I had the delight of speaking with Nathan Holmquist recently about his business. Nathan’s “Selling on Amazon’s FBA Program” was the first book I read about FBA years ago (click here for free copy) and what it did for me was clearly demonstrate how FBA works. I understood how Nathan could buy books and sell them for $4 and make money. You could see the light bulb above my head!
Nathan’s book is newly updated so if you read the old version, be sure to get your copy of the new one. It is years later and Nathan is still making a living selling books. I read his blog regularly and especially appreciate his running data updates where he shows you what he spent on a sale, when the books sold and how much money he made. Real numbers from a real seller doing it every day.
If you read my blog post last week, then you know I am using his new ScanLister software to help clear thousands of books I have in a storage unit. Acquiring and listing books is only part of the story of making a living selling books. Repricing is also critically important. I’m the first to admit I don’t reprice as often as I should and I do a lot of it manually (which makes me dread the whole process). Nathan’s success story depends heavily on repricing and I was inspired by our conversation to segment my books and focus on clearing out those lower value books. In addition to repricing my inventory this week (hooray!), I also created a Repricing Step-by-Step chart that shows the features of the major repricing software providers so you can find a solution that best fits your needs as an online seller.
Cynthia: How do you shop for books?
Nathan: Generally, I’m looking for books I can get for around $1. I go to a lot of different kinds of book sales all around the country. I love to use a book sale to pay for my travel.
Cynthia: Are there particular books you look for when scanning?
Nathan: Mostly non-fiction such as Art, Science, Religion, Self Help, etc.
Cynthia: What tools do you use to scan?
Nathan: I use ASellerTool on my Android phone with a small attached scanner. (See his video here of his set-up)The latest version lets you download the book database like a PDA, but it is on your phone. Because I have the database, I get accurate, fast data when scanning. I also don’t need a 3G or 4G internet connection while scouting which is really helpful in some of those library basements. I can also click through to get data real time if I want. It is a hybrid system.
Cynthia: When I used ASellerTool it used to take hours to download the database to my PDA. Does it still take a long time to do that?
Nathan: No. I can download in less than 20 minutes which means I can take fresh data with me on every shopping trip.
Cynthia: With Amazon limiting its FBA seller information to what it considers “competitive,” the information we get on our scanners is not always comprehensive any more. How do you know what books to buy?
Nathan: I don’t rely on the FBA data to make my decisions.
Nathan: What I’ve discovered for me is that the merchant sellers are a better indicator of whether I can sell my books for my minimum of $9.95.
Nathan: Penny books – books that merchants sell for one cent and that cost the buyer $4 after shipping – are not profitable any more. They are usually glutted with other sellers and selling at $4 or less by FBA sellers. If the book is selling for a penny by the merchants there will likely be tons of FBA sellers as well. For the past year I’ve been running an ongoing experiment with my books where I don’t even look at the other FBA sellers. Instead, I look at merchant sellers. Where I am today is that the lowest used merchant seller is selling the book for $4.48. That is, the merchant is selling the book for 49 cents and then there is the $3.99 shipping cost. Since ASellerTool gives me a choice with how I want to see the offers, I choose to see them without the shipping included ̶ I’m looking for $.49 or better. That tells me that I’ll be able to price the book for $9.95 at a minimum and likely sell it. It shaves a lot of time from the scouting process and is accurate enough that I can make a good living.
Cynthia: That’s astounding! Do you have any parameters for rank?
Nathan: Most of my books are two million or under, but I have gone up to 10 million and sold the book. You have to be patient, but if the payoff is right it is worth it. It only costs 2-3 cents a month to store a book at Amazon and I’m getting my books very cheaply. A lot of times I’m buying on $10 bag day. I started a sales rank experiment this year in April to get a feel for how long it takes books to sell at various ranks. In the first three months of my experiment I sold 38 books with a rank over 1 million of which two were much higher – 5 million and 10 million respectively. I will be updating that experiment throughout the year.
Cynthia: It sounds like you’ve really winnowed the book business down to its most efficient components – fast scanning, fast listing, outsource labels to Amazon and automated repricing.
Nathan: Yes, for what I call the “commodity” books. These are books that are generally sellable between $10-$15. To work within my system, a commodity book needs a barcode so I can scan quickly and send to Amazon to apply my labels. Books without barcodes are only worth my trouble if they look valuable like textbooks, art books, etc., which are NOT commodity books and I scan and list them separately. Rather than set a price for my commodity books, I set a floor. I let my repricer set the price based on that floor and some other rules. This makes listing much faster because I don’t have to price and I don’t have to put on labels. I can get several hundred books out the door in a couple of hours. This works particularly well when I’m traveling and don’t want to spend all my time processing books!
Cynthia: For those commodity books, how do you reprice them?
Nathan: I use ScanLister to list them and then Repricit to reprice them. With ScanLister, I use one fixed price for everything. Since I reprice every day, I know they’ll be quickly re-set to an appropriate price. I have a set of rules for Repricit for the various types of inventory I sell. I can control my floor – critical to my strategy – whether to match the lowest FBA seller, the Buy Box owner and how much below Amazon I want to stay. I have rules for whether or not there are FBA sellers. If not, for example, then I match the lowest merchant price, plus shipping and an additional 20%. If there are FBA sellers, I can set it up so I match rather than go below the lowest FBA price. I can reprice by segment. Repricit knows how long my books have been at Amazon, for example. Books that have been in my inventory for less than 90 days are priced with a floor of $9.95.
From any given book sale, I generally sell about 50% of my books in 90 days and 67% in six months and 70% in a year. Those that don’t sell in 90 days are repriced with a new floor of $8.95. After another three months, I’ll drop that to $7.95. After a year the returns diminish significantly. I might lower them more or get rid of them. Again, these are the inexpensive books. My strategy for high value books is different. I’ll hold on to them for years if it makes sense.
Cynthia: How do you keep from repricing your high-value textbooks, art books and similar books at these low prices?
Nathan: I can exclude certain MSKUs from the repricing with Repricit. You actually taught me a fast way to do it in one of your blog posts. You sorted an inventory spreadsheet downloaded from Amazon to show the most expensive inventory items at the top so you knew which products required the most personal attention. I used my spreadsheet to help me quickly pull out the high-value MSKUs and exclude them from my daily repricing rules.
Cynthia: Do you sell exclusively on Amazon or do you sell on eBay and other marketplaces, too?
Nathan: I sell almost of my items on Amazon FBA. Occasionally, I will sell something obscure on eBay.
Cynthia: Are there particular categories that you scan at a book sale or will you scan any section?
Nathan: Mostly non-fiction such as Art, Science, Religion, Self Help, etc.
Cynthia: With ScanLister you don’t have the option to replenish. Does this mean you have multiple MSKUs for the same book/condition for sale at a time?
Nathan: Yes, I suppose. I’ve never had an issue with that.
Cynthia: How do you list and reprice your high-value books?
Nathan: Many times I will list my high value books with Inventory Lab and price it myself. I will then put that MSKU number in the “exclude items” section on my Repriceit account.
Cynthia: What is your ratio of commodity to high value books?
Nathan: 70% of my sales are books priced at $9.95 at lower.
I think it is important to note that while I’m primarily searching for these low end books, I will inevitably stumble across books that are worth $20, $40, and $100. That is one of the benefits of scanning so many books.
Cynthia: Do you sell books without bar codes?
Nathan: Absolutely! I put those in a separate pile for processing. I have found many of those have value. Plus, many sellers don’t take the time to manually type in the ISBN number at book sales. There are many valuable books without bar codes that are left behind at book sales which creates an opportunity for me.
Cynthia: How many books do you send in to Amazon per month on average?
Nathan: To be honest, I don’t really keep track. I’m not as big as a seller as I used to be. I think at one point I had 20,000 books in Amazon’s warehouses. These days, I have around 4,000 books for sale.
Cynthia: Do you sell retail arbitrage also?
Nathan: I’m starting to get into online retail arbitrage. Right now, I’m getting one item for $6 with shipping included. I’m consistently selling it for $25-$35 on FBA. The best part is that I’m the only seller selling that item. I can definitely see the appeal for that business model.
Cynthia: How are your rules for repricing different for new, non-book items vs. books?
Nathan: I don’t have enough new, non-book items to set a repricing rule. I just exclude those from my repricer and price them myself.
Cynthia: You said you reprice every day. How long does that take you? Or does it take you any time? Is it all pre-scheduled? If so, how much time a month would you say you spend repricing?
Nathan: It’s all automated so it doesn’t take any time at all. It’s all done on the “back-end” so I don’t see any of it.
I have it set to reprice every day at 10am. So at around 10:15, I will get an email with all the price changes. That way, I can go over the changes if I want to.
One thing that really appeals to me about Nathan’s business model is his laser focus. He started with books, understands
books and is selling books. Anyone who is having trouble finding inventory to sell on Amazon, needs to re-read his story. I often tell my private clients to focus and drill deep rather than cast wide when they are struggling to find inventory to sell. Learn one category really well and in a short time it will seem like inventory is suddenly everywhere. It would be fun to scan a book sale with Nathan. It would look like books were jumping into his arms!
Nathan uses Repricit and is very happy with it. I use ScanPower’s repricing program which I’m happy with. It comes for free with ScanPower List. For this week’s blog I prepared a chart of all the major inventory repricers out there for FBA sellers. While it is tiny below, you can see the full PDF with live hyperlinks in the FBA Library HEREunder “Bonuses,” and “Step by Step Guides.” If I missed one you think is a significant repricer, or if I made a mistake it is all on me. I used information on various websites to pull this together in one place. Please let me know so I can adjust the chart!
Interested to learn more about Nathan’s book sale experiment results? Check out his blog at www.booktothefuture.com and search for “Book Sale Experiment” to see all the posts. Want to know more about ScanLister? Check out last week’s blog post.