When you decide to start selling on Amazon, especially if you are a wholesale seller, one of the very first decisions you are going to have to make once you land your first account is how you are going to handle product prep.

Should you do it yourself or work with a third-party logistic (3PL) like MyFBAPrep.com?

In today’s episode, my guest Taylor Smits shares with me how a seller should find – and then evaluate – a 3PL company so that they can make the most informed decision possible on the best route to take.

Full Transcript

Trent:                  Hey everybody. Welcome back to another episode of the Bright Ideas Podcast. As always, I am your host Trent Dyrsmid and I’m here to help you discover what is working in e-commerce by shining a light on the tools, the tactics, and the strategies that are in use by today’s most successful entrepreneurs. In episode number 290 you heard Dave Chaffey talk about content marketing strategies for e-commerce and in today’s episode I’m joined by Taylor Smits, a former corporate guy turned e-commerce officiant auto with almost a decade of online selling under his belt. In 2010 he started selling sporting goods and concert tickets online and has since done stunts in drop shipping, private label and Amazon wholesale. While he’s not in front of, rather when he’s not in front of a screen, Taylor is most likely seeking adventure in one of those as one of those Amazon digital nomads, he holds a private pilot’s license scuba certification and he is an ordained minister.

Trent:                  Taylor is on the show with me today to talk about My FBA Prep a company he co-founded with two others, which aims to be the largest network of e-commerce, third party logistics centers in the country. And to date they have over 10 prep centers throughout the country that provide prep, fulfillment and logistics services to e-commerce sellers. Dave, thank you so much for being on the show. Welcome.

Taylor:                Hi Trent. How’s it going?

Trent:                  Very well. Thank you. So let’s have it in your own words. Uh, who are you and what do you do? What do you really love to do?

Taylor:                Yeah. Uh, my name is Taylor Smits and um, what I love to do is all forms of e-commerce. Um, the venture we’re here to talk about today, My FBA Prep. Um, we are a network of prep centers all over the country as you mentioned. And um, we provide prep, logistics and fulfillment services too, different types of e-commerce sellers. I don’t want to say all types, but many different types of e-commerce sellers. And yeah, again, we, we aim to be the biggest network of prep centers in the country and, um, we have been very excited with our growth lately and very happy to be here to talk to you.

Trent:                  All right folks. And here’s what I want. I want to set expectations for this episode. If you are thinking about selling on Amazon and you haven’t figured out how you’re going to handle film and yet, or maybe you’re already doing it in your garage or you’re wondering, you know, should I do it? Should I get a warehouse? You know, what do I do? We’re going to talk to you about how to that third party fulfillment centers if you’re going to choose one, how to choose one, what questions you should ask, what things you should look for. So, um, as I mentioned, I, I often get this question, you know, do I need a warehouse? And I generally advise folks who are in the beginning to either do it themselves in their garage, which is how I started. Or perhaps if they don’t have a garage or they don’t have room in the garage or they don’t want to do that work, perhaps they should work with a pill.

Taylor:                Yeah.

Trent:                  Given that a seller, well, first of all, let’s, let’s, let’s hang out there for a minute. Garage versus three PL. I’m sure you have some thoughts on that.

Taylor:                Um, I think I have this theory about Amazon sellers and an a marketplace where there are over 500 million products being sold. Um, don’t believe anyone who tells you this way, that way, black or white. So, um, I’m not, I’m not at all trying to punt the question, but I, I do think everyone needs to keep an open mind, which is who are you, where you’re at and why that works for you. Um, I’m going throughout this call to give a number of reasons why I think that, um, that it makes sense for a lot of intermediate sellers to, uh, choose a three PL. But, um, I’ll, I guess I’ll, I’ll start with, uh, the, the seller journey, which really comes to mind for me.

Taylor:                Um, so specifically new sellers, I do recommend that they get to learn the prep process on their own. So, Mmm. For example, my own story, you would’ve seen boxes and boxes and boxes in my office, in my basement, in the garage. Um, and I think most Amazon sellers, I can relate to that and that is their story. At some point you will come to start to question that, um, you mean like 18 wheelers backing up into your driveway and the neighbors are standing in the culdesac wondering what the hell is going on? I actually, personally, whenever, uh, whenever a truck showed up to my house, I was kind of proud. You know, like I bet the neighbors think I have like an arcade going in the basement or something. But, um, I would say Trent, um, probably more like when your wife starts to make comments about it and this, uh, this hobby that’s making you money.

Taylor:                And I think most people start out selling on Amazon as a hobby until they can get to a full time job. But this hobby that’s making you money is causing a strife in your relationships, or people are making comments or you have to step over a box to find the dog, you know, that sort of thing. So, um, yeah, that’s what I’m talking about in terms of the, in terms of the seller journey, let’s say that someone’s got their Amazon business to about a thousand units a month or 250 a week. Um, and let’s say that their average sale price happens to be a $25 a unit because I’m not great at math and I know that that is $25,000 in revenue a month. Okay? So let’s say that that person decides to spend four to five hours a week prepping, let’s say 250 products a week, which will get you again to that a thousand units a month number.

Taylor:                Okay. So let’s just say for example, that that’s free for you to prep it on your own. It’s not, but let’s say it is. Okay. So you’re spending four to five hours a week, um, prepping on your own. Well, what would that cost you with? A prep center, I’ll tell you for, for our prep center, if you’re doing a thousand units a month, uh, that’s going to cost you about $950 so the question becomes for $950 a month can you can get four to five hours a week of your life back. Is that worth your time? So that’s 16 to 20 hours a month back. So my advice for someone at that level would be why don’t you take those 20 hours a month back and focused on getting even one new supplier a month, which will take your, let’s say you can, one supplier will increase your revenue at that stage, 25020% and that gets you to 30,000 a month. So now you’re doing 1200 units or 30,000 in revenue a month and then you backed it out and say, what does that cost me to prep? What’s like $1,000? It’s like, I think you would take that trade off any day of the week.

Trent:                  I couldn’t agree more. I, as I’ve said many, many, many, many times to people in person and on the show and in webinars as the boss, your job is to close deals. Your job is to land suppliers. Your job is not to put tape on boxes. If you’re putting tape on boxes, in my opinion, you’re doing it wrong because your time is far, far, far too valuable. So now that you and I have at least both agreed that a third party prep center is better than doing it yourself in your garage. Okay, well how does a seller go and find them? I don’t know where in AR, what do I search for or does their business directory, what’s the phrases on Google’s? Do I ask around?

Taylor:                Sure. Sure. Um, well I think all Amazon sellers would probably start on Google. Type in FBA prep. Um, try and get rid of the ads, go down to the organics and see, see what you find there. Um, I give that answer about a, a C+. Um, you can, uh, a better answer might be going to a site like seller essentials or web retailer, which tries not to pick favorites. They’re, they’re more like aggregators and they will just list sometimes by state, sometimes by service service, meaning are you a wholesaler, are you private label, etc etc. Um, and that’s a better answer, but you only get extra credit if you actually go through and then call them and start to ask them some questions, which I’m sure we’ll get into in a bit. Um, and then my favorite answer is to uhmm

Taylor:                Go to the biggest, baddest Amazon seller, you know, and ask them about their prep. Now they may say they own their own warehouse or they may say, I’m sorry, I don’t feel like sharing that information with you. Um, but I always think it’s important in Amazon or in fact, any area of your business life, go to someone who is at the point you want to be and for those who are really dense in the morning, what I mean is who’s making the most money that you know, on Amazon and ask them. Um, I think that typically will get you the quickest, best answer. Um, and not to take this too far off off topic, but, um, I have this theory in all of the biggest, um, highest revenue earning Amazon sellers that I know, they all follow terms of service. They all do not feel comfortable skating in the gray or black hat area because they want their account to be around for a long, long time. Um, so I think that if you kind of trust them and the people who have done it before, you’ll find that they are much more conservative and they’re much more logical, methodical, um, etc etc. So, so I recommend going to someone we know and trust and saying, Hey, where do you get your prep done? Um, and, and let them tell you a good place to start.

Trent:                  So let’s assume somebody doesn’t have a referral source or they do get a referral to a prep center and now they’re there in that evaluation phase. What are some of the questions that a person, a seller should be asking? A prep center?

Taylor:                Yeah. Well, I, uh, I think that every prep center can be categorized in one of two ways. Um, there the mom and pop prep centers and there are the commercial prep centers. Um, obviously My FBA Prep is a commercial prep center and there, there are some benefits there. Now again, if you’re starting off, there’s nothing wrong with, um, ping your nephew, ping your little brother as I’ve done before, etc etc. Um, but I think first question to ask is, is you want to have the answer to the question, is this a mom and pop prep center or is this commercial prep center? And the larger your business grows, the more it will matter if they’re a commercial prep center or not. So add a thousand units. It probably isn’t important to you, but I do think it’s best to get in the beginning with the people that you want to be working with a year from now.

Taylor:                So, um, I’ll, I’ll, I’ll dive into that just a little bit. Well, why commercial prep center? A great question. And one of my favorite questions to ask is, do you have insurance and does it cover my goods in your warehouse? Okay. So instantly monopod prep centers are going to be scratching their heads, but the more inventory you send in an example use earlier, we’re talking, uh, in revenue 30,000. So let’s say, you know, $20,000 worth of inventory. You don’t want that to be, Mmm know, to be an accident to a flood or anything like that. Um, things can happen. You just want to be insured. So that’s important. Um, and then as far as like the questions as you go down the line, Mmm. It can be quite telling if they have a forklift or not in the prep center. Um, which doesn’t seem like a big deal as long as they can get the job done.

Taylor:                But it, it becomes a very big deal when you start sending in a lot of pallets or you need a whole container unloaded. And then I would, I would just look at your past a month of shipments and look at the types of ACEs you’re selling and say, okay, tell me about how you would do this type of prep. I send in a lot of bundles. How do you do bundles? I have a lot of fragile items. What’s your policy there? What does it look like? Could you take some pictures of um, fragile items that you’ve used? Bubble wrap on and send them to me so I know how the finished product looks. Um, and uh, another one just popped into mind. One of my favorite questions is how do I know if there’s a problem with my prep or something that I need to know about? Basically, do you know, you call me, do I have to call you?

Taylor:                Do I find out when it gets sent to Amazon? And the more refined the prep center is, the better their answers to these questions will be. And if you’re wondering, well, how do I know if the answer is good or not? Well, how do you feel when they give you the answer? I mean, do you, if you’re the one doing your prep now and you want to put, um, you know, a bottle of water and a bottle of Gatorade together in a bundle, I assume you’re going to do that in a poly bag. Um, great. So if they say that’s how they’re going to do it, maybe that maybe that passes your test, perhaps a better answer would be, um, well we shrink wrap it together, or we have a heat tunnel, which will make it come out looking like it was bought brand new from a store. I mean, that’s a really great answer. And those are some of the differentiators between, you know, mom and mom and pop prep centers and the commercial prep centers who we’ll invest in in these things. Um, you know, to get the best finished product as possible.

Trent:                  So that was actually a great, a great segue to my next question is, so what type of services? You’ve got the mom and pop prep center versus the commercial prep center at the high end of the commercial proof center. What are, what is the portfolio of services actually looks like?

Taylor:                So, Mmm. Basically you can, you can think of it now is what type of sellers are there? So many of our sellers are Amazon wholesalers and that’s sort of what I’ve been giving most of these answers. I’m assuming that the, the people listening are the customer, in this case, an Amazon wholesaler. We also have a lot of private label sellers who ended up sending entire containers to our warehouses, but they need a different type of prep. So the wholesale prep is typically standard prep, basically FN skew label over the UPC. There’s more than that, but let’s keep it simple. Uh, private label, a lot of times they want carton forwarding and sort of a added benefit of sending it to, um, a prep center as opposed to to your house or directly into Amazon, which you can do. Uh, but in the beginning, I recommend you send it somewhere else first because when we check it in, it’s like your first, Mmm.

Taylor:                Quality control tests this side of the border. Now most people are doing it. And I think most of the gurus teaching how to do private label are getting it right and say, Hey, you should have someone inspected for it, gets on the boat in China. But when it comes here, I also think someone should count it for quantity, make sure nothing’s broken, et cetera. So we offer that service, um, which is like, it’s included in what we do, but it’s just the inspection, cutting the units, et cetera. And then we do the carton label reporting. Um, we are just opening our book prep center, which will be out of Indiana. And, um, so if you’re doing any type of book arbitrage, um, for example, you’re using a software like scout IQ, which is a great one. Um, and you’re buying FBM to sell FBA. Well, you can send your books in and when we fill up a box, 40 to 50 pounds, we’ll send it into Amazon on your behalf.

Taylor:                Um, and then also if you’re a book seller, if you sell a, if you purchase entire Gaylords and pallets, you can have those delivered to our warehouse. We have the space, uh, we’ll sort through them. We’ll list them for you, which is specific to put prep services because we don’t list for other people, but we’ll list your books for you and you’ll go about it that way. So you never have to test the product effect. You won’t see it most of the time. Mmm. And the, the last, uh, sort of customer segment that we like to promote, um, which rounds out the four is um, eCommerce fulfillment. So people selling their own products and their own website. Um, what we do is we use a, um, a warehouse management system, which is a software that will, a login to your website, Shopify, Magento, WooCommerce, and about 15 or 20 others.

Taylor:                And as people order, uh, we print the order packing slips, um, we’re holding the inventory on the pallets in our warehouses and then we send it out for you. So that fulfillment piece is becoming a big part of our business as well. For those e-commerce sellers out there who have their own website. One of the things I’m seeing is the shift to the middle, which is the blurring of the lines between, I’m an Amazon seller or I’m any eCommerce seller, and Trent, you probably know this from from your own business, but many people who sell on on their own websites also sell on Amazon and vice versa. It makes sense. So it’s nice for them. Mmm. California is one of our, our warehouse locations. There’s actually four in California, all very close to each other and they specialize at this. But what we’re seeing is when we win big Amazon sellers to the California warehouse, they then bring their eCommerce business we never knew about. And that’s where I’m kind of coming up with this idea that, Hey, wait a minute. There’s a lot of guys out there who do both. Just as there’s a lot of guys out there who do private label and wholesale, for example.

Trent:                  Well, absolutely, because I know in our case we do FBA, we do FBM, we do Walmart, we do jet, and we do eBay. So everything except FBA. You know, we’ve, when we were handling it ourselves, we, you know, we had probably, I don’t know, thousand square feet stock with product and we did pick, pack and ship ourselves and now we’re shutting down our warehouse cause we’re going with you guys and uh, obviously you have to build a handle that for us.

Taylor:                Yeah.

Trent:                  And I’m sure Liz, I’m sure when Liz was interviewing you, she asked you a good number of questions around that.

Taylor:                I, uh, I wouldn’t have thought that the more thorough of the two would be her. And that’s just because I watch all your interviews and I hear the way you interview people. But, um, he asked, she asked me any questions.

Trent:                  She’s far more in the weeds than I am. She’s the one that runs our Amazon business these days. I have essentially no involvement in it. All right. So, um, with respect to communication, how should a seller, I mean, is it, we’re just gonna shoot emails back and forth? Is there a communication system? Is there, like, what should you expect from a professional’s repeal for communication?

Taylor:                Yeah, well I think fast communication, whatever medium that is, uh, should be the expectation. Um, and there’s more than one good way to have fast communication. But, um, for us, uh, in our, in our Prep Topia software, um, basically what it looks like is each shipment gets its own, um, shipment ID. And we have a tracker associated with that shipment, which basically serves as like a Domino’s pizza tracker. And so throughout the different stages, um, of the prep process, whether it’s in receiving, whether we’re doing a quality check, um, whether [inaudible] in second inspection or we’re prepping it, there’s all different stages and if something goes wrong, you will get a notification. So what that typically looks like is, Hey, this customer ordered 20 units and only 10 showed up. So then in the inspection stage you would get an email from us through our system, which is linked to your order, which says, Hey, order number is 602.

Taylor:                Um, they, you know, we, we got the inventory in, but there it said out of stock and so you got this many units less. And then that is basically opening up the conversation, which, which then goes like this, do you want us to send everything we have or do you want us to wait until we get that inventory to send it in? Um, so that’s how our communication works. Um, I’ll also say many, many, many customers email me, one of my partners, um, our customer service or we have dedicated customer service reps, uh, which we may have multiple reps coming on soon. And, um, you know, that, that’s a quick way to say, Hey, there’s, is there an issue here? What’s going on? Did it arrive? That sort of thing. But, um, we’re trying to automate that. So, uh, in the tracker you won’t have to ask or email or call, did my stuff arrive?

Taylor:                When it arrives? It goes from receiving to arrived and then it’ll go to the inspection and prep and then shipped out to FBA. Mmm. All of that should live in the system. Um, and that’s, that’s really what we’ve built, um, software wise to try and, um, solve this problem of how does one customer with inventory in seven States or 10 warehouses? No, we’re all their stuff is, um, that’s, that’s a big problem. Um, we think we’ve, we’ve done a pretty good job and we get great feedback from customers saying, Hey, why don’t you add this feature? We get, we get feedback from our warehouse to saying, well, the customer is asking about this shipment and referring to it as the supplier name, but I only have the order ID and the date can, can we add that into, into software? And we say, yeah, let us work on that feature. So, um,

Trent:                  You mentioned Prep Topia. Is that your software?

Taylor:                Yeah, so it’s, uh, it’s our proprietary prep tracking technology. And what it does is it allows the warehouse to Mmm, be in the back. And so for people who haven’t been to a number of prep centers, you typically have computers and offices in the front. And then in the back it’s like a warehouse or a storage and it looks kind of like the back of let’s say a Walmart or something. And what we want to do is bring those two together. So we want our warehouse managers or people prepping our customer’s inventory to be carrying an iPad. And then with the push of a button, say, okay, we have a co we have a quantity issue on this one, or something is arrived as broken or this, this skew was not listed in your inventory.

Taylor:                How do you want us to handle that? And we want them to be able to do that as they’re in front of the inventory, which is interestingly enough, not the way most prep centers operate that typically write it down a notepad, take it back the end and an email or call the customer and we want them to do that all. Yeah, with one finger so they can actually push a button on their end. And soon we’re going to be launching SMS notifications, which we hope customers will love. But you will be heading prep notifications on your cell phone because we’re clicking and saying this order, this skew, Mmm, quantity issue. What do you want us to do? And that’ll buzz on your phone and you’ll know somewhere, somewhere in the country, someone’s looking at your, your inventory and wanting to prep it.

Trent:                  That sounds horrible. I would never want that coming to my phone. I’m fine for someone who’s at a lower volume. I can see how initially they might think that was pretty spectacular. Yeah.

Taylor:                Well they cannot by the way, they can opt for just the email. So no worries.

Trent:                  So, so let’s talk about pricing. You, you kind of alluded to pricing before, but let’s break it down. How does pricing typically, I mean cause obviously in this repeal space there’s a whole different variety of ways. So I’m not going to ask you to answer how other companies price. Let’s just talk about how you do it.

Taylor:                Yeah. So, um, we do subscription pricing and there are different levels. And as per earlier in our conversation, we do think it’s best for sellers to wait until they’re at, you know, couple of hundred units a month. So our, our base plan starts at $250 a month, which gets you 250 standard units. So it starts at about a dollar, um, a dollar per unit. And it goes down from there. Whether you sign up for the $1,000 a month plan, $2,000 or 3,500 and then we typically custom quotes above 5,000 because we want to know what type of inventory people or sell are sending into us. You know, some people send in 10,000 units, but it’s a 100 skews. And that’s, I mean, that’s amazing, right? But other people are 7,000 units and 5,000 skews. And um, and that’s a, that’s, that’s quite a beast. So, um, well custom quote that, but yeah, so it’s basically the more units you’re having prep, the cost goes down.

Taylor:                If you’re doing 3,500 to 5,000 units, you can get a 85 80 cents, um, working with us. And then we do charge. Mmm. We charge more for different types of things. So.

Trent:                  Bundles or are multi-packs, that kind of thing.

Taylor:                Yeah, exactly. So, so in a bundle, for example, um, if you take two units and make them one, and I, and this can be confusing. So the way I look at it is in seller central units out the door and not what’s coming in to our warehouse, what’s going out to Amazon and that, that single ASEN, which is two units brought together in one bundle, um, that will cost on the most basic plan, an extra 50 cents. So, um, and the way we look at it is, well, per unit you sent in, you’re averaging now 75 cents a unit as opposed to a dollar, but that bundle is costing one 50.

Trent:                  Yep. Okay. Okay. What are some of the ways that sellers can get screwed over?

Taylor:                Yeah, if the prep is done wrong in any way, um, you’ll know it, but unfortunately you won’t know it until it’s too late. And what that means is, um, you won’t know it until it gets to Amazon and then it gets clogged up. Uh, and you have to go inside seller central and try and fix it. Or even worse, you won’t know it until the customer gets it and says, Hey, wait a minute, I ordered a blue candle and you sent me a black picture frame and you’re like, ah, somebody, somebody messed up that happens to there. Um, but that’s kinda a little stuff. I would say the, the worst thing, um, that can happen through a three PL is just delays. And I remember, um, when we first launched our Florida warehouse, um, we did a presentation for an awesome group that I, I know you know of.

Taylor:                Um, it’s Carlos from wizards was Amazon. Yeah. Yeah. They are amazing. If you have not heard of an Amazon cult, and I say that jokingly, check them out. Go see one of their meetups. No one has ever given away more free content in the Amazon world than Carlos Alvarez of wizards of Amazon. But we, we got to speak to some of his customers and Mmm. Uh, or I’m sorry, his community, cause they, they’re not paying customers, they just show up for free meetup. And Carlos said, you know, these guys have come to me asking for a prep center. I just wanted to introduce you and you guys can can speak. And they told us about w uh, another prep center that I should say, does great work in Florida does great work. But they were so busy about this time of year, it wasn’t quite Q4 but it was about this time of year and um, their inventory set in the, in the parking lot for two weeks before it was taken in by the prep center.

Taylor:                I’m not talking about the Amazon fulfillment center, I’m saying the prep center. And so those delays are extremely costly. And I can, I can speak to that even further, which is to say that a lot of our biggest customers who only send LTL 5-10 pallets every week have switched at this time of year doing everything, SPD, small parcel delivery. So rather than sending an inventory that comes in on pallets, let’s say 500 units on a pallet, they’re saying, Hey, can you guys box this up for us? Which obviously costs more and all that. And you ask yourself, well, why would they do that? And the reason is because delays mean missed sales. And so they’re saying we’re willing to pay more for our prep in terms of packing materials and all that sort of thing so that our inventory can actually be there and be selling in the most important time of the year for an Amazon seller. Mmm. So, you know, I think regardless of which prep center you choose, you should always be able to communicate with them and say, Hey, is it okay if I change the way I do this this month? I’d really like to send things in SPD cause it’s Q4, you know and hopefully there’s someone on the other end who can work with you and will answer that. And, um, there’s a lot of great prep centers out there who will help with that.

Trent:                  Are there other ways prep centers can monkey around? Can they try and sneak a few extra charges in? Can they overcharge on a unit basis and, and how to sellers, you know, make sure that they, uh, they don’t get the wool pulled over their eyes.

Trent:                  Yeah, I think I’m one of one of the good questions you can ask as you’re coming to your final prep centers. Um, as you’re trying to select one is, okay, talk to me about hidden fees. Will I be charged for? Mmm. Will I be charged for your time to unload a package? Will I be charged for um, a pallet? Um, if you have to build one. And what we try and do is we say outright, we say we want to take a human approach and if your stuff comes in on a pallet, we want to use that pallet to send it out and we don’t want to charge you. And if your stuff comes in and 10 boxes and we can get out and 10 boxes, we don’t want to charge you. Mmm. Are there other ways you can get the Wolf PO pulled over your eyes? Uh huh.

Trent:                  That you’ve seen. I’m not asking you to like make stuff up.

Taylor:                Mmm. Look, I think that if you’re, if you’re very thorough upfront, uh, in the questions you ask there, there shouldn’t be any surprises. And getting back to sort of the number one fast communication as should, should definitely be on your checklist somewhere. Um, you should be able to be having this conversation. Are there any hidden fees that I don’t know about that I don’t see here? And then if something does come up on your invoice as a line item, you don’t understand, you should be able to get a quick response saying, Hey, what’s this? Can you fix it? Can you work with us here? Um, so that’s, that’s what I would say with that.

Trent:                  Okay. And are there any ways that a third three PL can add value to a seller in ways that they might not expect like a new seller and been doing this for very long? So they’re coming in and they’re thinking, well, they’re going to put stuff in boxes and ship it for me, but are there other things that a professional’s repeal might bring to the table for them?

Taylor:                Yeah. Um, I think not, not to beat this point home too much, but, um, I want to talk about, um, the wholesale formula guys who I think, uh, everyone believes are, are kind of best in class Amazon wholesale guys. And I know that, um, I know that you know them quite well. Um, so these guys are great Amazon sellers and do over 7 million in revenue a month is what they [inaudible] is what they say on their site. And if anything, I believe it’s higher than that. Um, and after five years of having their own massive warehouse and doing it all on their own, they put this blog posts up and they said, we’re closing down our warehouse. And I think you’ve got to scratch your head and say, well, why is that? And you’ve got to ask what’s going on here? And um, they said it very nicely in, in their own words, but the essence of it is this, you have to ask yourself, what business are you in?

Taylor:                And my guess is it’s not the prep business. To your earlier point, you should be closing deals. You should be winning suppliers. You should be managing your team, should you be ordering Scotty peelers and you know, taking stickers off with a heat gun? Probably not. Um, so I, I can’t stress that enough for people who, um, are at a point where they can say, yeah, I can trade money four times and uh, and get my time back. And then the last thing I’ll say about that particular article that they make the argument, they said, we actually believe in some ways it can be cheaper. Do you use a prep center? And, and I don’t think that’s always the case. So I, I don’t want, I want to be clear about that. But it can be if you’re, if you’re paying your own employees, if you’re paying for your insurance, if you’re paying for all the supplies, you have fixed costs every month where, where you have to do X number of units just to make that workout.

Taylor:                But for a prep center, um, you can change your plan up and down if you’re on a per unit basis or if you’re on a subscription subscription level, you can go up and down based on where you’re at. So [inaudible] I think it’s interesting, um, to consider, okay, what business am I in and will this actually costs me more money or, or not? Mmm. And you might start rethinking it. And, um, there’s one other guy who put it in one of his posts, which I thought was a great way of phrasing it. Um, he basically was saying, what if I told you that whether you sell a hundred units a month or 10,000 units a month, it will take you the same amount of time and prep? And I’m like, well, that I don’t know what’s the answer. And the answer is a prep center, uh, because there’s, there’s a minimum amount of time, five to 10 minutes, every time you order, we’ve got to communicate to them, Hey, this order is coming in, in our system.

Taylor:                You, you know, you, you send them, let’s say a purchase order. You click on the state, you want it to go to, um, you make sure that your Amazon user permissions are set up and you’re done. And so whether you’re sending in one order of a hundred units or whether you’re sending in 10,000 units, that prep takes you the same amount of time. Um, so none of this is, is earth shattering. But when you start to think in terms of what’s the best use of my time, what business am I in? You know, how, how can I get from where I’m at today to where I want to be next month? I think, I think it becomes an obvious answer that you got to get rid of some of these things. And it’s, it’s not just prep. There’s obviously many other aspects of your Amazon business, but prep, certainly one of them that is easily taken off your plate.

Trent:                  So who is your company good for? And from a seller perspective, and then who shouldn’t work with you?

Taylor:                Um, Amazon wholesale sellers, uh, Amazon booksellers, private label people who are sending in, um, you know, many pallets or containers who want carton forwarding, which we, we do that at a special price. We don’t charge you per unit. We charge you depending on the service. But typically it’s per carton. Couple bucks per part. Pardon? Um, [inaudible] commerce sellers who sell on their own website, those are our four main customer segments that we go after. And the people who aren’t good for us, well, I say in the beginning you should get to learn the difference between, you know, a UPC and an ASEN and F and skew and how do you do it? You should definitely get inside seller central, learn those shipments. Um, those are, those are the type of people who should wait until they sign up with us.

Taylor:                And then probably the only segment which we’re, we’re not really set up for, um, is online arbitrage. We had a tax free, um, warehouse for awhile and we use them, but we just had so many customers. And in the online arbitrage world, you can’t control how many units you actually get from whenever, um, say you’re sourcing from. And so it just became 50 packages of 10 units a day and it just became a giant headache. And we said, you know what, we’d really like to focus on the stuff we know we can do very well, like Amazon wholesale or, or fulfillment. Um, and so we had to, we had to put, Mmm. We had to put our online arbitrage customers aside and say, you know, please come back to us down the road or if you change models, but we’re not the best for that.

Trent:                  What about retail arbitrage? Do you love that any other way?

Taylor:                Mmm, retail arbitrage. We probably have 10 retail arbitrary customers who are lucky enough to live near one of our prep centers. Uh, if you get on our site, you can see the map on the pricing page of, of where, uh, at least what States we’re in. We don’t put specific addresses on there, but Mmm. If you’re lucky enough to live near them, then, uh, then the warehouse manager has the opportunity to say yes. You know what? I liked that guy. He came, he did a warehouse tour. He told me what kind of, um, inventory he brings. Mmm. But the one warning I have a retail arbitrage is if you’re buying stuff that might not look new, like for example, you’re buying it from Nordstrom rack or you’re buying it from, um, TJ max and it has 10 stickers on it, it’s probably not, um, it’s probably not gonna work for either party because our warehouse managers might get frustrated that it’s not.

Taylor:                Um, it’s not easy prep in the sense that we like to know, well, what is getting this right look like? And with brand new items, we know the answer to that. With used items, it’s tough to tell. Did you want me to cut off all the tags? Are there stickers on the inside? Do I have to put stuffing in these shoes? So, um, I’d say email me if you’re interested in retail arbitrage and, uh, I’ll, I’ll see. It depends.

Trent:                  Okay. So do you have an offer for my listeners? Something special?

Taylor:                Absolutely. Um, I think there’ll be a link in the show notes. Um, you can use the link and enter the code. Bright Ideas 25 for $25 off any subscription you choose. Mmm. And by all means, shoot me an email, taylor@myfbaprep.com. Um, and somewhere in the email I want you to tell me your favorite, uh, interview that PR Trent’s ever done, Bright Ideas or otherwise, and uh, then we can actually get to know each other on a human level as opposed to just a customer level. But, um, yeah, Bright ideas. 25. Check us out. My FBA, prep.com.

Trent:                  All right, Taylor. Thank you so much for making some time to be on the show. It’s been a pleasure to have you here.

Taylor:                Thank you. Try and have a good one.

Questions Asked During the Interview

[01:30] Who are you and what do you do?
[03:20] One of the very first questions I get from new sellers is, “do I need a warehouse” and I generally tell them that they would be better off using a 3PL
[07:18] How does the new seller find them?
[09:34] What questions should they ask?
[13:06] What are the services that one should expect?
[17:56] How will the 3PL communicate with the seller and what types of systems should the seller expect the 3PL to have to accomplish this?
[22:34] How do 3PLs normally charge sellers?
[24:20] What are some of the ways that sellers get screwed by 3PLs?
[29:21] What are some of the ways that a prep center can add value to a seller in ways that they might not have expected?
[32:48] Who are you good for, and who shouldn’t work with you?
[35:30] Do you have an offer for my listeners?

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Today’s Guest

Taylor Smits is a former corporate guy turned eCommerce aficionado with almost a decade of online selling under his belt.

In 2010, he started selling sporting and concert tickets online and has since done stints in dropshipping, private label, and Amazon wholesale.

When he’s not in front of a screen, Taylor is most likely seeking adventure as “one of those” Amazon digital nomads.  He holds a Private Pilot’s license, SCUBA certification, and he is an ordained minister.

Taylor is on the show today to talk about MyFBAPrep, a company he co-founded with two others which aims to be the largest network of eCommerce 3rd party logistics centers in the country.  To date, they have over 10 prep centers throughout the country that provide prep, fulfillment, and logistics services to eCommerce sellers.

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