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How The Buy Box on Amazon Works and How You Can Win It

The eBay & Amazon Seller's News, July Mid Month, 2014, Volume 14, Issue No. 13

Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
by: Skip McGrath

In This Issue:

Musings from eBay, Amazon and The World Wide Web

  1. How The Buy Box on Amazon Works and How You Can Win It
  2. Amazon Introduces Used Offers in The Buy Box
  3. Setting up and Organizing Your eBay or Amazon Business
  4. Using Amazon FBA to Fulfill Orders for eBay and Other Selling Sites
  5. New Wholesale Sources for eBay and Amazon Sellers

"Success consists of going from failure to failure without loss of enthusiasm." ~ Winston Churchill


Musings from eBay, Amazon, and beyond

Did you know that third party sellers like you and me sell almost 90% of the products sold on Amazon? Here is a link to an interesting article in eCommerce Bytes that reports from an analyst that Amazon is increasing the number of SKUs they sell directly, but even with that increase their share of products listed is only 10%.


While I was looking around the eCommerce Bytes website I found another good resource. It turns out that some states have laws regarding selling on consignment on eBay. Here is a link to a list of all the states with their law regarding selling on consignment.


For the past six months I have been working with Jenni Hunt who is running a private Facebook group for folks who sell in the Grocery and gourmet food and the Health & Beauty categories. The group has several experts who follow it full time and I drop in from time to time as well. Each group is limited to 100 people and runs for 3 months.

If you sell in those categories this is a place where you can get expert advice, learn about new wholesale sources in those categories and learn how to build and expand your business. The sources include both Retail arbitrage opportunities and regular gourmet food manufacturers and distributors for those of you who prefer to sell repeatable wholesale items.

I can tell you that without exception, members of the first two groups have been exceedingly happy with the service and all of them have benefited by growing their business and profits. The experts hold nothing back - they are big sellers who share their secrets. I don't have enough time to be one of the full-time experts, but I do chime in several times a week and help out.

Jenni has created a special landing page where you can read and learn about the group. Here is the link to the Private Facebook Grocery and H&B group.


One of my readers has created a website - http://whohasitcheaper.com/ that compares prices on eBay and Amazon. Although mostly useful for buyers it does give sellers an opportunity to compare prices and maybe even find the occasional arbitrage item to flip from one site to the other.


If you are looking for a service that you can buy wholesale merchandise and have it shipped to a warehouse and have that warehouse label and prepare your Amazon FBA shipments, I have recommended My Inventory Team. But this week I got an email from a reader who has recently started a similar operation. They are brand new and I have no experience with them, but if you want to check them out or compare them the site is http://www.fbaexpress.com.

Besides providing and Amazon shipping service, My Inventory Team also sells Liquidation goods that you can sell on eBay and/or Amazon -and when you buy it they will label it and ship it to FBA for you.


Pending Orders on Amazon - If you go to your Orders page in Amazon Seller Central, you will see a link that says Advance Search. Click on that link and you will see a drop down box that says Pending Orders. Select that and all of your pending orders will be displayed. Select the time period of 7 days when you do this, as that is how long Amazon leaves items in Pending Orders.

So what is a pending order? Here is how Amazon explains it:

Buyers placed the orders and we tried to authorize payment from the buyer's credit card but were unsuccessful. The buyers were immediately notified about this issue. We are still trying to secure payment from the buyer's card.

While an order is pending, the Units that the buyers orders will be held in reserve in your Inventory Amazon fulfills page.

If we are not able to verify the payment method of the buyers within seven days of the sale date, we will cancel the orders and the units will be again added back to your fulfillable Inventory Amazon fulfills page.

Since we have informed the buyers that the orders cannot be completed until the payment information is updated, the buyers should be aware that the order may be delivered later than originally expected.

I think seven days is a bit long. As I suspect that a lot of folks, add something to their shopping cart and get a notice back from Amazon that their card would not go through (In most cases this is probably because they have reached their limit) so they abandon the order and wait until the end of the month to make a payment. Meanwhile our products sit in reserved status for a full week.

This can really add up. I pulled a report a few days ago and I had 31 items in pending status, and a few of them were products where my stock is very low so this also affects your inventory planning.


Confused and frustrated by Sales Tax? Check out TaxJar. TaxJar integrates with eBay, PayPal, Etsy and Amazon (and a few other sites as well). They calculate your sales tax and give you a simple quick report each month to make your sales tax payment quick and simple. Check out Tax Jar here.


eBay blames its poor quarter on security breach and password reset. eBay just finished one of its worst quarters ever - coming in with only single digit growth. In an investor meeting, CEO John Donohoe blamed the performance on the security breach and claimed it frightened people away from the site.

Because of strong performance from the PayPal division, eBay as a whole saw revenue increase 13% in Q2 (April, May, and June), but eBay Marketplaces revenue was up only 6%.

What Donohoe didn't mention was the effect of the security breach on us sellers. First we have the normal summer slowdown, couple that with the security breach and eBay sellers (who pay the fees and generate the income) saw their business suffer. In my personal case, my eBay sales for the quarter were down almost 30% from the previous quarter and 15% from the same quarter last year.


Stamps.com has renewed their free offer for my readers. You get a free $50-value digital postage scale, $45 in free postage coupons and $5 worth of shipping supplies. Here are some reasons for using Stamps.com:

  1. Import orders from multiple sources (eBay, Amazon, Etsy, etc.)
  2. Import orders from multiple eBay accounts into one interface
  3. USPS Tracking automatically updated into data source
  4. FREE 5 lb. USB digital scale with registration
  5. If you buy your postage with your PayPal Debit card - you get 1% cash back

Sign-up for our FREE special program at: Stamps.com


Lets get started with this issue’s articles:

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1. How The Buy Box on Amazon Works and How You Can Win It

The Buy Box is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts. When you do a search on Amazon, you come up with a list of products. When you click on the product the page that opens is the buy box. Here is an example of a buy box page:

A key feature of the Amazon platform is that multiple sellers can offer the same product. If more than one eligible seller offers a product, they may compete for, the Buy Box for that product. When seller offers are equal, they can also share the Buy Box on a rotating basis.

Amazon requires that sellers meet certain performance-based standards to be eligible to win Buy Box placement. In most non-media categories the Buy Box is responsible for over 75% of all sales (and about 50% in the media categories), so it's pretty important that you earn your position in the buy box.

The Buy Box winner is selected from the pool of eligible sellers based on, among other things, price and availability. The winning "New" condition offer is presented as the first choice for buyers using the Add to Cart button on the product detail page. A new feature on Amazon is that buyers can also view the winning "Used" condition offer, if any, by selecting the "Buy used" radio button (see next article for more info on this).

In addition to the Buy Box winning offer, up to three additional Buy Box eligible offers will display in the More Buying Choices box on the product detail page. Any remaining seller offers --including offers that are not Buy Box eligible, are available to customers who click the new & used link (or new link) at the bottom of the More Buying Choices box. This takes buyers to the offer-listing page.

Winning the Buy Box

The first requirement to win the buy box is that you must be a professional-level seller ($39.95 per month fee).

Also, sellers must meet performance-based requirements to be eligible to compete for Buy Box placement. All Buy Box eligible offers are then further evaluated to determine the Buy Box winning offer. One "New" and one "Used" condition offer, as applicable, will receive Buy Box placement.

Increasing your chances of winning the Buy Box

Since seller performance metric targets can vary by category and are subject to change, Amazon does not disclose specific targets for becoming Buy Box eligible. Buy Box eligibility requires meeting very high standards. So even if I have a higher price, Amazon will put me in the buy box if your account is below standard.

Excelling in all areas that deliver an outstanding customer experience is the best way to achieve Buy Box eligibility. To win the Buy Box, several other factors come into play including:

  • Pricing. Customers are looking for low prices, so Amazon typically features the lowest price (including shipping) in the buy box if you meet all the other standards. (Note - Amazon used to consider any price that with within plus or minus 2% to be an identical price, but that is no longer true. They still have some margin but it is much lower -more likely closer to 0.5%. So for example if my price is $21.95 and your price is $21.99 then Amazon considers that to be the same price and we would share the buy box on a rotating basis).

  • Having product in FBA - When two sellers are close in price and account standing Amazon tends to favor the seller who is in FBA over the seller that is merchant fulfilled. The way they do this is by giving the FBA seller longer periods of rotation in the buy box. For example, I have one product where I am the only FBA seller. There are two other sellers who match my price and have good account standing, but I get the buy box for about 4 days at a time while they get it for about 1 day at a time.

  • Watch your competition to stay competitive. You can view the price of the offer that is currently winning the Buy Box. Here is how you do that. Go to your Manage Inventory page, click the Preferences button, and select Show when available for the current Buy Box winning price. Buy Box winning prices are displayed for "New" condition listings only.

  • Stay on top of your inventory. If you run out of a product, you cannot win the Buy Box. Watch your inventory levels and re-order steady selling product to make sure you don't run out. When you do the next higher priced person moves into the buy box. (A good way to watch your inventory is to set up inventory alerts on the Manage Your Inventory page).

  • If you are a merchant fulfilled seller keep your inventory up to date. Listing items that are out of stock is a great way to earn negative feedback, especially around the holidays. To ensure that buyers cannot place orders for out-of-stock items, keep your inventory updated. If you sell the same product on other platforms such as eBay, you really need to watch your inventory carefully to make sure you don't sell something you don't have.

  • Plan vacations. If you are merchant fulfilling and going on vacation, make sure that customers are not left waiting for orders to arrive.

  • Customer service is measured in numerous ways. Excelling in all areas can help you succeed on Amazon. The Account Health page on the Performance link can help you track your customer metrics.

For more information about performance standards, log into your seller Central and then click on Seller Performance Measurement. This will explain how Amazon looks at your account.

[top]

2. Amazon Introduces Used Offers in The Buy Box

Last week Amazon announced that the Buy Box now features used items. The Buy Box is the box on a product detail page where customers start the purchase process by adding items to their shopping carts.

In the past, only media categories featured a used offer in the Buy Box, but now all categories that permit used offers may also feature these offers in the Buy Box. Used offers that win the Buy Box are featured simultaneously with new offers that win the Buy Box in an expandable, accordion-style Buy Box.

If a product has both new and used offers available in the Buy Box, the Buy Box defaults to the winning new offer (Figure 1). Customers can view winning used offers by selecting the "Buy used" option (Figure 2).

A key feature of the Amazon platform is that multiple sellers can sell the same product. If several sellers offer the same product in used condition, they may compete for the Buy Box for that product.

Sellers must be Buy Box Eligible * in order to compete for Buy Box placement. Buy Box eligibility is tied to specific seller performance criteria that determine the sellers who have consistently provided customers with a great buying experience. The Buy Box winner for a used product is selected from the pool of eligible sellers offering that product based on, among other things, price and availability.

Amazon will present the winning seller's used offer as the first choice for buyers using the "Add to Shopping Cart" box on product detail pages. For many sellers, this placement may lead to increased product sales.

* Buy Box eligible sellers are Professional sellers who have met performance-based requirements. There is no additional fee for being Buy Box eligible, and sellers must maintain their performance levels in order to retain the status of Buy Box eligible.

Sellers with Buy Box eligible seller status gain placement advantages for their listings on Amazon.com. Their listings are eligible to compete for the Buy Box and listings that do not win the Buy Box are eligible for placement in the More Buying Choices box and Buy Box eligibility. Amazon does not guarantee placement in either of these locations.

Customers can find listings that do not win the Buy Box or placement in the More Buying Choices box when they click the "# used & new" link at the bottom of the More Buying Choices box. (If there are no used listings, the link will say "# new.")

It used to be that eBay was the best place to sell used or vintage items, but this move by Amazon will cut into their almost monopoly on used goods. It is going to be interesting to see which categories Amazon opens up to used items.

[top]

3. Setting up and Organizing Your eBay or Amazon Business

Whether you are a newbie, or have been selling online for a while, I get a lot of questions about issues such as business names, licensing and usernames. So lets take a look at some of these.

One of the first things you want to do is get a business bank account in your business name. This is important for a few reasons.

One reason is that many legitimate wholesalers want to see business names on their checks and many wholesale markets and trade shows ask for a copy of your business check to gain admission. And, running all your business transactions through your business bank account helps you keep everything separate and this makes your life easier at tax time.

But, before you open a business account at your bank, you need a business name. So picking a name is one of the first things you should do.

There are several types of business names. If you decide to incorporate or form an LLC then the name of that will be your business name. This name can be anything including your name such as Sally Smith LLC. Once you have the LLC set up with the business name, you can register what is called a DBA (Doing Business As). If your business name was Sally Smith LLC, and you sold jewelry, you could, for example, register a DBA such as Sally's Fine Jewelry.

There are two types of business names - general and specific. If you are going to sell a wide variety of products as I do, then you want to pick a business name that doesn't mention any specific type of product. Examples of that type of name could be names like Northeast Sales, Johnson Marketing, Excel Sales & Marketing, Little House Sales, etc.

A specific name would reflect the product niche you sell in such as Oakdale Foods, Sally's Fine Jewelry, Harold's Sporting Goods and so on.

But remember, none of those has to be your business name. Whether you are incorporated or not, you can get a DBA in any of those names.

Next - do not confuse your business name with your eBay user ID or Amazon display name. Lets say you opened your account on Amazon with your business name as Johnson Sales. That does not have to be your display name. If you started out selling books, your display name could be FredsFineBooks. That is the name Amazon buyers will see, so no one can tell that FredsFineBooks is actually Johnson Books. The same thing goes for eBay. Your eBay user ID can be almost anything that is not already taken.

Business Licensing

There are several types of business licenses. A few cities and towns require a business license to do online business from home. But many of them do not require or enforce it for businesses that operate out of a home as long as it's not a place where customers come. (For example, if you were operating a hair salon out of your home that would require a license).

Sales Tax Number

All of the states that charge sales tax, requires you to have a sales tax number (Some states call this a Resale Certificate). In some states when you apply for a sales tax number that also gets you a business license and you can apply for DBAs at the same time.

Sales tax numbers are important for two reasons. One is that many wholesale suppliers will ask for a copy of your sales tax number or resale certificate before doing business with you. The other one is that you risk an audit and fines if you sell goods to someone in your state and do not collect and pay sales tax.

You only have to collect and pay tax on sales made to someone located in your state - not out of state. (There is an exception to this called Nexus but I am not going to deal with that here for reasons of space).

Federal Tax ID Number

This is not a license of any kind and unless you incorporate its not required by law, but it's a good idea for any seller to have one of these.

Essentially a Federal TAX ID (Called an EIN Number) is a number that is tied to your business that replaces your social security number. This way you do not have to give out your social security number to vendors. And there are some wholesale suppliers who will ask for your tax ID number as a way of assuring you are a real business. Just go to www.IRS.gov and apply online. Type "EIN number" into the search box on the site and it will take you to a page where you can apply and get a number within a few minutes - best of all it's free. If you incorporate or set up an LLC then you are required to have an EIN number, but if you are a sole proprietor it is optional.

The other thing you want to do is enter the EIN number into your tax information page on Amazon, eBay and PayPal (or any other sites you sell on). This way when they send you a 1099, it will be linked to your tax number and not your personal SS number. This makes it easier for your tax guy at tax time.

There is one other issue I wanted to mention regarding incorporating or forming an LLC. You can to this at any time, but the best time of year to do that is on January 1. This way you do not have to fill out two separate business returns, each one for part of a year and that will save you money with your CPA or tax preparer.

[top]

4. Using Amazon FBA to Fulfill Orders for eBay and Other Selling Sites

I got an email this week from a reader who is struggling with the typical summer slowdown on eBay. I wrote back that one way to deal with that is to expand to Amazon so they will have two sales channels going for them. Most eBay sellers don't know that they can use Amazon to fulfill their eBay orders. In fact you can use Amazon to fulfill orders from any selling venue - Etsy, eBay, New Egg, Sears.com or your own website.

Let take a look at how this works

The first thing you need to do is register as a seller on Amazon and sign up for their fulfillment service FBA (Fulfillment By Amazon). Once you are singed up, start creating listings on Amazon for all of the products you have listed on eBay (or any other site). Once you have your listings created, convert them to FBA using the drop down box in Manage Inventory. (See screenshot)

You just check the box for the items you want to send in and select Change to Fulfilled By Amazon (third item on the pull down list). This will take you to a page where you create a shipment. The system will lead you through the process of creating a product label and a shipping label. Now you put a label on each item, box it up, measure and weigh the box. After you enter that info, Amazon will generate a shipping label and all you have to do is call UPS or take it to a UPS drop off site.

Once your items arrive at Amazon your listings will go live. When one of them sells on eBay (or any other site) you go into your Seller Central Page on Amazon and create a Fulfillment Order. Here is how you do that:

Go to your Inventory Amazon Fulfills page. Find and check off the item that sold. (See screenshot).

When you select an item and click on Create Fulfillment Order it will take you to a page where you fill out the address.

Once you do that you select the shipping - standard or expedited. In this example I picked standard:


You can also offer expedited 2nd-day shipping. Here is the cost for that:

Notice that you can ship a one-pound package for $5.95 standard and only $9.05 for 2nd Day air. That is far less than you could ship UPS under your own account. The reason for this is that Amazon has the lowest shipping rates in the country and they pass their shipping rate onto you.

This is the manual way to do this, but it has a problem. What happens if you sell the last item on Amazon while you are watching TV? Then a little later someone on eBay buys the item. Now you are in a bind because you have an eBay order you can't fulfill. The answer to this is automation.

I recommend a company called Auto MCF (www.automcf.com). What they do is link in to both your eBay and Amazon account. When something sells on eBay, Auto MCF automatically creates a fulfillment order on Amazon. If they see that the order was your last item and your inventory is now zero, AutoMCF automatically ends your eBay listing. This all happens within less than one minute, so there is very little danger of selling something you don't have. The other thing they do is automatically enter the tracking info into eBay as soon as Amazon generates it. Besides eBay, Auto MCF also integrates with eBay Canada and Europe, Rakuten (formerly Best Buy), Sears.com, New Egg, and Amazon Canada and Europe.

Vendio offers a similar service but you have to also use Vendio for your listing and inventory service, which is not that bad. I have been using Vendio for the past 8 years and have been very happy with the service.

There are two distinct advantages to using Amazon FBA to fulfill your other sales. First of all if you are just selling on eBay, you now have more sales possibilities by adding Amazon. Secondly, the lower shipping charges from Amazon make you more competitive on eBay because you can offer lower shipping costs (or add free shipping at a very reasonable price).

If you already sell on eBay, I have a book that explains how to make the move to Amazon. It's called eBay to Amazon. If you want complete training I also offer The Complete Amazon Marketing System. Note: If you have already bought The Complete eBay Marketing System then do not buy the complete Amazon system, as you will have duplicate information. Instead just get eBay to Amazon and you will be all set.

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5. New Wholesale Sources for eBay and Amazon Sellers

Wholesale Fashion Inc. sells a large line of fashion products and accessories including Zumba and even belly dancing outfits and accessories.

Liqui-Tech sells refurbished electronics including iPads, Android Phones, laptops and Kindles. They don't show any products on their website, you have to contact them for their current list that changes weekly. Tel: 888-203-8520, Toll Free: 888-203-8520 - Email: sales@liquitechint.com

High Voltage Wholesale sells a large line of Detox products and other supplements.

Letters From Home ABC Art has a new line, The Vintage Inspire Collection, offering peel and stick chalkboard labels, vintage inspired labels, and vintage inspired canvas to match. Small table top displays for smaller stores offer a perfect impulse buy.

Cole + Parker designs and manufacturers bold, colorful premium quality men's socks.

Black Box Cosmetics sells a line of Advanced Anti-Aging Skin Care in the including paraben, sulfate and gluten free and Vegan. No animal testing is used in their products.

Shorganics is another skin care company with products made with organic ingredients and Verified Vegan by Vegan Action.

SignPast Vintage Signs sells authentic-looking replica signs including vintage automotive, drag strip, gas/oil, and aviation. SignPast crafts their signs from heavy-duty 18-gauge steel for a realistic look.

Country Club Products sells a wide range of bed sheets and sets including bamboo sheets.

Cowboy Knives and Collectibles sells a line of collectible and functional knives and other products they design.

Deals 2 Sell is a new wholesale distributor that sells merchandise and ships it direct to Amazon FBA for you. They have a $1200 minimum order but you can mix and match a lot of different types of goods for that. Be careful in the toys section. They are selling some Disney Frozen merchandise and Amazon has been killing a lot of those listings due to so many counterfeit items on the platform.

The Real Insect Company sells a line of Lucite products with real insects including spiders, scorpions and beetles in them. Uggg! But they sell.

Fortune Products sells a wide range of decorative lights and light strings.

Alltex sells all kinds of towels from kitchen products to bathroom and spa towels and robes.

The Extra Mile sells a large line of licensed NBA, NFL, and MLB products and novelties.

EcoSmart Designs sells a wide variety of fashion jewelry all made in the USA.

Great Lakes Wholesale is a distributor of gourmet food and snacks. They ship all over the US.

That is for July – See you in August. Only a few more weeks of the summer slowdown left and then things should pick up..

Skip McGrath
The Online Seller's News

P.S. If you missed the last issue, click here to read it.


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