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Scaling OA with a Prep Company

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In my most recent post, I outlined a roadmap to success for building a business instead of a job.  If you haven’t read it yet, here are the Cliff’s Notes:

  • Start up – launch your business quickly and on a minimal budget, prove that the model works.
  • Scale up – optimize your business, focus on efficiency, and pursue growth.
  • Step back – outsource wisely to create a hands-off business that protects your most valuable asset: time.  If done correctly, this will create a stream of residual income for you as the business owner.

In today’s post we will apply this roadmap to the business model of Online Arbitrage, or OA.  Since this is a blog about flipping books on Amazon, we will discuss concepts related to scaling an FBA book business.  These same principles can also be applied to flipping other products, so if your business isn’t 100% books you can easily substitute the word “books” for whatever products you source online.

BACKGROUND:  OA lends itself well to scalability due to its online nature.  Many of the physical barriers to sourcing products are completely removed thanks to the power of the internet.  Using Amazon’s FBA program further aids in scaling your OA business since your business can run without your direct effort and without the need to hire any employees to fulfill your orders.  In fact, I’m writing this post from a coffee shop in Sydney, Australia, just to prove my point!  My wife and I are on a three week adventure visiting five countries and our business is still running smoothly with minimal effort on our part thanks to the strategies we will outline here.  Unfortunately, my CPA advised me that writing a single blog post from another country doesn’t automatically qualify it as a business trip for tax purposes.  Major bummer!

START UP:  I’m going to assume that most people reading this post are already selling products online.  If that’s true, then your business has already launched.  Congrats!  There are a number of software solutions available to help find inventory online that you can flip, including eFLIP, OAXray, and Tactical Arbitrage, to name a few.  Or you can find your own products through your own methods of combing through websites such as Amazon, eBay, Walmart, etc.

SCALE UP:  OA opens up windows of opportunity to new demographics of people who may struggle to find inventory through physical channels.  A few examples include:

  • Stay at home moms or dads – it’s tough to wrangle kids into the family “swagger wagon” and drive around to find inventory.  By sourcing online, you can now shop during nap time.  Problem solved!
  • Full-timers with a side hustle – if you work a 9-to-5 job, your options for finding physical inventory are limited to your lunch break, evenings, and weekends. If you live in a small town, this further compounds the problem due to limited sources available within a short drive. Turning to sourcing books online means you can snag books at any hour of the day, even when local shops or libraries are closed. And if you need to kill time during that boring staff meeting, feel free to buy inventory DURING your work day. I won’t tell if you won’t…
  • Nomads and wanderers – if you live outside of the United States or enjoy driving around the country in an RV, it may be difficult to source and ship physical products for your Amazon business. OA allows you to buy inventory from anywhere with an internet connection. And if you combine OA with a prep company, you can set up a business where you never physically touch your products.

Remember, scaling your business is about maximizing efficiency. If you can buy books online instead of spending hours behind your steering wheel to drive from store to store, you can increase your books acquired per day. If you can source books on Amazon at 11 pm when your local stores are all closed, you can build your business faster than if you only sourced physical products. Building a more efficient business increases your effective hourly wage. This direct correlation between effort and reward is one reason why working for yourself so fulfilling.

A more efficient business also means you can carve out more time to explore other business ideas. Perhaps you can experiment with a new software to find inventory. Or you could train multiple employees to source products online for you so you can have a small army buying books on your behalf.

One last note about efficiency – be sure to maximize your cash back deals on your credit cards by signing up for the Amazon Prime Rewards Visa Signature Card.  It offers an impressive 5% back on Amazon purchases if you have a Prime account tied to the card.  Even if you use the card with a separate Amazon business account, you’ll still rack up the 5% cash back.  **Note** Please use credit cards wisely – pay off all balances every month and only use them as a means to earn points and rewards, not to buy inventory beyond your current cash flow.

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STEP BACK: This last step is not for the faint of heart. It requires giving up control over certain aspects of your business, and for most people that is more easily said than done. If you’re an FBA seller, your fulfillment is already handled for you. All that remains is to outsource the buying and the receiving/prep work.

Outsource Buying – Once you’ve mastered your own methods for finding flips and can write down the specific steps involved, you can hire an employee or find a VA to handle the buying on your behalf. You’ll want to be as specific as possible and include screen shots with your sales rank guidelines, maximum purchase prices, target profit margins, and condition guidelines so you can communicate clearly when you train them. Early on, I would recommend having them not do any actual buying, but instead send you a list of ISBNs via email or in a private Facebook group so you can give them feedback on their finds. Over time you should be able to build trust and allow them to start actually buying books with your hard-earned cash. For compensation, you could pay an hourly rate or offer them a commission per book. Personally, I pay around a buck a book to my online scouts to incentivize them to find quality flips. As their scouting improves, their hourly wage can rise significantly. This aligns our incentives so we can both “win” together.

Outsource receiving/prep work – If your mailman hates you because of all your online purchases or your spouse won’t talk to you anymore because you’ve filled every square inch of your house with books… it may be time to find a prep company! Since you’re buying books online already, it won’t cost you any extra money to have your books delivered straight to a prep company instead of to your front porch. A prep company will typically charge a fee per book they process for you, and will receive inventory, inspect it, label it, and ship it to an Amazon warehouse on your behalf.  It’s like hiring an employee without having to manage their schedule or figure out payroll!  Whether you are scaling your business or looking to step back from your business, a prep company may be something for you to consider.

If you are using eFLIP to do your online arbitrage, we recently partnered with Texas Prep Pack & Ship as our preferred prep company.  They specialize in books, have staff members with decades of experience working with used books, and offer discounts to eFLIP members. Here’s the low down on Texas PPS:

Website: texaspps.com

Support email: support@texaspps.com

Initial set-up fee: $49.95 (normal rate is $199)

Per-book fee: $1.00 (normal rate is $1.50)

Set-up time for new customers: typically 3-5 days

Minimum books per month: 50

Overview of the process:  Texas PPS will set you up with a Google Drive folder where you can share order numbers, seller names, ISBNs, and the stated condition of the books that you order.  When your books arrive at their warehouse, they will confirm that the ISBN matches exactly (they’ll weed out instructor’s editions and international editions) and that the condition matches what was stated in the original listing.  If you want to return any books, they’ll provide images to prove that the ISBN doesn’t match or that the condition was worse than described, and you can file the return request from your own buyer account.  Once the return is approved, you can upload the return shipping label to the Google Drive folder and Texas PPS will mail the book out on your behalf for only 50 cents per return.  When they have received 20+ books for you, you can go ahead and list your books through whatever method you prefer (AccelerList, InventoryLab, ScanPower, ScanLister), and when you’re done you’ll submit the shipment to Amazon and Texas PPS will take over from there.  They will access your Seller Central account (you’ll have to give them the necessary permissions to see your shipping plans), and print out the FNSKU labels for you, label your books, box them up, split shipments as needed, and even upload box level contents information on your behalf.  There are even FBA warehouses in Texas that handle books, so you may even save a bit of money on inbound shipping costs to Amazon’s warehouses since they’re so close (in Denver, my inbound shipping costs average around 33 cents per pound – from Texas PPS they are closer to 20 cents per pound).  They’ll do all this work for you for just $1.00 per book.  Not a bad deal!

To learn more about their services or to sign up, drop them a line at support@texaspps.com.  Tell them Caleb sent you.

If you’d like to test out OA for yourself, you can sign up for an extended 10-day free trial of eFLIP here: https://eflip.co/product/10-day-trial-1837/

That’s all for now, folks!  Best of luck scaling your OA ventures.  Check back soon as we’ll be discussing ideas for scaling your Amazon FBA business through hiring book scouts and through travel arbitrage.

30 Comments

  1. Do you pay your buyer $1 a book (sold) or just sourced?

    • Sourced, since they can’t control the sales aspect. I don’t pay the $1 when the books are returned due to being an instructor’s edition or poor quality, though, since that encourages them to buy from more reputable sellers.

  2. Major keyz dropped in this blog post

    I’d give this a thumb up if i can — this definitely is a step by step guide on how to take your biz to the next level by completely setting things up so it frees you up to have more TIME

    Thanks Caleb and much!

    Btw i keep getting “your comment seems like a spam please check your reply”
    I guess leaving comments is really difficult

    • That’s probably just because you’re located in South Korea and the software thinks you’re employed by the North Koreans to spam my site! Haha. This one came through just fine. Hopefully future ones will as well.

      Thanks for the read! Time is the most important asset any of us have. Spend it wisely.

  3. The prep company looks promising, but I don’t like the idea of an upfront “set up” fee.

    • Or on a bright side just a way to get serious sellers. Could also indicate their quality of service which is very important when it comes to books assessment. I for example don’t know of other prep service that specialize in books.

    • They recently implemented that due to many people signing up, wasting their employees’ time to set up all the paperwork on the back end, and then they would never send in any books. It’s a way to weed out people who won’t actually use their services. Many companies charge $1.25 or $1.50 per item to prep, so a lower variable cost from TexasPPS will actually offset any setup fees within a month or two, depending on your volume.

  4. This is valuable information for anyone thinking about getting into the OA book business. If you’re doing textbooks, there’s never a bad time to start. Not only do they sell all year round, but the next textbook season isn’t in August. There’s an often overlooked mini textbook season in May that we should all be stockpiled for. Best of luck, everyone.

    • Appreciate your insights, Manny. I look to you when it comes to better understanding the textbook seasons! Have you ever looked at Google Trends info for the term “textbooks”? Quite revealing!

      • Caleb
        Very interesting. Had never looked at Google Trends before. Looking over 3 yr period it really shows the May & even December bump, and although expected, was surprised how big the August is, compared to Jan. Thanks for the insight.

  5. Hi Caleb.

    I have been in OA for 2 years and never sold media. I had opportunities to buy software but was concerned regarding inauthenticity cases some sellers had and fraudulent buyers that use licences and ask for refund.

    How long would it take me to make back on my monthly investment in eFlip? Thanks.

    • Yeah software can be a nasty animal to deal with. There are fakes that have been popping up in the textbook world, but they’re not everywhere yet.

      I don’t make claims about time to make back your investment. It all depends on how well you can buy books, how much you’re willing to spend, how you price them, market dynamics, etc. If you bought 8 decent flips where you would profit $10 when you sold them, that would be your break-even point. How fast you can flip them depends on your strategies.

  6. I liked what i read about the company but their website does not list scanlister as an option. Other than that i would love to use them. The offer only the following on the site

    Workflow: *
    Inventory Lab
    Seller Central
    ScanPower
    None

    • Their site must not be updated. And they don’t list for you, so you can list with any software program you’d like, including ScanLister or AccelerList.

      • OK. I sent them an email that night but haven’t had any response.

        But I still like the idea of using a prep service. Saves me time and space. I have several boxes of PL products coming that I would have much rather have sent to a service than received in my 18th floor apt in Chicago.

        • As a follow up they did respond to me today.

          Hi Mike,
          As long as you are able to create a shipping plan in Seller Central, and stop at the “Label Products” stage, we can work with whatever lister you prefer to use.

          Though what is more than a bit alarming is that they responded March 6….MARCH 6!!!

          I sent the note to them March 1. I’m glad i wasn’t trying to get information on a shipment. They may want to read your posts on outsourcing and find a VA to help them with customer service, Five days is horrible. You answered my question within 24 hours and you dont even work there.

          • Sorry for their lack of speed in replying. I know they’ve been inundated with new business the past few weeks, but it’s no excuse for slow customer service. Hopefully you’re up and running now!

  7. Biggest issue I have so far is that buying many MF books off of Amazon is that seller is claiming is very good or better are always downgraded by the prep center when they arrive as good or sometimes acceptable… bothering to return a penny or $1 book is a waste of time. This issue has caused me to back off at this time as well as they fee changes have brought sales to a crawl. I have noticed alot more larger MF seller offering Free shipping now on the majority of the listings I’m on. I am competitive on close to 100% of my listings and still only 3 sales in the 15 days… how are your sales now vs this time last year Caleb?

    • My February sales are up 62% compared to 2016, and my turn rate in February was 14% compared to 12% last year, so I have no complaints about the current market. I would go back and review your pricing if your sales are slowing, and be sure to keep sending in new inventory as fresh inventory always results in a spike in sales.

      Receiving poorly graded books is a bummer, but it’s part of the OA game. If you’re willing to deal with the hassle of returns and poorly graded books, you can sell them Prime and reach an audience who doesn’t want to deal with the mistakes and will pay more for Prime. Do what others won’t, and you’ll usually put yourself in a fairly good position!

  8. Caleb,

    How does someone become an “online scout” for you?

    Thanks,
    Jude R.

    • Hey Jude – we’re currently “scouted out” right now, and not taking on any additional scouts. You’re welcome to test drive eFLIP for yourself and see if that can work for your own business though!

  9. Okay, Thank you, Caleb. Please disregard my other recent message to you. I will likely try eFLIP when ready. Thanks, Jude

    Looks like you might follow John Piper. Is that true?

  10. About to get into this but I’m concerned about Market saturation and low level of entry if anyone can us eflip etc.

    Any advice about the ROI for finance and time for going into this right now?

    Thanks for your blog though, Authoritative info.

  11. Hello,
    i am new, limited to funds yet, what apps can i use to scan books while im “HUNTING”…any advice to make the process easier would help….

    • Check out the Amazon Seller app (free) or Profit Bandit ($10/month). If you’re serious about a book business though, get an app with a downloadable database as speed is king in this business.

  12. Caleb
    Do you have anything you can share on what you have your scouts search for.
    What is the criteria you give them?
    thanks,

  13. Hi Caleb,

    How has it worked out with the prep company? Any details would be greatly appreciated.

    Thank you,
    Barry

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