When I started selling books on Amazon, about 3 ½ year ago, my life was a lot slower than it is now. Yes, I was married, had a house and a full-time job but my job was a lot different than it is now and it didn’t keep me as busy. The most important and biggest difference between now and almost four years ago is my beautiful daughter. Things in life just seem to take over and get busier and more complicated as each day passes and this is the main reason I decided to hire an employee. About a year and a half ago a lot of things came together at the same time to make this happen. I’d like to share with you briefly as to how I finally made the decision to hire my first employee.

About a year and a half ago my mother got laid off during this wonderful economy we are in right now. As luck would have it, her husband, my step father still had a good paying job and they were able to get by just fine without my mother’s income. Previously, she had expressed some interest in helping me out with the books and since I was always trying to find time to do everything myself I thought it was a great time to bring my first employee on board, my mom. The one reason I was able to afford this was because I had built up my business to where I had plenty of sources lined up and I was making enough money to pay an employee. At first it was a little difficult for me to let go of certain aspects of the business as I was used to doing everything on my own and my own way. After training my mother on how to do the tasks, I began transitioning more away from the day-to-day activities and was able to concentrate more on my full-time job, my family and taking more of an ownership role.

As time went on my mother began to feel overwhelmed due to all the tasks she had on her plate; from picking up the books, scanning, creating FBA orders, listing, fulfilling orders and customer service, it was just too much for one person to do by herself. While she was doing everything just as I taught her, she didn’t have the experience I had. We began looking at the possibility of hiring a part-time employee to help out with scanning. I hired a good person and things went really well. Now I have two employees working for me.

So, the question I want to help you answer is how do you know when to hire your first employee?

There are three very important guidelines you should consider:

1. Make sure you have a consistent recurring amount of income that can warrant an employee. You may have more things to do than you have time to do them but if you’re not generating the income to support an employee then there is no way you can hire someone. So, first be sure to have a consistent and reliable amount of income. Be sure to have regular sources lined up and make sure you are going to be able to generate a consistent amount of income to hire that employee.
   
   
2. Decide what pieces of your business you want to hand off to someone else. For me, as I mentioned, I didn’t want to do the day-to-day scanning anymore. I wanted to be dealing more with the executive decisions. If you have read my blog for a while, you will know that I buy books in bulks and not singles. The process is to find the books, a couple thousand books at a time from big dealers, bring them in and just start scanning them and see what we have. Frankly, it bored me to scan book after book, look at prices and throw them in the pile they needed to go to. I would rather give that task to someone else and it really didn’t require a lot of training. Once I had someone reliable (and who could be more reliable than my mom!), it didn’t take long to do the training. Once trained to do the scanning, hook up the laptop and know what to do and when to do it, it was smooth sailing from there on out. Now it was just a matter of me transitioning off that responsibility and I could focus my time on lining up more sources.
   
   
3. Figure out if you value your time more than money. The reason I say this is because labor is by far the biggest expense I have in my book business. I spend around two to three hours a week maximum working on my book business. This process came about slowly and gradually while training my mom and the other employee on how to run nearly all aspects of the business. At this point, I simply act as a consultant and steer the business in the right direction from an owners’ perspective. The time that has been given back to me by hiring employees has been wonderful. Prior to bringing them on board, I would spend close to 20-30 hours away from wife and daughter as my office is away from my home; my family time was definitely neglected. I also didn’t have time to do anything for myself.

Being able to hire an employee has also given me the opportunity to not only grow a successful business, but to also look into other ventures, such as, eBizControl and my new inventory receiving project yet to be named that I will have more information about later. I am beginning to transition and merge my technology background with my Amazon seller background. I will soon be offering some services that I have been wanting ever since I became a seller and it will benefit other book sellers. I can’t wait!

In conclusion, hiring employees is what has made my book business so successful today. I believe my book business would have been closed down a long time ago without them. Just like with most things in life, when you get bored with something, you end up becoming uninterested in doing the routine tasks and move on to something else. There were some aspects of my business that I simply grew tired of; like I said, with the scanning and picking up the books. If you don’t enjoy what you’re doing you may as well not be doing it. Instead of simply throwing my arms up, saying I quit, this sucks, I found someone who would like to do those tasks. My mother loves scanning books and she enjoys trying to find treasures, as she calls them. So it was a win/win situation for both of us; my mom is able to find the “treasures”, make some money and I was able to progress onto other ventures and leave the things behind that I would rather not do.

Do you currently have employees?  Are you thinking about hiring one?  Let us know in the comments!

That was the response I got from my mother when I told her that the hundreds of books that we had got from a new source ended up being review copies that were unsellable on Amazon.

To give a brief history,  we recently acquired a new source of books that we had never gotten from before. This was a new source so we didn’t really know what to expect.  When we got to the place, we picked up a massive amount of books which looked promising. They looked new–brand new–which was rare for what we usually get. In short, we were pretty excited about it.

We went back and started going through them, and it turns out that there tons of different copies of the books that were looked brand new!  This was rare for us because typically, the books that we buy in bulk are older books, rare (not the super-valuable kind), ex-library books that we typically get for close to nothing.  At first we were a little skeptical, but after looking them up and scanning them with the barcode scanner with the receiving script I created, we found out  that they were actually very valuable and had a low sales rank.  W00t!

However, this is when the point of the title comes into play.  Not long after we got all excited we started seeing signs of review copies.  Page counts were wrong on some books, some had paper inserts on how to order more copies and a few had notes etched in them to change certain pieces.  There were tell-tale signs of review copies.

If you’re not familiar with a review copy, a review copy is typically a draft of a book that the author makes and sends to the publisher. The publisher prints out a few copies, sends it back to the author, then the author approves  the changes. The author signs off on it and sends it back to the publisher, and the publisher prints the final copy.

Needless to say, selling review copies of books on Amazon is strictly prohibited.  After some further investigation by matching up Amazon’s detail page and searching WorldCat for another authoritative source, we found the huge majority were, in fact, review copies.

There are a few things that you can take away from this experience that I had.

1. Know Amazon’s rules; know what they expect and disallow. Amazon does not allow any review copies to be sold on their site. They explicitly say this in their Terms of Service. If found to be selling review copies, you may have your seller account discontinued.
2. Learn how to distinguish a review copy from a final copy.  Review copies may have notes in them for the author saying “to add this, remove this, change this,etc” with notes on the margins.  Also, they may not have barcode on the back where the ISBN usually is.
3. Look for inserts  from the publisher that may not look like they’re part of the book. Inserts can be anything, such as where to order more copies of the book, who to contact when submitting revisions, etc.  In this instance, I had purchased tons of educational books for students.  These books, although were clearly student textbooks, had an insert in it to order copies of other related textbooks.  This seemed a little off to me that this material would be for the student. These materials were clearly meant for the authors themselves
4. Finally, if you’re not sure, always check the publisher’s website to verify details (if possible) or WorldCat.  Sometimes, the product detail page you’re looking at may not have the correct details.  This can be for different reasons but the first that pops into my head is the page may have been created from another seller and not Amazon.  Because of this possibility, always consult an authoritative source if you’re unsure.

I apologize for the posting time out I’ve had lately.  I’ve been working hard on my newest web application eBizControl and another inventory receiving application for bulk buyers that’s taking up a considerable amount of my time.  However, I hope that the time invested will pay off in the end.  In any case, I’m going to make an attempt to get back to posting on a regular schedule.  Let me know if you want to hear about anything in particular.

Amazon’s FBA service has become hugely popular as of late and rightfully so.  You can’t beat someone else shipping orders for you, accepting returns and dealing with irate customers!  It’s a great service that many have chosen to take advantage of.  However, there are some sellers that either haven’t started yet or are still a little unsure on exactly how it works and exactly what to send to Amazon for fulfillment.  Why are sellers unsure of what to send?  The fees!  Amazon has become known as the place to sell used items.  One of the reasons why is due to the free listing.  Unlike eBay who charges your every time an item gets listed, Amazon only charges you if your item sells.  This means there is absolutely no risk to you if nothing sells.  However, with the introduction of FBA, Amazon also brought forth the inventory fees and rightfully so.  Your stuff takes up warehouse space and incurs labor costs to manage it.  This is why Amazon introduced the monthly storage fee and more recently, the long-term storage fee.  These fees are incurred the moment your book gets listed regardless if it sells or not.  Oh no!

The monthly storage fee is a fee that’s charged on a monthly basis based on the size of your item. To be more specific, it is based on the size in cubic feet and currently it is 45 cents per cubic foot. This fee begins to incur the moment your item is scanned in at Amazon and the total cubic feet of all your inventory is tallied up every day and then tacked on to your total monthly charge. Refer to the link above for more information.  The recent long-term storage fee was introduced because presumably too many sellers were leaving their stale inventory in Amazon’s warehouses and the FBA program was unexpectedly much more popular than what Amazon had intended.  This fee is a whopping $45 per cubic foot!  This fee doesn’t start to incur until your item has been at Amazon for longer than a year and you have multiple copies.  Due to these inventory fees, sellers have become a little more choosy about what they decide to list for sale via FBA.

With the thought of potentially shelling out hard-earned cash without selling anything in return, how do you decide what to send to Amazon to try your hand?  Here are the 2 criteria you need to look out for.

1. High Demand

If you’re in a position where you are charged a fee based on time to sell you better send items that sell and sell quick!  The less time they spend in the warehouse the less money you have to pay.  How do we do this?  I’m glad you asked!  The answer is the Amazon sales rank or “bestsellers rank” as they’re calling it now.  Without going into the technicalities of this, this number is simply a measurement of how well a particular book is selling relative to all other books on Amazon.

The sales rank is a great way to guesstimate how fast your item will sell.  Personally, I choose a sales rank of 1,000,000 or under to send to FBA.  Others have told me they use 500,000 that aren’t quite as daring but I like to live on the edge.  By taking the sales rank this high you will get some books that never sell and decide to sit in the warehouse forever.  These have to be returned to you or destroyed if you don’t want them incurring the dreaded long-term storage fee.

2. Low Lose Weight Exercise/price ratio

This is an important piece to take into consideration also.  Some people will tell you to only send lightweight books like mass market paperbacks and be done with it.  I choose to explore all opportunities for profit and actually dive into the numbers to see the potential of sending 1,2 even 4 pound books to Amazon.  The Lose Weight Exercise is irrelevant if the price that you can get is high enough.  To figure out this ratio, here’s a quick calculation that you can do. Disclaimer: All prices shown will be for media items.  If you want more pricing information you can visit Amazon’s FBA pricing page. Let’s say you’ve got a book with a sales rank of 50,000 that weighs 3lbs.  This is a pretty good sales rank and I’d estimate it would sell within 1 week barring any unforeseen circumstances.  My strategy is to list this book and match the lowest FBA offer which, at the time, is $10.00.  I say, at the time, because by the time that item gets to Amazon and listed it may be $9.75 depending on how volatile the pricing is.  Just remember the price 9/10 times will always go down.  Remember to take that into consideration.

We’ve now got a few pieces of key information.  We’ve got our expected sale price ($9.75), our expected time to sell the item (1 week), our current sales rank (50,000) and our Lose Weight Exercise (3lbs).  We’re now ready to calculate our potential fees.  Let’s list them out.

Expected storage fee: $0.45 / 4 = $0.12 for 1 week’s worth of time

Pick/Pack Fee: $0.60 flat fee

Weight Handling: $0.40 x 3 = $1.20 for our 3lb book

Commission: $9.75 x .15 = $1.46 flat commission

Variable Closing Fee: $1.35 flat fee

Our fees end up adding up to $4.73 giving us a profit of $5.02.  To get a feel for the profit if you decided to list it yourself you could run similar numbers.  Amazon has an excellent FBA price calculator that allows you to run various scenarios with ease.

I hope this has helped you in deciding what to send to FBA.  This was one of my questions whenever I first started with FBA back in March of 2009 and through the years I’ve learned the hard way what not to send.

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This is a guest post by Mike Gibson.  Mike is a successful online bookseller that has an excellent blog at ambooked.com.  I highly recommend checking it out.

- Adam

Imagine that you’re an online bookseller. You have a profitable business going but no employees. You have a few thousand books and you sell a few each day, seven days a week. Life is good – you have
created a profitable business working from home!

Then one day you decide to take a week vacation. You log into Amazon and Half.com and put your listings on “vacation” setting. You also remove your books from eBay. You’re having a good time on
vacation but in the back of your mind you know that you are not making any money. Worse than that, you fear that potential customers are buying books that are usually in your inventory from competitors.
You try to decide when to end your “vacation” settings – when you return or two business days before returning? Do you really want to get back and have to ship a dozen books as soon as you walk in the
door?x

This was my experience two years ago. My long term goal was and is to build a business and travel – A LOT. I realized that this may not be possible with selling books online. Did I just waste almost two years
learning everything I could about selling books online, finding sources of inventory, and investing in supplies and inventory?

About a year and a half ago I started experimenting with Amazon FBA (Fulfillment by Amazon). I have found that not only has FBA made my business more profitable – it has also made it less time
consuming, easier, and most importantly, given me more freedom.

With FBA, Amazon stores and ships my inventory for me. I do not need to be chained to my house anymore to ship orders or even to answer customer emails (Amazon does this for me).

A few months ago I decided to experiment with FBA remotely. I found a huge book sale across the country in a city where my brother lives. I packed my laptop and my wife and I hopped on a plane. I
spent parts of 2 days at the book sale and the rest of the week I had fun. Before I returned home I bought some boxes, borrowed my brother’s printer, and shipped hundreds of books to Amazon.

I flew back home at the end of the week without taking any inventory with me. I realized that two great things resulted: 1) while I was away I was selling books each day and making money, and 2) the books I
acquired while away later sold for more than enough to cover my travel expenses!

For me, FBA has changed my entire business for the better – I have nearly all my inventory in FBA now. Of course there are negatives to FBA – it can take awhile to learn, the fees are higher, and sales
rankings are more important than anything (even price). If you are interested in selling only antique or collectible books FBA will probably not be profitable. If your goals are like mine – building a profitable
business and being able to travel – FBA may be worth looking into.

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You may have heard the rumblings of a brand new fee introduced by Amazon lately for their FBA program.  If not, I’m sorry to be the first one to bring you this news.  Effective August 15, 2011, Amazon will begin charging $45 per cubic ft for all your inventory per year.  That’s right.  I didn’t forget to exclude a decimal.  That’s 45 bucks per year.  A lot of people are up in arms about this particularly because FBA is known for their already very low industry standard storage fees.  However, I believe that Amazon has announced this new fee the wrong way and have not explained everything clearly.  Let me tell you why.

I immediately got emails about this from people a couple days after it was announced.  People were concerned, irritated and immediately thinking of ways of getting out of this long-term storage fee.  At first, I did the same…at first.  I took a look at my ever-growing inventory with Amazon and thought I was going to literally have to hand out thousands of dollars if my books hit the year mark.  That is until I started to read the “fine print”.  It turns out this fee is only directed to sellers with multiple quantities of an ASIN.  This most likely means the mega sellers or smaller book remainder sellers neither of which are me.   If you read a sentence or two into the description of the inventory storage fee you’ll see this line “Each seller may maintain a single Unit of each ASIN in its inventory, which will be exempted from the annual Long-Term Storage Fee".  This means sellers that typically only have 1 item per ASIN are in the clear.  Yay!  I’ve never had a business model to where I have multiple quantities so after I wiped the sweat from my brow and I relaxed.

Just because I was in the clear didn’t mean I was going to let this announcement to the wayside.  I’d been neglecting my FBA inventory for years.  When Amazon does everything for you and you’ve got a reliable pricing engine to keep your books competitive, you tend to even forget the books are there and just expect that bi weekly bank disbursement.  I got way too used to everything.  This announcement made me take a more proactive approach with my inventory and make some changes.  I thought these changes were very beneficial so I’d thought I’d share.

Being an analytical thinker I immediately started thinking “what would I do if I had to pay this yearly fee?” and started to run some numbers.  I’ve honed my FBA skills over the years in an attempt to only send salable books to Amazon but the market is constantly changing so I’m positive I’ve got some inventory that will never sell that’s only eating up storage fees.  It is my goal now to sell every book I have within 1 year or less.  How am I gonna make this happen?  I don’t want to simply have Amazon destroy them right away because they still might sell.   I got it!  I’m going to liquidate this aged inventory by drastically cutting the price down and selling it on eBay!  If you caught my previous post about using FBA’s multi-channel fulfillment program and making more money on eBay, please check it out now.  By using the increased profit I can get from eBay I can significantly reduce the price on my books and still squeak out a profit.  I wanted to make exactly a $2 profit if a book sold.

Here are the steps I took in an attempt to make that happen.  I realize these are pretty vague steps but because I personally use Monsoon I know a lot of you still use Amazon’s builtin reports.  I hope this still can apply.

1. Download your Amazon FBA Inventory Age report.  This repot will give you every book that you have at Amazon and how long it’s been in their fulfillment centers.

2. Open this report up in Microsoft Excel, OpenOffice or another spreadsheet application and filter all the results for age > 300 days.  You should now have a list of SKUs that are approaching (or already over) the one year mark.

3. The next step you need to take is to get each SKU’s price and Lose Weight Exercise.  I used Monsoon’s great inventory filtering and reporting abilities to do this.  What you’re looking for is a spreadsheet that ultimately has 3 columns; SKU, Lose Weight Exercise and current price.  I’m sure you’d be able to get this information from the Amazon reports and a skilled spreadsheet/database guy if you’re unfamiliar.

4. Once you’ve got all your inventory on a spreadsheet in this manner, you now need to calculate the price you’ll need to sell your book at to make a $2 profit on eBay.  You’ll need to take into account the eBay Final Value Fee, Paypal Fee, FBA Multi-Channel Weight Fee, FBA Multi-Channel Order Handling Fee, FBA Pick/Pack Fee and finally add your eBay shipping credit to the total.

5. You should now have a spreadsheet with SKU, Lose Weight Exercise, current price and finally your liquidation price.  Now, delist all of those books from Amazon ASAP.  Why?  Because from my calculations if I reduce the price this much on these books I’ll loseWeight Exercise MORE money if the book actually sells on Amazon than if I would simply have it destroyed!  You can make far more money on eBay!  You’ll get a ton of FBA inventory listings looking like this but don’t be alarmed.  This is only because the item is sitting in Amazon’s fulfillment center and not listed on Amazon.  This is what you want because if you’re using multi-channel fulfillment it will still be listed on eBay.

6. So now you’ve got all of your old inventory delisted from Amazon and priced at liquidation prices.  Just for reference, I marked all my books down that were less than a pound to $2, 1-2 pounds at $2.25 and 2+ pounds $2.50.   If you’ve got your multi-channel fulfillment process automated you’ll now just sit back and wait for your eBay customers to bail you out.

Continue to keep an eye out on the inventory age in case they all don’t sell.  If you want, you could continue to drop the price to the point to where you’ll only profit more than the disposal fee but I’m not getting that granular.  For my inventory, if the book hasn’t sold for that long and didn’t even sell at a hugely discounted price I’ll let Amazon destroy it.

I hope that this has helped you by giving you some ideas on how to keep your inventory fresh.  Also, if you’re one of the unfortunate ones that depends on quantity and you’ll be affected by the long-term storage fee I hope this strategy will allow you to save some money.

- Adam

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