Frustration by Amazon

Every now and then a shopping portal offers a fantastic deal that’s too good to pass up even if you don’t really want to buy anything.  As a result, I often find myself buying things just to earn points and miles.  I then sell those things with the goal of losing as little money as possible.  The end result is usually that I effectively buy miles at a very low cost.  For example, when the British Airways portal offered 36X at Nordstrom I bought and sold headphones and watches (see “How Amazon paid me to collect miles”).  And when the Southwest Rapid Rewards portal offered 15X at Sears I bought and sold tablet computers (see “Sears 15X: Frequent Miler’s almost final results”).

Currently, Sears is offering 10X through the Ultimate Rewards Mall.  Once again, this is a deal too good to pass up.  See “Sears 10X: Leveraging the Deal” for more info.

Thanks to HansGolden who will be co-presenting with me at the Chicago Seminars, I learned about a service called Fulfillment by Amazon.  With this service, Amazon lets you ship things to them to be sold and fulfilled via Amazon.com.  Amazon takes a cut of each sale and charges a small warehousing fee until the items sell.  When you have a lot of items to sell, this service is many times easier than selling one by one on EBay or Craigslist.  Plus, since Amazon has such a large shopping audience, items tend to sell quickly.  Unfortunately, not everything always goes as planned…

List as new, or not…

When I went to sell my Dr. Dre Headphones (bought at Nordstrom for 36X), I learned a lesson…

After logging into my Seller account, I clicked “Add a Product”:

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I found the headphones I wanted to list and then started to fill out the item details.  In the box named “condition” I wanted to list the item as “New”, but I wasn’t given that option:

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It turns out that certain brands do not allow resellers to list their items as new.  Amazon recommends selecting “Used – Like New” for this situation, but that would effectively devalue your product quite a bit.  The alternative is to find or create an alternate product page for the same product.  In my case, there already existed an alternate page so I was able to add my headphones as new to that page.  If you have to create a new product page on your own, you have to be a Pro Merchant (for $39.99 per month).  I haven’t tried that yet so I don’t know how much of a headache that would be.  In the end, I did OK with the headphones, but not as well as I would have done if I could have listed on the main product page.

Having learned from my prior mistake, when looking for items to buy and sell, I now first try to add a listing to Amazon to see if it will let me list the item as “New”.  If not, I look for a different item to buy.  Unfortunately, there are many items that do not allow resellers to list as new.

Amazon Mistakes

As a regular consumer, I used to think Amazon was an efficient, tightly run organization.  As a seller, I now have my doubts.  Here are some mistakes that have occurred:

  • As I reported in the post “How Amazon paid me to collect miles,” Amazon somehow sold on my behalf far more watches than I sent to them.  I did the right thing and filed a support ticket, but it was closed with a message basically saying that it was too late, tough luck but I would have to keep their money.  Um…, OK, thanks!
  • Later, the opposite happened, and Amazon lost one of the tablets I sent them.  I filed a support ticket and after about a month they gave up the search and paid me the amount I earned on the other tablets sold.  I was pretty happy with that outcome!
  • Most recently, I requested that a returned tablet be sent back to me.  About a month has passed and they have yet to find it.  Maybe they’ll just give me the money again?

In the examples given above, I mostly benefited or came out even from Amazon’s mistakes, but one can’t count on that.  It’s a little scary to trust hundreds or thousands of dollars worth of merchandise to an organization that seems to slip up so easily!

Returns

In the post “Sears 15X: Frequent Miler’s almost final results” a reader named Sun commented:

I think your CPP calculation needs to wait until the return period for Amazon expires. Like Phil says… it is very risky selling commodity products like electronics.

Sun was so right.  Soon after that post, I received notice that two of my tablets had been returned as defective.  I requested that they be shipped back to me (the alternative is that Amazon disposes of them!), but only one of the two has made it back.  The other seems to be lost in the netherworld.  In going through that process, I also discovered that a few of the phantom watches I sold were also returned as defective, so I asked that they be shipped back to me as well.  Of the three watches and one tablet so far returned to me, it is clear that only one package was even opened by the consumers (and that watch works fine).  That means that for the rest, I can still sell them as new.  Or, maybe a give-away contest is in order?…

I believe that people return items as defective as a way of getting all of their money back when they change their minds about a purchase.  Regardless of whether it turns out alright in the end, returns are a huge hassle!  If you go into the buy/sell game be prepared to deal with headaches like these.

What did I miss?

I know some readers have much more experience than I do with buying and selling.  What other “gotchas” do people need to watch out for?


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Comments

  1. Yes indeed a very informative and useful post. I would say it highlights many of the issues and risks you have buying and selling items for profit or miles, not just on Amazon but also on other sites like ebay. One thing is for sure, if you do all this, I think it’s perfectly reasonable to justify your “business” existence for business credit card apps :) You are certainly taking real risk.

  2. Great post FM. You just confirmed my assessment!! I went through the motions of FBA and the conclusion I came to is the same. FBA or EBAY works great if you are able to invest the time and energy. However, if you are pursuing this as a part timer or as a hobby, it is frought with headaches. The alternative of using PJ or CP is better but that is not without risks as some of your readers have alluded to before.

    ms

  3. During the previous Sears 15x, I shipped all my products through USPS Priority Mail. I had an Ebay customer contact me a couple weeks after shipping stating that they did not receive the item. I requested tracking numbers when I shipped the items, but to my surprise USPS doesn’t offer true tracking such as UPS or Fedex. I filed a claim and they looked into it, but couldn’t really offer much help.

    As a result, I will never ship anything with USPS in the future. I continued messaging the customer to follow up and he stopped responding to my inquiries, so I imagine that he eventually received the product…

  4. I’ve been banned from Amazon Marketplace after listing one item (speakers) in my entire life. I tried to dispute it, but they claimed they have indisputable evidence to support their decision. I love Amazon, but there are some major flaws with the company that aren’t obvious to 99% of their customers.

    “Hello from Amazon.

    We are writing to let you know that we have removed your selling privileges.

    We took this action because our records indicate that this account is related to another selling account that was closed by Amazon. Once selling privileges have been removed, sellers are not allowed to establish new accounts.”

    and…

    “Thank you for writing. After a review of your account by an account specialist, we have decided not to reinstate your selling privileges.

    We regret we are unable to provide further information on this situation. Further correspondence regarding the closure of your selling account may not be answered.

    The closure of this account is a permanent action. Any subsequent accounts that are opened will be closed as well.”

  5. Yep, good point. Good thing about eBay though is you can list “no returns” at least so that this can’t happen as easily. Sure they can file a paypal case, but be sure to cash out your money from paypal as soon as it hits so they cannot lock up your $ if someone disputes a perfectly legit resale like you’re doing.

  6. @Erik

    I have had a similar problem twice with half.com (an ebay company) shipments that buyers claims they never received. In my experience, if you have the reciept and tracking number from USPS showing you shipped it from your zip code to the zip of the buyer, that is enough to prevent ebay from returning the money to the buyer.

    Dan

  7. Coming from an experienced ebay and amazon shipper, always buy tracking service (confirmation number from USPS) and upload the tracking number to the site where you sold your item. Half.com and Amazon.com let you print shipping labels through them and have the tracking information automatically posted. Also, if you sell items over $250, USPS recommends that you get Signature Confirmation ($2.10) and I would always recommend buying insurance on anything over $50.

  8. Thank FM!

    With Amazon, you are looking at 6% and higher plus S&H if applicable. With eBay you are looking at 9% plus listing fee. Combine both with the taxes you pay when buying from Sears (average 5%), and nothing looks good. Keep in mind that it might take time to sell the items and you might end up fronting the money.

    My advice, if you do not have a minimum spend to meet, be careful. I cancelled my order of Samsung Tab 2 thanks to the members here.

    Just so that you guys can get a good feel of the demand, post the product on Craigslist and see the kind of offers (if any) you get. I am not suggesting you actually do that but merely a way to test the waters.

    Good luck everyone!

  9. It seems like the only way to come out ahead is if you actually want the products Sears sells and the prices at which they sell them, anything else would most likely result in a loss.

  10. FM, I’m curious about how you’ll handle your tax return after selling many products that amount to relatively big sum for an individual seller. Amazon would probably report these sales once you pass the minimum threshold, which I think it’s 200 transactions and $20,000. I wonder how IRS will think of these whole transactions and I’m curious on how an individual should handle the accounting, since you aren’t really making money directly. You could be even making losses, which of course is completely covered by the points you accrue, but IRS doesn’t know that.

  11. If you purchase and print your Priority Mail shipping labels through eBay for items sold er on eBay you get free tracking. The tracking number loads automatically and your customer gets an email with the tracking number. You and your customer can track where the package is in the system. This also deters people from saying they never got the item and then requesting a refund. eBay is very clear that as a seller it is your responsibility to get the item to the customer. Having a tracking number is your proof. You can also buy tracking for about 85 cents if you ship your package from a USPS location. Another benefit of buying postage through eBay is that the USPS offers a discount.

    One more thing to note is that whether you buy postage through eBay or at the counter, you can purchase insurance in addition to tracking. For up to $100 I believe the amount is $1.85 and goes up a dollar or two for each $100. Again, buying insurance through eBay saves you a half buck or so.

  12. when I retire I may do something like this

    I did tell wife to look at sears.com to see if there is anything we NEED…she is still looking:-)

    Would love to find out about your trip when you get back!

  13. I take a loss and count then as the cost for points. The 10x sears deals is really hot. I only buy items I can fit inside the flat rate boxes.

    I also do this as a hobby.
    And try to keep transactions to anminimum.

    Who knows maybe one day this can turn into
    Something. In the mean time a 300 investment in points a month gets me a dream vacation. I am happy.

    Enjoy your trip FM

    Anyone knows if we can utilize cc to buy car, I’m all ears

  14. @Mark – what items have you successfully been buying and selling and what has been the average cost per point?

    As for your question about cars, most dealerships take CC. My wife paid for her downpayment with a CC and I paid my car in full with a CC. If you do this, however, make sure you’re can pay the balance in full because the interest cost most likely is not worth the points. You can’t, however, use a CC to pay an auto loan.

  15. FM – can you give us an update on how things panned out?
    Also do you take delivery from Sears and then ship on to Amazon or do you drop ship?
    Managed to find an item selling at Sears on special for $200 that is selling on Amazon for at least $243, so I am eyeing an opportunity to try and dump the $1k or so of gift cards I have remaining from the Southwest deal

    • Phil: Due to vacation and whatnot, I had forgotten about this. The second of the two tablets still has not been returned to me! I just sent another request. I was stupidly waiting for the second one before trying to resell the first. I need to get on that…

      With Sears, I take delivery and then send stuff to Amazon.

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