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eBay has always been fun and rewarding for us. But 29 months ago we jumped into the Amazon FBA pond and rode a wave like crazy until this December. We felt the wave falling out from below us, hoped it was temporary, and when the fees changed, we crashed down.
Hopefully others have done better?
Our business model has primarily been retail arbitrage of discontinued items that aren’t covered by a warranty (it’s the only safe way that we found to avoid the RA trap of warranty issues). We have averaged somewhere around 13,000 a month on AZ with 30-40% pretax margins. We would buy, ship, and forget. There have been issues, but always worth it.
During this time we still did eBay, but as a side gig and without building our pipeline where it should be. The big money was on Amazon, and we were grabbing it like we were in one of those acrylic windtunnels where you would grab dollar bills out of the air for a specified time.
Now we are spending every waking moment building our eBay pipeline to make up for the loss in AZ revenue that we are experiencing. The fees have stripped margins, our sourcing has become significantly more difficult due to the brand gating costs, and our sales have trickled despite having the buy box on the majority of the listings.
I certainly welcome any insight/commiseration as we transition once again. For those interested, here are my thoughts about online selling and our journey:
1) We do this for control of our time. That being said, we are still playing in others sandbox and subject to taking their toys away.
2) When they take their toys away, it’s not personal to us. It feels personal because of the lost income, but they have to make the best decision for them just as we do for us.
3) We will not be selling the same way we are today in 10 years. I doubt any of us will. Change occurs, both good and bad, and we adapt and roll with it or we die.
4) Diversity. Diversity. Diversity. We allowed ourselves to become imbalanced and primarily reliant on Amazon. It worked at the time. But now we totally have to shift gears and crank up another platform. Some brief work? Sure. But doable. And with rewards.
5) The only debt we have is on a second rental and it is minimal. Crashing on the Amazon wave feels terrifying. The sound of the figurative crashing, the water closing in, all feel catastrophic. But we have reinvested and saved our online proceeds. We realize the sun is still shining and that We haven’t failed. We simply have to surf somewhere else.
6) eBay could become Amazon and we get pushed out for whatever reason. We are always looking for other places to surf. Or maybe sailboard. It’s fun to look for alternate revenue streams and then figure out how to make them happy.
I hope others are faring much better and any insight into continued success, or lessons learned would be appreciated.
whiskey
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I like this thread. Do you have a sense that other Amazon sellers are also having these issues? We were never big into Amazon, but have decided it’s not for us. The margins are too thin and fees are too high. I also don’t like how radically they change the rules of the game. eBay could do this, but they’ve always changed things bit by bit which has made it a stable selling platform.
It’s very important for us to keep our living expenses very very low. We have mortgages on income property, but our monthly living expenses are probably $1,500 (fuel, electric, food, eating out, entertainment, etc). So we don’t need to sell much on eBay to survive.
Our rental properties pay for themselves (plus extra income). So we don’t depend on eBay to keep that business going.
When we’re making a lot of money, we make sure to invest it. Either by purchasing investment property, paying off debt, or saving cash. When slow months come or Amazon doesnt work out, we’re not bothered by it. Other income replaces it or we have the cash to ride it out. We just have less money to invest.
My assumption is that some people get their monthly expenses to match their highest income months, and then get killed when that income dips for any reason. Low expenses is key.
When I see the dudes on Youtube who say they make a million dollars a year on Amazon, I always wonder how they spend that money. If we ever made a million dollars, we’d be totally set for life because we live so cheap (though it feels very luxurious).
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We do the same thing with our living expenses and free cash. It’s amazing how free you feel knowing that a bad couple of months really don’t impact you or your lifestyle.
We appreciate the fact that eBay is fairly consistent and the fact that as long as we are fairly describing our items and treating the customers fairly we are okay with eBay. On AZ a crazy accusation can lead to suspension until they fully investigate it and then people are reinstated. But in the mean time their previous efforts are shot.
I enjoyed see the discussion on another thread about the coin ops. We looked at a drive through car wash and couldn’t make the numbers pencil. But some fairly passive income would be nice.
Ah yes, the Amazon “pump and dumpers.” I was reading a missive by someone that subscribed to their “teachings” and was complaining that despite building his AZ business to 40k PER MONTH he couldn’t turn a profit. We could easily build a business to those levels of sales, but we value our time. Sales numbers are worthless. Margins and time to acquire those margins is key. That is where the rubber meets the road.
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I have changed what I look for to send in to Amazon. I do a little RA, I don’t go out searching, but if I am already out, I will scan some barcodes. With the fee change, it seems that I have to be a lot more conscious of sales rank. No more send everything it in and it will eventually sell.
My 2 cents, if you enjoy selling on Amazon, you may have to adjust what you sell. Look at the items you sell, are there some real winners? Maybe try to find the items that have the best profit margin and try to isolate what they have in common. Then you can still arbitrage with amazon and stay diversified. Diversification is not a bad thing if it is not distracting.
I have moved away from ebay to explore FBA and I am still finding profits there. I still enjoy ebay and will list more items soon, but I really like the simplicity of sending it in to Amazon and forgetting it, no pictures, no key words, just boop with the scanner, and its done. As long as it is easy and profitable, I will do it.
I do worry that soon everything will be gated on FBA. but if that happens, I will pay to ungate or just move along.
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I agree with what you say. You just have to keep scanning and be much more aware of the ranking and fees. The item must be sought after, cheap to buy, and make a decent profit after all the new FBA fees. It’s a lot of requirements to demand of an item.
Are you still finding enough items to make good money on Amazon? For us, we no longer find many books worth sending in. We don’t feel comfortable sending in “like new” items anymore because many Amazon buyers want items that are actually “new”, and not returns with beat up packaging. So that doesn’t leave us with much selection to send in.
Unless we wanted to sell wholesale or private label, we simply cant find enough inventory to build a big enough pipeline to make a decent profit. It may be easy to send it into FBA, but all the work/time is spent looking for the right inventory.
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I am buying a majority of my items on ebay, and I do find inventory. It requires time, but it is easy enough. Most days I scroll through my amazon inventory and search for items with quantity 0, then go to ebay and do a quick search, sort for new, low – high and see if there are any items worth looking at. I look very closely at the pictures and make sure the listing says new with no conditions. Once I receive the items, I inspect them closely. If the packaging is damaged, I send it back. Ebay makes that part easy. This process usually takes about 30 minutes or so.
Other days, when I have time, I search broad categories in ebay looking for different items to add. When I find those items I have to do more research on sales rank, pricing history and competition. Research is fairly easy sitting at my desk chair. I believe there are a lot of items out there that would be eligible for an eb-az flip.
I am building this portion of my business up now because I am hoping to turn the eb-az business over to my wife. She has no desire to scour ebay for different items to list, but she can easily search for specific items. We have a 2 month old, so she is busy right now, but in the months to come she should be able to learn the process. Since she had the baby, she has been working very part time for her old job. The plan is for her to continue working 4-8 hours a week outside the home, but then she can stay home most of the time to be with the kids and work a couple hours a day on amazon.
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Cool. If you feel you have a consistent stream of good products to send to Amazon, then that’s 80% of the challenge. Your experiments continue to prove you’re doing soemthing right!
Searching through the web at your computer or searching through boxes at auctions, it’s all time spent. Just a choice where you want to spend it.
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I hear you, Lee.
We aren’t walking away completely. By diversity I meant diversity in selling platforms, not product lines. That being said, we won’t be putting nearly as many eggs in the Amazon basket in the future. We are seeking to be balanced in our platforms. But one thing this has taught us is exactly what Jay has said– AZ is subject to wide, sweeping changes without warning. It’s like they try to turn an aircraft carrier by spinning the wheel and hoping the ship turns on a dime. eBay steers their ship in a nice sweeping arc that doesn’t throw people overboard.
As for paying to ungate, the fees have already doubled from 1500 to 3000 for a lot of brands. Amazon has found a cash cow I think. Given the lack of consistency from AZ in enforcing and maintaining it’s policy, why would I pay 3k to ungate a brand when AZ may change everything tomorrow?
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I have not actually done any un-gating, so I was speaking in the theoretical sense I guess. Right now I am concentrating on expanding into as many categories and brands as I can with the hope that I will be grandfathered in if gating happens.
Amazon is making sweeping changes, but remember it is a lot newer than ebay. In the beginning, ebay made some broad sweeping changes. I remember when BIN was added, I thought ebay was silly. Now, almost everything I sell is BIN.
Fun times, fun times.
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Whiskey,
I always felt that RA was an inherently risky business model. The few times I played around with RA it seemed like it was a race to the bottom with every product I found. So many videos and how-to guides showed any motivated seller where to look for the exact same products as the other 6k viewers of the video.
I primarily sell books on AZ, book sellers were slapped with more fees than any other category this February. I am still selling well on AZ but profit have shrunk in conjunction with the new fees. Down at least 20k gross a month. I merchant fulfill more now and only FBA items that I can clearly mark up enough to balance out the new FBA fees.
It seems like you were a highly motivated seller on Amazon, if you apply the same energy to Ebay you will do just fine. In the meantime continue selling what you can on Amazon and use it as a secondary stream of income. We still treat our Amazon as primary, ebay as secondary, but who knows when that will flip.
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michael d,
He was referencing a sentence in your earlier post.
I agree with you. We have transitioned to primarily FBM and are doing pretty well, but it requires more effort. In the meantime we are changing our eBay plan and busting it out to make that a bigger percentage of our margins.
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