read descriptions and look at feedback.

I would suggest never selling a books as new. That is actually the only real dangerous area of selling books.

Finally if you aren’t a subscriber of Tactical Arbitrage, sign up for the free trial and make yourself some bulk lists to test out what you can find.

Sourcing Book Sales For FBA: I Was Outclassed By The Pros, But I Learned And Have A Plan

In this post I want to detail my experience attending my first library books sale. Even though I am an experienced FBA seller, I got bitch slapped so to speak. I did have some winning moves, but didn’t make the money that the experienced book sellers were.

I want to cover both what I did wrong and what I need to improve and what I did right that the book sellers probably didn’t know ( thanks to my FBA sourcing experience)

Background

I am an experienced FBA seller that generally sources from Walmart and Big Lots via retail arbitrage ( RA) that has always sold a few books here and there but that was a small part of my business.

Side note: I generally buy local books from college students and this tells how I do it.

How To Flip Local College Textbooks

With the recent changes to Amazon with restrictions and suspensions , I have decided to move away from sourcing at big box retailers and basically only source via wholesale along with book selling.

The logic behind this is that both wholesale and books seem to be safer than general RA right now. Setting up wholesale account and wholesale in general is boring and I need my RA fix ( and income while switching over from RA to wholesale).

Book sourcing takes care of both of these.

Side note: When it comes to OA book flips, ie buying for MF sellers on Amazon and sending them back to sell on Amazon FBA, I use Tactical Arbitrage. This is the only real OA I am doing right now.

Tactical Arbitrage

And I have a special bulk list I have created that take about 3 days to run, that looks for specific “ scholarly” books.

Tactical Arbitrage Scholarly Bulk Souring List 

The Book Sale

I had decided that I was going to a local library honey hole that I have to source some books. I made the mistake of not know the library hours and it ended up being closed when I arrived and wouldn’t open for over 2 hours of when I arrived.

So I continued to another library and found some good books but decided to go to another town that I had seen via a Google search that was having a book sale that was starting today at 3:00 PM ( Thursday)

I actually went to several other place before hand and my cell battery was nowhere near being fully charged. ( epic fail on my part)

About 2 PM I started to head toward the library sale and turned my phone off and had it on the charger

Sourcing hint: putting your phone in airplane mode will allow it to charge 2x as fast and turning it off with charge it 3x-4x as fast

This didn’t help due to the short drive and I ended up sitting in the library and trying to charge my phone.

10 minutes before the sale was to start, I headed to the basement where I found a line and a huge crowd.

 

Sourcing Book Sales For FBA

I wasn’t expecting this for this size town.

I saw guys with Dell X51 PDAs and boxes and bags.

I started to think that I my be out of my league at this point.

Finally they opened the doors and how best do I explain this? Ever see the running with the bulls?

book arbitrage

The “real book sellers” knew right where to go.

No biggy. I am a smart FBA guy. I can handle this, They aren’t as smart as me.

Everything was marked and all the money book categories had a “real book seller” scanning it already by the time I was able to get in.

I looked for an open spot to start scanning.

I saw the business books were open and went over there.

I looked down and saw the America 2020 book.

I didn’t even scan this.

Even I know this is always a buy.

 

A few seconds later, the guy I am going to call Mr. A ( for asshole) , showed up and basically pushed me out of the way. At one point I thought he was hanging over my shoulders.

(^^^^^^^^^ Mr. A and his horde of books.  He did very well this day.)

Obliviously I was dazed and confused and he was experienced. ( other wise we may have had an issue with him trying to scan over me)

He was using a Dell PDA with the whole Amazon catalog downloaded on it. He didn’t need wifi.

I was using Scoutify with my Bluetooth scanner because it is way faster than the Amazon seller app, but I was still at a disadvantage.

I couldn’t scan fast enough. The “real book sellers” were blowing through all the boxes and I was getting discouraged.

I sort of just wandered around. Scanning a book here and there but it was hard to even move around in the crowd.

Not going well.

I wanted to at least make a little profit to cover my time and learn what I needed to do the next time I go to one of these.

My Weaknesses

First thing I need to do is get me a PDA to scan with. I actually had one a couple of years ago but used it a couple times unsuccessfully ( the scanner card kept falling out and I had trouble interrupting the non live data)

Side not: I just ordered a Dell X50 PDA and a CF Socket Laser scanner instead of the SD one I had used before ( note if I had kept my old one, adding Velcro to the card would take care of the issue)

Here is the details of choosing the PDA and lasers cards http://www.scoutpal.com/db/slotchoices.htm

The service I am going with is ScoutPal ( what I used before) for $9.95 a month

http://www.scoutpal.com/

Next I need to address the fact that I honestly didn’t know that the sale was happening or planned on going until I happened to Google the library website just prior to going out.

There are actually website that post these type of sales. I am sure that not every sales shows up on here, but it is worth looking at.

Here is one site: http://www.booksalefinder.com/

So I don’t actually have that many weakness to fix but while  I was outclassed but I did pull a few tricks out of my sleeves

What I Did Right ( Thank You FBA)

First I hit the “classics fiction” area. No real book seller looks there because fiction is a no-no in the book selling world.

But actually many of the “classic fiction” are required reading for college and high school classes. Some of these are profitable.

I picked up a couple of books here. Score one for me!

Next I walked over to the psychology area. Every book scanner had already been there and there was actually another scanner going through them at the same time. I was literally going through his leftovers.

I saw this book and it didn’t have a bar code. ( not a bad find for $.50)

This is a biggy here. The book scanners only look at books that have bar code.

Actually funny thing is that when I hook up my Bluetooth scanner, my phone won’t allow me to enter numbers via the keyboard until I turn off the Bluetooth scanner.

My quick work around was to use the AZ scanner and use the “flow” image scanner that it uses to “see” the book and find it on AZ.

( this could be a big advantage if I use a PDA and have my phone ready to do an image search of the books with the AZ scanner)

None of the other sellers were doing that. You would have to be selective and have an idea the book is worth scanning and not do this on every book.

It would also help when a tag is covering the bar code.

Or just type in the ISBN if that is faster)

My proudest find was some DVDs.

I can’t sell DVD’s on Amazon but I do know that I can trade them in for Amazon gift cards.

I saw 2 DVD’s in the homeschooling/textbook section. Every book scanner had already worked this section and there wasn’t anything to be found. Well nothing but these 2 DVDs.

I scanned them and saw they were selling for about $40 new an Amazon.

That is a good sign that Amazon might be taking trade ins on these. So I opened up my AZ buyers app ( not the seller scanning app) and scanned the 2 DVDs. One said trade in up $19 ish and the other $14 ish.

The DVD’s were $2 each, so I could buy these, trade them in and make about $20 ish on these.

None of the book scanner were thinking about doing this!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Was It Worth My Time?

So I spent about 1 hour in total wandering around the sale. Most of which I was watching, not really scanning.

So how did I do?

Well I spent $12 total  ( $ 8 books and $4 DVDs) and the books came to $106 profit

Then I got  $27.88 ($12.98 and $14.90) trade in for the DVD’s ( one was less because it was not new)

So for 1 hour, I made about $ 125 profit

Not killing it like the pros were, but not shabby for 1 hour of work and learning.

Takeaways

First I need to have better equipment, which is have already ordered. I am getting a Dell X50 with the laser scanner for $59 and resubscribing to ScoutPal.

Next I am going to start looking the book sale websites to plan possible sourcing trips.

I will make sure my equipment is fully charged and use my cell phone to visually search books that the other people skip over.

I will arrive early and get to the better sections first.

I will keep my eyes open for DVD’s that I can trade in to make a risk less profit.

Your Takeaways

Books are about the safest category right now on Amazon to source for.

The ROI is still very high on books.

If you miss the rush of doing RA, these sales could give you the fix you need.

If you go to these sales, be prepared with the right equipment.

Realize that there will be someone pushy and rude people ( Mr. A)  trying to grab everything for themselves. ( think Black Friday )

And finally, think like an FBA seller, not a bookseller to find the hidden profit the other guys miss.