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My readers have such great questions. I try to answer personally when I can but that is getting harder as volume increases. This week I thought I’d reprint some recent questions in the hopes that others may have had the same question. In addition, there are some follow-up answers from the recent sales tax blogs. Have a great week selling!

Q. Do You Have Any Recommendations For A Smartphone To Use With This Business?

There are two approaches to this question:  1) buy the phone outright and pay for a lower per-month plan; or 2) get the phone cheap or for free and pay more per month on an ongoing basis.  A friend of mine chose the first option and paid about $200 for an Android phone and then got a cheap ($40/month) month-to-month unlimited data plan. I chose the second option and paid one penny (yep, 1 cent) for a top-of-the-line Android phone from Amazon.com’s cell phone store. I was locked in to a two-year contract, however. My son has an iPhone and between the two of us, our bill is about $120 a month or about $60 per month each.

An Android phone will be significantly cheaper than the iPhone usually (unless you are buying an older iPhone model perhaps).  4G is better than 3G without a doubt.  Chris Green uses Sprint.  I use AT&T. We are both happy with our service providers. I’m not a fan of T-Mobile.  My husband has that with his work phone and it seems to have a lot of problems with service quality. Your best bet when choosing a service provider is to do some online research in your area and find out which providers have the best coverage at the highest speed. It doesn’t make much sense to pay extra for a 4G phone, for example, if no one offers 4G service in your area.

Q. Is there a HazMat issue with shaving cream? I’m worried about it exploding from the pressure during shipping.

I’ve never sent in shaving cream, but I did send in a toy once that shot webbing out (Spiderman webbing) and they confiscated and destroyed it with no reimbursement for me.  Basically, anything under pressure is a problem. This link will take you to the latest list of possible HazMat items from Amazon Shaving cream is on the list.  In the future, if you are not sure and your item isn’t on Amazon’s list, call Amazon first and ask to speak to an FBA specialist about HazMat.  Hopefully he/she can save you the trouble of shipping it in if it is forbidden under HazMat guidelines. You can still merchant fulfill the item, of course.

Also, even though something is on this list or not on this list, doesn’t mean you have the right answer. In other words, some cameras are sold on Amazon even though they have batteries in them and there are many items that are HazMat that aren’t on this list like my Spiderman web shooter. They allow teeth whiteners even though they are technically HazMat.  Fun, right? Your best bet in doubt is to call first.

Q. Can Amazon customers see the seller’s email? I’m wondering if I should have a special email or if my Yahoo account is OK…

All email correspondence with a customer gores through Amazon’s system which changes the email addresses on both ends. You can’t see the customer’s email address and they can’t see yours. So use any email you like. Be aware, that you are not allowed to put in hyperlinks, phone numbers, email addresses or URLs in any correspondence with a customer.

Q. I have some friends who would like me to sell books for them on Amazon. They have entire cases full of books they want to get rid of. What do you recommend in terms of a consignment arrangement?

Generally, there are two approaches to this. You can offer them a flat sum for their items and then sell them and keep the profit. This is, basically, the garage sale approach except you will likely be offering them better than they could get at a garage sale, plus you are collecting and disposing of these items for them which is valuable. In this scenario, you might offer them a flat 25 cents, 50 cents or $1 for each book/item you can sell which is much better than Half Price Books will give them. Are their books textbooks and expensive looking non-fictions or are they mostly best-selling novels? That will help you determine what to offer.

The other approach is a shared consignment. In that case, you offer to split the profits together in some sort of equitable split. Profits are after expenses are taken out including shipping, all Amazon fees and a reasonable amount for materials (say 3-5 cents a book to cover your cost for boxes, tape, labels, packing paper, etc.). For example, you might offer them 40% of the profit. When you send in their books, be sure to use a unique SKU so it will be easy to pick out their sales. You can reconcile with them once a month until all the books sell.

What would this look like? Most books I sell are in the $7-$12 range, which means you’ll clear $2-$5 after fees and shipping.  40% would be $.80 – $2 for your friends for a typical book. In this case, they would make more per book, but it might take longer to get it.  The benefit to you of this approach is no out-of-pocket costs to get the inventory – you can pay with your sales. There is more bookkeeping on your part, however, so you’ll need to weigh that in your decision-making.

For the books that you can’t sell on Amazon, take them to Half-Price Books or some other used bookstore. They will generally give you a nickel to 10 cents a book, but sometimes you get lucky and they pay more. You could also post an ad on Craigslist selling them by the boxful for $3-$5 a box. There are plenty of merchant fulfilled sellers who will take those books and sell them on Amazon. The nice part about this approach is they pick up the heavy books at your house. The downside of this approach is they pick up the books at your house. If you are worried about crazy Craigslist people, meet them somewhere well populated for the exchange.

Q. Is there any way I can compare the rank of an item from when I sent it to Amazon vs. when it sold? I have a CD that sold at 205,000 rank and I’m wondering what rank it was when I sent it in.

I’m afraid rank is only a snapshot in time. There is no way to go back and find out what a rank was when you bought it versus after it sold. The rank of 205,000 that you saw was after it sold which tells me that this is a fairly slow selling CD, plus the fact that you sent it in December and it just sold now (late March 2013).

When I’m experimenting on rank in a new category or one where I don’t have a lot of experience, I will take note of my “experiments” to see when they sell. For example, if I buy a CD at some high rank, I’ll make a note of it and then when it sells, I’ll note that to myself. I bought a bunch of CDs at a book sale for 10 cents apiece which makes for an excellent and inexpensive test for me. I noted the ones with the highest, a middle rank and a relatively low rank to see when they sell (so 3 or 4 CDs, not all of them). I once bought some fancy shampoos in beauty for what I thought was a relatively low rank – WRONG! It took nearly a year to sell even one unit. Ideally you want to be the only FBA seller for that item so it is more likely you will be the next sale. Also, I usually price near the merchant prices for these experiments. In other words, you don’t want to be testing too many factors in your experiment when you are testing rank.

Q. I’m Overwhelmed By The Thought Of Incorporating. Do I Have To Incorporate To Start This Business?

You don’t have to incorporate to get started with Amazon, but eventually you will want to for financial reasons.

Here are two books I recommend about incorporating that explain the whys and hows of it in plain English:

Incorporate and Grow Rich

Start Your Own Corporation: Why the Rich Own Their Own Companies and Everyone Else Works for Them

Whether or not selling on Amazon is the right business for you, these books will help you in any venture you start-up.

Q. I have 12 of the same item (used books) how do I label them – all with the same label? What if I have different descriptions for some of the books?

This reader uses Scan Power and my answer relates to Scan Power. Each condition requires a separate SKU. Amazon perceives them as separate products. If you have 12 books, you need to condition them. If they are all “good” for example, then you can send them in together under one SKU.  If you need to write notes, add them to the one description. This description may say “has personal inscription on first page and minor highlights and notes” and only a few of the books actually have those issues. For the other people who get their book without a personal inscription or notes, they are happy.

If 2 of the 12 are “very good” or “like new,” then you should send them in a separate batch. In other words, click “ship” for the 10 that are “good” (plus whatever else you had in the batch). Then start a new batch and scan in the book again. This time, change the condition and notes in Scan Power to “very good.” It will try to automatically make them “good” since that is what you recently sent in. You have to edit the listing – sometimes twice to get it to take. Then you click ship again and add it to your existing batch in the shipping queue. Now you have 10 “good” and 2 “very good.”

Q. Amazon keeps having me send multiple items to warehouses all over the country which is expensive and inconvenient – what should I do?

It depends. If the other warehouse is one where I send merchandise fairly regularly, I will simply wait until I have a full box which makes the shipping cost lower (Scan Power and Amazon let you add to existing shipments on the Shipping Queue). If the extra shipping cost to the other warehouse cuts into my margin too much I can either take the goods back (walk of shame…) or I can try to re-list them later in a separate batch (delete the original shipment, in other words). Sometimes when I do that, my goods are suddenly going to my regular warehouse again.  As a final option, Amazon will allow you to combine items into one box. Be aware that they charge for this service and they charge a per-item fee for everything in your box not just the extra items.  If your items are fairly bulky like toys, this may not be a big deal because you can only fit a certain number in a box anyway.

This service, called Inventory Placement Service, allows you to send all quantities of a single merchant SKU to a single fulfillment center. They charge 30 cents for each standard-sized item and $1.30 for each oversized unit. Standard size is up to 18”X14”X8” and 20 lbs. Anything bigger is oversized. You can change your settings with Amazon such that they will always do this for you when you have multiples:

  • Go to “Settings” and “Fulfillment by Amazon.”
  • Under “Inventory Placement” option, click “edit.”
  • Select your preferred option
  • Click the “update” button.

Obviously, you need to make sure you have enough margin in your items to cover these additional fees.

Q. Does Scan Power offer a Canadian version of its software for the new Canada FBA program?

Not at this time. You will need to either use Amazon’s listing system or find a vendor who has a Canadian version. While Amazon’s version is less efficient, it is free, which is a huge boon to a new seller.  Right now, the following vendors providing listing software in the U.S. and perhaps in Canada, too.  If you find a vendor you like down the road, I would greatly appreciate an email letting me know so I can help future Canadian customers:

 

Q. Big Lots won’t let me use my sales tax certificate and get credit on its rewards program. Is there a workaround for that?

Until recently I would have said “no,” but one of my readers told me how he does it.  Steve submits his receipts after the fact into the rewards program. There is a number on the receipt that you key in.  What you do is login to your Buzz Club Rewards.  Scroll down to the bottom of the page.  You will see “Add a prior Purchase to Acccount.”

Q. How can I check to make sure that someone else doesn’t have my Amazon seller name before I register it with my state and get a tax ID#, etc.?

My suggestion for you would be to search for your seller name on Amazon beforehand.  You can do this at Amazon.com.  Go to the search box and put in your desired name. Amazon will then bring up everything related to that name. IF it is the name of a seller, you’ll find that out by clicking on one of the products and looking at the FBA sellers for that item. For example, in looking at a product recently, I saw that one of the other sellers was “Iggy’s Toy Shoppe.”  I typed that name into the search bar and a whole bunch of toys came up on the screen. I clicked on one of the toys and looked at all the new sellers and found Iggy’s Toy Shoppe. If I was really interested in Iggy, I could have clicked on his/her name and I would have been able to see the complete online catalog of Iggy’s inventory which is pretty cool. Anyway, that’s the only way I know to do it.

One thing to think about when choosing a name is to either choose a name that is very similar to other, big-name sellers or very different from everyone. If the name is similar, then you get some of their reflected glory when people shop because they might think you are someone else. If the name is very different, you stand out and people remember you. I knew my name was unique and didn’t even look on Amazon in advance because I had done a nationwide search for my name long before I sold on Amazon.

My other advice about choosing a name is not to use your real name as part of it. While this is likely to make it more unique, you’ve now created a potential problem for yourself in that it is much easier for people (crazy people are the ones I’m worried about here) to find you outside of Amazon. You want all your correspondence with customers to go through the Amazon interface. So pick a name that is not easily traceable.

Lastly, there’s a really good chance that no one has your desired name. Amazon’s FBA program is still young, compared to eBay or other sites like that. There aren’t that many sellers and so a reasonable effort at a unique name is very likely to win the day.  Good luck with your new business!

Q. Why are the Amazon sales tax reports wrong?

I’ve not been able to get a straight answer on this topic from Amazon which is unusual and frustrating.  However, I got two very helpful answers from TaxJar.com and online seller Keith Yockey on the ThatKat! Facebook group One of the issues I raised in my blog was Pennsylvania and how when I sold in Philadelphia or Alleghany county, Amazon wasn’t collecting extra taxes.  According to this terrific blog from TaxJar.com, we don’t actually owe extra taxes in Philadelphia and Allegheny County because PA is what they call an “origin-based” sales tax state. Since the Amazon warehouse is not in Philadelphia, nor in Allegheny County, we will never owe that additional tax. We can set the tax to 6% for all transactions in PA and collect what is required.  See the details here at Why Amazon Doesn’t Collect Local Tax Rates in PA. I feel much better knowing that.

According to Keith Yockey, Amazon uses a third-party provider to figure tax.  This is why there is no one at Amazon who can answer our questions about the reports – they are not making them.  It would be nice if Amazon would tell us this instead of driving us mad with stupid and wrong answers. Keith runs a Facebook group called Stop Sales Tax Fees Now where they are currently talking about the sales tax bill in the Senate and House right now.

Q.  Do I need to pay sales tax in all the states where Amazon has a warehouse or just the states where Amazon is paying sales tax?

The short answer is “the former.” Many people have noticed that Amazon is only paying taxes in nine states right now and not all of them even have a warehouse.  What are FBA sellers like us supposed to do?  On this issue, there are 20 years of state sales tax law dictating that what we are supposed to do. It is just that most did not comply. Why should we? If Amazon wasn’t paying sales tax, why should we? Things have changed now that Amazon is being sued by all the states to pay up.  They’ve settled with nine so far, but more will follow. 

To be clear, though, what affects Amazon does not necessarily affect us. Amazon has a lot more physical locations than warehouses, plus they own many entities like Zappos and Woot! that have nothing to do with us selling on Amazon. Sometimes they are complying even without a physical presence.  In New York, for example, they don’t even have a nexus but have agreed to pay anyway. That does not mean we are obligated to pay in New York.

So what’s new in the last year or so? The states have claimed – successfully – that a warehouse is a physical presence (nexus). That does affect us since we sell online and store our merchandise in Amazon’s warehouses. If I were storing my inventory in my home or a storage unit instead, for example, then I would only owe sales tax for Texas.

Amazon often moves inventory around after we send it in to a warehouse. They do this to keep inventory close to potential customers.  So I may never send merchandise to Pennsylvania, but later I’ll find out that the PA warehouse delivered my goods to a customer.  Because of this policy of Amazon, I have to list with all the states where there are warehouses if I want to be in compliance.

For this reason, I’m signed up or in the process of signing up in 13 of the 15 states where Amazon has a warehouse. Two states (Delaware & NH) do not collect sales tax.

Q. I clicked on one of your “Step-by-Step” links and I was asked by Scribd to pay a fee to download/print the PDF – what gives?

This problem should be resolved now. My online document storage company Scribd decided to monetize its site and didn’t tell its users that all their previously free content was now premium.  I’ve changed my Scribd settings such that this should never happen again.  However, if you are still getting the message, it may mean you need to clear your cache or reboot your computer such that the Scribd “cookies” go away and your internet browser will display the new settings for you.