Amazon vs eBay? – Cliff Aliperti's Inside Scoop on Amazon FBA

Cliff Aliperti - Guest Blogger

Cliff Aliperti - Guest Blogger

Cliff Aliperti is known in some circles (Twitter - Land) as the eBay buyer/Amazon seller.

Cliff Aliperti specializes in paper goods and collectibles and is a long time eBay seller and buyer. He has a nifty blog/website called "things and other stuff" which focuses on his passion for these items he collects and sells.

Recently Cliff has ventured into the world of Amazon and Amazon FBA as a merchant and he is quite active on Twitter discussing with excitement his daily purchases on eBay and then subsequent sales on Amazon through the FBA program.

I asked Cliff to explain Amazon FBA to our readers here at the Trading Assistant Journal because we are always aware of the desire to look outside of eBay and learn about eBay competition. Naturally Amazon is one of the first places eBay sellers think about when considering a switch.

I think Cliff's frank and honest story reveals two constants.

  • It is not always greener on the other side of the fence - but sometimes it is cooler.
  • The tournament is always easier to win - When you know how to play the game.

I want to extend my personal thanks to Cliff for this amazing insight into Amazon FBA, not only is it a great story, but when told from the perspective of a long time eBay seller it brings the ring of truth rarely found in these types of reviews. Thanks Cliff!

Amazon FBA from a eBay Powersellers perspective: by: Cliff Aliperti

You ever get that feeling that you're dealing with a bunch of idiots who know less about the company that they work for than you do?

This was my start to selling on Amazon.

I'd never sold on Amazon before, wait, that's not true.  At the time of my return in Spring 2008 I had one seller feedback from an old Z-Shops sale back in 2000.  That was almost embarrassing.

Then sometime in 2007 I signed up for one of their web stores under a free trial, quickly became confused, then irritated, then shut down well before the trial was up.  I left shaking my head content to continue selling on eBay.

Then I started reading Randy Smythe's My Blog Utopia! and his adventures with something called FBA and little by little the thought of trying out Amazon one more time sprouted.

Amazon FBA

Amazon FBA

Amazon FBA

FBA is the acronym for Fulfillment by Amazon.  Basically, you take your product, list them for sale on Amazon, click a button to convert them from merchant fulfilled (ie: you pack it up and ship it out after a sale) to fulfilled by Amazon.  Then you just have to put some identifying labels on your goods, box 'em up, ship 'em out, and sit back while Amazon fulfills your customers orders.

The Goods Will Move!

So I'm reading about this, flipping the idea around in my head, and thinking to myself, "This guy just sits back and rakes in money while his product is warehoused miles and miles away and taken care of by Amazon."  It's your goods and they're always in stock, at least until they sell, more dependable than drop-shipping.  And it's Amazon.com the almighty online retailer who's flipping product over by the second.  The goods will move.  I've got to try this!

I had some back and forth with Randy, e-mails, a phone call, I can't stress enough how much he helped me get started with this, and I decided a risk free test was in order.  I have, well had, a ridiculously large personal collection of Media items, Books, CDs, DVD, and a whole lot of VHS, including several rare and out of print items that I knew were worth some money.

eBay Powerseller

Good spot for a little aside.  I'm an eBay Powerseller who specializes in Movie Collectibles and Magazine Back Issues.  Those specialties, besides being areas of collecting that I love, share a trait that Media items do not possess.  They're flats.  Back in my early days on eBay, when I was willy-nilly selling anything not nailed down, I learned to despise selling non-flats, especially items like books which would involve bubble-wrap and worries that they weren't packed quite well enough.  This was well-before you could print a shipping label through PayPal and I'd be on long lines at the Post Office for an hour at time a few times per week juggling boxes, sometimes looking like a cartoon character with a stack reaching up over my head.  Once I had enough of that I made a conscious effort to switch over to flats.  No more books or videos being shipped out.

Like an eBay Virgin

Excited to at the very least be able to clear out some clutter from the house, feeling a little like an eBay virgin again, I sat down with a stack of DVDs and listed the first one on Amazon.  Then I went into my Seller Account and looked for the button to "Convert to FBA," and...did not find it.  Stalled out after one item.

Long story short, it took their customer service a full week to convert me over to FBA.  I resumed listing and lo and behold actually sold a CD on the site before I even had the chance to convert it to FBA!  Bad part, I'd have to pack and ship it; Great sign, they're buying stuff before I get it off my desk!

I started out with the Easy Sell program.  This is a good spot to get into the fees.  Coming from eBay I was immediately turned off by Amazon's fees.  They seem prohibitively high, but, and a big BUT, there are no listing fees.  I'm going to throw some numbers at you here, first I'm going to assume that you're starting fresh like me.  You're not already selling on Amazon, you're not already a Pro Merchant (more on that coming).

Costs of Amazon FBA

This is what it's going to cost you to use FBA to sell a Media item under the Easy Sell program:

$0.99 Amazon Fixed Closing fee (This is also paid by non-Pro Merchants on any sale on the site)
$1.00 FBA per unit fee (Your basic FBA charge for Media items under $25, fee does vary however)
$0.04 FBA weight based fee (This varies, but looks to always be under a dime. It's basically their handling fee)
$0.80 Variable Closing fee (I honestly don't know what this one is specifically for, feels like another closing fee tacked on. It’s 80 cents for DVDs, VHS, CDs, $1.35 for Books, Video Games and Software).
PLUS 15% commission for Media Items

Yikes!  So we're working with $2.83 plus 15% going to Amazon on any sale of a DVD, VHS, or CD, which is primarily what I'm sending them.

How do I compete with the penny-sellers?

You don't.  The biggest advantage to selling with Amazon through FBA is that your items are eligible for their shipping specials.  That means that instead of tacking a shipping fee onto your sale price your customers are instead eligible for Amazon's Super Saver Shipping, which is free shipping by the cheapest method on orders $25.00 and above and probably more importantly Amazon Prime customers receive the same deals on shipping for your items as they do for Amazon's own eligible merchandise.  These are customers who pay an annual fee and in return receive free 2-day shipping year round.

As someone who never made an Amazon purchase for under $25...at least until Prime came along, I could relate to these two benefits.

By shipping through FBA your items gain an advantage over the majority of sellers in a couple of different ways.  A standard $2.98 shipping charge is added to a single item order from a non-FBA seller.  Third party items are default listed by order of price, cheapest first on the page.  So when a Amazon Prime buyer clicks through to view third-party offers on an item whose cheapest offer used is $5.00, the FBA seller will actually come up first in search by pricing his item $7.97 or lower.  Non-prime members will see a note that the item is eligible for Super Saver Shipping, which, once again makes you stand out from the majority of sellers whose items are not eligible.  Finally, there is a sort button at the top of the page so buyers can filter the search by Amazon Prime offers only.  They click that button and odds are it's probably just you and Amazon, assuming the item is still in print.  I've listed close to 1,000 items now and I've yet to see more than two other competing FBA sellers on any item.

Competition Disappears

This is potentially advantageous when there are a couple hundred of an item available in stock and it takes you until page two of the results to find one for over half a buck.  Prime customer clicks to see Prime eligible items and those other few hundred competing offers disappear.

Back to my story, I had converted over enough items to FBA to fill a case nicely so I went in to print my labels.  You need to pick up a package of 1" X 2-5/8" removable labels for this step.  I say removable because we are sticking them directly over the bar code on our items.  Your buyer will be a lot happier if he can easily peel the sticker off and make the item his own without damaging it.  The label contains Amazon's own bar code, which they use to track your item in their stock, so this is an important step.

Then you print your shipping label through Amazon.  They recommend you use UPS as they give you their UPS discount on shipping.  It's dirt cheap, I've sent several cases out now and they've pretty much all ranged between $4-$8 and the $8 was a monster box of VHS!  But they had to teach me a lesson first, I opted for USPS Media Mail, since this is what I'm familiar with.  Again, I'm a flats guy, USPS has always worked like a charm for me.

This is where my selling on Amazon with FBA stalled for the second time.  They got my package, but man, it was not a smooth delivery.  Here's the actual info from that experience:

Shipped: March 14 (via USPS Media Mail)
USPS Delivered: March 21 (according to delivery confirmation)
Amazon Received: April 15 (Items received and available for sale).

A day over a month!  Oh man, this isn't going to work.  Well, I've used UPS since then and packages have always been received and available for sale within 4 business days, once as quick as 2 days!  Use the UPS, believe me, cheaper and better, at least in the specific example of shipping product to Amazon FBA facilities.

Pro Merchant

It took me three months to become a Pro Merchant.  Pro Merchant is not a special honor afforded you like eBay Powerseller.  To become a Pro Merchant you just click a button to convert your account and Amazon begins charging you a $39.99 monthly fee.  What do you get?  The 99 cent Fixed Closing fee disappears and the FBA per unit fee halves itself.

Remember, Amazon was taking $2.83 + 15% from us as an Easy Seller, now they're taking the $39.99 per month, but just $1.34 plus 15% of each sale.  We save $1.49 per sale in exchange for the monthly fee--the more you sell, the more the fee is absorbed and the less it hits your pocket.  But basically once you dependably have 27 sales per month you should convert--at 27 sales the fees comes out even, any number over that and you're already ahead of the game as a Pro Merchant.

So if you're pricing an item $6.99, you'll see $3.11 of that as an Easy Seller, but $4.60 of it as a Pro Merchant (plus the applicable portion of your monthly Pro Merchant fee).

I should also mention that after items are in stock for a time FBA sellers are charged a warehousing fee--I just got hit with my first one and it was about $2 and change, quite minimal.  I think it averages out to something like a penny per month on CDs and most DVDs, 2 cents per month for VHS and DVD sets.  I don't have many books in stock with them at this time, but obviously fees are going to vary by volume and weight (still pennies though).

Customer Service No Better than eBay

I clicked the button and as far as I knew I was converted to Pro Merchant.  Nope.  Soon after my first sale I clicked through to Seller Help and sent this e-mail:

Hi, I am still being charged $1.00 for the FBA per unit fulfillment fee on items under $25.  Shouldn't this be 50 cents per item now that I've upgraded to Pro Merchant?

To which I received this reply:
Since you are in our Merchant program, your concerns are best addressed by our Technical Account Management team. To contact them, click the "Get technical support" link (found at the bottom of most Seller Central pages)...

Problem, I had no such link on any pages.  This necessitates several phone calls over a two or three week period.  Once I was passed around for 45 minutes.  Another time I was transferred to a gentleman who spoke with a quiet unsettling voice that I found a bit eerie.  He realized he couldn't help me explained that he didn't have the ability to transfer me to anyone who could.  I'd have to call back.

This place is a nut-house!

Finally I got in touch with someone who understood my problem, was quite helpful and then followed up with an e-mail explaining everything we had discussed.  It took some more time, but Darren finally straightened out my account and I was even credited all of the little half-dollar fees that they were holding back from me.

Now if it sounds like I went through hell, well, I have to admit I was close to quitting a few times.  It just should not have been as hard as it was to get the help I required.  Even on a call with one of the more helpful reps I had to direct them through their own website to show them specific rates that they thought I was making up.

I created my first Amazon listing on February 28, 2008 and my account did not get itself ironed out until mid-June.  Look, before you read too much into my story, let me say that as far as I know it's unusual.

Glad I Stuck it Out

I'm glad I stuck it out because now I'm the guy who feels like he's getting money for nothing.  eBay is still my primary bread and butter, but if I want a change of pace from my normal grind I prepare a case of goods for the Amazon warehouse.  I haven't had any problems with my FBA inbound shipments since I switched over to UPS after that first one.  My account has been running smooth since it was corrected in mid-June.  I get to go in and hit the button to transfer payments to my bank account every few days.

I'm not doing a tremendous amount of business, but I'm doing enough that I'm more than covering the Pro Merchant fee.  I've been sending Amazon orders as often as possible, hoping to get my stock up in time for big holiday sales.  While I'm still getting rid of some of my own stuff (there was a lot!), I've made several purchases, ironically off eBay, of items I receive, open up, price and label for Amazon, then seal the box and ship away.

After 5 Months - The Payoff

In other words, after going through four to five months of some of my worst experiences ever online, the pay off is enough that I've stuck with it and plan to continue doing so.  Heck, I've even activated an Amazon web store and begun cross-listing some of my eBay stock onto it.  But that's another story...

Cliff Aliperti is an eBay PowerSeller who has been selling on the site since 2000.  He also operates things-and-other-stuff.com, an informational website featuring vintage movie collectibles and notes on collecting magazine back issues.  Cliff recently started selling on Amazon.com through their FBA program.

Follow Up:

Randy Smythe "added to this conversation" - (or had a Amazon FBA post in the works anyway) and just released his latest take on FBA today.  Read more about Amazon FBA here: Consider FBA This Christmas

, , , , , , , , ,

10 Responses to Amazon vs eBay? – Cliff Aliperti's Inside Scoop on Amazon FBA

  1. Consignment Pal Business Directory August 27, 2008 at 1:00 pm #

    Cliff – Very insightful to hear how you learned the ropes on Amazon.

    Scott – Thanks for sharing this!

    Linda

  2. Randy Smythe August 27, 2008 at 1:01 pm #

    Scott, thanks for sniping Cliff for this post 🙂 It is always great to hear “true life” stories, warts and all.

    My posts often paint a rosier picture, but that has been my experience.

    In the end, it is good to know Cliff thinks FBA was/is worthwhile. Here’s to a great 4th Quarter.

    Good job Cliff.

  3. Scott Pooler August 27, 2008 at 1:05 pm #

    Linda,

    What about you? Why don’t you send us your real life story of starting the ConsignmentPal directory?

    Always best when the words come from the creator of innovative businesses like yours….

  4. Henrietta August 27, 2008 at 4:16 pm #

    Fascinating and answered a lot of questions. Thanks Cliff and Scott for making it possible.

  5. Cliff Aliperti August 27, 2008 at 11:28 pm #

    Thanks again for this, Scott, I really enjoyed it!

    I think a lot of my early problems were due to a combination of a learning curve and some obvious customer support flaws. As irritating as it was at times I do recall myself laughing once in awhile and saying to support, “Don’t worry, I know this is new for you guys too.”

    I mentioned elsewhere today I think most of my problems with Amazon could have been cut-off if they simply streamlined the customer support for FBA sellers. Cut-out the middlemen and send FBA sellers directly to FBA trained support.

    Thanks again,
    Cliff

  6. Matt September 4, 2008 at 12:04 am #

    I would caution anyone considering using FBA for more than a few items. Trust me, they will screw up your inventory. I was a major retail partner with them and one of the first 3rd party sellers ever on Amazon back when the Toys R us lawsuit. I was also one of the first FBA accounts.

    Here are a list of major problems they can’t seem to get right, and the main reasons I am no longer a seller on Amazon.

    15% commission for toys – highly excessive in my opinion

    Watch out for damages! If you have a significant amount of inventory there they damage and loose things often. Even if you have a $300 item there, they only pay a max of $20 per unit no matter what if it is lost or damaged. That can cost you some serious money like it did me.

    Once your inventory is there, they allow amazon retail and other sellers to screw up the listing descriptions and make them inaccurate. Then the mad customer leaves you negative feedback because the description wasn’t right.

    Amazon retail will compete with any item that sells well and undercut you to the point where you can’t sell you inventory and then it sits and racks up storage fees.

    When you have finally had enough and want your inventory back, they stall and take MONTHS to return it to you. We still don’t have all of our inventory back and we have been trying since the first of August.

    Beware of Amazon, they will let you make them money no problem, but they make it nearly impossible to have a cost effective way to warehouse your stuff based on my experience.

    They let

  7. Ref December 5, 2008 at 4:52 pm #

    I’ve been FBA’ing for about half a year, and haven’t run into any of the problems with damaged items, but I can vouch for the excessive fees on toys. Ouch!

  8. Cliff December 6, 2008 at 4:59 pm #

    WOW – Insightful, thorough post here.

    After taking it all in (including other posts), Matt (above) seems to summarize the consensus – FBA *WILL* screw up your inventory, your feedback, and possibly your income.

    FYI – here’s a price comparison/fee chart I found:
    http://fba-problems.blogspot.com/2008/08/fba-fee-comparison-more-than-you-might.html

    And here’s a link to Amazon’s own discussion board on the subject (lots of problems documented here, too):
    http://www.amazonsellercommunity.com/forums/forum.jspa?forumID=29

    Thanks again for helping me make up my mind. I’m glad you have the time/energy to stick it out, and I hope it eventually pays off for you. Please keep us updated, let us know if the “nut-house” ever gets their act together. Cheers!

  9. Alex April 25, 2009 at 1:34 am #

    New site launched in the UK for Fulfilment by Amazon users on Amazon.co.uk. Check it out at www. fba-forum.co.uk

Trackbacks/Pingbacks

  1. Movie Profiles & Premiums � Blog Archive » See My Guest Post on Amazon FBA at Trading Assistant Journal - August 27, 2008

    […] Today’s the day for Amazon FBA. What’s that? I’ll just say it stands for Fulfillment By Amazon and then let you read about the details in my guest post over on Scott Pooler’s Trading Assistant Journal. […]

Leave a Reply