Today’s post will be an interview with Peter Valley from FBA Mastery. Peter sells on amazon for his primary source of income, and is focused mainly on selling books. He writes an excellent blog about selling books, and also has written several eBooks related to selling on amazon that I will provide links to at the end of the post.
Here is the interview:
Tell us about the intention behind FBA Mastery. Sum the site up on in once sentence for those unaware.
In one sentence: FBA Mastery covers all aspects of selling books and media using Fulfillment by Amazon.
I’ll elaborate: I take a dull subject (bookselling) and put a lot of work into making it interesting. I do this primarily through the use of stories. I emphasize the use of stories to share advice and impart lessons, rather than a drier, “how-to” format.
The top article on the site (as of this writing) is about spending an afternoon digging through dorm dumpsters at a major university on the last day of the semester, looking for books students had thrown away. The next is my account of spending a Saturday going to garage sales.
To take the latter as an example, a boring way to offer advice on sourcing from garage sales would be to serve up a list of tips for going to garage sales. Instead, I did a blow-for-blow of 6 garage sales I went to, what I found, and how much I made; taking care to embed the story with useful advice. I still do a fair amount of boring “how to” checklist articles, but I always try to work in a story element.
A minute ago I was finishing an article on buying 1,000 CDs off Craigslist. It can be a challenge to make stories like this interesting, but I went into how this particular seller shorted me by 300 CDs, the whole process of sorting the collection, pricing strategy sellers can use with CDs, and more. Again, I’m taking my personal experiences selling on Amazon and trying to make them both useful and actionable for other sellers.
In short, it’s the site I wish I had when I got started selling on Amazon. I got an angry email from a bookseller a few weeks ago, who said that I was giving away too much useful advice, and ruining it for everyone (not an exact quote). That was the best compliment I’ve ever received.
How did you get started selling online? Any books, courses, people, etc. that helped you get going?
My friends always tended towards those who employed creative tactics to avoid having real jobs, existing somewhere in the space between entrepreneurship and vagrancy. So for years I had known people who sold on Amazon part time as a means of maintaining an easy livable income, but never knew anyone who took it seriously as a full-time business.
In 2007, my previous entrepreneurial pursuit came to an end, and a girlfriend and I decided to follow the path of some of my friends by trying Amazon. Within weeks, we went to a garage sale and bought a photography book for $1, which we turned around and sold on Amazon $450. That sealed it. I loved books, and remained committed to not having a real job, so I was hooked.
I made it up as I went for a few years. I built up my inventory to a modest 1,500 books, all of which were stored in my bedroom, in a house I shared with several friends. When I was preparing to move, I was faced the daunting task of transporting 1,500 books cross-country. I had heard of Fulfillment by Amazon, but every time I’d looked into it I had quickly dismissed it for the high fees. With the move, my back was against the wall, and I stayed up all night reading e-books on selling with FBA. Every time I finished one book, I ordered another. I absorbed just about everything written about FBA up to that point in one night. I think I spent over $100 on e-books in that overnight frenzy of reading. I have since turned that $100 into somewhere in range of $200,000, which I consider a pretty good return on my investment.
If I remember right, a few of the books I purchased that night were Used Books, Big Business (Bertram), Amazon FBA Recipe for Success (Tarant, Wells), Selling on Amazon’s FBA (Fulfillment by Amazon) Program (Holmquist), Retail Arbitrage (Chris Green), Leftover Gold – How to Profit from Overlooked, Under-Appreciated, and Odd-ball Items (Lindhorst), and a few more.
People are rightfully skeptical of investing in “how to make money” e-books. I’ve bough some truly bad ones about selling on amazon, but I’ve never bought one that didn’t pay for itself many times over. Even if I can pull one good idea from an otherwise bad book, I’ll always make back my investment a hundred-fold.
Switching to FBA was definitely the tipping point. My revenue more than doubled, and I’ve been making double the money for half the work ever since.
Are you selling via Amazon full-time? If so, how did you decide to jump in full-time? If not, what else fills your time?
“Full time” isn’t entirely accurate. Better to say that Amazon is my “primary source of income.” I can’t call it “full time,” because it only occupies about 25 hours a week, on average. This is by design. I leverage Fulfillment by Amazon to free up my time, so I don’t have to do any one thing “full time.”
The decision to make Amazon my main source of income is a product of deliberate parameters I set for myself and how I live my life. Whatever I do, as a baseline standard, I have to be able to set my own hours, and be location-independent (i.e. do it from anywhere). Amazon allows me this freedom. And as a bonus, I love being around books.
I run two other internet-based businesses on a very part-time basis, and spread the rest of my time across many other activities. I spend a lot of time reading in coffee shops. I buy way too many records. I do a lot of urban exploration. And many more exotic pursuits I won’t even go into ranging from crashing offbeat trade shows to working on a hip hop record.
Any numbers you are willing to share for 2013 related to your FBA business?
I had to go into my closet to pull out my tax paperwork for this one…
Gross sales: $148,854
Amazon payouts: $85,005
“Payment transactions” (I assume this means items sold): 9,721
Inventory expenses: $8,242.90 (Note this is only the amount reflected on receipts, and the actual amount may be 15% or more higher simply because I buy a lot for which I am not given a receipt [garage sales, etc])
This is exactly $409 more than I made last year, so revenue has held steady. However expenses went down by almost 20%, which I read to mean that as my back-inventory builds, I’m making more money off older inventory I paid for a year or more ago. My inventory has been hovering around 5,000 for the past 6 months.
Some booksellers have the same inventory numbers, and sell the same number of items, yet don’t have half the revenue. They price low and deal in penny books, and keep adjusting their prices downward when an item doesn’t sell right away, all things which I won’t do.
You talk mainly about selling books & media items; do you sell any other types of items?
It’s 90% books and media. This type of inventory is uniquely suited for my lifestyle and personality: They’re available everywhere (I spend a lot of time in off-the-beaten-path places), they’re cheap (I’m a “slow dime” seller. I price high and will sit on something for a year or more until I get the price I want, and need the high margins), and I just love books.
Where do you buy most of your inventory?
Most of it comes from what we’ll call the “second hand market.” This is deliberately vague, and it encompasses a ton of sources. I’m being indistinct partly in the interest of brevity, because I source from a ton of places. And partly because selling books is like selling drugs: You always protect your sources.
My whole formula was shaken up about four months ago, when I moved to a new town with vastly fewer book-sourcing options. I’ve embraced the opportunity to diversify, getting into new sources I never gave adequate time to, from estate sales to Craigslist sourcing to recycling centers. And this adjustment has been successful – my Amazon payouts have hardly taken a hit. There’s a lesson there: Be fluid.
I’m always adding new sources to my list, and enjoy being creative. (Teaser: I’m finishing an upcoming 100+ page book on book sourcing now.)
Here’s one thing about my sourcing methods that I’ll freely admit: They’re very amateur. There are people doing big things with used media and FBA that I haven’t even begun to touch. I just completed an extensive interview with someone who did $25k a month sourcing from landfills. That’s a true professional. I’m just an entry-level amateur, but my system works.
You take “sourcing road trips” to find inventory to resell. This is something that I am planning on doing later in the year. You have an entire book dedicated to this topic, but are you willing to share a bit about: How often do you go on these? Do you find better items on these than around your home area? Do you usually go on these trips solo?
I’m taking a trip for at least a few days at least once a month. Sometimes I’ll leave and not come home for 6 weeks. Altogether I’m probably traveling 25% of the year.
Very rarely is sourcing the primary motivation for the trip. My approach is to decide where I want to go, then figure out how to make the trip not only pay for itself, but turn a profit. I don’t think I’ve taken a trip in at least two years that didn’t pay for itself. I’m very disciplined about setting time aside to acquire inventory.
Just last week I took a trip with a friend to rented condo in Estes Park, Colorado. We had a room on the river, with a balcony hot tub, for three nights. Keep in mind we were in a very small town with few options. I still covered all of my expenses for the weekend in just two stops. I mention this only 5% to brag, 95% to give people an idea as to what’s possible when you run a totally portable business. It was a rather opulent vacation, and it was totally free.
One of the benefits to sourcing while traveling is that the sources are fresh. You’re not going over your own leftovers like you might be at home. You can safely assume that you’ll encounter competition if you travel to any major city; however I tend to travel to some off-the-beaten-path locations, and find these to be the most fruitful. When you get away from the interstates and start driving the two-lane highways, its pretty amazing what you can find.
In the rare event I am traveling just to source, I’ll prefer to go alone. I just won’t be the best company when I’m in a full-time sourcing fury.
Otherwise, I’ll do plenty of both: Solo trips, and with friends. When I’m traveling with others, I lower my sourcing standards to try to break-even for the trip. Not a lot of people will have the patience to wait when I’m in full-sourcing-machine mode.
On this topic, I learned from doing taxes this year that I spent $431 on using the printers at Staples, which I only go to when I’m doing shipments while traveling. At 50 cents per page, you can do the math on how much I’m shipping in from the road. It’s a big part of my business.
My largest “source as I go” road trip (which I wrote about on FBA Mastery) was one I took from Chicago to Seattle at the end of last summer. When it was over I had 1,200 books. Odd thing was, it didn’t really feel like I had spent that much time sourcing. Inventory just sort of happens when you keep your eyes open. Most of my memories from that trip involve me staying in weird log cabins in Glacier National Park, and riding the ferry in Seattle, and somehow when it was all over I also had close to $10,000 in inventory too. It’s pretty awesome what you can do with FBA.
My next plan is a Hawaiian, trip, funded entirely with FBA.
You’ve made some big buys, from buying out a video store that was closing, to over 800 books from a book sale in one day; do you have a favorite big buy? And how did you build up to buying these large quantities?
In most instances, there’s no build-up necessary (or possible), because you don’t know these buys are happening until they happen. This is a wonderful advantage of Fulfillment by Amazon: All you have to do is get it out the door. They’ll take care of the rest.
When I acquire a huge amount of inventory, I’m ruthless about getting it out the door. I cancel all plans, drink a lot of coffee, and just power through it. I mentioned earlier I just bought 1,000 CDs over the weekend, and I’m in the middle of going through them now. CDs are small, yet it takes the same time and effort to price and ship 1,000 CDs as 1,000 books. It’s a project. I haven’t been outside in two days, but I’m committed to having them out the door by sunrise, and I’ll make it happen.
I think the only single buy I’ve made that I can confidently say brought me five-figures was the aforementioned DVD store. But I have fairly regular four-figure buys (or at least four-figure days), and it would be hard to pick one. Last weekend, I had an unexpected score, catching the very end of an estate sale I didn’t learn of until last-minute. The deceased was a hardcore herbalist, and I arrived to find her whole library untouched. I offered $75 for collection of natural medicine books, and expect to make about $1,800 off the set. I was in and out in 30 minutes.
If someone could only read one of your blog posts, which one would you recommend they read?
The most popular, unexpectedly so, is a post I titled “My detailed account of a perfectly average trip to a thrift store ” It’s a very simple post, just me narrating a visit I made to a random thrift store, and sort of “thinking aloud” as I move through the store, shopping. It’s basic material, but it’s gotten the most traffic and most response. It’s a good entry-level post.
As far as basic, actionable advice for those already up and running, I would direct people to any article on either pricing strategy, or understanding Sales Rank. The biggest mistake I see people make as FBA sellers is pricing too low and being intimidated by Sales Rank’s upwards of 1 million. I haven’t done the numbers, but I wouldn’t be surprised if 40% of my revenue was from high-value, poorly-ranked inventory. I sell a lot of things other sellers are afraid to touch.
In one post it was mentioned that you have been influenced by the 4 Hour Workweek by Tim Ferriss. Are there a couple of things you have implemented based on this book that have had a large influence?
It seems almost cliché in 2014 to cite this book as an influence, but it has definitely had an impact on how I run my business.
A friend mailed me 4HWW in 2007, around the time I started selling on Amazon. What impacted me was not the specific how-to material, but the potential for a business architecture that is totally virtual and portable. There wasn’t anything groundbreakingly new in the book, but it was new to me. It was exactly what I needed at exactly the right time. After reading, I committed to never doing anything for money that I couldn’t run from a laptop anywhere in the world. Done and done.
The kind of business parameters Timothy Ferriss lays out I found to be a very powerful form of “addition by subtraction”. By limiting the kind of work you’re willing to do (working for someone else, being anchored to a physical location), you open up tremendous options you didn’t know were possible.
What are your goals related to 2014 with selling online?
Diversify. I got very comfortable in the town I lived in until four months ago, and it’s been a lot of fun getting outside my comfort zone. I’ve got some big sourcing plans for the summer I might do well to not reveal here. Let’s just say I’m finding people who have done big things and pried them with money to tell me their secrets. Now I’m going to put what they taught me into action.
In short: More bulk sourcing, more variety, and going bigger.
What’s one thing you are doing currently related to selling online that others could implement with good results?
Number one, if you sell anything online, look into FBA. I don’t really want the competition, but at the same time it’s not suitable for every business, and it’s unlikely we’re selling the same things, so I’m not too concerned.
Two, whatever your niche is, identify the blind spots. Look where everyone else is going, and go somewhere else. Look at what everyone else is doing, and do something else.
Any closing thoughts?
The true measure of a business’s success is not its revenue. The true measure is its effort/time/profit ratio. Never before have there been more options to work less and make more. The leverage we have available to us now is incredible. If you value your time and want to live a diverse life, start an online business tonight.
And then, do something with that freedom.
A big thank you to Peter for doing this interview and providing such detailed answers! If you want to read more by Peter you can find many great posts over at www.fbamastery.com. In addition Peter has written 3 books related to selling on amazon, Amazon Autopilot: How to start an online business with FBA, Amazon Autopilot II: On the Road – complete system for free travel using FBA, and Feedback Mastery.
Definitely check out his blog, as I have learned many valuable tips related to sourcing books & media through reading his posts. If you have any questions or comments, please leave them below!