What if you were banned from selling online?

May 27th, 2014

In today’s post I want to take a deeper dive into the question of what would happen if you were for some reason banned from selling on amazon and/or eBay.  I am not trying to scare anyone away, but I want everyone to at least consider what would happen if they no longer had the ability to sell on amazon or eBay.  This could happen due to poor seller performance, or due to no fault of sellers own, and amazon/eBay no longer allowing people to sell on their platform.  I don’t think this is likely, but no one ever thinks they are going to get fired or laid off from their jobs either.

So why did I decide to write this post today? There are 3 reasons, and I will cover each of them as we go through this post.

The first reason is that amazon has recently required new sellers to obtain approval to sell in the Grocery, Beauty, and Health and Personal Care categories.  Sellers  who had already been selling in these categories who had the proper performance metrics were “grandfathered in” and were automatically approved to sell in these 3 categories.  This essentially meant no change for sellers currently selling in these categories, but for new sellers this is a fairly significant hurdle to jump over to obtain the approval before selling in any of the 3 categories.  If a sellers metrics falls below a certain level in these categories it is also possible that they will not maintain their approval to sell in these categories.  The point here is that amazon makes the rules, can change them at any time, and we have to play by their rules.  What if they had banned third party sellers from these categories altogether? This would have affected my business negatively, as well as the businesses of many other sellers.  If you are unsure of if  you are now approved in these categories, or want to learn how to apply, Jessica Larrew covered this on her blog last week.  HERE is a link if you want to check it out.

The second reason for this post today is that amazon recently temporarily restricted 3rd party sellers from selling many items related to the recent Disney movie Frozen.  If you were selling or had sold any Frozen items in the past few months it is likely that you received an email that looked like this (click to enlarge): Frozen EmailThis email proceeded to list all of the items that were removed and are temporarily not available for sale.  Some sellers had significant amounts of money tied up into Frozen merchandise and for now it is sitting in limbo as amazon investigates.  The reason for the investigation is that many customers have been receiving fake knock off versions that sellers are trying to pass off as authentic merchandise.  It makes sense why amazon is doing this, but it is no fun for sellers who now have items that they are unable to sell on amazon.  After amazon concludes their investigation these items will go back to active status and available for purchase, but for now they are stranded.  If you are looking for more information about the removal of the Frozen listings, Stephen from the blog Full-Time FBA wrote a great post HERE discussing more on why this happened and potential implications/options for affected sellers.

The 3rd and final reason that I am writing this post today is that I have been receiving many emails from people who tell me they too have a goal of selling online full time.  I think this is great!  Selling online allows me to live the lifestyle I want, and be on my own terms, and I hope many others are able to experience this as well.

With that said, I feel some degree of responsibility to provide some food for thought before one decides to take this leap into selling full time.

I will begin with my personal situation at the time I quit my job, 24 years old, single, and no financial problems.  At the time, and I still do, live in a duplex that I purchased and I rent out the other half.  I also rent out a room in my unit to a roommate.  The rent I receive from the other half of the duplex and my roommate more than cover my monthly mortgage payment.  My car was, and still is, a 15 year old car that gets the job done and lets me avoid a monthly car payment.  I did, and still do, have about $300 a month in student loan payments.  I never carry a balance on my credit cards, so my only debt was student loans and the mortgage that is paid through the rent I am bringing in.  In addition to having the duplex, I am a 50% owner of a textbooks business that provides some income in August and January each year.  At the time I quit my job, I was receiving around $6,000-$7,000 per year in profits from this business.  Definitely not enough to live on, but a significant enough amount to factor into the decision.  In addition to this, I was making about $1,000 per month in profits for several months in a row from selling online.

So when I made my decision, I knew I would only be affecting myself if this went poorly, I knew my living costs were extremely low, I had virtually no debt, I had some proven income from my textbooks business, I was having reasonable success selling online part time, and I had a dream of being completely self-employed.  Weighing all these factors into consideration I decided to go for it, and I haven’t looked back.   My very first post further explains my decision to sell online full time, in case you have never read it, HERE is a link.

There was risk involved in my decision, as I didn’t know with certainty this was going to work, and the income streams I had developed at the time were a far cry from the salary I was leaving behind.

Now, onto the question of if I was banned from selling online.  At the present time, the vast majority of my eggs are in the amazon basket.  I make almost all of my money from selling online, which is risky, but I have evaluated these risks and I am ok with them for now.  If I was to lose my ability to sell online today, my first option would be to sell on the other online platform (amazon or eBay) assuming I didn’t get banned from both.  If that didn’t succeed, option 2 would be to go out and get another job in the accounting field.  I left the company I was working for on good terms and they told me to let me know if I ever decided I wanted to come back.  I would likely call them and see if there is still a place for me.  If not, I am confident I could find another position in a short amount of time as I have had several recruiters reach out to me to see if I would be interested in positions they have available.  I would prefer not to have to go this route of back to a “normal” job, but it is my backup plan if I lose my ability to sell online completely.

I am working to diversify my income streams as well so that I can have fall back plans that do not involve going to get a job.  I plan to continue to invest in real estate and plan to buy another duplex within the next  year.  In addition, I am constantly looking for new business opportunities and income sources to complement my income from selling online.  My goal is to get to a point of having several income sources, and if any one of them was suddenly wiped out, that I would not have to drastically change my life (i.e. go back and get a job).

Now, I want you to think about your personal situation.  Are you married? do you have kids? Do you have debt? What income level do you need? How long could you live off of savings? Could you go back to your job if needed? Depending on your answers to these questions, it might complicate matters a bit if you want to sell online full time.  By no means am I trying to stop you, I just want you to sit back and think about these things.  I am all for pursuing your dreams whether that be selling online, or anything else.  I absolutely think that if there is something you want, you should do what it takes to make it happen.  If there are other people involved or any other complicating factors, just make sure you are going to be able to sleep at night and not be up worrying about if enough items are going to sell this month to pay the mortgage.

My final point for today, is that selling on amazon is a privilege, and not a right.  We need to realize this and do everything we can to make sure that we maintain our open invitations to sell product on amazon.  I am very grateful for the ability to sell on amazon and the lifestyle it allows me to live.  I am also very aware that I am playing in amazon’s playground and that they could kick me out if they so choose.  My plan is to play fair, play nice, and play hard, for as long as my invitation to sell on amazon stands.

So we’ll wrap this up with a few questions, and I would love to hear your thoughts in the comments below!  What if you were banned from selling online? What would you do instead?  Does this risk factor into your decision of potentially wanting to sell online full time?  Any other thoughts or questions?

 

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26 responses to “What if you were banned from selling online?”

  1. Mark says:

    Great post Ryan! I’ve been considering this issue myself as I have been excluded from listing in some categories.

    In brief, I dealt very fairly with some customers by not sending them some substandard merchandise. Amazon saw this as a negative. It would have been better for me to send the merchandise, let them complain and give a refund than to not send it at all.
    Anyway, I am also selling on eBay and will be creating my own merchant website as well.
    Ultimately, my wife and I are planning to buy a farm and include the income streams from that in our totals.
    Finally, what it all boils down for us is to have as many options open as possible. Right now that includes a full time job for me that pays benefits.

    • Ryan Grant says:

      Thanks Mark! Sounds like you and your wife have a good plan in place and are going about it the right way.

      Best Regards,
      Ryan

  2. Iqbal says:

    Great post Ryan – I like how you keep all your information easy to understand.

    I am still at very early stages in my FBA career. Developing different income streams is something I wasn’t thinking about and is a great idea.

    I thought I would share the following as well.

    I’m going to follow something I heard Duane Malek say from Fast Turns Radio. He only keeps inventory for a month and doesn’t go into credit. So should Amazon ever shut down his account then he isn’t left with lots of inventory and in a huge amount of debt.

    Also, I’ve heard other people say you should make sure you understand as much as possible about Amazon’s rules so your account is not at risk.

    Thanks for sharing all the information.

    • Mike says:

      Duane Malek doesn’t understand how leverage can and is used by almost all businesses to increase their bottom line.

      Great info as always, but please capitalize Amazon

      • Ryan Grant says:

        Hi Mike,

        Absolutely, my plan is to capitalize on amazon. I believe that Duane Malek is applying personal finance “rules” to the business of selling online, and as a part of that he avoids debt altogether in his personal life as well as his business. There are many others that share this view, and I respect his view, but I do see how leverage can be very beneficial to this business selling on amazon.

        Best Regards,
        Ryan

    • Ryan Grant says:

      Hi Iqbal,

      Glad you enjoyed the post! I think that there is merit to the “fast turn” model and not holding things for over a month and it definitely works for some people. I sell the vast majority of my inventory within 3 months, but I still have higher margins items that will take longer to sell as well. I think having a balance of items that will sell quickly and those that will take awhile to sell is the best strategy for me. The beauty of selling on amazon is that everyone can did it their own way, and they just have to find out what works best for them.

      Best Regards,
      Ryan

  3. Stephen says:

    Great question! Everyone needs to think about this as nothing on this Earth is certain. Being diversified is one way to help bring some stability to the uncertainty of the online selling world.

    I currently have multiple income streams, so if one of them were to stop, the others would help me get by while I looked for a replacement for the lost stream. That being said, Amazon is my #1 income producing channel. If I were banned from selling on Amazon I would most likely move over into eBay, as I have over 15 years of experience with eBay. I would also step up my other channels (blogging, book writing, affiliate marketing, helping OFFline businesses use social media, etc).

    Great question, Ryan! Keep up the awesome blog content!

    • Ryan Grant says:

      Thank you Stephen!

      That’s great to hear you have the other income sources that you are able to turn to, and it sounds like you have a ton of experience with eBay as well so that would be very beneficial as well.

      Thanks for sharing, and great to hear your plan!

      Best Regards,
      Ryan

  4. Jane Kaiser says:

    Ryan,

    Great post! I am one of the new FBA sellers (I’ve dabbled in eBay and Amazon Marketplace for several years) that wants to work towards selling full time.

    But I have no debt, drive an 11 year old car and am an accountant…so it is always easy to get quick temporary work. I think your points are many things that a lot of people don’t think about before they launch into a business full time; whether that be selling online or other ventures.

    Keep up the good work!

    Jane Kaiser

    • Ryan Grant says:

      Hi Jane,

      That’s awesome that it is your goal to do this full time! It sounds like you have already considered many of these things before I ever wrote this post. Driving the older car and having no debt will significantly lower your risks when you end up selling online full time.

      Best of luck to you on your goal!

      -Ryan

  5. Natalie Sevillano says:

    Good post on an important topic! I currently have a full time job, and I would LOVE to quit and be my own boss, and plan to someday soon. However, I want to make sure that I have several streams of diverse income that I can rely on before making the jump. With all the changes that Amazon has made recently and reading stories from other FBA sellers that have been banned from selling, it’s definitely smart to be cautious and not have all your eggs in Amazon’s basket.

    My plan is to continue growing my Amazon business while paying off my debts and working on ways to generate and build a more passive income.

    • Ryan Grant says:

      Hey Natalie,

      Thanks for sharing! I think it sounds like you have a good plan in place for eventually stepping away from your full time job to be your own boss. Good luck to you on making it happen!

      Best Regards,
      Ryan

  6. Charlie says:

    Great post Ryan
    For a young man you have a lot of wisdom and sound money management principles.

    I make half my monthly income from Amazon and the other half from doing auto interior repair. ( How’s that for 2 totally unrelated businesses.) Anyway I would love to stop doing auto interior repair for multiple reasons but this blog post highlights exactly why I won’t.

    • Ryan Grant says:

      Thanks Charlie!

      That is definitely 2 unrelated businesses, but that is an awesome form of diversification. It might still be possible for you to sell online full time if the auto interior repair is something that you could pick back up in the future should it become necessary. That would be a sort of back up plan if something unexpected were to happen related to selling online. It’s really all about managing risk, and right now it sounds like you are well diversified and aware of those risks if at some point you decide to go into selling online full time.

      Best Regards,
      Ryan

  7. Jerry says:

    You really wise beyond your years. I’m impressed…

  8. NancyR says:

    Great article. I am a full time mobile worker for a large software company and was recently banned from selling on ebay My job pays the bills but ebay brought in my fun money, funding plane tickets and vacations and providing valuable tax write-offs. I know first hand what a sudden, unexpected blow a ban can present. One day you’re making $1500 a month and the next day its all gone.

    I have never sold on Amazon, but I am learning all I can to get started and get that income stream going again. I feel really blessed that there is another viable online sales avenue open to me and I fully plan to fly well under the ban police radar this time!

    • Ryan Grant says:

      Hi Nancy,

      That’s too bad you are banned from selling on eBay, but it is great to have an option to sell on amazon. If you don’t mind me asking, what was the reason for the ban? I am guessing your eBay experience will lessen the learning curve for getting started on amazon.

      Best Regards,
      Ryan

  9. Hef says:

    Great blog you got here Rya, thanks for that.
    I got some questions though:
    – Have you ever thought about importing products from China, create your own brand and sell them this way? Seems to me this option would be more complex and risky but could provide much higher profits.
    – Do you think Europeans could make a living from selling on amazon.com(FBA) as well? (since the EU amazon market is noticably sall compared to the american one)

    • Ryan Grant says:

      Hello Hef,

      Thank you! As for your questions:

      I have considered creating my own brands and selling that way, but thus far have not tried it out. I agree on it being more risky with higher potential returns, and it is something I will likely look more into in the future.

      I do think it would be possible for Europeans to make a living. There are at least a couple European seller who comment here fairly regularly and seem to be doing quite well selling via FBA. I am not sure if they are full-time, but they are definitely making some extra income.

      Best Regards,
      Ryan

  10. Dave Koziel says:

    Hey Ryan,

    I’d be interested in hearing more about your plans for investing in real estate. It’s something I want to get into myself and in some ways I feel like investing in real estate has some similarities to reselling.

    • Ryan Grant says:

      Hey Dave,

      I think there are definitely similarities to reselling. It’s just at a lot higher financial investment. Currently, my plan revolves around buying duplexes and possibly triplexes/fourplexes if they are affordable. I hope to buy one every couple of years to create a separate sustainable income not related to selling online. I don’t have definitive plans yet, but the basic idea is to continue buying duplexes around where I live over the next few years and see where it expands from there. If you ever want to chat real estate, feel free to send me an email, I don’t have too much experience at this point, but I always enjoy talking about it and strategizing.

      Best Regards,
      Ryan

  11. Dylan S says:

    Hey Ryan,

    I’m curious about the textbook business you wrote about. I’m a college student and I’ve been thinking about doing the same lately. Can you provide a little more information on that?

    How did you source and sell the books?
    Did you buy them online to sell to students or did you buy them from student to sell them online?
    How did you make sure the editions you were buying were going to still be used next semester?

    Maybe a future blog post 😉

    Thanks man!,

    Dylan

    • Ryan Grant says:

      Hi Dylan,

      Thanks for the comment. I probably won’t be sharing any info on the textbooks business in a blog post. If I ever share the specifics of that strategy it would be through a paid guide/course.

      Best Regards,
      Ryan

  12. Dave says:

    There’s always a way to get back to selling on amazon and eBay again. In my opinion it still better to go with your own personal website.

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