Selling on Amazon

Photo by: Caleb Woods

I have struggled with amazon’s calculations since beginning to sell books on Amazon. At first, I thought “Wow how cool is this”. Then I started to dig deeper into the way they charge what they charge
Amazon fees FBA Pick & Pack Fee ($1.06)
Amazon fees FBA Weight Handling Fee ($0.85)
Amazon fees Referral Fee on Item Price ($1.21)
Amazon fees Variable Closing Fee ($1.35)
Product charges $8.09

In this example above: the cost to sell a book for $8.09 is $4.47 leaving a profit of $3.62. This is amazons cost just for selling the book. If the book cost is $1.00 you are now at $2.62 but you’re not done yet you still have to get it to Amazon. If you’re like me, you will most likely get an average of 28 books into a box with a discounted shipping rate by courtesy of Amazon of nearly 35% to 40%. I pay around $9.00 to $11.00 per shipment which is an average of $0.36 per book and if you subtract that from the $3.62 it leaves you with $2.26. You’re not done yet, though. If you factor in tape, boxes, and labels you will need to subtract that cost as well. For me, I average about $0.08 per book leaving me with $2.18 for a book that was sold for $8.09.
Not bad right? Well, you can do better, much better by fulfilling your own orders it’s not as hard as you may think. Packaging mailers, you can get for free and you can eliminate most of the Amazon fees here is an example using the same example for the book above.
1 LB or less

Sale price for the book under 1 LB.
$ 8.09
$ 3.99 POSTAGE
_______
$ 12.08 Total sale

$ (1.35) Variable Closing Fee
$ (1.21) Commission on sale
$ (2.56) Total cost
$ (2.72) mail postage (actual)
___________
$ (5.28) Total cost to sell

$ 6.80 Net

If your selling Fulfilled By Merchant this is your cost and what you will net from Amazon. Here is where you will start to gain profit filling your own orders. By getting creative you can pick up cardboard boxes for free when your sourcing your books. It may be obvious but I feel I need to point out “Don’t use pizza boxes of ratty looking stained cardboard”. After a little practice, you should be able to knock out about 40 mailers in an hour so if you spend a day doing just mailers maybe get a friend or family member to help you can have about 4 or 5 hundred done and they may last you a month. You can’t get away from using tape so there is one cost you will have to absorb. I get around 50 books done with a roll so around $0.06 per book which leaves you $6.74 which comes in at about $3.50 – $4.56 more in your pocket. If you’re doing 100 books a week, then yeah it’s worth it but if all your books sell over $25.00 each, then you may not want to spend your time doing an extra three or so hours a week work mailing books. And did I mention you’re not paying storage fees at Amazon’s warehouses?
There is another advantage to fulfilling your own orders that you may not have noticed and that is if you’ll recall we are getting $3.99 for shipping but it only cost $2.72 to mail a book, even less if your mailing out over one hundred a week. The last benefit is you have control over your inventory. I can’t tell you how many shipments amazon has lost on me, or how many books are lost or damaged in receiving or being transferred to another facility. Sure they pay you for them but do you catch them all? I developed a system to see just how good their logistics are and I can safely say I’m not impressed. Two out of the last three shipments I sent in were “LOST” 51 books total were missing but not just missing. Some were being sold out in Amazon land but showed inactive or just plain not in my inventory. Some were in my inventory but showed “inactive” but never sold. If I did not take the trouble to look through every book and yes it took a few days, I never would have noticed because I was still selling and still feeding the machine. Don’t get me wrong I am not bashing Amazon and I am most likely the exception but as the saying goes “Stuff Happens”. It’s been about three weeks now and the last thing they said was “don’t send us more than five SKU’s at a time so we can serve you better” my thoughts are there goes about $500.00 net.

Tools I Use
I am now filling my own orders and I will be relying on Accelerlist to scan and list my books, at least, five to ten times faster than I have done in the past. This software is cloud based so you don’t need to load it on your computer. Because I am not selling Prime I have to rely on increasing the number of listings I have to keep my sales going strong.
Thanks, Guys.

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Amazon selling journey Part 1

Time just fly’s by doesn’t it? So here is where I am in my Amazon selling journey. I killed it in the first two months then BAM! The bottom fell out, and it’s all my fault. I saw the gold ring and could not resist reaching for it. All I can say is you have to crawl before you can walk. I saw all the big profits that the Privet label guys were making, so I got sidetracked and instead of following my original plan I got into things like building a website, sending away to China for samples. I even became affiliated with a global book distributor so here’s the bottom line. I ordered coloring books that I got from the book dealer at a 35% discount only to find I could have bought them from Amazon cheaper yea dumb huh? During all this time of reaching for the gold ring, my inventory dwindled to about 37 books with a very low selling price, so cheap I even lost twenty-five cents on one of them due to Amazon’s fees so I re-priced my little inventory so I would not get burned again. My last check was only fifty-one dollars, and some change which was what woke me up to what I had been doing was getting greedy. So now I have all this inventory that is six dollars an item that is on page two and three where no one ever looks resulting in no sales. What do I do to fix this mess? I still have to pay thirty-nine dollars a month and sell forty-one items each month or drop down to a non-pro account and pay another dollar to Amazon in selling fees for each item sold.
Here is what I discovered. I took the books that I had started selling them as Merchant Fulfilled. I built a spreadsheet that had six charts with each weight break down for mailing media, and I found I could make money on postage. Take a look at the table below as I explain how the finer details of merchant fulfilled work.

Up to 1 Pound $2.61
Book Cost  $       0.20
Postage on sale  $       3.99
Actual Postage to Mail  $       2.61
15% Amazon Referral Fee  $       0.60
Variable Closing Fee  $       1.35
Mailing Supplies  $       0.02
Selling Price  $       4.00  
 
Left after Amazon Fee’s  $       3.21  

The last batch of books I bought was over one thousand and was two hundred dollars that break down to about twenty cents per book. When I sold this book in the example on Amazon as FBA Fulfilled By Amazon I lost a quarter because of fees (If you want to know leave a comment, and I will post it). In this FBM example, you can see, I made a little over three dollars on the four-dollar book. I also figured out that if I made the mailing boxes, I would be able to save even more. So Combining that and the fact I was also saving fifty cents per book by not sending it to amazons warehouse not to mention they sometimes transfer your stuff to other stores which, you guessed it they charge a fee. Even though it shows three dollars and twenty-one cents, on average in this selling sincere I could be as high as four dollars in my pocket instead of losing twenty-five cents.
If you have noticed the “mailing supplies” are only two-cents that is for the tape to close the boxes. I found a way to make my boxes for free “free is good” Everywhere you look people are throwing away cardboard of all kinds and sizes I did some experimenting and came up with standard sizes that I could pre-make and have ready for shipping. I made a sheet metal template I put down on two sheets of cardboard and just trace it with a razor knife. I can make two at once turning out about forty boxes in a few hours or less. If I was one of the big booksellers, I could get mailers for about fifteen cents each. I would have to be mailing over one hundred books a day to get discounts like that, for now, I have not found any boxes for less than a dollar or two so for me that’s a significant saving.

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