Q: When does FBA not make sense?
A: Everyone loves FBA! It makes selling on Amazon easy! But, it isn’t always the best choice.
In our last Q&A, I mentioned that orders for fragile, high value items, like rare books, might be better to fulfill yourself. That’s because you may not want to trust Amazon to do a great job packing these expensive and breakable items.
Some sellers who specialize in toys have stopped selling some LEGO sets through FBA. Unfortunately this is because some unscrupulous buyers will purchase full sets, remove the valuable mini-figs (jargon for LEGO men) and then return the sets for a refund. Amazon has a poor track record in these situations, allowing returns for items that aren’t complete and often failing to do their best to protect sellers. If you fulfill items yourself, you’ll have more control over your return policy and will be able to better inspect returned items yourself.
And under no circumstances should any seller take part in Amazon’s FBA stickerless commingled inventory program. The risks are just too high. It really can cost you your entire business.
Note: Read Amazon’s documentation to learn more about stickerless, commingled inventory.
Overall, my advice would be to use FBA for most items. It’s very safe and a great way to reach those valuable Prime customers. But, in situations where you expose yourself to significant risk, consider selling MFN.
But beyond that, compare fulfillment costs. Use the FBA Revenue calculator to compare the fees and costs associated with shipping an item yourself versus FBA.
Q: What are the best places to scout?
A: Without knowing where you’re located and what stores you have available to you, I can’t be too specific. But I’ll do my best to give you some guidelines of places to start.
- Thrift Shops – Goodwill is especially popular, but now that Goodwill is selling online, the pickings can be slim in some parts of the company. Smaller, local thrift stores can be better options.
- Big Box Stores – If you have a lot of Target and Walmart locations nearby you might be in luck! The clearance sales at these stores can be very profitable.
- Discount Stores – TJ Maxx, Marshall’s, Big Lots and other stores can have very low prices. Stock varies widely from store-to-store, so they can be very hit or miss.
- Library and Book Sales – These can be a real madhouse with lots of people looking for inventory or just buying for their own personal collections. But they’re popular for a reason and can have great deals. Be mindful of condition, however. Amazon’s guidelines state that no former library books can be sold as collectible.
- Farmers’ Markets and Craft Shows – If you’re ready to start buying UPCs and creating product bundles, farmers’ markets, craft shows and other places where you can connect with artists and creators can be great sourcing opportunities. Look for popular locally made items. Search out niche items that aren’t available anywhere else. Negotiate and make deals to be an exclusive Amazon supplier.
More important, however, is to explore your area and find what’s available to you. If you live 100 miles away from the nearest Walmart, then you probably won’t be doing most of your scouting there. Don’t waste time grumbling about what isn’t in your area.
Instead focus on what you do have nearby. Look for the opportunities in your area! They’re there, you just have to find them!
Q: What is the best method to raise a price that is “floored?”
A: For those reading this who don’t understand the question, let me start by explaining it. A “floored” price is one where increased competition has resulted in a price that has gotten lower and lower, until for whatever reason, it isn’t going any lower.
So, how do you break out of that situation?
First, you should be ready to accept that it might not be possible. You need to be ready to sell your remaining stock at a low price, hoping to just break even.
If you’re not willing to do that, you should actually raise your price. Hopefully your competitors will either follow your lead or will sell out, leaving you to sell at a better price.
Q: What is the future of FBA? Will it burn out like media?
A: I love this question! I spent a lot of time thinking about it and it is just too big to answer here. Look for the answer on the blog next week.