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PLMA 2013 Tradeshow Report

November 22, 2013 Leave a comment

I just returned from the Private Label Manufacturers’ Association (PLMA) Tradeshow in Chicago.  It was a good show, and took me two pretty full days to talk to all of the exhibitors I wanted to see.

It was my first time at the show, and one of the things that really stood out for me was the number of companies making private label food products.  If you’re looking to sell your own brand of food, definitely go to this show next year.

Besides talking to the manufacturers I had pre-arranged to see, I also spent some time just wandering around the aisles to get ideas for other things I might like to sell but haven’t thought of.  I did come across one type of product that’s related to my current sales strategy that I don’t sell yet.  The trip would have been worth it for just that one revelation, but of course I got a lot of other business done, too.

In addition to products to sell, there were also some exhibitors there offering services to retailers.  For example, if you’re going to sell private label products, you want attractive, professional-looking packaging.  There were exhibitors at the show to help with all steps in creating your own packaging.

If you attended the show let me know what you thought of it.

There’s another good trade show for private label manufacturers and retailers coming up in March, ASD Las Vegas.  Check out their site, especially Source Direct, there’s probably something useful there for you to attend.

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2013 Last Minute Holiday Preparations

October 18, 2013 Leave a comment

Despite the just ended government shut down, my online sales have been going well.  It looks like it’s going to be a strong Christmas season!

Here are some last minute things you should take care of now, in case you’ve fallen behind:

First, make sure you have up to date information on total cost associated with every sku you sell.  You need to know what your margins will be at any given sales price, so you can set your prices correctly based on competition.

Second, if you sell on an online marketplace like Amazon or eBay, spend some time checking out your competitions’ pricing strategy.  Remember, people can set prices differently based on day of the week and time of day, so start sampling your competitions’ prices throughout the day for several days in a row, and keep it in a spreadsheet.

Third, decide what your sales strategy will be for each of your products.  E.g., if you don’t have a lot of inventory on a strong selling product, you may want to raise your prices now and let other retailers sell out their inventory, so you can sell at a higher margin later in the season.

My next post will be right around Halloween, and traditionally my sales slow down in the days leading up to Halloween.  So there should be some extra free time in the next couple of weeks to spend on looking for more products to sell.

Good luck, and let me know how your holiday sales are going!

 

Private Label Manufacturers

September 13, 2013 Leave a comment

Last week I talked about selling private label products as a way to avoid intense price competition on Amazon.  Of course, to do that you have to find private label manufacturers.

This November there’s a private label trade show in Chicago.  I’ve never been to this particular trade show, though I plan to attend this year.  The organizers say there will be over 1000 companies exhibiting their products.

The ASD trade show is in Las Vegas in March.  That trade show is not dedicated to private label manufacturing.  But it does have over 2000 manufacturers and importers exhibiting their products, so there’s a good chance you can find manufacturers to work with.

If you attend either show, please send me an email and let me know how it went, and how valuable you thought it was.

 

Finding an Amazon Niche

August 30, 2013 Leave a comment

If you’re selling on Amazon, you’ll eventually notice that just about any product can get into a price war.  Someone decides they’re going to undercut everyone else to take the volume, and survive on thin margins.  Usually it’s a large seller with lots of volume.  Check out any of the most popular toys selling on Amazon as an example.

What can sellers who are just starting out do?

My suggestion is to start with products that aren’t going to invite a lot of price competition from large sellers.  E.g., you can focus on products that have good but not great volumes.  Products that rank in the 10K – 50K range are often good candidates.  Do make sure you track their sales rank for a couple of weeks to make sure they never drop below about 50K.

If you have a reliable source of used products of a single sku that can also be a good choice.  Most of the high volume / thin margin sellers want to concentrate on new products.  If you go this route it’s important that your source of products be pretty stable.  It takes time to create a good listing, so you need to sell a lot of products to make it worth your while.  A notable exception to little competition selling used products, though, is books.  There’s a lot of competition in used books.

Products that need preparation before being sent to an Amazon warehouse can also be good candidates.  Some high volume sellers handle their own fulfillment, but many send their inventory to an Amazon warehouse for FBA fulfillment.  If they do, they probably don’t want to spend the effort on a lot of manual, time-consuming product preparation, and will skip selling such skus.  However, if you’re fulfilling your own sales, you don’t have to worry about prepping the products to send them to Amazon.

You can also sell unique products, like your own art work or craft work.  A clever example of this I read about was someone who could print t-shirts on demand.  He had a program that generated random messages, and create an image of a t-shirt with that message (so he didn’t have to actually make a t-shirt with that message until an order was placed).  Then he had a program create an Amazon listing with the message, using the image created earlier.  In this way he was able to quickly create millions of unique t-shirt listings on Amazon, and of course no direct competition.

There’s no limit to the number of ways you can succeed selling on Amazon, but it will take a lot of effort to come up with a reliable way you can win.  The important thing is to actively work on finding a way to win, rather than just trying to compete on price, or hoping no one else starts competing with you.

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I’ve updated my list of potentially good products for you to sell on Amazon for August.

 

Amazon FBA Fees

June 7, 2013 Leave a comment

The Fulfillment By Amazon (FBA) program allows third party sellers on Amazon to ship their inventory to Amazon, and Amazon performs the pick, pack, and ship when you receive an order on Amazon.  They also handle returns, and all customer service functions.  It’s about as hands-off as you can get, and with Amazon capturing a large part of online sales it’s a great opportunity for anyone who wants to grow their online sales into their main income.

Amazon recently announced changes to their pricing for FBA services, and I wanted to talk about them here because they definitely affect your business.

Amazon would like to receive FBA merchandise in condition to be ready to ship to a customer.  However, it doesn’t always arrive that way and Amazon performs the necessary preparations when they receive the merchandise.  For example, since the merchandise will be stored in a warehouse, which can be rather dirty, they require anything that’s particularly harmed by some dirt to be in polybags.  Clothes would be a good example of this.  Until now, Amazon has done this preparation free of charge, but that has now changed.

If your merchandise reaches the Amazon warehouse, and it isn’t prepared the way Amazon specifies, they’ll still do the preparation for you, but they’ll now charge you for it.  As examples, at the time of this writing, putting a label on a product is $0.20, and putting a product in a polybag is $0.50.

These aren’t unreasonable prices for these services, but the fees will definitely add up.  E.g., if you ship 10,000 items to Amazon per year that need to be polybagged and labeled, it will cost you $7,000 per year.  Ouch!  These fees may also make it no longer worth it to carry some products.  If you’re making $1 per item, and your fees go up $0.70 per item, it’s probably not worth it to carry anymore (or at least, you’ll need to start doing the preparations yourself).

This is a new and rather large change, and it will take time for Amazon to get all of this right.  E.g., when I was creating a shipment recently they indicated the products needed to be polybagged.  However, the product comes from the manufacturer in a sealed box, clearly no polybag was actually needed.  So be prepared to file help requests letting them know when they flag a product as needing preparation when in reality it doesn’t.  No one shipment will cost you that much, but over time it will add up.

One more note before leaving this topic, you can also use the FBA program to fulfill orders on other channels, like eBay or Sears Marketplace.  You’ll need to enter the orders on your Amazon account yourself, or pay a service to do this for you, but it’s still a good deal because of the shipping rates they get, compared to what a small retailer can get from UPS / FedEx / USPS.

 

Amazon FBA Fees Update

March 29, 2013 Leave a comment

There was a recent addition to FBA Fees that I want to mention.  For those of you not familiar with Amazon’s ‘Fulfillment By Amazon’ service, it’s a product fulfillment service where you ship your inventory to Amazon, and when an order comes in on Amazon for one of your FBA-fulfilled items Amazon does the pick, pack, and ship for you.  They also handle any customer problems with the order, such as returns.  It’s a great deal, and if you sell any reasonable amount of volume on Amazon I recommend you consider using their FBA service.

To date Amazon did not charge a fee to process customer returns.  Obviously it does cost them money to process a return, so doing this for free was a real gift to FBA sellers.  Unfortunately, they’ve decided to start charging a fee to process returns, with the fee being equivalent to the fee they charge to fulfill the order.  If you look at a transaction report from March or onwards (assuming you had any FBA returns), you’ll see these fees in your report now.

While it’s unfortunate that processing returns is no longer free, I still feel FBA is a good deal.  It frees you from having to touch every individual order you receive.  It also frees you from having to process returns and from most order-related customer interactions.

If you do use FBA, you need to account for the return fees when setting your price.  Of course, you need to know what percentage of each sku you stock gets returned on average to effectively do this.

Having no returns is the best way to minimize the cost to you of return fees.  Avoiding low-quality manufacturers is your best bet here, over the years I’ve dropped a number of manufacturers whose products sold well, but the merchandise was often defective.  It’s bad for both your customers and you if the merchandise is often defective.

Some types of products, though, just naturally have a higher return rate even if the merchandise isn’t defective.  Anything that must ‘fit’ correctly, and there’s no way to guarantee a fit without the customer physically having the product in hand, is an example of this.  For these products it will be especially important to factor the cost of returns into your price, or you will end up making little or no money on these items.

I should mention that the FBA service can also be used to fill non-Amazon orders.  When you get an order on another channel (Sears Marketplace, eBay, etc.), you enter the order into your Amazon seller account and they take care of the pick, pack and ship for you.  This isn’t quite as automated as your orders from Amazon, since the order information must be entered into the Amazon system.  If you don’t have high volumes from outside of Amazon this isn’t a problem, and if you do have high volumes outside of Amazon there are services available to automatically transfer this order information to Amazon for you, for a fee.

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My monthly list of potentially good products to sell online has been updated for March 2013, if you haven’t checked it out yet this would be a good time to do so.

 

Selling on Amazon – Starting Your Online Retail Business

March 16, 2013 Leave a comment

As you probably know from my previous posts, I recommend that anyone who is just starting to sell online start on Amazon.  Of the marketplaces I’ve sold on they’re the easiest.  They let you do as much or as little as you want.  If you want to just have your listings show up on Amazon, and do all of the order fulfillment and customer support yourself, you can.  If you want to just buy products, send them to an Amazon warehouse, and have no more to do with the sales process, you can do that, too.

Your desired level of involvement will change over time as your sales grow and your objectives change.  At first, with small volumes, you may as well handle the order fulfillment yourself, it doesn’t take much time or storage space.  Eventually you’ll reach a point where it’s taking a lot of your time and holding you back from growing sales, and you’ll want a fulfillment service to take that over from you.

The two things that generally constrain your sales are time and money.  Time to find new products to sell, which should always be a big part of the time you spend on your online business, and money to buy additional inventory.  As a retailer you can only sell what you buy, so having capital to buy more inventory is essential to growing your sales.

In terms of time, always keep track of how much time you’re spending on each aspect of your business, and actively spend time every week thinking of ways to reduce it.  Reducing how much time you spend on any activity will free up more time to look for additional products to sell (to help, here is a free list I update monthly with items to sell on Amazon).  This isn’t rocket science, if you actively spend time thinking of ways to become more efficient every week you’ll find them.  Maybe not every week, but you will find them.

Money is trickier.  I recommend that you not borrow money.  Not every product you sell is going to sell well, you don’t want to borrow money to buy inventory that you can’t sell.  If you’re just starting out and don’t have much money for inventory, you can look for one-off products to sell in outlet stores and the like.  It’s a lot more time intensive to sell one-off products, and I don’t know of a way to really ramp up to large volumes doing that, but if you’re just getting started and need a way to generate profit to but more inventory it’s a path that can work.