It’s time for another post by a guest blogger, Frank Giovinazzi.  This is post 3 of 4 for Frank.  If you’re interested in writing for SYBO drop me an email or hit up the contact form and let me know.  I pay $10 post for at least 500 words of well thought out, educational yet entertaining posts about selling online.

- Adam

My car was up on the lift, ostensibly for an oil change. I was relaxing in the shitty, dirty, old school repair shop waiting area.  I couldn’t complain though because the place had always been cheaper than Jiffy-Lube-You-Right-Up-The-Ass and they were usually fast. But the regular manager wasn’t on duty, and the older guy behind the counter was probably the owner. When I finally realized it was taking longer than usual, I also realized the guy’s behavior was off. It was probably just a standard issue Red Bull overdose, but could just as easily have been some kind of speed. There was the added component of the nervousness born of larceny.

On alert I was up and in the no customers allowed waiting area in a flash. Why were my front tires off the fucking car? He said, “Your inspection was overdue and one of the front struts was broken. It’ll only be another half hour.” “How much?, I said” “With the oil change and inspection, $400, he told me” “Too much. Finish the oil change and put my tires back on the fucking car.” I knew the struts were also off and figured to use the hassle to negotiate a lower price. Now I was realizing he had already had a couple heated exchanges with some other customers and goddamn, if this guy wasn’t trying to pay his fucking mortgage by stuffing unneeded repairs on his customers. We went back and forth. I accused him of lying about the broken strut. He was getting more agitated, and a couple more customers were starting to argue with him too. If I had to incite an insurrection to get the price down, so be it.

He showed me the leaking fluid from the strut. It was probably actually broken, and I could remember that the car was riding soft up front so I acquiesced. I got the total price down to $325, after the supply store sent the wrong struts the first time and the job took almost four hours. The laid back younger manager had come back, and he had the “I have a shitty job working for an asshole and I’m sorry” look on his face, and I let it go. The new struts turned out to be necessary. The problem was the guy tried to stuff me without explaining the need, and also tried to overcharge me.

But his assholishness didn’t change the fact that driving all over the place hauling books in a sedan had broken the equipment. A couple months later I incurred a physical injury that was much more painful. I bent down to pick up a pair of stacked boxes and heard the rip. It went down from the top of my shoulder to about the middle of my back. I never had it formally diagnosed, but from reading about the effects – and the pain – and talking to other people who had the same injury, I believe it was a torn rotator cuff.

The pain actually wasn’t too bad for a couple weeks but then it got unbearable. I couldn’t lift my right arm over my shoulder, occasionally walked like Marty Feldman in Young Frankenstein and was terrified it was never going to heal.

It lasted over six months. Half a year of being unable to lift my arm, even in the shower to wash properly [I raised it and laid it against the tile with my left hand like a cripple to get underarm clean], was an unsettling experience.

Is this what my little subsistence job was doing for me? Enough money for inventory, gas, food and a lifetime disability? I had damaged my car, and now my self, and throw in the four foot of snow shitty winter and Seasonal Affective Disorder, and I was not a happy camper. But it was what I had, and I compensated by shifting to smaller, lighter boxes [from 65 pounders to 35] and just kept going. After about four months my shoulder started getting better, and it got back to maybe 80%. A little sigh of existential relief and less smelly armpits.

Eventually it healed. I can lift my arm over my head. I can lift 70 pound boxes – though if I do it a couple days in a row the right shoulder is sore. The struts in the car are holding up, and I switched service providers to the local Lincoln-Mercury dealer where I bought car. They’re more expensive, but they do a good job and there’s no bait and switch.

Any job or business has inherent physical challenges. Think about how many people are trying to scam a workman’s compensation claim on repetitive stroke injury – “I hurt myself typing!” Because the book business entails dealing with a large volume of heavy boxes the potential injuries to body and equipment are pretty obvious. They happened to me. I’m more careful now handling equipment and loading vehicles, and generally pause when lifting a lot of boxes. It’s just another cost.

Adam’s note:  Wow, it must suck being old, huh, Frank?

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Fulfillment by Amazon is one of the most popular services for the small-time bookseller.  It seems that it has gotten so much attention both from Amazon’s marketing team as well as from guys like Chris Green at FBAblog, Nathan Holmquist at SellFBA.com and countless other people.  I’m included in this list ever since I started writing about my first experiences with FBA way back in October of 2009. My first FBA post got over 36 comments which is huge for this blog.

I’ve raved about the service many times but I’ve never actually written an informative post about the downsides to FBA.  You can’t have your cake and eat it too, right?  In my opinion, there is little information out there about the downsides to using FBA.  For the novice to the service it’s wise to always take the good with the bad before jumping in.  To start off with, I found a blog a few months ago that is solely dedicated on telling you how much FBA sucks.  Coincidentally it’s called Problems with FBA.  It’s not updated that often but there are a few posts that make valid points against Amazon’s service.

Here is a list of my reasons why you may not want to use Amazon’s FBA service.  Take them as you will and weigh how important these issues will be to your business.  Choose accordingly.

1. Higher fees than listing yourself

FBA includes 3 additional fees than if you were fulfilling orders yourself.  These are called the Pick & Pack, Weight Handling and Storage fees.  When selling an item via FBA be prepared to tack on an additional flat fee of 50 cents plus 40 cents/lb and 45 cents/month per cubic feet of space your stuff takes up.  For comparison let’s say you sell a 1 pound book for a dollar.  If you were to fulfill this yourself your Amazon fees would be ($1 * .15) + $1.35 which would leave you with $-1.20.  Add on the $3.99 standard shipping credit they’ll give you and you’ve got $2.79.  You’ve also got postage (~$2.38) plus shipping supplies (~$0.25) costs and you’ve made 16 cents.  However, let’s say this book was FBA and it’s been in their warehouse for 6 months.  If this book sells via FBA you’ve got your $1 sale price – Commission ($1 * .15) – VCF ($1.35) – Weight handling ($0.40) -  Pick/Pack ($0.50) – Storage (~$0.10) which ends up giving you a net LOSS at a buck ten cents.  Now there is the typical add $3.99 to that which makes up for this lost but this is just an example.

2. Considerably less control

I have no problem with this because once the books are off I could care less as long as they sell.  However some book sellers want ultimate control over their inventory.  Be prepared to relinquish all control to Amazon once they’re out of your hands.  Amazon has full reign to give refunds to customers as they please and deal with customers how they please.  You’re feedback is also subject to Amazon’s performance.  They’re pretty good about sending out your orders in a timely fashion and if you do get a feedback that’s Amazon fault they’re supposed to remove it.  However, you are still relinquishing control of your feedback to Amazon.

3. Risk of paying money for books that DON’T sell

The storage fees for your inventory is minimal but it’s still there.  If you’re selling books out of your home then you have no risk of listing 10,000 books if they don’t sell.  On the contrary if you’ve got 10,000 books in Amazon’s warehouse a monthly storage fee of $300-$40 wouldn’t be out of the question.  Only send high demand books to Amazon to prevent them sticking around too long.

4. $3,438 for changing your mind against FBA

I currently have 5,730 books with the FBA service right now.  Let’s say I had a situation to where I wanted to close down my business for good and stop paying the monthly storage fee for all my books.  Since I have so many books in their warehouses it’s gonna cost me over $3,000 for them to ship them all back to me.  This is because Amazon charges you the same cost that it would cost them to pick and pack the book to a customer of another sales channel like eBay.  This is called the multi-channel fulfillment rate.  Currently, it’s 60 cents per item.  As of this writing, Amazon is still waiving the Lose Weight Exercise-handling fee.  However, due to the increase in usage of the FBA program Amazon has been known to significantly decrease the price of removal to clear up space.  I’ve gotten at least 3 emails so far from them notifying of a decreased price of removal if I decide to do so.

Keep the removal cost in mind once you start sending thousands of books their way because it’s not  free ride back.

5. Waiting to see your current inventory

This is one I just came up with while writing this post. I was trying to get my current inventory numbers and was victim to the message “Your data is more than 24 hours old, please wait a minute and refresh again”.  Typically, it takes longer than a minute but not too much longer. It’s a very minor annoyance to me because it always does show back up but if you’re in a hurry then be prepared to wait a few minutes to see your FBA inventory.

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Guest post by: James Cecil

A couple of days ago I was presented with a problem by one of my customers from my Amazon store ReadItAgain books. The problem was that the shipment of a VHS cassette tape was not the right one that was sent to them. My first thoughts of were of gloom and despair that hit me as I had just walked into the door of my office. I was upset more at myself since I was the one who picked up the VHS cassette with the dust cover that clearly indicated the correct title that the customer ordered which was “The Land Before Time”. I did not even check to make certain that it was the right VHS Cassette tape in the VHS dust cover before I put into the box and got the box ready to ship out the next morning.

How did I find out that I made this error? By selling on Amazon.com I have my Amazon Seller account set up to automatically send me an e-mail copy of my customers concerns and request. That way I will not have to log into Amazon Seller Central and have to retrieve them. The customer that contacted me about this error on my part let me know that her 3-year grandson was disappointed that he did not get the “The Land Before Time” VHS and asked me if I still had that title. While I was still in my gloom and despair mood plus worry about the negative customer rating I would be getting I took a deep breath, exhaled and then went upstairs to a bedroom that has been turned into a storage room. I quickly found the “The Land Before Time” VHS cassette and made absolutely certain I indeed had the right VHS this time around and headed back to my office where I got onto my laptop and logged into my Amazon Seller account.  I immediately sent off an e-mail to my customer apologizing for the error that I made and informed her that I will shipping the correct VHS cassette tape out to her with an extra bonus in it. Four dinosaurs puppets from the “The Land Before Time” movie for her three-year old grandson to enjoy playing with while he watches the “The Land Before Time” VHS tape. I also told my customer that she would not have to pay for shipping and that I was enclosing a self address stamped envelope for the return of the incorrectly shipped VHS tape.

So what have I learned from this? To check and make sure that I have the correct title that the customer has ordered before fulfilling a customers order. You’ll find out like I did that you made a mistake and learn from that mistake. Just remember that it’s not an end of the world moment. You’re only human and you will make many more mistakes as you continue on with your enterprise. By me acknowledging the error to my customer and promptly taking care of the issue I have at least gone above and beyond this customer’s expectation and have given them a satisfying and rewarding experience.

All I can say is to admit to your customers that you made a mistake and show them that you willing to work towards an amicable solution, stay in contact and treat them like you would treat yourself. Sometimes you’ll come up with a simple solution to the problem of which your customer will think you’ve gone over to the top for them and leaves them completely satisfied.

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I remember reading somewhere that the Internet has been called a “Rage Machine” for the way it whips people into a frenzy over news events, and also for the manner in which it induces paranoia, depression and a pic-a-pack of mental disorders.  I don’t think anyone who uses electronic communication is immune to it.  There is corresponding research being done at the moment attempting to chart how the news medium is actually rewiring the wet stuff between our ears to make us literally and physically different than the grandparents who helped bring us onto this sphere.  I’m of course not immune to this which is why I don’t leave comments on new stories and blogs anymore. Always a bad idea.

But because of the way the Amazon system grades resellers such as myself, I am at the mercy of often anonymous folks who leave feedback on the product and service performance I provide.  As of this writing I have sold 13,649 items and received 1,834 feedback ratings. This is about a 13.4% response ratio, which is within the average range. I have a 98% overall positive rating, with 100% positive in the last 30 and 90 day periods.  I am happy with this – it appears to be a little above average for medium sellers and markedly better than large scale shops who often have positives as low as 93%, due to volume and actually, because many of the larger shops pound crap through the tube and don’t have the capacity to respond to buyer concerns. But that’s another post.

You can’t please everyone, for sure, and I have misgraded books, and sometimes flat-out missed a particular of damage because I rushed through the processing. I have made mistakes and earned a couple of those negative feedbacks but there have been a handful – maybe 20 or 30 people – who have left such unbalanced feedbacks that  the wisest thing to do is not respond to them. Just like a bar can’t keep a drunk from walking through the door,  Amazon is all-access and psychotics are people, too! So they can buy stuff and leave feedback with their little tinfoil hats firmly affixed to their unwashed heads. Because shampoo is known to be manufactured with reagents that shrivel your kidneys to make you dependent on government-run dialysis machines, don’t you know.

They often just have unrealistic expectations for a book they buy for a penny and get delivered to their front door for less than four bucks. Or, after spending hundreds of hours being exposed to tales of every shade of nefarious human activity, they impute evil onto your character.

Like the guy who was convinced I was a large scale DVD bootlegger, who should be “BANNED FROM AMAZON,” and that “NO ONE SHOULD DO BUSINESS WITH THIS SELLER.”  It is possible he might have actually gotten a bootleg – I bought over 2,000 CDs and DVDs from one guy, and actually found several bootlegs myself, and discarded them. One or two may have gotten through, even though I did my best. I tried to reason with the guy, but he was convinced I was EVIL.

Then there was the guy who bought an ex-library copy from me, and wrote that I was stealing books from libraries to sell on Amazon, and, “WHY DOES AMAZON ALLOW THIS?”  Now this is serious, because there have been several publicized cases of people stealing books from libraries and selling them on Amazon. Fortunately the way the guy wrote his feedback it was clear he was unaware of the practice of libraries discarding and selling off books and Amazon actually removed the feedback.

Then there was a guy who complained that a book “LOOKED LIKE IT HAD BEEN SITTING ON A SHELF FOR DECADES.” In fact, it was a 50-year-old book, so WTF? He also complained about the quality, given “THE PRICE I PAID.” In fact, he paid about eighty cents for the book, plus shipping. Fortunately, that was a case where he agreed to remove the feedback.

I’ve run into situations where the negs are crazy, or looking to scam a refund and get to keep the item, or just plain D-U-M, dumb, but I’ve gotten to the point where I expect to receive a looney-tunes feedback as matter of doing the business. There are times when I would like access to Amazon’s ginormous database to see exactly what percentage the number of psychos is, but for my small sample it factors out to about one-fifth of one percent.

Next!

This has been post #2 in a series of 4 posts by Frank Giovinazzi set to debut in the coming weeks.  I hope you all like Frank’s zany yet useful posts because I sure do.

- Adam

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Some years ago I visited a friend of my Dad’s at his office. It was sterile – there were no pictures, very few papers on the desk, little in the way of files or anything else that looked like normal business activity. It looked like one of those rent-a-suites that has no life in it.  Since he was a long-time family friend, I was like, “Hey Arby, what’s with the office?”  “Wal-Mart’s over 80% of our business now. When they pull the plug we’re wrapping it up.”

Now this was a company that had been in business for about 50 years. To give you an idea of the longevity of the company and Arby’s position, it was my father who actually got him the job – in 1962.  Dad was actually working for the boss, Irv, at the time, but had decided to join the Army. Since he didn’t want to leave the guy flat, he decided to provide Arby in his stead. The story goes that Dad told Irv, like, the day before he was leaving. So it’s a funny anecdote, and Arby worked there in some capacity for close to 40 years. He eventually came to run the place, and I believe, had an ownership stake.  He was now sitting around just waiting for one customer to pull the plug.

You may have heard of the ways Wal-Mart puts suppliers out of business. First, they become their majority customer, forcing them into a vassal state. Then they either ask for unmeetable prices, or tell them they can’t pay on time, or cancel an order. And the company is done.  Arby’s company went out of business in that manner, but they had a long and lucrative ride.

In the book business, I consider a Wal-Mart problem to be when you have one supplier that is responsible for 80% of your inventory. If that supplier closes down, or raises the price or refuses to sell to you, you’re done. If you don’t have enough runway to last long enough before you can line up another supplier, let me repeat, you’re done.  It’s basically a vigilance issue. If you have a Wal-Mart problem, you have to take the extra time necessary to find new suppliers, new sources of inventory, and keep them alive, even as you are enjoying the fruits of your major supplier. If you even think you might have a Wal-Mart problem, you have a Wal-Mart problem and have to find new sources of inventory.

Besides being just good business sense, protecting your flank, there are at least two other benefits I can think of to constantly looking for new suppliers:

• First, any thing you can do to get out of your comfort zone, meet new people and come to understand the used-goods ecosystem, the better. Meeting new people and going into new situations is often uncomfortable, but people are the bridge to learning new things. And the more you know, the more money you can make.
• Second, when someone or some business is responsible for 80% of your business, they instinctively know they have you by the balls. They don’t need to have them in a jar behind their desk. By creating multiple sources of inventory you are sending an equally concrete message – I appreciate your business, but you don’t own me.

Guest post by: Frank Giovinazzi

Adam’s note:  This post by Frank backs up one of the biggest pieces of advice that I preach about.  If you want to make $100/month then head over to the thrift stores once a week and make a few bucks on each book you buy.  If you want to make $10,000/month or more  you have to forget talking to the clerk at the check-out counter and set your sights higher in the office.  Be sure to sign up for my email list at the sidebar on the left to get immediate notification of my near-completed inventory sourcing eBook.  It finally reveals every source I’ve ever used and gives you many ideas for unconventional sources for you to use also.

The Wal-Mart Problem: 1 Source, 1 Death [ 4:48 ] Play Now | Play in Popup | Download (48)