I have been working on some alternatives to Smugmug over the last 24 hours since I finally bit the bullet and decided that it is time to go, as I explained here yesterday. What I am seeing is that the sites are basically breaking down into two categories, showcase and warehouse. While my experience doesn’t [...]
About seven years ago, a friend of mine who was helping me get into photography recommended that I check out Smugmug, and a wonderful relationship was born. I love, have loved, and will appreciate Smugmug even as I am walking away from the web site. Over the last three years I have shoved some 853,000 [...]
2012 has been a phenomenal six months of some of the most intense picture viewing on my Smugmug, Flickr and Deviant Art accounts I have ever recorded. In 2011, I had around 64,000 picture views for the year and thought that was awesome, this year so far in the first six months I have had [...]
I would think that just about every third party seller on Amazon has read the article on the Wall Street Journal about Amazon and third party sellers. As a happy third party seller on Amazon myself through my company I have some thoughts on this one that some other third party sellers might agree with, or disagree with, yet in the longer run, what Amazon does, and what other third party sellers do greatly influences the products we put up for sale on the site.
Our buying decisions are simple, see something we think is neat, check the prices on Amazon, check the number of merchants offering the same product, check the pricing model to see what the discount rate is online, and then see if we can be competitive for that product. If we can’t we don’t purchase it, if we can, then we do get it from our distributor.
The biggest thing in my mind is that Amazon has become the low cost leader; they are the online equivalent to Wall-Mart. When you go into a category that Amazon has, you are competing not just with Amazon, but with their pricing structure. Some companies simply ask for the retail price and it will sit on their shelves for about two to three years before Amazon decides and the low ball sellers decide the product is not worth carrying, or it has gone out of print. It is the longer tail of retail or better prices that an Amazon seller who wants retail will need to think about if they are selling on the site. This is something we do, we will sit on products for a year or two before they finally sell, but then I also get the retail or a little over to make up for that time in storage.
We also do a lot of conventions, so we often sell our products there regardless of what is happening on Amazon. Sometimes we will sell out of a product long before it ever hits Amazon because we do both physical conventions and online sales.
One of the issues not addressed in the Wall Street Journal article is that an Amazon third party seller is also competing against other third party sellers. If the seller happens to purchase something and needs retail prices to make up for the fees charged, they are going to wait and sit on that product because some third party sellers sell well below the wholesale cost of an item just to get it off their shelves. You can see this in toys, and especially during the slower summer months.
Let take the Doctor Who Nano Recorder as an example. The wholesale price I pay for that item runs about 19 dollars, the retail price is about 38, 39 dollars depending on which supplier/distributor you believe in for pricing. The current low cost item for that is 12.99, the average price for that is 21.38, the high price for that item is 39.99. Most people are priced in around 21 dollars for the item, it is not popular, and it sells slowly. The average overhead for selling on Amazon is around 25% of the cost of the item. By overhead I mean the cut that Amazon takes, plus shipping overage because it is classic that the weight of the item and shipping costs are not always covered by the amount of money you get from Amazon to ship the item. Because it weighs over a pound, your average parcel post shipping is going to be around 9.50, of which you get 4.99 from Amazon, and the person who bought it. The other fun thing is that Amazon takes some of the postage as a service fee when selling toys to go along with that, so you actually get less postage depending on what shipping services you chose. Ebay does the same thing, so this is just another cost of doing business online.
Some quick math here,
12.99 + 4.99 = 17.98 (rounded), less shipping of 9.50 = 8.48 take home, then less Amazon fees of about 15% or about 2.70 wholesale cost of 19, roughly I would be in the hole or in the red no profit of about 13.22. I lost money, now if that is your business model that is awesome, go for it, you will not be in business long.
And that is the rub, if your business model is to liquidate items on Amazon and make sure you are always the lowest price, or the “Wall-Mart-ization” of the site, then that is awesome for customers. Customers will buy a lot of things for a penny, or discount toys, or anything under liquidation prices. This is also good for Amazon, they take money off the top, and they will always get paid regardless. It is up to the Third Party merchant to figure all this stuff out and decide what their business model is. By the way, Amazon does not directly sell the Doctor Who Nano Recorder either, these prices are independently set by other third party merchants.
Some of the Third Party merchants are huge and buy in enough quantity that they can do their own version of Amazon competition where other smaller merchants cannot do the same. These bigger merchants can and do and will reduce prices just to unlock anything from the items they are carrying, and often provide rock bottom pricing across the board, and some of those unpopular items are going to take a while to clear out of the warehouse. Prices will always be low until they are gone, even if the Third Party merchant is losing money on the deal. Other items will help make up for that loss by averaging out the total profit and loss across all their products.
Amazon is a tricky beast with many quirks that Third Party merchants needs to understand before they start selling there. There are actually better venues out there in terms of what you can charge for an item, but Amazon is the king of e-commerce right now and you would be foolish to bypass it. You simply need to know what you are getting into before you dive in. The good part is that there are awesome books on the subject (even I have written one), tons of online advice, the Amazon sellers forums, and other sites that can help you out. In the meantime, regardless of what the Wall Street Journal says, you run your own business your way, competitors come and go, your job is to sell enough stuff quickly enough in a niche so that you can make a profit.
Some of you might know that I run my own company, and we have Amazon.com as an outlet for our awesome products. In 2011 we decided early on that we wanted to use FBA, Fulfillment By Amazon for our products that were top selling to help customers who were upset about the shipping prices. We [...]
Note: Going through the back catalog of what I have written over here at Techwag, this one really popped out, because I never did find a solution for my friend. The incident of bad mouthing stopped after about 120 days, but there was so much bad blood after that between my friend, the company, and [...]
The recession still blazes on, and people are still losing their jobs right and left. A friend of mine was recently fired and as we sat drinking coffee in our other office, the question was “how do I handle this?” Handling being fired is not easy, it is not meant to be easy; it is a rejection, and few of us like rejection. It is also in some ways a betrayal, because look at all the extra hours I put in or all the extra things I did for you outside my job description. And it is also part of who we are, many of us define ourselves by what we do, who we work for, and what size paycheck we bring in.
As I sat with my friend, we discussed strategies for what she was going to do next. One of the first things we agreed on was that she will never badmouth the company, or speak well of the company. She will simply admit she worked there. For companies that rely on word of mouth for attention this is important, you do not have to say anything bad, or good, rather say nothing at all speaks volumes. Plus not saying anything bad means you get to be the adult in the room. When it comes down to interview time at your next possible gig, be honest and say you were let go, but also say that you saw this as a huge opportunity to retool, retrain, and revise what you wanted to, and this is why you are here interviewing now.
One of the other things we did was read Penelope Trunk over on her blog, she has two very good articles on how to manage being let go from a company. The two articles were on her own experience being let from Yahoo, and another one on some of the tougher decisions that she and her husband had to make when they decided to strike out on their own.
Another thing we talked about was survivability, or the “backup plan”. She had one, which I thought was rather interesting, which was to keep her skills up by volunteering at various non-profits and other organizations. We talked about the Seattle Startup Scene as one way to approach this, and we also talked about taking minor equity in some of the smaller startups for work she was doing for them. When we ran the numbers, it was a good way to defer income for later on, but she also needed to pay the bills now.
Getting income now is always going to be a challenge. There are always bills to pay, cats to feed, and gasoline to purchase. No money in means changes in lifestyle, that weekly pizza bill for 25 dollars a week could be a savings of 100 dollars a month if not spent. Not everything has to go out the window, but money management just became a needed skill. The good part is that she is married, so there is some income coming into the house, but belt tightening is in order. She decided against unemployment filing for now, hoping that she can find something in the short term. She also discussed becoming an “a-dasher” with any one of the consulting firms here in town as a possible option. Realistically, it is much easier to become an “A-dasher” (Microsoft contract employee with an orange badge) than it will be to find a decent long term job in this market. At the very least it will show that she was working soon after being let go.
One of the more interesting things to come out of the conversation though was the idea of “never again”. She really did not want to work for another company that saw her as a cog in the machine. That means she needs to start her own company, her own startup with what she knows and the people she knows outside and inside the company she used to work for or other companies and friends. I have seen this a lot in people as the recession grinds on into its third year, people worked hundreds if not thousands of extra off book hours at their job only to find out that they were replaceable. There is a certain amount of resentment on that idea of “look at all the free work I did for you”. The reality is that technology is a 60 to 80 hour work week regardless of where you are; she thought it might be refreshing to only have to work 40 hours as a contractor and spending the rest of the time working on her own safety net. She really liked the idea of starting her own company doing something she loves to do, and taking that big risk was very important to her. She needs to work out the logistics of it with the people in her life who will be most impacted, but it looks like this is something she is going to seriously do, and being the general advisor that I have been for years will help her get started.
The gamut of emotions wandering throughout the conversation was also something that needs to be discussed. Being fired is never going to be easy, and in many ways the person being fired goes through the same process as grief, we deny, we get angry, we discuss, until we finally accept that indeed this thing happened, and now it is time to do something different. There is no easy way to manage this process, there are no hard and fast answers, and while there are jobs out there, finding one that pays a living wage is difficult. What makes this interesting is that this is a hit home for me, I have been there in the past and came to many of the same conclusions that she has come to. Work can be transitory for some people; it is accepted practice to work about 3 years in a job now without taking any weird questions at interview time. What a person does with that knowledge is important, as they will be continually planning their next three year plan to make sure there is always a safety net.
Job loss is never easy, as I stated in the opening paragraph, it is not meant to be easy for multiple reasons. Hopefully though you have someone, friends, family, compadres who can help you get support you do need. There is a huge mental toll on being fired, there are huge financial risks to being fired, and there is a hugely uncertain job market right now as well. Even though Silicon Valley is hiring, things are a bit quieter in other locations. If you have been fired, drop me a note here and let me know what you did to survive it and how you overcame it. I will share these with my friend.
Note: I wrote this and I don’t think I posted it anywhere. Being fired is traumatic, it is that simple, and my friend has since moved on and gotten an awesome job with an employer she really likes. She is a temporary contractor now, but they are trying to find room to make her full time. She is questioning the idea of going full time, because she does not want to end up in another bad situation. While she loves being a contractor, I really don’t think she is going to take the FTE job that they are arranging for her. Have to see how this goes, right now though she is happy, healthy, and simply enjoying her life.
- How Soon is ‘Too Soon’? – On Replacing Recent Hires With ‘Better’ Ones (smallbusiness.uprinting.com)
- A strengthening job market reflected in numbers (news.yahoo.com)
- The February job market: not bad by recent standards (lbo-news.com)
- If You Are Going To Fire Me Today, Here Are A Few Tips On What To Say (managebetternow.com)
The comic book industry is hard, good times or bad times, the entire industry has crashed and burned so many times there should be a hazard warning out for anyone insane enough to get into this industry. The economic recession of 2008 through today has been very hard on comic book stores as customers stop [...]