Beginner’s guide to Fulfillment by Amazon: Setting up an account

Fulfillment by Amazon

I refer to Fulfillment by Amazon (FBA) a lot, because it is my number one outlet for reselling in the pursuit of points. Chatting with a friend, I realized that I’ve never actually put together anything basic about how to get started with FBA. Here is my attempt at that.

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Setting up a new Amazon Seller Account

The first place you want to start (and probably bookmark) is Amazon Seller Central.

From there you can register for a new account, but Amazon helpfully offers some considerations, such as identifying what you want to sell, and determining how much you want to sell per month.

The key here is, when it comes to products you want to sell, you’ll want to verify that you can actually sell those products. Here are the categories that you can sell right from the start, without additional approval required:

Amazon Cats no approval req

 

It’s important to note the “Conditions allowed” area. This one has tripped me up a few times, as BigHabitat has noted is the case with Samsung Tablets. Generally speaking, you want to sell as “New,” that gives greater chances of being able to make a profit, or at least, stem the losses.

Now, if that awesome product that you just know there’s a market for, doesn’t happen to be on that list, don’t despair, because Amazon may just give approve you to sell it anyway, here are those categories:

Amazon Cats requiring Approval

 

I’ll have another post on getting that approval– what Amazon calls “ungating” in a couple of days. I will also note that, Amazon has two categories of Selling Plans, Individual, and Professional. In order to gain access to the additional 15 items in the list directly above, you need to be a Professional Seller, which carriers a monthly cost of $39.99. I’ll caveat this with – I’ve always had the Professional Selling Plan.

Ok, now that we’ve cleared the parameters of an Amazon Seller Account, the process for setting one up is fairly simple. From that link I gave you earlier (and here it is again), click “Register Now”, then click “Sell as Professional”, there you’ll have the chance to enter your e-mail address, and you can register a new account. Note – if you use your e-mail address linked to your Amazon Account, sometimes you get better benefits; I haven’t actually verified it, but I tend to get many of the benefits that Amazon Prime gets.

From there you’ll provide some biographical details, then the real fun starts! You get to enter your business’s legal name, or, if you don’t have one, just enter your name.

You’ll run through some more steps, providing more information, such as the Display Name (this is your chance to be creative! Don’t worry, you can change it later), as well as entering your address, and some option stuff, like main product category, number of products you plan to sell, and if you own any brands. Then you’ll enter your credit card information and confirm the billing address — this is so Amazon can charge you the $39.99; after you start selling though, that fee will just come out of your account before they send you the money (twice a month is the automated way).

Then you’ll need to do a phone verification, you can either call, or have it texted to you. This is how Amazon confirms you’re not a robot.

After that is the Tax Interview! Fun stuff! Ok, not so fun but necessary if you plan to do a bunch. My first year, I didn’t get any tax docs, but I was under $20,000, last year, I was well over that and did. Still, its a necessary step. It says you can skip, but, it kept giving me the run around, so you’ll need to do it. This will require either a Social Security Number, Tax Identification Number, or Employer Identification Number.

Once you finish your tax interview, its smooth sailing from there! Celebrate, pop the Krug–or maybe just the Korbel, since you haven’t really sold anything yet.

When Timing Matters for Reselling

Hourglass

My friend Chasing the Points shared a Wall Street Journal article with me yesterday that jumped out. The article: The Web’s Most Maniacal Bargain Hunters talks about folks who do this reselling for different reasons than I do. These folks are going purely for cash, and there’s nothing wrong with that. In fact, I love the fact that people can do stuff like that – the entrepreneurial flame is one that should be stoked, after all.

But the thing that stuck out for me the most, and, in fact, resonated with something I have heard Hans Mast speak of a few times, is being able to “time the market.” Now, if I said that in the context of the stock market, you’d laugh at me, and you’d be right to do so. But, no, I am talking about timing the consumer market. The example from the Wall Street Journal’s article should give you an idea of what I mean:

Ms. Zarraonandia once sold $2 canned pumpkin from Safeway for $13 each ahead of Thanksgiving, when a supplier fell behind on production. – Wall Street Journal

When you look at that example, its completely logical, right? Canned pumpkin is kind’ve important around Thanksgiving, it’s not terribly surprising that some folks will pay 6x+ for it in order to make a pumpkin pie for the family. The thing is, though, in order to have your canned pumpkin in place in time to ship it, requires pure speculation. As I’ve read in What I Learned Losing a Million Dollars there is some research you can do – such as Jim Price attempted to do with soybean oil. But, that’s if you’re talking big dollars.

Educated Guesses

There are times of the year that certain things work for reselling. Some of the easy guesses include holidays. We can get a lot of data from what moves when around the big holiday, aka Christmas. That’s a big time of year, in fact, if you plan ahead, it can make or break your year. The problem I ran into this past year, was that aside from some November portal bonuses, there wasn’t a whole lot of excitement. In hindsight, I should’ve started earlier, like, months earlier, and you should too.

Another time of the year, is the perennial Apple iPhone or iPad release dates. Last year I bought a few iPhones, and sat on them for a few days until Amazon FBA would allow me to ship the phones to an FBA center. I probably could’ve made more than the 25% margin I made on the regular model – I mean, just look at this chart.

Chart courtesy of CamelCamelCamel

Chart courtesy of CamelCamelCamel

I suppose you could say the same for other electronics — did anyone get in on the Apple Watch? (Fair warning: I think Watches need to be ungated to sell on Amazon).

Wrapping Up

It goes without saying (but I’ll say it anyway), that the Wall Street Journal article is well worth reading for resellers. There’s some discussion of tools which are more useful for folks walking the aisles (and I’ll probably try some out like ASellerTool just because), but there’s also insight into how folks identify deals. The key though, is that you need to plan early, in order to time the market – that means ungating the category for example.

My biggest takeaway though, is to start looking at the expiration dates for canned pumpkin and figuring out whether I need to get ungated now.

Introducing Fulfillment by Sears for Resellers

Fulfilled by Sears

Over the weekend, I happened to see an old post from Frugal Hack about reselling Marketplaces, and I felt like there had to be more options out there. I felt like, we, as mile and point focused resellers could do more. So I did some research into another marketplace, Fulfillment by Sears (FBS).

About Fulfilled by Sears

Sometime in the “past” (articles seem to disagree), Sears, which had provided a marketplace, which according to the Amazon Sellers was untested. The article that I did find notes that Fulfilled by Sears (FBS), was released in the March, 2013 time frame. The program was specifically designed to compete with Fulfillment by Amazon (FBA), and as of March, 2013 had a “pay as you go” approach (you may see in the Amazon Sellers link, that there was a $40 fee just to try it out).

The pricing seems somewhat competitive to FBA, here is their top level summary:

Fulfilled by Sears pricing

Fulfilled by Sears pricing

Comparing Fulfilled by Sears (FBS) to Fulfillment by Amazon (FBA)

Other than the monthly fee (with Sears requires you to pay $39.99 after $400 in sales, and Amazon gives you the choice), its hard to see the differences.

Since I have a hard time looking at summaries like the above and applying them to products I sell, in general I like to use examples. Sears FBS has a calculator that is, shall we say, not as robust as Amazon’s FBA calculator. For this particular example, I selected two products, one electronic, and one home good, to try to get a good spread.

The first example uses the Asus Nexus Tab 16GB, which BigHabitat has posted a bunch about.

Asus Nexus Tab 16GB FBS to FBA Comparison

Asus Nexus Tab 16GB Fulfilled by Sears Fulfilled by Amazon
Item Price $199.00 $199.00
Shipping $0 $0
Revenue Subtotal $199.00 $199.00
Marketplace Commission $16.14 $11.94
Pick and Pack Fee $1.00 $1.02
Shipping $0 $0
Order Handling $0 $1.00
Weight Handling $0.70 $1.34
Storage $0.00 $0.02
Inbound Shipping $0 $0
Customer Service $0 $0
Net Cost $17.84 $15.32
Net Revenue $181.16 $183.68

 

The second example is a Dyson that was popular over the holidays.

Dyson DC35 FBS to FBA Comparison

Dyson DC35 Fulfilled by Sears Fulfilled by Amazon
Item Price $285.00 $285.00
Shipping $0 $0
Revenue Subtotal $285.00 $285.00
Marketplace Commission $42.75 $42.75
Pick and Pack Fee $1.00 $4.03
Shipping $0 $0
Order Handling $0 $0
Weight Handling $8.75 $10.70
Storage $0.00 $0.66
Inbound Shipping $0 $0
Customer Service $0 $0
Net Cost $52.50 $58.14
Net Revenue $232.50 $226.86

So, really, Sears is pretty competitive when you look at the breakdowns, although their marketplace commissions are more for electronics, they are pretty neck and neck at the bottom line price.

Wrapping Up

Fulfilled by Sears is just another marketplace option out there for those that want to try an alternative to Amazon without having to do your own fulfillment. Sears does have a national and somewhat respected name.

I’ll have some more analysis later this week.

What do you think of Fulfilled by Sears?

 

The post: Introducing Fulfillment by Sears for Resellers was first posted on TaggingMiles

One of the untold frustrations of Reselling

A couple of days ago, Dia, the Deal Mommy found some clothing deals and was kind enough to share them with me, as well as some other tips on brands that generally sell better than others. The first thing I do whenever I see something that might work for reselling, is to head to my handy Amazon Seller Central. I was met with this:

FBA Seller Central trying to list Levis Women Jeans.

FBA Seller Central trying to list Levis Women Jeans.

For those folks that haven’t been met with this, all is not lost.

Listing Restrictions

Amazon Seller Center Category, Product, and Listing Restrictions.

Amazon Seller Center Category, Product, and Listing Restrictions.

Amazon “Gates” certain product categories for a variety of reasons. They might restrict them due to policy, laws, or because Amazon wants to verify that sellers can source legitimate products consistently. There are a bunch of categories that fall into this area, and “Clothing & Accessories” is one of them. I was going to put a screenshot of the requirements, but, I’m trying to keep this post short and sweet and the requirements are, shall we say, long (like 3 pages long). Some other products are easier.

Getting permission to sell

First of all, Amazon calls this an “ungating request.” Looking at a few other (non-clothing) categories, it looks like there are generally performance targets (defect rate, pre-fulfillment cancel rate, and late shipment rate) that apply less to FBA sellers, because they’re sending the product directly to Amazon first (so it’ll never ship late for example).

The other requirements are to be able to provide acceptable documentation, which usually is an invoice with the pricing blocked out, but with the company that you’re sourcing the products from, and your or your company’s name on the invoice. Below is a screenshot of a screen that I’ve seen a few times for other products (I don’t plan on selling “Beauty” products… But I suppose really that’s in the eye of the beholder, isn’t it?).

Amazon Seller Ungating Request

Amazon Seller Ungating Request

After you submit the initial request, it becomes a timed chess game. Amazon will respond asking to up to 3 invoices, as I mentioned above and soon, within 2-3 days. They will be particular – just take a look:

Amazon Seller Central request for documentation to ungate product category.

Amazon Seller Central request for documentation to ungate product category.

If you pass muster, you’re ungated. Otherwise there might be additional requests.

Some pitfalls I’ve noticed

When it comes to documentation, Amazon is pretty specific. They want packing slips or invoices. They do not want online order confirmations, they do not want shipping confirmations. They will be picky, unfortunately. I haven’t gone through many ungating requests, but thus far I’ve only not received approval once (and I’m still working on a strategy to provide sufficient documentation to get them to ungate it).

Conclusion

Just because a product category might be restricted or “gated,” its not cause to just give up. The key though is that you need to limit your risk – so if you don’t have invoices or packing slips for three items, you want to obtain those at the lowest possible cost. Consider it an investment in getting access to sell potentially lucrative products.

Balancing the Amazon(s)

 

Balancing Amazon.com's many services

Update: In my haste to post this before I boarded a plane, I mis-typed; the 1099 is generated from $20,000 AND 200 transactions.

Amazon.com for lack of a better way to describe it, is a veritable powerhouse for manufactured spending. Some of Amazon’s services are very far out there in the blogosphere, with many of the nitty-gritty details, right down to your circles and arrows. Others aren’t. Here are the services that I either use or find to be useful for MS.

Amazon Payments

This topic has been hammered, so I’ll be short here: You can send up to $1,000 per month as an Amazon Payment – always select “goods/services” and avoid Citi Cards which can result in a cash advance fee. There are other aspects to be concerned about, such as the potential of getting shut down. If you do this, first, use Amazon Payments for legitimate reasons (e.g. paying a friend for purchasing an airline ticket for you, or your rent, etc.), or, make sure that both accounts aren’t linked to the same bank accounts. Avoid A-B-A type circuits, or operating two accounts from the same IP address. You can–and should–research more on Amazon Payments on FlyerTalk.

Also see below the risks, as all components roll-up to the tax liability/1099-K risk.

Finally, I’ve gone through a couple of Amazon’s Annual Reports / 10-K’s, and can’t identify how it is that Amazon accounts for the fees from Amazon Payments. It looks like this falls under “Services” or “Cost of Sales.” The services component’s revenue continues to grow a few percentage points a year. Cost of Sales varies, but also includes things like Shipping, Payment Processing, etc. Either way, it looks like even though this may be a “loss” or “expense” for them, they are covering it by providing payment processing to businesses.

Fulfillment by Amazon

This is where I spend most of my non-pure Manufactured Spending efforts. The simple premise with selling on Amazon is that you can sell products on Amazon just like eBay, however if you pay a little more (e.g. earn a little lower margin) you can ship your products to one of Amazon’s fulfillment centers, and when your product sells, they do all the work. I really quite like the set up. I really enjoy getting e-mails from Amazon saying that they’ve shipped another product.

FrequentMiler has a slightly dated “intro” to FBA. I’m currently working on a more detailed post outlining some of the pitfalls. For example, I’m hearing more and more that we might soon need to move to collecting sales taxes at least in the states that products reside (e.g. the fulfillment centers that we send products to). I’m not a tax professional, but I am working with a tax professional and hope to have more on that by early or mid-October.

Amazon Local Register

Amazon Local Register is Amazon’s latest tool out there for processing spending. Ostensibly, it is Amazon’s attempt to get into brick and mortar stores, however it could, in theory be used to generate miles and points at a 1.75 cent cost per point. Scott talks more about it as a potential manufactured spend tool. Note, this service includes a 1.75% (which is how it comes out to be a 1.75 cent cost per point) transaction fee, so you’re already looking at a mitigated return.

The Risks

It’s well documented that if you have more than 200 transactions or $20,000 received (it doesn’t appear you get dinged for sending money via Amazon Payments for example), with Amazon Payments you will receive a 1099-K. If you generate more than $20,000 in revenue and have 200 transactions with FBA, you will receive a 1099-K.

Fulfillment by Amazon's IRS Reporting Requirements

Fulfillment by Amazon’s IRS Reporting Requirements

Fat Wallet Forums has a bunch of information on this as well. It all rolls up to, so far as I can tell, a combined 200 transactions, and $20,000 revenue / received funds via Amazon will get you an unwanted tax form to fill out. If you are going to push it, I highly recommend that your tax filings are air tight, such that you can endure the additional scrutiny. Note: I am not a tax professional.

Pulling it all together

The greatest benefits of using Amazon’s services is that most can be done from the comfort of your own home. If you simply leverage these services (sans Fulfillment by Amazon) shy of the $20,000 / 200 transaction combined–across Amazon Payments, Amazon Local Register and Fulfillment by Amazon–threshold, they you can still do well enough to meet most minimum spend targets, if you’re judicious in your use of other manufactured techniques. All told, Amazon’s upside is great, but while it may seem limitless, the headaches can increase as you scale.