Tips for selling on Amazon

When shopping portals run big promotions, it sometimes pays to buy things just for the shopping portal points.  For example, early last year, the British Airways shopping portal briefly offered 36 points per dollar for first time users shopping at Nordstrom.  I qualified, so I bought over $4000 worth of headphones and GPS watches and I earned over 144,000 points.  The idea was to resell the merchandise in order to get most of my money back.  Whatever money was not recovered would be my cost for “buying” 144,000 points.  As it happened, I ended up making money on that deal, but that was due to a one time fluke (see “How Amazon paid me to collect miles“).

Next to credit card signups, buying and selling merchandise is probably the fastest way to rack up points quickly.  It’s not for everyone though!  It takes a big time commitment. It requires money up front that may not be recovered in time to pay your bills. It is risky in that whatever you buy may not sell well or may depreciate before you sell it.  And, it is stressful.  While you wait for items to sell and when you realize that your costs are higher than expected, your stress levels will rise.  And, things can go wrong.  To see some examples, please see this post that I wrote last August: “Frustration by Amazon.”

If you still want to buy and sell things despite the paragraph above, then one great option to consider is called Fulfillment by Amazon (FBA).  With this service, you send merchandise to Amazon so that they can sell it on your behalf.  You control the prices, but they handle all customer interactions, packaging and shipping, etc.  In return, they charge seller fees and handling fees.  The best thing about this service is that it requires far less work than selling each item individually on your own.  The second best thing about this service is that items tend to sell quickly since they qualify for Amazon free shipping.  This includes both Amazon’s policy of offering free shipping for orders over $25, and free two-day shipping for Amazon Prime members.

Fulfillment by Amazon Basics

  • Sign up for FBA here.
  • The first time you sell a particular product through FBA, you need to add it to your inventory.  Click “Inventory… Add a Product”.  Fill out the required fields.
  • When you’re ready to send items to Amazon, you need to create an FBA shipment (Go to “Manage FBA Inventory” then click “Send/Replenish Inventory”).  A wizard like UI makes this easy.  Make sure to print out a packing slip for each box and include it at the top, inside, before sealing the box.

Understanding Fees

There are quite a few different fees that you may be subject to as a seller.  The most important thing to understand is that there are fees for selling on Amazon regardless of whether you use their FBA service.  These include Amazon referral fees and Variable closing fees.  Details about these fees can be found here.  Referral fees range from 6% of the sale price (for personal computers) to 25% for Kindle accessories.  The fee for most electronics-related categories is 8% and the majority of other categories is 15%.  Variable closing fees vary by item type, but are generally around $1 per item.  You will also have a fixed closing fee of 99 cents per item unless you sign up to become a Pro Merchant.

In addition to the referral fees and closing fees, you will encounter FBA fees.  These include Order Handling fees, Pick & Pack per unit fees, Weight Handling fees, and Oversize Item fees.  There are two good ways to figure out what these fees will be.  One option is to use the FBA Revenue Calculator.  Another option is to add the item to your FBA inventory, then go to the “Manage FBA Inventory” page and look at the “Fee Preview” that shows up next to each item.  Click on the fee shown to see fee details.

Tips for Saving Money

  • Sell items with the lowest referral fees.  Computers are 6%.  Cameras, electronics, video game consoles, and unlocked cell phones are 8%.  Other categories are more expensive.
  • Amazon charges a fixed closing fee of 99 cents for each item sold unless you become a Pro Merchant for $39.99 per month.  If you plan to sell 40 or more items in a month, sign up to be a Pro Merchant.  You can downgrade to the free service at any time. 
  • Amazon charges some FBA fees per item (for most items), so you can reduce fees as a percentage of total by selling higher priced items. 
  • Amazon charges modest FBA fees for storage and weight handling (for most items).  Sell items that are small and light to reduce these fees.
  • Take advantage of Amazon’s Zero Fee Fulfillment.  Amazon says “Standard-Size units that sell for $300 or more on Amazon.com are eligible for Zero Fee Fulfillment. You pay nothing for Order Fulfillment fees, which include Order Handling, Pick & Pack, and Weight Handling. Other fees such as Inventory Storage, optional services, and Selling on Amazon fees still apply.
  • When sending items to Amazon for fulfillment, select the “Amazon-Partnered Carrier (UPS)” option for deeply discounted shipping.

 

Tips for Selling Effectively

  • Sell items that are high on Amazon’s Best Seller lists.  When browsing Amazon.com within a department (“Camera, Photo & Video”, for example), you’ll see a small “Best Sellers” link.  By clicking that link, you’ll see the top selling items in that category.
  • Sell items with good reviews.
  • Before buying items, make sure that Amazon lets you list the item as “New”.  Some brands do not allow this.  I’d recommend not even bothering with a product if you can’t sell it as new (assuming it is new).  Even before you have the item, you can add it to your inventory awaiting shipment to Amazon.  By doing so, you will be led to the page where you are asked to select the item’s condition.  If “new” is not in the dropdown box, then abort.
  • Price competitively, but not too competitively.  If you’re selling a very popular item, you can simply match the best price that qualifies for Amazon free shipping.  If you need your product to sell better, undercut that best price by a penny or a dollar or so.  Don’t undercut too much because you’ll risk entering a price war with other sellers.

 

Miscellaneous Other Tips

  • Buy items in manageable sets.  For example, lets say you want to buy and sell 50 tablet computers and you’d guess that 5 can fit in a reasonably sized shipping box.  Consider making 10 separate orders of 5 each so that the packages will arrive in boxes you can reuse.  When they arrive, simply fill out the Amazon shipment order and slap the appropriate packing slip inside each box, and then tape the FBA label and shipping label to the outside.
  • Watch out for returns. People will return things as “damaged” even if there is nothing wrong with them just so that they can do the return for free.  Your only option at that point is to request the item to be returned to you.  Then, if its in good condition, you can re-sell it.  In my experience, cheap stuff (toys, etc.) are less likely to be returned than more expensive stuff (tablets, GPS devices, etc.)

 

Reader Input

Do you have your own tips for selling on Amazon?  Please comment below!


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Comments

  1. Great post, thanks for the info! Are you required to remit taxes for items that you sell via FBA? I imagine that could potentially get complicated.

    • Treane: If Amazon sends a 1099, then I will have to file taxes, but since I mostly lose a bit of money and/or break even it shouldn’t cause me to pay any more taxes.
      Corky: I think that the official rule is 200 items AND >$20K, but businesses can choose to send 1099’s even if those thresholds aren’t met. I’m not sure what Amazon’s own rules are.
      Anita: Yes, just select “case packed” items (or something like that) in order to send all of the items together. Also, even if Amazon splits your request into multiple shipments, you can change the numbers in each individual shipment (set some to zero items, for example).

  2. Greg,

    Every time I’ve shipped an item to FBA, I’m required to split my items among various fulfillment centers. Even if I only ship them 3 of a SKU, it gets sent to two or even three centers. This greatly increases my shipping costs.

    You mention just shipping your items to FBA in the original shipping package.
    Have you found some way to avoid shipping to multiple locations?

    Anita

  3. I just started selling GPS units that I’ve been finding at really good prices. Unfortunately, the site I buy them through isn’t available in any rewards mall. But I have been using it to hit the spend on a couple cards, and the site does give 10% back as credit on their site, so I can always get a nice discount on my next purchase.

  4. Can you see the section where it requires you to list condition before you list the product? That way I can have them in my head before I buy them. I would hate to buy something and then find out I can not list it as new. I did just buy a bunch of watches for real cheap. I asked how to get approval to sell them and they directed me to a form to fill out. It took a couple of days after filling it out but I did get approval.

    • Dave: Yes, you should always see if your item can be listed as New before you buy the item.
      MA: No, you have to have the items shipped to you first so that you can add Amazon FBA tracking information
      Dan: Interesting! Yes, if I’m just selling a couple of items I’m more likely to use EBay mainly so that I can mark it as “no returns”. If I’m selling more items the convenience of FBA is fantastic.

  5. Can you ship products directly from the online stores to FBA?

    In Europe, we have something called Stickerless, Commingled Inventory, which it seems to help with that.

  6. Amazon is much easier but for expensive stuff I much prefer ebay due to their customer service. I have had some issues with both amazon and ebay buyers but ebay’s customer serivce is better. On Ebay, I sold a watch to a new customer with no feedback rating. He turned out to be someone who didn’t speak much English or understand how ebay works. After one week he wanted to return the watch since “he didnt want it anymore.” I spoke to someone at ebay who recognized my long selling history and stellar feedback rating and said he would speak to the buyer. The associate actually got a Hindi speaker to contact the buyer and tell him how ebay works. Was blown away by the customer service I received. They also told the buyer he could not return the watch.

  7. If you choose to FBA things like tablet, the return rate sometimes rack up to more than 10 percent thus offset all the points earned.

  8. I know you are selling some items that you purchased from Kohl’s. On your spreadsheet when you bought the $1,000 in Kohl’s e-cards by going through TopCash back and purchasing them from Staples.com, you listed your points as 1,000. If you used your Chase Ink card, wouldn’t that net you 5,000 Ultimate Rewards points? I’m thinking of trying this for my first time (but at a much lower level).

  9. Ray: That is possible. I haven’t had that bad of a return rate myself though.

    Johnnycomeslate: Percentages are all over the board from 6 or 7% to 25% or so.

    Nikki O: You’re right that I should get 5X for buying e-cards. Did I input the spreadsheet incorrectly? Which line are you looking at?

  10. Your description of the Amazon process reinforces my belief that it would be INSANE to sell things on Amazon “for the miles.” :)

    I have done a little selling on ebay of merchandise that I have essentially gotten for free and — even with my cost of goods near zero — I have found it to be non-worthwhile. Basically, too much work for too little reward. The high cost to individuals for shipping inexpensive goods is one of the biggest problems with online selling. Add in all the fees, and it’s a very tough way to make a buck.

  11. If you are going to go through this much effort to resell merchandise, you might as well get a resale license and buy this merchandise at wholesale. Sure you have to report it on your taxes, but think of all the tax breaks and perks as well. Most suppliers will accept credit cards, so you can earn miles buying products wholesale. Now when you resell on Amazon or eBay, you can actually make a profit to compensate you for the time spent listing and shipping the item.

  12. Do not buy watches and hope to sell them FBA. I bought ten G-Shock watches (from Kohls for the points, with the intention of reselling)… only to find out watches are a special item and you have to have approval from Amazon (which I tried to get, and was denied). I sold them on Ebay instead.

    • @David I was surprised but I did get approval for watches. I sent them a message asking them how to apply because the request form wanted a website and I do not have one. They wrote back and said they wanted to see the pics I was going to post. So I put them on Photobucket and filled out the request form and they approved it!

  13. Fm I see some items such as cosmetics bags normally $50 for $15 on the vendors site. Whe.n I check amazon 5 sellers have it listed for $25. With a points multiplier via ur mall is this something worth experimenting with or would shipping and other fees cancel out any benefit on selling these small items?

    • BonnieB: I’ve done it both ways. Its very easy to label items yourself, but its also pretty cheap to let Amazon do so. If the item is pretty expensive, then I usually let Amazon do it since the cost of the label is insignificant compared to the selling price of the item.

  14. I started selling alittle on amazon recently. Closeouts, flash-sales, and the like. But I get eaten-up alot by the %7 sales-tax that I pay. Technically, resellers don’t pay tax, so I was considering getting a reseller license. But that only works when buying from a whole-seller. Is there any way to get refunded sales-tax for items purchased at regular retailers like staples or bestbuy?

  15. If you have a reseller license, then yes, you can be refunded the sales tax from stores like staples and bestbuy. The process varies by state and retailer. In Texas, there is a standard form that I fill out with my tax # and order info and simply email it to Staples and they refund the Sales tax.

    One thing to note: going this route requires you to collect sales tax from buyers in your state at a minimum. Using FBA, can create a sales tax nexus for you in each state where amazon has an FBA warehouse and stores your items.

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