I had a good run. I have been selling on Amazon going back to the days when they had auctions. I bet you didn’t even know they ever had auctions! After that I switched to selling on Amazon using the Merchant Fulfilled process. Someone would buy a product from me, and I would ship it to them. I began using FBA (Fulfilled by Amazon) back in May of 2011, when I was having some medical issues and would be out of commission for a while. A client gave me tons of CDs, DVDs and books to sell for them and I was game to try this thing called FBA.
In no time, I was in heaven. I scanned the bar code of books, CDs and DVDs, set a price and then shipped many large boxes to the Amazon warehouses around the USA, before my hiatus. Using their highly reduced rate for shipping those heavy boxes was such fun. One could see that being a high volume shipper like Amazon has it’s advantages!
After sending in hundreds and hundreds of items, I watched the sales pour in during my recovery phase. Who wouldn’t like making money while reclining on the couch? After I was back up to speed, I sent in at least one and more often multiple boxes per week to the Amazon warehouses. I even used UPS pick-up to make things much easier and convenient with those boxes. I shopped for products that would sell for at least triple the price I purchased them for, in order to at least double my money. The rule of 3X was my guide!
At one time I had almost 3,000 items in various Amazon warehouses around the country. In order to become competitive, I started using a repricing software. In one month alone, I had over $10,000 in sales! I was hooked! Amazon shipped out thousands of packages for me that were purchased by their Amazon Prime buyers. At the same time, I was also selling on eBay. When one platform performed well, the other might be slightly down and visa versa. It was an ideal way to sell online! That is, until it all changed. Here are ten reasons I have decided to stop selling on Amazon using FBA!
1) Amazon began charging enormous fees for Long Term Storage. My 3,000 items would cost a fortune to keep in their warehouses if they were not fast movers. Okay I get it, people were just sending in anything and everything and space is money! I had to become more selective of what I shipped into them.
2) There was pressure to collect sales tax from the states where I had Nexus. Nexus means the location where my stuff was located became my location of doing business. Even though they were online sales, I was responsible for collecting sales tax in about fourteen states including my home state of California. Thank goodness for software like TaxJar! Follow this link to learn more about what they do!
3) After taking about a month to set up all the states where I had Nexus, which included getting business licenses from all of them and filling out endless paperwork online, my tax reporting became pretty automatic. Out of the lot of fourteen states, five were monthly, six were quarterly and two were annually. I did spend a couple hours each month, paying and filing! Again, thank goodness for TaxJar, who imported my numbers and gave me a step by step of how to report. I have to admit it became a hassle and time suck, especially as my overall sales dropped. I was doing a lot of work for very little return.
4) As for my eBay selling, I became sales tax compliant on that marketplace, too. I had to collect sales tax from eBay buyers from the same states I collected for sales on Amazon. Again, TaxJar came to the rescue and was easy to set up, but I can’t tell you how many angry eBay buyers needed calming down. I had to give refunds to many of them because asking them to pay for sales tax when I wasn't physically located in their state became a “deal breaker”. I am happy to eliminate this hassle as I continue to sell happily on eBay! Now I only need to collect sales tax from fellow Californians! That is easy to do with the eBay tax schedule included in my listings. I only am obligated to report my sales tax for California State Board of Equalization once every July.
5) Amazon became more restrictive in what products I was allowed to send in. If an item was deemed HAZMAT (hazardous material) or was a “gated” product, I couldn’t sell without sending in receipts from multiple vendors. Frankly, I picked up most of my CD’s and DVD’s at garage sales and rummage sales, so I had no receipt. If a DVD sold for over $25, I was locked out. A lot of those items were my bread and butter as far as sales went.
6) Amazon became more competitive among fellow FBA sellers. I used to be one of the only people scanning at my local library sale. However, the writing was on the wall when the library themselves began scanning everything before they put the books out on the shelves. Good for them, but who needs that as competition, and so many others.
7) Amazon kept raising their fees. In order to make any money, I would have to sell higher priced items. Anything priced under $20, and higher for items priced under $10 was subject to a larger percentage Amazon fee. In some cases, I was losing money with a sale because it was not priced high enough. I don't need pay Amazon anymore than I already do!
8) I didn't want to jump on the bandwagon of producing my own products in China, to sell as the only seller on Amazon, known as "White Label". The cost upfront for that process was something I was not willing to pay. I did sell one "white label" product that eventually sold out, which did make me some money. There are lots of sneaky sellers on Amazon who piggyback on one's listings just to try and get ahead and I didn't want to have that happen.
9) I am tired of buyers on Amazon not leaving feedback. After almost twenty years, I have received less feedback in that whole time frame overall than in just one year of eBay. So if a single buyer leaves a negative feedback on Amazon, it really can hurt ones numbers and standing with Amazon. One can asked for it to be removed, if warranted, but that takes time and management of ones Amazon account. No more.
10) I am tired of living in fear of being kicked off of Amazon. I have heard stories of folks waking up and being locked out of their accounts for a random selling mishap. Amazon is not very forgiving. It did honestly happen to me in selling T-Shirts through the Amazon Merch Program. After selling what were approved t-shirt designs, one day I was reported by someone I didn't know and the next day I was gone. Even with an appeal, there is no getting back into Amazon's good graces. Frankly, I didn't want to go through that with my regular FBA account. So I ended my Professional account and kept my Merchant Fulfilled in place (buyer pays, I ship) and now save $39.99 per month. I am not looking back. My eBay biz is in full swing and I am happy to be playing in that sandbox for now!
Full disclosure: I am still a Prime member for buying stuff on Amazon. I like getting FREE 2-Day Shipping on all the things I buy that are designated PRIME. I am glad for the experience of selling as an FBA seller on Amazon, but I am glad to be done for all the reasons above!