Arbitrage 411

How To Keepa Camel

I was a beta tester for Stephen Smotherman’s new ebook/video course (How To Keepa Camel)  on CamelCamelCamel and Keepa Charts.

I am going to be blunt. This is the most important training I have seen come out since Chris Green’s Online Arbitrage.

I choose to watch the videos instead of reading the ebook. Video fits my learning style the best and I just think you pick up way more by video than reading especially since you are looking at CCC and Keepa charts.

There are 34 videos for a total 3 ½ hours of video. ( I didn’t watch the last one because it was just an advertisement for his other products)

I basically watched them one after another. I watched about 20 before bed one night and got up to watch the rest the next morning.

Why?

Well I was learning so much.

I value my time and if it was just the same things I already knew, I would have turned it off.

I am not exactly a rookie, so I was actually surprised at what I was learning. Some of it was stuff I just hadn’t taken the time to think through and other things were concepts that I just didn’t know.       (Yeah I am man enough to admit that I don’t know it all.)

Stephen has been selling way longer than me. I am sure he has forgotten more than I know.

I am good with that.

It Is All In The Charts

So you think you know how to read CCC or Keepa charts?

Think again.

I thought I knew how to read them too.

So let’s talk about something besides Amazon.

Ever try stock trading?’

I have.

I sucked at it.

But…I am pretty anal about stuff. When I am interested in something, I AM INTERESTED IN SOMETHING. I read everything I can about it.

One of the things I learned was that people chart prices and they make buying decisions based on the charts. The charts showed a lot more than what the untrained eye would see.

One of the coolest was Candlestick charting. People can tell you exactly what happened, what people are going to do next and how they make all their decisions from what they see on the charts.

I knew about the charts and knew how to read them but I still thought that my decisions (ok freaking guesses) would do better.

Boy was I wrong. ( I don’t trade stock anymore)

If I had to do it over again, I would stick to using the charts. They worked but it took work to read them. It took time to read them and after making a bad buy, it is not the best time to do the research.

Fast forward to now and me selling on Amazon.

I am pretty good at sourcing but honestly, I have had times where some things have bit me in the ass.

I thought it was a great buy at the store and by the time I went to list it, I was like, WTF was I thinking?

Why does this happen?

Well I honestly never look at the charts when I am in the stores sourcing.

I have looked at them when I use to do a lot of OA (I don’t really do that anymore) but now I realize that when I was looking at the charts, I really wasn’t getting all the info I needed.

Tired of hearing me ramble? Check the course out for yourself here

My Buying Mistake

I will admit that I almost never look at the charts while out sourcing and here is an example of a very recent mistake I made.

I bought a LOT of a shampoo while sourcing at a flea market for $2.50 each.

I went to list them (about a month later after taking this training) and they are selling for $4.97. WTF?

I hadn’t went through the training yet when I bought these but I was listing them after going through the training, so I pulled up the charts on my laptop.

If you saw the chart,  you would see that I literally scanned and bought these when Amazon had just ran out of stock.

If you were look  closer at the chart more, you would see that Amazon has only ran out of stock once in the last year (at the exact time I bought them ) and they are back in stock.

Basically it was terrible timing for me and if I had taken an extra minute to pull up the Keepa chart, I would have known not to buy them.

Anyone need shampoo?

What To Expect From This Training

If I had to sum it up, he teaches you what a full time, seasoned reseller knows. He teaches you how to think and make better sourcing decisions.

Stephen does show the basics but actually spends very little time on that. You don’t really need to spend a ton of time learning how to install Keepa or CCC extensions.

He mostly shows you charts of products. He goes through the charts and explains what is going on and shows you how you would make the decision to buy or not buy.

What Stood Out

Obviously I can’t just telling you everything that is in the training. Stephen worked hard to put it all together and should be compensated for all the time he put into it and the value he is bringing.

With that said, I will share a few things that really stood out to me.

Stephen actually did research on products and sales rank before CCC and Keepa were a thing.

He recorded the sales rank of products on a daily basis. He did this manually everyday.

From this, he was able to learn how the sales ranks changes due to sales.

You can do this yourself. While it would be a pain in the butt, I think you could learn a ton from this.

Look for a toy on Amazon and start recording the sales rank each day. Just make an Excel sheet like he did.

Now you have an advantage over him. You can actually compare Excel sheet to the CCC or Keepa chart. This should really help get the concept into you head, but it will require some effort.

Average Sales rank

When the sales rank is bouncing around all over the place, how do you decide if it is a buy or not?

Stephen shows how to come up with an average sales rank and how to use a sales rank chart to make your buying decisions.

What? What is this magic he is teaching?

Basically this technique can help you make a better buying decision when you might have just been confused. You may have scanned when the sales rank was great and cleared a shelf off when you shouldn’t have or you may have scanned when the sales rank was terrible and passed on buying. Both would be bad. But after you learn how to do this technique, you could make a better decision.

Learning To Project Sales ( Seasonal) Based On The Charts

When you are preparing to sell in say Q4 or a certain season, you need to know what kind of sales you can expect to decide how much product you should buy. This also holds true if you are buying clearance out of season.

When products are out of season, the sales ranks are going to be bad and the prices are going to be bad. That is pretty common knowledge (I hope you understand that).

So this is a problem.

Just how good is it likely to sell? And for how much?

Or maybe you just pass because “My buying rules say I never buy over 100k sales rank” .

Worse, you know that products out of season have bad sales ranks so you go ahead and buy it, but if you looked on the chart,you would find that even in season, it has a bad sales rank.

The simple answer is to check the charts to see if you can gather more information to help you make a better buying decision.

Advanced Techniques

Toward the end of the training, Stephen moves into more advanced stuff.

Honestly there are a lot of lessons on how to think like an experienced, full-time FBA seller.

Besides learning how to read charts and get a lot more information out of them than you did before, Stephen takes it a step farther. You will honestly feel kind of like an amateur  after you see how he thinks.

I almost feel like it is 2 different courses in one.

Conclusion

I could go on and on and show more examples of what he has in his course, but that just wouldn’t be right.

I honestly found a lot of value in it that I will be applying to my sourcing.

Will others see it that way?

I honestly don’t know.

It was something that I found value in and I understood it. Maybe others aren’t at the same place as me.  Maybe others are more advanced than me, but I highly recommend taking the How To Keepa Camel training.

I have been away for awhile dealing with some family health issues. During that time I was PMed to do a post on what reports are needed/what you need for taxes concerning FBA.

So first, I am not an accountant ( actually I do have a degree in Accounting) so I can’t give tax advice but I can tell you what my experience is dealing with my tax guy.

So the basic thing AZ is going to give you is a report that says the total sales you had, the total fees you paid AZ and how much money they sent you.

From this point let’s say they said you sold $100k, that they charged you $33k and sent you $67k back.

The $67k is the important number. This is what the government thinks you made and wants you to pay taxes on until you take out your cost of goods (COG) and expenses.

So you need to know the value of the inventory you had in stock on Jan. 1 of 2015 and Dec. 31 of 2015. The value is what your cost was, not what it will sell for. Your tax guy needs this.

Now this is a big problem if you aren’t keeping good records or if you aren’t using Inventory Lab. ( this is the #1 reason to use Inventory Lab)

The report that you can run on Dec. 31 from AZ just tells you what you have in stock. It doesn’t give you the value. If you are using IL, it will tell you the COG of that inventory.

So if you aren’t keeping track of this, you need to have a number for the COG. I sure hope at least you coded the cost in the MSKU like I recommend you do on every product.

You would have to go through every single item, take the COG times every unit for every single item you had in stock on Dec 31 to get your ending inventory value ( oh wait, it gets better)

Now we need to know what your COG was for everything you sold for the whole year.

If you are keeping good records, then you would just subtract the ending COG from the total years COG and then you would have that COG for the products you sold through the whole year.

Let’s say that number is $33k. So the tax guy would subtract $33k from the $67k number AZ gives you, so now the government wants to tax you on $34k.

Now if you didn’t keep records, man you are SOL. You are going to have to look at every single sale you made and come up with a COG for each item. This is really hard if you have no record of what each item cost and if you had a lot of sales, you are going to be super busy.

So now that we have $34k left, this is where that tax guy is going to try to take expenses and deductions away to get this number lower. It doesn’t mean that you didn’t really make $34k, it just means that you don’t want to pay taxes on $34k.

Here are some of the things my tax guy wanted.

Mileage. This is big! You get to deduct $.54 a mile for your sourcing trips. So in this case, if you had 1000 miles of deductible mileage, then $540 is coming off of the $34k and you won’t have to pay taxes on the $540. So let’s say you pay 25% tax on the money. You just saved $135 in taxes.

The tax guy will have questions about your car, insurance, usage , etc.

So hopefully you have been keeping a record of mileage. If not, you got some work ahead of you.

Now you can claim mileage even if you don’t find any products while sourcing but I personally want to have a receipt to back up every sourcing trip.

It gets muddy when you mix personal trips with business trips. Think of grocery shopping and you pick up some FBA stuff. Do you get to claim that? Talk to you tax guy.

So my tax guy wants to know other things.

He takes a deduction for me working out of my house. So he needs to know the square footage of my house and the square footage of my work area that is used for FBA. He also needs things like how much my insurance is, the utilities, etc.

So the tax guy is going to come up with a number for what he can take off as a deduction for you working out of your house. Now if you are bigger than that with say a warehouse, the tax guy will need all the cost involved with that.

So the tax guy will take this out off the $34k, making your tax bill lower.

Expenses are another deduction that tax guy will want. Hopefully you have been keeping records of all the boxes, box tape, polybags, etc.

All this stuff is going to come off the $34k.

So how many times you see people in a FB group say ” I am not going to pay for boxes”? Well they don’t realize how little it actually cost them.

Say that you are paying 25% tax. That $1.30 box is going to come off of the $34k, so it is actually costing you $.98.

You are now a business owner and things that you need for your business that make things easier/better you should buy because you are basically getting them as a discount because you take them as expenses.

Your tax guy will be trying to get the $34k down as far as possible because that is what you will be paying taxes on.

There are probably things I forgot to include, but that is the general process of the taxes.

Now if this was your first year selling, now you have a surprise coming your way.

Uncle Sam doesn’t want you to have a free ride and wants the taxes paid before the end of each year.

Most likely your tax guy will talk to you about quarterly estimated taxes.

Basically every 3 months, you are going to start paying taxes and surprise, your first quarterly tax is due on April 15 along with your 2015 taxes.

Now quarterly taxes are a pain. Why? Well you need to pay 90% of what you owe ( which if your business is growing, becomes hard to figure) or you have to a pay a penalty ( actually you are ok if you pay 100% of the last years tax. ie, talk to your tax guy)

So this is a quick overview of the process and this is why you need to pay a tax guy to help you.

You also need to keep good records ( that is why Inventory Lab gets $50 a month)

I am not a tax adviser and this is not tax advice.  Please consult your CPA

With that said, generally all businesses need to know the value of their inventory at year end to provide to their tax preparer.

This is a simple thing to do in Seller Central.  You basically just run a report.

This needs to be done late December 31 or early Jan. 1 ( so basically log into Seller Central and run the report before you head out to your New Years Eve party)

You don’t have to do anything immediately with the report, you just need to run it at that time to show the value of the inventory you have at years end.

Here is a video on how to run the report:

The basic steps are:

Go to “Reports”,  then select “Fulfillment.”.

Click “Amazon Fulfilled Inventory”, then click “Request Download”

After it is complete, download it to your computer.

It is a .txt file that is hard to read.  You should open it up in Excel ( or Open Office or Google Drive ) and rename the file and save it in a safe place.

Here is a really good detailed post on what to do:

http://www.fulltimefba.com/how-to-run-end-of-the-year-inventory-sales-reports-for-tax-purposes/