North American Remote Fulfillment (NARF) - Sign Up if You Haven't Already!

This year, Amazon started a program called NARF (North American Remote Fulfillment).  NARF allows you to sell your items on Amazon Canada and Mexico via your FBA inventory without having to send any inventory to Amazon and Canada.

Advantages

I'm a little late to this party but in case anyone isn't on it, as far as I can tell it is very worthwhile to participate in NARF.

1. Once you are set up, there is no extra work to continue selling.  Amazon takes whatever listings you have that are eligible and automatically adds your inventory to Amazon.ca and Amazon.com.mx
2. Amazon automatically calculates how much money you would make via selling on Amazon.com and sets your prices including the current conversion rates on the other marketplaces so that you earn the same amount for each sale.  Distributions go into your amazon.com banking option.  Nothing changes!
3. As you change your price on Amazon.com, your price will automatically change on other marketplaces as well.
4. Customers pay import fees and buyers take ownership of the item while still in the US so you don't need to deal with any extra international bureaucracy and taxes.
5. Seller Fulfilled listings are automatically removed so you don't end up paying shipping to Mexico and Canada
6. You might sell items that just aren't selling on Amazon.com (happened on a few items for me).

I've even had to raise my price on some items on Amazon.com that weren't selling on Amazon.com but were selling very well on other marketplaces.

Disadvantages

There are some disadvantages to the program but not too many that I have noticed:

1. Inventory Lab - If you use Inventory Lab, like I do, IL only supports sales o Amazon.com and therefore you have to add in your profit separately for NARF sales.  Hopefully this becomes a big problem because that would mean my sales are significant :)   
1. I already deal with this for eBay and Walmart and the time investment is minimal.  I download all my sales at the end of the year, put it into excel and add a column for my COGS (and shipping costs for eBay and Walmart) and sum up all my profit and add manually to IL.  Accounting for FBA is very difficult because of all the fees associated with shipping in and keeping your inventory at a fulfillment center.  If you are just accounting for sales it is a much simpler process.
2. Your inventory often stays in your account for longer.  Amazon offers free shipping to prime customers in Mexico of 5-9 days and in Canada for 7-12 days, so your items sometimes stay in your inventory (presumably while paying storage) for longer so it takes longer to get paid
3.  I have yet to experience the return rate or lost item rate so I can't comment on that.  Returns come back to America so that is not an issue.
4. You need to get ungated separately on each platform.  Just because you are ungated for a brand on Amazon.com does not mean you will be ungated for a brand on Mexico or Canada.  In fact, for some brands I was ungated on Mexico but not Canada.  🤷

How it is going so far

I am posting my sales here on both marketplaces based off units.  You can see that I am not going to get rich doing this but the investment is so minimal that it was definitely worth the small effort for me.

You can see that I am selling many more units on Mexico than on Canada.  This could be because the population of mexico is significantly larger than Canada, but just as important, I am gated for a large toy company in Canada but not Mexico and during December that was probably just as important, if not more so.

I am working on getting ungated on Amazon.ca as well to increase my sales there

You can see more details on the NARF Program here 

How to Sign Up

To Start you need a North American Unified account, enable FBA export and you need to apply to sell on Amazon Canada and Amazon Mexico. Make sure your application goes through fully.  I was delayed about 10 days or so (really important December days) because I thought I was signed up for Canada but my application needed to be verified. 

You also need to be signed up for FBA in those locations.  Try to make a shipment and it will tell you that you need to apply for FBA.  You don't actually have to go through with creating the shipment but need to apply for FBA.

Then you need to enable NARF which is found under the "Inventory" dropdown menu.  You will see Remote Fulfillment with FBA

Once there, follow the prompts to enable the program (you may have to click "program settings" in upper right), international listings will be generated and you can usually start selling same day or the next!

If things go really well, you can consider to start sending actual inventory to FBA fulfillment centers in Canada or Mexico, which I'm sure is part of Amazon's goal.

How has NARF been going for you?  Is there any downsides I am missing?  Would love to hear your thoughts!

Be Flexible - Amazon FBA in the Age of Covid 19

It's time for my annual post!

As in most sectors, selling on Amazon with Coronavirus around has been different and has presented its problems and challenges.  Thankfully, as opposed to many sectors, there has also been a push for more online shopping so while the challenges are there, opportunity abounds for those who are able to take advantage.

In my business I have seen both the challenges and the opportunities.  I want to walk you through them and how I've tried to deal with them and hopefully that is helpful for you.

FBA Inventory Limits

Problems:

1) In March, Amazon started falling behind on FBA orders.  Prime shipments for non essential items were delayed a month or more and amazon started severely limiting how much of any particular non essential item you could send in. 

2) There were lots of suspensions for price gouging on essential items as they came under short supply.  There wasn't a lot of logic to what caused a price gouging warning or suspension but it caused a lot of fear among sellers.

Solutions:

1) More FBM - This is not a solution that I was able to implement in my business (for reasons I'll explain) but if you switched to fulfilling items from your warehouse you could take advantage of the lack of supply of prime and you could even deliver the items significantly faster than prime.  Many times, Amazon gave the buybox to a more expensive FBM over FBA because FBA delivery was so slow.

2) This was the time I was able to get rid of a ton of excess inventory at Amazon.  Items that been a problem with way too much inventory, all of a sudden, I didn't have enough.  The speed of sales of some specific items switched extremely fast and you knew that other sellers couldn't send in very much to meet the demand.

3) Switch to essential items.  I've had to pivot my business many times over the years so this is pretty natural to me.  Instead of the usual items that I sell, I started switching to other items temporarily like food, feminine hygiene products, etc.  Inventory of these items were not limited and if you could somehow find them prices were excellent and you couldn't buy enough to meet the demand.

On the other hand, once things got back to normal, a lot of these items got overbought by everyone and now the prices have unsurprisingly plummeted.


4) Avoid Personal Protective Equipment (PPE) during a crisis.  I had many, many opportunities to buy various types of masks and gowns and gloves in the height of the crisis.  I've been around long enough in the selling community to know I didn't want to get anywhere near them. 

I would recommend avoiding them always unless your supplier is 100% legit.  The last thing you want is for someone to buy a faulty mask from you and you are responsible for that person's health.  Besides that, during a crisis Amazon has, is and will continue to crack down on items needed for that crisis (think water during a hurricane).  It's just not worth it.  Yes, you can make thousands or tens of thousands of dollars, but you can lose your business and have the attorney generals's office going after you..

Local Business and Warehouse Shutdowns 

Problems

1) During the crisis, many local business voluntary shutdown or were forced to shutdown.  This meant that your warehouse may no longer be available to you.  That could completely shut you down.  This happened to my local warehouse until they got an exemption because they were considered an "essential business."

2) People got sick.  In one of the warehouses that I used, quite a few employees got sick, some even had to go to the hospital and this was during the thick of the pandemic in NY/NJ.  It was a really scare time.  The warehouse, which normally had 1.5 employees per day working on just my stuff, now had 1 person 1x a week sometimes and sometimes no one was available at all.  I complete understood but it doesn't change the fact that it basically shut me down for a while, at least from them.   This is essentially the reason I could not pivot to FBM, see above.

3) Need for Social distancing.  Even after people returned to work and were healthy again, the employees needed to socially distance.  You couldn't have as many people working at the same time so again I went from 1.5 employees per day to 1 employee 2x a week.  This lasted for a couple of months and they are still limited in how many people work with my stuff and it is thankfully unrelated to anyone actively being sick.

Solutions

1) Be understanding with your warehouse, it is a pandemic after all, but be flexible and get access to more warehouses.  I don't use just one warehouse.  I have 2 that I often use and 1 that I rarely use.  I was able to pivot from 90% at my main warehouse to almost 100% at my secondary warehouse for a while.  This allowed my business to continue functioning.  We are now back to about 60% primary and 40% secondary. 

2) Pay your employees better.  During Covid, the same job took a lot longer and couldn't be shared among employees.  In addition, prices on Amazon went higher on my products.  I temporarily increased the commission I paid to my buyers (who certainly needed the money) to reflect how much longer to took to do literally the same thing.  This was especially important for those who lost significant income from their regular jobs.

Conclusion

The challenges of Covid have been real and numerous but if you are able to be flexible in your product choice and your warehouse choice, the demand for online shopping can more than make up for the challenges.  These can be some of the most profitable months you will see for a while so take advantage if you can.



What challenges did your business go through? How did you overcome them?  I would love to hear from you in the comments

Radically New Amazon Storage Rules and What They Mean for Me

Amazon has released their new storage fee calculations for this year.  The changes are broken down into three groups, short term storage fees,  long terms fees and inventory management.  The new systems start in April.

Short Term Storage Fees

Short term storage fees (storage fees assessed on your inventory at fulfillment centers the previous month) have been increased across the board.  There is a $0.05 per cubic foot increase.  If you were selling a standard sized item which was exactly 1 cubic foot, rather than paying $0.64 per unit, you now pay $0.69 per unit.  If the item is 1/2 of a cubic foot you are going from $0.32 per unit to $0.345 per unit per month.  It's a 7.8% increase in storage fees for standard sized for 9 months of the year.  The same $0.05 is added for oversized units though the percentage increase is lower.

The October through December extra storage fees continues, again with a $.05 increase in storage fees per cubic foot.

Long Term Storage Fees

Rather than just increasing fees across the board for Long Term Storage Fees (LTSF), Amazon has radically changed the way LTSFs are calculated.

Rather than assessing LTSFs twice a year, they are now assessed monthly.  Every unit that has been there for 6 months or longer will now incur a severely increased monthly storage fee.  This fee is less than the biannual fee, but when you consider that it will have been charged 5 extra times after 6 months, it comes out to significantly more than the previous system.

In addition, any unit that has been there for more than 365 days will incur a minimum of $0.50 per unit monthly charge.

This is an all out assault on long term storage at Amazon Fulfillment Centers.

Storage Limits and Fees

Unit now, everyone was given specific storage limits for standard and oversized units.  Now your storage will be determined by your inventory performance index (must be logged in to access the link).  If you have more than a 350 you will have unlimited storage.  If you have lower than 350 you will be warned and if it continues you will receive inventory limits and cannot create a new shipment until your inventory gets below your limit.  If that hasn't happened by the end of the month you will be charged $10 per cubic foot above your storage limits.  Evaluations are done every 3 months.  You can read more about it here.

You can see that the index is made up of your excess inventory, keeping popular products in stock and how much of your inventory is stranded.

Ramifications

Smaller is better

As usual this affects larger items much more than smaller items. Focusing on smaller items should be much more profitable via FBA.

Faster is Better

Items that are slow moving are going to hurt a lot more.  Cycling through more volume is better for storage than slow (even if profitable items).  Slower moving items will have a far greater chance for LTSFs since it only takes 7 months to get there now.

Sending in Pallets is less beneficial

Shipping with pallets is much cheaper than individual boxes, especially as you said multiple pallets.  That being said, sending multiple pallets of a single items is going to be more difficult while still avoid LTSFs.  Mixed pallets should be unaffected.

Gaming LTSFs is Gone

It used to be that if you sent in an item after mid February or after mid August you could get almost a full year of storage without paying LTSF since your item wasn't at a FC for 6 months when LTSFs came around. That is gone.

Active Inventory Management 

You (at least I will) will need to have a much more active inventory management system in place.  You can't just check twice a year before LTSF to make sure you sell everything.  You will have to check every month.  It makes large catalogs much tougher to work with.  Consider an autopricer to help you.

Prices Will Decrease

There will be a ton of people lowering prices right now.  Previously you could hold onto a video game indefinitely a pay less than $0.20 a unit of storage per year since they were so small.  Now, you will pay a minimum of $0.50 a unit per month every month that it has been there for more than a year.  People will look to dump their bad positions.  The fees start soon so sellers will need to lower now to make sure to avoid these fees.

Long term I think prices will increase as sellers will go out of stock more frequently but short term prices will go down in my opinion.

Store Less at Amazon, Fulfill Less via Amazon

Storing outside of Amazon is more important than ever.  If you buy 300 of something and you only plan on selling 30 a month, don't send all 300 in.  In addition, if you fulfill orders on your own (FBM, Seller Fulfilled Prime or other marketplaces), you will avoid these fees entirely. 

Once you have your own facility and are doing more fulfillment on your own, other marketplaces will start to become more attractive, especially if sellers start to have to raise prices on Amazon to keep their margins within reason.  Customers may start looking elsewhere for better prices.

Conclusion

Amazon has the right to raise their fees.  Sellers can't stay static, they need to react appropriately to remain profitable.  You don't want to turn around months later trying to figure out why you aren't making money any more or why you are making less money.

As always, good luck selling!

A Lot Has Changed in 6 Months...

Massive Life Change

If you used to follow this site, you definitely would have noticed that I haven't posted in a bit more than 6 months and even then posting has been sporadic.

Just a few brief words of explanation.  There was a major upheaval in my life.  I moved out of America.  It's always been a life goal of mine to move to Israel and I was almost successful 2 summers ago.  It didn't happen then but in August I finally did it.  

Moving to another country is hard.  There was a ton of paperwork to fill out and meetings to go to before we left and getting everything set up once we arrived.  Government bureaucracy is not fun, especially when it is in a language that isn't your mother tongue.  Just ask any immigrant to talk about their first month in America and you'll probably get an ear full.  All the while I've been trying to keep the business afloat and successful.  So that's what's been happening and why I've been radio silent.

The fourth quarter can be stressful so I thought this might be a bit cathartic. 

Business from Out of Town is Different

You Aren't There at the Warehouse

Running an Amazon business when you aren't in the country and you aren't in the warehouse consistently is a big challenge.  You need to have perfect records and people you trust there. I rely on email, What'sApp and phone calls to communicate but I won't pretend that it's the same.  It's not.  It's different.

You are very much relying on your worker's paying attention, that they aren't stealing from you, that they notice if something came that was different from what you ordered and aren't just putting it in a box to send to Amazon because that's easier for them.  If there is something in the corner that hasn't been selling, they may not mention it to me but when I was there I would look around and see if there is product that has been unfairly ignored.  You just care more when it is your own business.

Social engineering is very important and for that reason I plan to somewhat regularly (2x a year?) come in, see what's going on at the warehouse, chat with everyone, take the manager to lunch, etc.  It's critical to keep lines of communication open.  They aren't going to keep doing a good job because they like their job, they are going to keep doing a good job because they like the manager, they like me and the manager likes me.

You Aren't There for Buying Either

I can't do retail arbitrage anymore unless I pay someone which I haven't had time to set up.  While I don't particularly like retail arbitrage, I had come to tolerate it.  It's so annoying that the margins tend to be even better.   I don't miss it at all, I mean at all, but the money was good.  Oh well, it's part of the process and until I get a buyer to go to stores for me it's not happening and I'll still live.

It's not just retail arbitrage.  I was close with a few neighbors and we would help each other out.  If there was a quantity limit on an item, I would have them purchase and it would show up at their door.  I'd go pick it up for them and take care of it.  There was almost nothing they had to do, just an order, and even that was highly profitable since they kept the portal bonuses and loyalty points.  I can't do that anymore.  That means that during my upcoming trip I will be moving things back and forth from friend's overflowing basements to the warehouse.  I've tried to pay them more to bring it themselves but they aren't interested.  Again, it's the new normal and something I knew going in.

The Business Has Changed

I'm amazed at how often the types of deals I'm interested in has changed over time.  I used to sell a lot of expensive electronics and I rarely sell them now (Q4 is a bit of an exception since it is easier to find great margins still).

I haven't had nearly as much time in the last six months to research deals as I would have liked but I've been able to keep everything going.  In fact, both sales and profits are up despite my time output being stagnant and many times less than years past and that's for two main reasons:

• I have focused on replenishables.  I don't have to really think about those other than paying attention if there is a sale on them.  This allows for minimal time output while continually increasing sales as you increase your repertoire of replenishables.

• I go bigger than I used to.  While I have always had the mantra of "Go Big or Go Home."  I have decided that I need to go even bigger.  If there is a good deal that earns $5 a unit and 60% ROI but I can only buy 2, guess what, I'm not buying it.  Even if I can buy 5-10 I'm probably not buying it.  Every SKU takes time for accounting and logistics and pricing.  It's not worth it for 2 of them.  My standard purchase is about 20-30 and during the fourth quarter my standard purchase is 50-100 to start.  If an item is a replenishable that has gone on sale, I might buy 400-500 if I can.  There are certainly times I get burned but that's happening less and less thankfully.

Move to Self Fulfillment

I have been trying to do more fulfillment on my own.  I'd like to sell more on Walmart which requires self fulfillment, in addition the more that I can sell on my own, the less reliant I am on Amazon in general.  There is also a lot fewer accounting nightmares trying to get all the product back that Amazon has borrowed permanently from me.  Even more critically, it allows you to sell before other sellers can because they are waiting for Amazon to receive their shipments and the eventual race to the bottom.

This hasn't been quite as linear an experience as I would like but I do think I've been making progress.  Often I buy 50 of something I will leave 10 back at the warehouse for self fulfillment and send in the other 40.  That way I can sell off while prices are high and still be in stock until my FBA stock comes in.

This is a picture from shipstation for the last 30 days of all my self fulfillment but it is mostly from the major shopping days and I don't have too many self fulfillment sales outside of those.  As you can see, even in self fulfillment is by far the most.  Of the six I have to ship today, four of them are Amazon FBM.  Two are items that the FBA units are on their way for the first time and 1 is something that sold too fast for me to restock FBA in time so I will sell FBM until I'm in stock. 

At some point this year I would like to move into Seller Fulfilled Prime.  That will likely really ramp up my self fulfillment operations but you have to make sure you have a good system in place and that your team is ready for it..

Goals for 2018

I have not been happy with the inventory channel softwares available currently that aren't $500+ monthly.  My sales on other channels just can't justify that type of expense, though it might get closer if I had one.  My plan is to work with a developer to create my own that suits my needs.  I hope to have that done early in 2018.

Private labeling.  I haven't done it yet but the plans are already in the works.  I am in the testing phase now.  The thought of getting suspended for an Intellectual Property claim on someone else's product scares me a ton.  I would like to have a full line of my own products on Amazon (and maybe my own site?) at some point but I will start with one :)  In order to not spend a ton of money importing a product that I don't know I can sell I am starting to slowly build a listing from scratch and once I have proven I can do it, it will be time to go the overseas route.

I don't expect to write too often in the future but this was kind of nice.  I hope you enjoyed it too :-)

FBA Temperature Sensitive Deadline Coming Up In May

Amazon warehouses can get up to 100 degrees in the summer so Amazon places restrictions on what can be sent to their warehouses from May 1st until September 30th.

If you have a lot temperature sensitive items at fulfillment centers now is the time to sell or place removal orders if you aren't able to sell by the end of the month.

You can't sell FBA from May through September but you can sell FBM and without the competition of FBA sellers, FBM can be extra lucrative during these months as long as you take shipping costs into account.

Doing well on Amazon is often about finding inefficiencies in the marketplace and exploiting them.  Sure this is more annoying and more work than FBA but use it to your advantage and you can sell a lot of chocolate. just make sure it doesn't melt on the way....

Selling Microsoft, Sony and Nikon No Longer Restricted on Amazon

HT: Ben

In a quick turnaround, it looks like the restriction on selling Microsoft, Sony and Nikon brands on Amazon was a short term glitch. These brands are no longer restricted.  I checked a few products of each brand and none were restricted.

Amazon Restricting Random ASINs?

A few people sent me a blog post from Lisa Suttora who is reporting that Amazon has begun to restrict FBA sellers from creating shipments on certain ASINs due to increased inventory at Amazon Fulfillment Centers.

These restrictions are coming without notice which is the only problem with this policy change.


I have not encountered this myself and no one I know has encountered this either but there are comments on her post that same the same as well.



It would be pretty bad if you are allowed to sell something as new, you buy it and then try to make a shipment and you aren't able to.  It's a waste of time and possibly money




The error message is


“You are already at the maximum inventory allowed for this product, due to capacity or other restrictions. This product must be removed from this shipment.”



There is one thing you can do to protect yourself but it is a bit annoying.  You can start a shipment with any particular ASIN before you purchase it to make sure Amazon will let you send it in.  That's pretty time consuming.



I understand that Amazon doesn't want their fulfillment centers to become storage units (I am guilty of this myself - I have over 4,000 units at FCs currently), especially long term storage units (less guilty of this) but changes should not be without warning.  

It could be that there will be more changes coming regarding storage fees or other ways to discourage hoarding inventory at FCs but I cannot be sure.


Have anyone come across this?  What was the rank of the item and in what category?  Let us know in the comments!