What Warren Buffett Says About Amazon FBA Fees

amazon fba fees

“You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple…”   ~ Warren Buffett

Amazon FBA fees are changing, again.  I have seen a lot of people in the Amazon seller community get pretty upset about it.  Some to the point that they are picking up their toys and going home, threatening to leave the platform.

This may sound harsh but that is a dumb decision.  If you think leaving the Amazon platform is going to hurt Amazon you may be suffering from confirmation bias at best and narcissistic delusion at worst.

All of this complaining got me thinking about a few things.  First, it brought to mind Warren Buffett’s quote at the beginning of this post.  When circumstances are in flux, which is a constant in the e-commerce field,  people tend to be scared.  Everyone likes things the way they were.

Gordon Gekko

This fear is a signal to me that it is time to be greedy.  I don’t mean Gordon Gekko greedy.  I just mean that it may be wise to think about growing your business rather than getting out of the business.

Let me drop some knowledge on you.

If you didn’t already know this e-commerce is a pimply faced, voice cracking, getting hair in weird places pubescent teenager.  It seems to have grown an inch overnight but it still has a long way to go before adulthood.

In case you missed the analogy, this is good news!

Online retail sales accounted for 8.1% of the total retail sales landscape in the second quarter of 2016.  Amazon owns a HUGE chunk of this market.  In fact, it is reported that Amazon accounted for 81% of the growth of online sales in the third quarter of 2016.

If you think that trend is going to come to a halt soon or Amazon is going to try and move away from online retail, please, share with me some of what you are smoking.

We, as third party sellers, have the opportunity to ride this wave.  Allowing Amazon to do the heavy lifting of storing, picking, packing, and shipping our inventory.  In addition, they also get to figure out how to stay ahead of Walmart, Jet, and other competitors.  In return, we pay them some FBA fees.

Sounds like the deal is skewed in our favor a bit.

Now, I’m not saying that you should put all your eggs in one basket.  In 2017 I plan to grow my business outside of the Amazon sales channel.  I believe it is wise for our backup plans to have backup plans.  But, for now, Amazon is a cash cow for us as sellers.  It would be unwise to slaughter it.

When I sat down to write this it was meant to be a piece discussing the changes coming down the pike in regards to Amazon FBA fees.  It turned into a bit of an opinion piece.

If you would like to see the breakdown of what is coming in regards to Amazon FBA fees you can do so here.  I, honestly, don’t think it is as bad as what some people are worried about.  In fact, I think if done right, you may be able to see yourself break even compared to your 2016 fees.

Please do me a favor.  Leave me a comment letting me know what you think below and join me over in my Facebook group Clear The Shelf (Amazon FBA) so we can continue this conversation.

Clear The Shelf

Tips from an Amazon Wife

Before my husband ventured into the world of Amazon and all it’s glory he was an insurance agent for his family’s company.  I was a wedding and event planner with my own company (still am…Rose Grant Weddings & Events).

We have one son, he is our world, and is now 3. When I was pregnant my husband and I talked about all the things we wanted to do with our son and how we wanted to raise him, taking him to the zoo and teaching him about all the animals, numbers, colors, and so much more.  Unfortunately, that was something we would have to plan to do on the weekends. My husband had a 9 to 5 job, as most people do, he technically worked for himself but he still had to punch a clock.

When our son was about eight months old my husband wanted to add income to our household because, as those of you with kids know, THEY ARE EXPENSIVE!

He started shopping thrift stores and selling things on ebay.  We couldn’t believe the profit that we could make by selling a tie that had been donated, then thumbed through by the masses.  One designer tie bought for $1.00 could sell for $80.00 online…WHAT?!?!

We were hooked!

We started slow then invested more and more into our new business. Then another surprise…books. One textbook bought for $2.00 at goodwill was going for over $200.00.

My husband, being the smart inquisitive man he is, read article after article to learn more to grow our business and signed up for an amazon seller account and thus we embarked on the journey of a new found way of life.

Expectations

 With the success of thrifting on the weekends and the benefit of having a husband that was eager to provide more for his family, we decided that he would quit the insurance agency and focus solely on Amazon.

Take a deep breath and here we go.

My husband had built up a great book of business at the insurance agency and we were comfortable, but seeing the potential of Amazon and seeing what we were bringing in from that left us with dazed dollar signs in our eyes.

There was no limit to the profit we could make. We could easily send our son to college (if he wanted to), we could take family vacations even.

The lingering feeling of leaving a steady income behind, an income that made us comfortable to embrace potential was unsettling. What if sales fell through? What if this doesn’t work out? What if we fail?

Well, I married a man that would never let that happen. He was too eager and too hard headed to fail at anything.

Selling on Amazon meant working for himself and working from home and that was a huge bonus. No more getting up finding something that didn’t have baby puke or sticky fingers from our son, and leaving his family to go to work every day.

We slept in a bit and dress was casual and by by that I mean for a small period of time there was a 3 day a week pajamas only days.

But there was no time to just sit around and binge watch Netflix, we had a business to run!

Reality

 Let’s be real, women have this stigma of shopping till we drop.  For the most part this is very true. I, however, am not your average woman. I like to get in and get out when it comes to shopping. I hate to linger and browse, I know what size I am and I know what I like.

My husband on the other time takes more time and that was why he was perfect for “sourcing”.  A term our family would come to know all too well. That meant that pajama workdays faded and my husband was sourcing ALL THE TIME. He was hitting all the stores, clearance sales,  and chasing all the hottest trends…who knew adult diapers were such a big seller online and could be sold for a profit at that.

So fighting the urge to sleep in and work in pajamas our business grew and I was able to help as well.

In between planning weddings I was roped into helping the home business and put in charge of packing and shipping. Sounds like a big honor, huh?

Well, really I was just given the task of taking the stickers off all the products my husband was buying.  That is no easy task, let me tell you.  I embraced finding creative ways to make my part easier (thank God for scotty peelers and heat guns).

TRADE SECRET: you can get almost any price tag off with a scottie peeler some lighter fluid and a heat gun.

My dinning room, much to my dismay, became a distribution center. With my husband out sourcing all the time I was never in need of something to do. Boxing up inventory was like a big game of adult tetris and our local UPS driver became a good friend, partly due to the beer we gave him after picking up big shipments.

Do’s and Don’ts

Working from home is great.  With our son in preschool now we had the day to work and get things done and shipped into Amazon. However, sometimes days ran into the night and having a little one running around isn’t always easy while running a business out of the home. Having to tell your son that he can’t have the toys on the dining room table because they were for daddy’s work became difficult at times.

My husband found a network of other Amazon sellers and was making great contacts. He set up shop in our basement to make important phone calls and have time away to send emails and work. But as anyone who has a home business and a family knows it’s not always easy to get things done. Being on the phone while your family is upstairs and your toddler is screaming “I want a snack” or “Daddy wipe my butt” can be tough.

On a normal day at the Grant Empire you can hear two dogs barking, a toddler pressing the boundaries of youth and me wrangling the house trying to keep some order to life. This can make my husband’s job more difficult at times. We fell into a system that seemed to work. We brought my husband’s work area upstairs so we weren’t constantly screaming down to the basement.

We moved the packing and shipping department to the garage so I could have my dining room back and we made it a point to work while or son was at school.  We made sure to be willing to be flexible in case an important email or some online arbitrage needs to be completed in the evenings.

Working together can be a big blessing, especially since both of us own our own home based businesses. But just because we are home together more during the day doesn’t mean we spend “quality” time together as husband and wife.

Sure he’s sitting right next to me but we are both working and that doesn’t mean we have the time to cuddle and share our feelings. So, we still need our date nights or sometimes lunch dates.  Amazon has really been a positive endeavor for our family. My husband is happy with what he does and he’s good at it.

There are so many avenues that you can make money with on Amazon that there is never a dull moment. It has given my husband the opportunity to provide for our family in new and creative ways.

He has made trusted friends in the same business and despite working very hard he is able to take the day off to take our son to the zoo and teach him about the animals and to the park just to blow off steam and run around.

We occasionally “netflix and chill” in our pajamas because that’s a benefit of working for yourself but my husband, being the man he is, he is always eager to work and provide while conquering each new hurdle that is thrown at him.

Please let us know in the comments what tips you have for making working with your significant other better or easier.

~Rose Grant

3 Tips to Help Your Amazon Business on Green Monday

green monday

Green Monday is right around the corner, literally.

How can you take advantage of Green Monday to take your Amazon business up a notch?  Good question, thanks for asking.

Here are some tips on how to take advantage of Green Monday for yourself and your business.

Pricing

Have you been pricing inventory high waiting for the competition to go out of stock?

It may be a good time to evaluate inventory levels and prices of your competition.  Green Monday can be a great day of moving your inventory if you choose to do so.

It isn’t completely necessary if you want to hold out just a bit longer.  There are still plenty of shopping days left before Christmas.  If your plan is to hold out for the highest prices of the season and wait for the last minute shoppers this would also be a good time to ensure your prices are not too low.

It can be a difficult balance but it is worth taking a little time to be sure your inventory is priced the way you want it to be.

Buying Inventory

Black Friday and Cyber Monday were killer days for purchasing inventory.  I know because not only did I buy some but I also made some massive shopping lists for people.  Hundreds of items were profitable to be flipped on Amazon.

There are reports that Green Monday is going to be very similar to Black Friday this year.

Online retailers want to be sure to compete against Amazon’s all year round low prices and move as much inventory of theirs as possible before the end of the year.

Green Monday would be a good day to be in front of a screen doing some online arbitrage.  You can even spend today looking through some Green Monday ads here.

If you need any help on becoming a ninja at online arbitrage please check out my in-depth tutorial about Tactical Arbitrage.

Check out OA Feed

This tip will be a bit self-serving, so forgive me.  However, I think it can be incredibly helpful.

If you keep an eye on the deals we post at OAFeed.com not only can you find some good products to flip on Amazon but you should be able to start down some rabbit trails.

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For example, if we post a Nerf gun that is profitable it would behoove you to start going down the trail of ancillary products.  Maybe Nerf darts are profitable, perhaps an off brand of dart shooting gun is good.

What other types of items would someone purchasing a toy gun buy?  Maybe an action figure, toy cars, or hot wheel tracks?

It’s a great service (in my humble opinion) that we offer a couple of free online arbitrage leads during the weekdays.  But where the real money is is those rabbit trails.  Looking for the “shoppers also viewed” areas on the website you are scouring can uncover some extremely profitable finds.

What are some tips you have for fellow Amazon sellers to take advantage of on Green Monday?

Leave a comment below, seriously, it’s like catnip for a blogger!

How to Stick it to Uncle Sam as an Amazon Seller

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*Note:  I am not a CPA.  I’m not even good at math.  However I have been self employed since the tender age of 18.  I have spent a lot of money on CPA’s, I have made a few mistakes, fixed said mistakes, and gone on to save a lot of tax money.  Not all of these ideas may be for you but they are available for you to use.

As an Amazon seller I believe it is our duty to keep as much money from the taxman as possible (that may make some of you cringe).  I say this because we have a duty to our families, to our employees, and to our business to grow, succeed, and invest.

Taxes may do some good.  We all like roads, bridges, and Yellowstone National park.  However, I believe, we can do much more with our money than the government can.  Heck, they are spending like 4 Billion (with a B) dollars on some new Air Force One planes.  I know they need to be replaced but you would think we could spend just a few nickels less to do it.

Anyway, enough talk about the government.  Let’s chat about how you can keep more of you green in your pockets and in your business as an Amazon seller and stick it to Uncle Sam.  In a legal loophole kind of way.

I’m going to break this up into a bunch of smaller points so it is easy to read and you can easily refer back to this at a later date.

Broke Uncle Sam

Home Office Tax Deduction

As an Amazon seller you probably work out of your home.  That means you can likely get the home office tax deduction.

This deduction can be tricky.  If you use your home as your exclusive place of business then you qualify.  If you have a warehouse but typically reprice, call vendors, do Online Arbitrage, or other things related to your business and that part of your home is exclusively used for that it’s expenses qualify for the home office deduction as well.

What you will need to do to get the proper discount is figure out how much space your place of business takes up.  For example, my business takes up 400 sq ft of my 1400 sq ft home (honestly).  That equates to 28.5% of my home.  I can now deduct electricity, gas, internet, cost of repairs, etc. for my home as an indirect expense to my business.

I suggest, even if you have a warehouse, trying to maximize this loophole for everything you can while staying within the confines of the law.

Here is a IRS Publication 587 regarding home office deductions so you don’t have to go looking for it.

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Mileage Deduction

This is one of my favorite deductions as an Amazon seller.  Why?  Well, let me answer with a few questions.

Do you go to the bank?

Do you practice retail arbitrage?

Do you ever go to the post office or UPS store?

Do you ever go pick up prep and packing supplies?

My guess is the answer is yes to all of the above.  Unless you have a huge operation and everything gets delivered.  Even then you will have mileage expenses.  Someone has to cash the big checks!

If you properly track your mileage you will be able to deduct 54 cents per mile from your gross income.  I do this using the Quickbooks Self Employed App.  It keeps track of all my mileage and then all I have to do is sort what is business and what is personal.

This tactic helped me drop my income in 2015 by over $10,000.  Here is some boring legalese to backup my claims.

rodney back to school cameo1

Education

No, you don’t have to go back to school to take advantage of this deduction.

This deduction applies to courses, books, conferences, and more.

This is one of the reasons I never feel bad about buying educational resources for myself.  Not only am I often learning something new and supporting a small business owner but I also get to remove that money from my income at tax time.

As long as it is quality information I am usually exceedingly happy to spend the coin to gain even a few ideas.  Chances are I will be able to make even more money from those ideas in the future.

Supplies & Equipment

This is actually two separate deductions.  However they are similar, minus one rule.

Office supplies, shipping supplies, and all the other things that go along with running your Amazon business are tax deductible.  Make sure to keep track of those items, of course.  Any time you buy boxes, labels, scotty peelers, extra scanners for retail arbitrage, pay your prep center, and so on.  Those little things will add up over time.

Equipment can also be a huge deduction.  These types of purchases can be deducted in one of two way.  You can either take 100% of the cost in the year you purchased the equipment or you can depreciate the equipment over 5 years.

I tend to take the deduction in the year I bought the equipment.  For example, I picked up a new Macbook Pro this year.  That will be deducted from my income.  However, in some instances, say buying a forklift or a gaylord dumping machine you may want to depreciate those purchases over 5 years.  This may be beneficial if your income isn’t extremely high but you have purchased equipment.  You can spread out the tax relief over several years.

Do not be worried which way you decide to go with this decision.  There really is not a right or a wrong answer.

Subscription Based Software

We Amazon sellers tend to have a lot of subscription services.  It can make sourcing, packing and shipping, and inventory management so much easier.

Just remember that these subscription costs are tax deductible.  So, as long as you can afford it, load up on them.  Not only will they reduce your taxable income but many of them are extremely helpful.  If they aren’t please cancel them.

Here are some services that I personally use and get quite a bit out of.  Much more than the actual fee.

Tactical Arbitrage – Arguably the best Online Arbitrage Software on the market

StoreFront Stalker Pro – A killer extension designed with Tactical Arbitrage in mind.

RevROI – This is self-serving since I built it, but, this helps you make sure you are maximizing cashback and discount gift cards.

Flippin.it Pro – This is a great and inexpesnive tool to help you with Amazon to Amazon Flips

Travel, Entertainment, Gifts, and even Meals

We are Amazon sellers.  We don’t travel much.

WRONG!

I have been to more conferences while being an Amazon seller than ever before.  Three of them in the course of about four months.

All of those expenses.  Airfare, hotel stay, tips, Uber rides, dry cleaning, and everything else that goes along with life on the road is tax deductible.

Except meals.  Meals are only 50% deductible while traveling.  I’m ok with that, you have to eat anyway and you get to take a bit of it off on your taxes so I’m not sure we can complain much.

If you are buying gifts for store managers, wholesale contacts, or meeting with suppliers and taking them out on the town.  All of it is deductible.  Make sure to maximize those savings.

Insurance Premiums and Retirement Savings

Since you are self employed you probably pay your own health insurance.  Those premiums are also 100% deductible from your taxes.  Go ahead, splurge on the platinum plan!

You are also able to maximize your retirement savings.  Did you know you can contribute up to 25% of your net earnings to a SEP IRA?  You also have the ability to sock away up to $18,000 in a 401k plan if you choose to do so.  You get to do this and deduct the money from your income!

Child Labor

Yeah, you read that right.  You can actually hire your kids and deduct what you pay them from your taxes.

Now, you have to be a sole proprietor or a partnership where only you and your spouse are the only partners.  The children must actually be paid.  Then there are several other caveats you can read about  if this is a strategy you wish to employ.

On top of the savings, you get to teach your kids work ethic and have them involved in something that isn’t sedentary like video games.

The Tax Drawback

Here is the one place I really dislike the tax law.  If you are self employed you have to pay double the social security tax.

This comes out to 15.3%.  The good news is that it is on your net profits not gross.  So be sure to maximize every single deduction you can.

Let’s Help Each Other

I am sure I have missed something here.  I’m only human.

So, would you do me a huge favor?  Would you leave a comment with your best tax saving strategy (not paying them doesn’t count, I’m looking at you Wesley Snipes).  Then share this with your Amazon seller friends.

I’d love your help in trying to make this a go to post for people to learn how to stick it to Uncle Sam!