Selling Grocery and Gourmet Foods on Amazon

Transcription

1 Selling Grocery and Gourmet Foods on Amazon By: Skip McGrath Copyright by Skip McGrath and Vision-One Press, 1004 Commercial Ave, PMB 223, Anacortes, WA All rights reserved. This book does not come with resale rights and may not be resold or reprinted in any form without the express permission of the author. Short quotes from the book are allowed for publicity purposes.

2 About the author: Skip McGrath ~ ebay, Amazon & Website Seller, Author and Trainer Skip McGrath and his wife Karen began selling on ebay in 1999 and expanded to selling on Amazon in Skip is the publisher of the ebay and Amazon Seller Newss, the oldest and largest ezine for online resellers. He is also the author of 17 books about online business and selling on ebay, Amazon and from websites, blogs and social media. Prior to starting his ebay business Skip had a 25-year career in international marketing and held executive positions at two Fortune 100 companies. He also started a number of businesses including a microwave component business in Silicon Valley and a highly successful antique shop in the Hudson Valley of New York. Skip and his wife Karen still sell on ebay and Amazon every day and Skip is still writing and publishing newsletters, books and blogs at the Online Sellers Resource. Print / Copy Shop Notice: Copy shops may make one copy for the personal use of the reader. If a copy shop requires specific permission, they can me at auctions@isomedia.com

3 The Legal Stuff This book contains statements and claims relating to how much money one can make using these methods. Please understand that these are estimates and projections. The exact amount you can make will depend on your talent, your experience, and how hard you work at it. New US Federal Trade Commission (FTC) regulations require that if I state any amount of money I have made, or someone using these methods has made, then I have to state the average amount of money that everyone who read this book made. Well, as you can imagine, I would have no way of knowing that! So to comply with the law, let me say that although myself and other people have made differing amounts of money with these methods: The average person who bought this book made less than one-cent (US$0.01). I have no way of knowing if you are average or not. So as you read examples about the amount of sales and money made, please keep that statement in mind. All websites and URLs in this book were current at the time of publication. However, websites change, may be taken down, or moved. The publisher and the author are not responsible for the content contained in any website mentioned or featured in this book, nor shall they be liable for any loss or damage arising from the information contained in this book. As with anything you do in life there is no substitute for good judgment. This book may contain links to websites that may offer products and/or services for sale. Some of these websites pay me a commission if you make a purchase through my link. However, I wish to assure you that I only recommend products and services that I use, or have used, and ones that come with a complete refund. If you ever have difficulty getting a refund from any product I recommend, please contact me and I will assist you. My policy on affiliate links is: If I wouldn t recommend it to my mother or my sister I won t recommend it to anyone else. Amazon, ebay and the Amazon or ebay logo, and any other logos are the property of those companies. All references to ebay, Amazon and other trademarked websites or properties are used in accordance with the Fair Use Doctrine and are not meant to imply that this book is endorsed for advertising or other commercial purposes or properties.

4 Introduction The Gourmet Food category on Amazon is huge and growing. This is an excellent niche for a small seller with limited start-up funds. There are several ways to source food items. 1. Retail Arbitrage buying from local stores such as Trader Joes, Sam s Club, Costco and Big Lots, etc. This method works very well and is used by many sellers. 2. Buying from local suppliers at Farmer s Markets and Street Fairs. This is my favorite way to source because I rarely have any competition. 3. Buying from local Food Distributors. To find these companies, simply google Food distributor and the name of your city. When the results come up, pass on the large grocery distributors and look for the small specialty distributors. 4. Create your own food product I do most of my sourcing using methods 1, 2 and 3. I haven t tried creating my own products, because of all the US Federal labeling requirements.

5 Locally Sourced Gourmet Foods Chapter 1 I have written before about how I negotiate exclusives on Amazon thereby insuring no competition for the buy box. One of the easiest products to do that with are gourmet food products that you find locally from small entrepreneurs. They can be jams, cooking sauces, hot sauces, packaged nuts or trail mix, jerky, spice mixes, honey, olive oil, dried mushrooms almost anything that is packaged, bottled and not fresh or frozen. Farmers s markets are known as the place to find fresh, local produce but almost every farmer s market I visited there have been several vendors selling locally-made bottled or packaged food items. I have also found packaged/bottled food vendors at street fairs and flea markets. The idea is very simple. You approach the vendor and ask if they sell wholesale. If they say yes (and most of them will), you offer to be their exclusive rep on ebay and Amazon. You could offer to do it on consignment, but I prefer to actually purchase the product in case lots and sell it myself. Most food vendors will not be interested in consigning product without cash up front. Here are just a few of the products I have found locally that I am now selling on ebay and Amazon:

6 I honestly don t know why, but for some reason buyers will pay insanely high prices for gourmet food items on Amazon, when they could find them locally for much less if they just shopped around.

7 At the moment I have a total of 20 different products from 6 different local vendors on Amazon.

8 Chapter 2 My Selling Strategy Notice that in all of the listings, I am selling two or more of each product. The reason for that is so I make a larger sale. Remember that Amazon s order-handling FBA fees are $2.41. If I were selling one bottle of the Sesame Ginger sauce for $9.99, that $2.41 fee would represent 24% of my selling price. But at $19.99 for two bottles, it s only 12%. I have some products where I take this a step further and sell three, or even four, of each to kick up the price thereby increasing my margins. My goal is to get my price point as close to $20 as I can. Finding Out What Sells Besides selling locally sourced foods, you can also source gourmet food products from food distributors. Just Google gourmet food distributor and the name of your city. For example: Seattle gourmet food distributor. This will bring up both large and small distributors in your area. Some of the larger ones will not work with you, but most of the smaller ones will. I have two such small distributors here in Seattle near where I live that I can buy from in one-case lots and they ship right to my door. It s easy to find out what is selling on Amazon. Of course, if you have a specific product you want to check you can just type it into the search box. But if you want to know what the best selling products in any category are, just select the category and leave the search box blank and hit Go. I did this for Gourmet Foods and discovered that where Amazon used to just list the top 100 best selling items in the broad category of Grocery & Gourmet Food, they are now delivering up a selection page, where you have to select the sub-category of food item you want to view. This makes it easier on the shopper, but it really sucks for doing research. Now you have to click on all the sub-categories to view the best selling products. Anyway I did this. I clicked on the subcategory of oils (since one of the products I sell is olive oil) and got this result.

9 Amazon always serves up their search results to display the best-selling products that relate to the search term a customer types into the search bar. As you can see 5 of the 6 top selling oils are Coconut Oil and the other one is Walnut oil. So guess what I just ordered from my local gourmet food distributor in Seattle? I am waiting for my first shipment of Coconut oil. (I am already selling Walnut Oil).

10 Chapter 3 Things You Need to Know Licenses You do not need any special type of license to sell gourmet food in the United States as long as it is already in a retail package. You only need licenses if you are manufacturing or bottling the food. (Note: I am not sure of the regulations in other countries, but I have seen a lot of food items selling on ebay and Amazon sites in other countries) Sales Tax & VAT One of the big advantages of selling food is that practically every state in the US exempts food from sales tax. Most countries with Value Added Tax (VAT) either have no, or reduced VAT on packaged food items. What You Cannot Sell Amazon has a restriction on glass jars containing liquids that are larger than 4-ounces (volume not weight) being shipped to Amazon FBA. That used to be a total restriction, but Amazon recently changed the rule to allow larger glass jars if the top is double sealed. We use shrink wrap and a heat gun. ebay does not have similar restrictions, because they do not have warehouses Shipping One advantage of sourcing locally is that you can simply arrange to pick up the product at the Farmer s market, or drive to the supplier and pick it up. This is a real advantage, as some products such as sauces tend to be heavy and costly to ship. If you buy from a distributor, then you will need a commercial address to ship to. This can be a mailbox rental place, or many storage locker and/or U-haul places will do this for a small monthly fee. Pricing your product As I mentioned earlier in the article, both Amazon and ebay buyers will pay high prices for gourmet food products. This is truer for Amazon if you use FBA, because of free super-saver shipping on items over $25. When I find a product I want to sell, my rule of thumb is 1/3 rd for Amazon, 1/3 rd for product cost and 1/3 rd for me. So if your product cost is say $6, then you would want to sell it for $18. Expiration Dates Expiration dates are not required by law but are considered good practice in the industry. Amazon announced a policy last year, that all food items sent to Amazon FBA must have an expiration date at least 90 days out and once a product reaches the 50-day mark, Amazon will pull and destroy the inventory with no reimbursement to you. (Amazon will, however, move the inventory to unfulfillable for a couple of weeks to give you time to submit a removal request before they destroy it). Products that can melt You have to be careful with any product that can melt at high temperatures. Amazon actually has a policy regarding chocolate. Amazon will not accept any chocolate products into an FBA shipment during the summer months. But products can melt at other times. (This happened to me when my products were shipped to a warehouse in Arizona in October when it is still quite warm in Arizona). Packing and Shipping - If you are selling a single item, you can just place your unique product label over the existing UPC codes and pack all the items in a well-packed box packed in such a way the items will not break in shipment.

11 If you are bundling (or multi-packing) items, what I like to do is wrap each item in one layer of bubble pak, wrap a couple layers of shrink-wrap around them and place them in a zip lock bag. Then I put my label on the zip lock bag. If you want to go a step further, you can put them in a box, seal the box and place your label on the outside. Make sure to cover any existing bar codes on products and on the shipping boxes also. Do not use loose Styrofoam peanuts in your shipping boxes, as Amazon does not allow this.

12 Chapter 4 Conclusion Gourmet Food is a great little niche that anyone can do. I know the final values are not that high, but you can make some excellent margins. On most of my items, I make between $7.00 to $15.00 profit after shipping and Amazon FBA fees. But the quantities I sell are excellent. Here is an example (see below): Look at the White Lightening Hot Pepper Sauce that I sell for $ After Amazon commission and FBA fees, my net on that product is $ My cost on the two bottles is $3.44 so that is a profit of $8.99 on each sale. That is almost a 300% markup. During the holiday selling season from November to December, I raised the price to $17.99 and completely sold out. Here is an olive oil product I sell where my cost is $14 for two bottles and I am selling them for $39. My net is $30.70 after Amazon fees, which is a profit of $16.70 per sale. This product sells about 4 to 5 per week year round, butmore in the Fall, as we get close to the holidays. In last year s run-up to Thanksgiving I was averaging over ten sets per week and we were completely sold out by Christmas. Those are two of the products I am now shrink wrapping the bottles. Even though they are sealed, Amazon requires a double seal on any glass liquid containers that exceed 4 ounces. I have been showing you Amazon listings so far, but here is an example of an ebay listing for one of my products:

13 My cost on those two bottles is under $ another $6 to cover my free shipping, ebay & PayPal fees average about 14%, so my net after costs is about $11.49 I average about 30 Gourmet food SKUs on ebay and Amazon at any one time. On those, I average about 10 to 12 sales a day or about $98 a day in profits after cost, shipping and ebay & Amazon fees. And that is just my food items. I also have about 500 additional SKUs on Amazon. Remember Amazon works 365 days a year, so $98 a day is $35,770. Imagine my profits when I have about 60 active SKUs on ebay and Amazon, which is where I plan to take this niche. So this weekend head out to your local Farmers Market or street fair and start sourcing these profitable items.