Changing Your LLC Operating Agreement as Your Company Grows

By Kat Simpson | August 1, 2014

 

cliff ennico“My two partners and I formed a limited liability company (LLC) several years ago.

Our business has grown substantially, and we now have several investors as well as employees who own nonvoting shares in our company.

We’re still using the Operating Agreement that we signed when we first started the company, but I have to believe we need to make some changes as what made sense back then for ‘just 3 guys’ may not make sense for a fast growing entrepreneurial company. Any suggestions?”

First of all, you are wise to ask this question before your minority owners start demanding changes (or worse, begin a lawsuit to force the changes).

You should ask your company lawyer to spend an hour reviewing your Operating Agreement and make specific recommendations for change. Here are some ideas:

Management by Managers. Your Operating Agreement probably says your company will be managed by the members acting as a partnership. That’s okay when it’s just the three of you, but with so many people involved now you may want to separate management from ownership by becoming a “manager managed LLC.”

The three of you would continue to run the company, only as “managers.” Certain very important matters (such as mergers, acquisitions or a change in the company’s business) would have to be approved by a majority of your company’s members. Minority owners would receive notice of important decisions and the right to be heard – very important for keeping investor lawsuits at bay.

Units of Membership Interest. Your Operating Agreement probably assigns each member a percentage of the LLC’s profits and losses. Time to grow up. Like a corporation, your LLC should authorize “units of membership interest” which function much the same as shares of stock in a corporation. It’s a lot easier to tell a new investor he will be receiving 5,000 ownership units than it is to tell him he’s getting 0.587433333% of the company.

Converting to units of membership interest will also make it easier for your LLC to convert into a corporation if and when you wish to do so.

Voting and Nonvoting Shares. Your message says you have given nonvoting shares to some of your employees. Are their rights spelled out in the Operating Agreement? If not, that needs to be fixed immediately as most state LLC statutes do not spell out the rights and obligations of nonvoting members.

Your Operating Agreement should authorize the managers to issue up to X units of nonvoting membership interest, granting owners of these interests the right to receive profits and losses from the LLC’s business and a percentage of the proceeds of any acquisition or liquidation transaction. A simple statement that “owners of Non-Voting Units have all of the rights of membership in the Company other than the right to vote on matters affecting the Company’s business, operations and affairs” may be sufficient.

Pre-Emptive Rights. Consider giving your nonvoting members the right to buy additional units if their percentage ownership of the company is “diluted” in a later offering.

Restrictions on Transfer of Shares. Your Operating Agreement should contain “buy-sell” provisions restricting members from selling their shares openly without first giving other members a “right of first refusal” to buy them. If it doesn’t, now is the time to add those provisions.

Voting members of an LLC should not be allowed to quit or otherwise withdraw from the business voluntarily without selling their shares back to the company or to the other members. You should allow voting members to transfer their shares to family members in their wills (as long as they convert to nonvoting shares upon the owner’s death). Transfers of nonvoting shares should not be restricted – since by definition these shares have no say in the management of the LLC, you shouldn’t really care who owns them.

Owners of nonvoting shares should be required to notify you when they transfer their shares – otherwise you won’t be able to track them down if they are entitled to payments or distributions down the road.

Valuation of Shares. When an LLC is first getting off the ground, you should use strict mathematical formulas value the company in order to determine the buyout price for a withdrawing member’s shares – for example, two times the earnings before income tax (EBIT) of the company averaged over the past three years, or 50% of the company’s gross sales averaged over the past three years.

As a company grows, however, multiples of sales and earnings may no longer reflect the true market value of the company. Some high-tech companies have recently paid billions to acquire startups that didn’t even have revenue yet, much less profit!

In the event a withdrawing member’s shares have to be repurchased, your Operating Agreement should require the company to be valued by an independent appraiser selected by the managers based on current market conditions. Yes, independent valuations are expensive, but you can afford them now. Congratulations!

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and host of the PBS television series ‘Money Hunt’.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2014 CLIFFORD R. ENNICO.  DISTRIBUTED BY CREATORS SYNDICATE, INC.

 

 

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Amazon Images: Resistance is Futile

By Kate Hornsby | July 31, 2014

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Why is it that every time Amazon makes an announcement about an upcoming change all I can think of is the Borgs from Star Trek and that classic line of “resistance is futile!”? If you’re not familiar with the Borgs or Star Trek, just know that they are an alien race who have what is called a “hive mind” and that means that they all have just one goal. That goal is “assimilation” or rather — to make all species the same.

 
The reason that I’m comparing Amazon to the Borgs today is that they have just sent out a notice stating that as of September 30, 2014, they will start hiding all photos in the U.S. Clothing and Accessories category that don’t have a main image with a non-white background. The requirement isn’t really new. They’ve have this in place for quite a while. In fact, as of October 15, 2013, all new ASINs have had to have the non-white background, but until now they weren’t forcing sellers to change all their clothing listings that were created prior to that date.

 
If you do not assimilate…uh…comply with this change by October 15…Amazon will hide your listings that are in non-compliance from their search and browse. That means they will technically no longer be for sale on their website although they aren’t quite wording it that way. The good news is that they aren’t actually ending your listings by making them disappear so that you have to start over. Instead, they will still appear in your seller account and you can access the listings with this problem by going to “Fix Suppressed Listings” in your Manage Inventory.

 
Once you upload new images and ensure that you have valid and complete product information on each of the products that you corrected the image on, you can then un-hide your listings and they will once again appear in the search and browse feature. Just remember the main photo image for each listing has to have a pure white (what they are calling RGB 255.255.255) background.

 
Do you have photos that need to be corrected? Leave a comment about how you are dealing with this problem below.

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Etsy Offers New Shipping Experience for Sellers

By Kate Hornsby | July 30, 2014

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Yesterday, Etsy announced that they were releasing a couple of new shipping features for their sellers. This change comes after they tested what they call a “new flow for marking orders” with their Shipping Management Improvements Prototype Team, which they say consists of a group of over 1,100 sellers from all different parts of the world. Here’s what you need to know:

Mark as Shipped: This change sends a notification to your buyer as soon as you mark that their order has shipped. Etsy says that that this will help to ensure that each buyer receives a notification about when their item is shipping and will hopefully cut down on the amount of messages going back and forth between a seller and buyer.

They said not to worry, however, if you have concerns about whether or not you have to add the tracking and shipping information. No changes there. They are still making that optional, so if it doesn’t apply to what you’re shipping, then you don’t have to worry about adding it. If you also sell on eBay, you know that this is one of their little bugaboo requirements, so this should be welcome news to sellers over at Etsy.

Schedule Shipping Notifications: This one I really like. Etsy is now allowing you to set a Ship Date for up to two days ahead of when you are marking an order as “Shipped.” This means that if you like to get your packages ready the night before you go to the post office, the buyer’s receipt simply shows that their order is listed as “Shipping Soon” until the package is actually at the post office and ready to go.

Etsy will then send out an email to the buyer on the day you plan to ship, typically between 9 a.m. and 5 p.m. to let the buyer know their package is on its way. One word of caution, however, if you don’t put in a Ship Date other than the current date, Etsy will go ahead and use the today’s date as the default.

Notes to Buyer: You know how frustrating it has been to have to edit your “Note to Buyer” every time you have an order? Well, now Etsy will allow you to create and keep up to 10 versions of the “Note to Buyer” that usually goes out along with your Shipping Notification. They are calling this new tool “Shipping Snippets.” When you write a note in the “Note to Buyer” field, you will soon see that you have an option to click and “Save” it.

Finally, don’t worry if you’re not seeing all these new tools and options on your page yet. Etsy said they will be rolling them out over the next several days, so things should update on your page soon. You can read the Etsy message in its entirety here.

What do you think about the new Etsy changes? Love them or hate them? Leave a message below!

 

 

 

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4 Tips for Using Hashtags on Social Media

By Kate Hornsby | July 25, 2014

As you probably already know, the use of hashtags on social media sites such as Twitter have become increasingly common. Now, Facebook has even started using them too. What you may not know, however, is that other social media sites such as Google+ and Tumblr also permit the use of hashtags and if you use them correctly it can really help you to promote your brand or merchandise.

The original purpose of using the hashtag was to group together messages of similar content by topic so that they could be more easily be found when someone wanted to add to the conversation. As an example, a lot of television shows use them so that fans of the certain shows can quickly locate other fans on to discuss certain scenes or characters. If you want to see a really good example of this, type in #Scandal on Twitter and look at all the literally thousands of tweets that were made last season for the final three episodes.

Unfortunately, when it comes to using hashtags to promote brands, sales, or products, a lot of sellers seem to get a little lost as to the best way to use them. Here’s quick some tips that can help make you a hashtag pro:

Keep your hashtags specific. Focus on one or two things that you want to promote in your business and use the same hashtag to help keep the conversation going. For instance, if you were running a promotion on purple pillows, then every post you send out during your promotion should have #PurplePillows on it. You may also want to put your brand name as a hashtag when you do this, which we’ll discuss more about this in a minute.

Use your hashtags sparingly. Too many hashtags on a post is too much of a good thing. One or two hashtags per post is best and will usually help you get the most engagement. So, one hashtag for your promotion and one hashtag for your brand name is plenty. Keep in mind that a lot of spammers fill their posts up with hashtags, so you want to avoid coming across as if you are trying to spam your followers.

 
Avoid hijacking popular hashtags. One of the most aggravating things about hashtag users is when someone uses a popular hashtag, but their post has nothing to do with the topic. As an example, during the Super Bowl a lot of people were tweeting about certain plays that were occurring. When you hopped on Twitter to participate in the conversation, however, you would usually find that someone was on there trying to sell something that had nothing to do with the Super Bowl and yet they were still using the hashtag as part of the promotion. Not only is this bad taste, but it has “spam” written all over it.

Finally...Keep those hashtags short. Although you can have longer messages on Facebook and Google+, on Twitter you still only get those 140 measly little characters, so it pays to leave room for your actual message. Plus, long hashtags confuse people and it makes it harder for them to remember what the hashtag actually was when they want to come back to Twitter and rejoin the conversation.

Topics: Social Media | No Comments »

B is for…Back to School

By Kate Hornsby | July 24, 2014

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Well, this summer has certainly flown by. It seems like just last week it was graduation time and now students are about to fill the school hallways once again. While most parents will probably snatch up notebooks, folders, pens and pencils from places like WalMart, Office Depot and Staples, there are still some ways that eBay and Amazon sellers can get in on that back to school rush.

Clothing and Shoes
Although I don’t particularly remember being excited about returning to school every year, I do remember getting excited about owning a bunch of new clothes to ‘celebrate’ the occasion. Students these days want name brands, however, and parents want to save money, so a lot of people will turn to online marketplaces like eBay, Amazon and maybe even Etsy to find some affordable deals. If you have new or gently used clothing items your own children have outgrown, now might be a good time to make a little cash before you do your own back to school shopping. Oh, and don’t forget — many teachers will want to update their look as well.

 
Book Bags
Book bags have really come a long way in the last several years. They’ve gone from being just functional to almost being an actual fashion accessory. If you’re wondering what age group you should target to sell to, high school and college students seem to be a safe bet. Just a quick run through of some book bags already listed on Amazon showed that all shades of blue seem to be popular and the trend for high school students (at least the female ones, which is what I looked at!) are sophisticated and chic.

 

Dorm Room Furnishings
Bed-in-a-bag kits, curtains, pillows, accessories. You name it, college kids need it or want it. The funny thing is, items don’t have to be new either. Retro items remain popular as do off the wall (or literally ON the wall) items, such as pink cookie sheets that serve as magnet boards and unusual shaped and colored baskets. If you have funky, chic or unique items you’ve been waiting to list, now is the time to do it.
Finally, you may think that you’ve already missed the opportunity to get back to school items listed, but keep in mind…reports say that although a little over 44-percent will start shopping a month or so before school starts, there is still over 4-percent that wait until the week of school to even begin.

Image courtesy of [hinnamsaisuy]/ FreeDigitalPhotos.net

 

 

 

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3 Tips to Improve Your Facebook Engagement

By Kate Hornsby | July 18, 2014

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Although I primarily consider myself a writer, I also have worked (and still do) as a social media coordinator. You might not think there is a whole lot to posting on social media sites, after all, it’s basically type out a few sentences and click “Post.” It might surprise you to learn, however, that there’s actually a good bit more to it. If you aren’t getting the engagement from your posts that you think you should, here are three tips that could help.

Know your posts average lifetime.

According to TechCrunch, the average lifetime for a post on Facebook is about three hours. This doesn’t mean you should post every three hours, but rather that is the span of time when your post is going to get the most comments and likes. Think about it like some of the celebrity news-stories you have seen. You know how for days and days it seems like all you hear about is Lindsay Lohan and her troubles with the law? Then one day she isn’t mentioned anymore and the media has moved on to something like Kim Kardashian’s wedding.

That is what is considered the lifespan for a news-story. In our case, it is how long your post will remain relevant, which is…the three hours.

So…how often should you post?

Most successful page owners typically post on their Facebook page only two to three times a day. If you post more than that, TechCrunch says you’re “cannibalizing” your own posts. Not only are you shortening the lifespan of your posts, but your newer posts are actually eating into the time of your other posts (pun intended). I’ve seen this happened when one of the non-profits I volunteer with wants to do a “Facebook blast,” which is when they want a lot of information to go out over a short period of time.

As an example, they have a yearly event and as it gets closer to it, they want it mentioned more often. They also want their sponsors to get mentioned, so you often have posts going out every one to two hours. When this happens, I typically see a drop in engagement and site viewing. BUT…all of it is relevant information, so it’s worth the trade off of losing some of the lifespan for each post. It’s not something I generally recommend for day-to-day reader engagement though.

When is the best time to post?

If you are posting only two to three times a day, when is the best time to do it? Well, typically during the week, the best hours for posting are considered between 1 to 4 p.m.. People are getting off work or they are waiting to get off work,so that is usually when they check their Facebook page. Between 9 a.m. and 11 a.m. are usually good times to post too.

If you want to do a third post, that’s a bit of a toss-up. The general rule of thumb is that you don’t want to post before 8 a.m. and you don’t want to post after 8 p.m. You may just want to play around with it a bit and see what works. Maybe right before or after lunch or maybe around 6 to 8 p.m.. Watch your numbers after you post and then count the amount of comments and likes. If it gets little or no attention, then keep adjusting each hour until you find the time that will engage the most readers

How often do you post? Do you have a certain time that works best for you? Leave a comment below.

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What You Need to Know About FBA Aged Inventory

By Kate Hornsby | July 16, 2014

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Doesn’t it seem like it was just the other day that Amazon sent out its FBA Aged Inventory reminder to sellers? Well, believe it or not that was actually at the beginning of the year (February 15) and now here we are again with the second reminder for the year (August 15).

In case you haven’t been selling on Amazon’s FBA program for at least 11 months, the letter is in reference to their inventory cleanup, which is basically a way for Amazon to get sellers to either get rid of their FBA merchandise that has been sitting in their warehouses for 365 days or longer, or….pay Amazon a Long-Term Storage Fee of $22.50 per cubic foot. (Ouch!)

While this fee varies, if you have a lot of old merchandise sitting in an Amazon warehouse, now is the time to decide what you want to do with it because you could end up paying $250+ for items that may or may not ever sell.

Here’s some ways to get creative that might help you get those items sold or gone before the big day of reckoning:

Reprice your item. While the general rule of thumb is that you never want to be the lowest seller of an item (the advice is usually to price items between the highest and the lowest), the rules go out the window when you need to get the item out of there. Price your item either with the lowest seller or go a little bit underneath them. Don’t worry about a price war at this point, the idea is to just get the item off of Amazon’s shelves and out the door.

Keep an eye on your repricing. Don’t reset and forget. Remember, you are not the only seller being affected by this, so keep an eye on your prices after you lower them. You may have to adjust the price several times as there will be other sellers following the same methods you are.

Try Amazon’s Multi-Channel Fulfillment. Amazon gets that most people sell on multiple venues. They would also like to make a little money from you when you do, so they have set it up that you can use their multi-channel fulfillment service to list your items elsewhere (or on your own website) and then if the item sells, you pay Amazon to ship it for you. This means that if you are sitting there with a bunch of free eBay listings, you could list your Amazon items on eBay and then pay Amazon to ship them to your eBay buyers when they sell.

Keep in mind, you’re going to have fees everywhere if you sell them on eBay, including eBay itself, PayPal and Amazon, so free shipping on eBay is not going to be the way to go for this. Use a price calculator and make sure that you’ll come out with something and you’re not actually going in the hole.

Finally, don’t go into panic mode. You do still have some options. You can:

 

Do you have aged inventory at an Amazon warehouse? What do you plan to do about it? Leave a comment below.

 

 

 

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My Summer Reading List – by Cliff Ennico

By Kat Simpson | July 15, 2014

cliffIt’s hard to believe, but we are almost halfway through the summer season. Most of my clients are away on vacation and leaving me alone for a little while to focus on chores I seldom have time for during the year (updating my lawbooks, digitizing my client files, you know the sort of thing).

So what does a small business expert put in his bookbag when he goes on vacation?

Be forewarned: I’m a pretty avid reader. When I was six years old, my Dad instructed me to read 50 pages of something – anything – a day. I took his advice seriously, and I’m still doing it years and years later (I’m not saying how many . . .).

Because I read so much about business and law during the year, I try to get as far away mentally from that as possible when I go on vacation.

But not entirely. There is a type of “fun” reading I enjoy that have helped me get a perspective on the business and political world in ways that reading the New York Times simply doesn’t. When I’m not reading about business, legal and technological developments, I read history, especially ancient and medieval European history, and novels set in those periods. The farther back you go in history, the easier it is to grasp the issues and personalities that defined that particular epoch, and because you are less emotionally attached to them (compared to, say, a history of Hitler’s Germany) it is often easier to glimpse the parallels between those times and our own.

Even more fun (and enlightening) is to read at the same time a nonfiction account of an historical period and a novel set in that period.

Here are the history books and “companion” historical novels I am taking with me on vacation:

Cicero: The Life and Times of Rome’s Greatest Politician, by Anthony Everitt; The Judgment of Caesar/The Triumph of Caesar by Steven Saylor. For hundreds of years, Rome was a republic ruled by a Senate whose members were elected from Rome’s most powerful and wealthy families. Along comes a populist politician (and military leader) named Julius Caesar, who battles income inequality among Rome’s elite, broadens the political base by empowering the poor, and sidesteps the Senate every chance he gets in order to do things his way with the army at his back. He is assassinated by a cabal of conservative Senators, and in the civil war that follows the Roman republic is destroyed and replaced by one of the most ruthless autocratic empires in history.

Cicero lived through all that. Watching him skillfully surfing the political waters and repeatedly surviving crisis after crisis where many other clever politicians fail, is truly awe-inspiring, as is the tragedy of seeing Cicero finally losing his head by taking a rigid principled stand rather than trimming his sails to the latest political wind-shifts. An object lesson for any wannabe politician.

Steven Saylor’s “Roma Sub Rosa” series of historical novels (12 so far) are set in this turbulent period. While these are primarily murder mysteries (Saylor’s stories are told from the perspective of “Gordianus the Finder,” a sort of Sherlock Holmes in a toga), Saylor is by trade a classical historian (at the University of Texas) and the books entwine Gordianus and his family with the wealthy and powerful, including Cicero, Caesar and their respective households.

Julian by Gore Vidal; The Closing of the Western Mind: The Rise of Faith and the Fall of Reason by Charles Freeman. Both books deal with the same moment in history – the reign of the Roman emperor Theodosius I (379 – 395 A.D.), who not only dictated that Christianity would theretofore be the official religion of Rome but who also dictated the form that religion would take, suppressing dissent and intellectual debate and calcifying Christian doctrine into an orthodoxy that would rule Europe for the next 1,000-plus years.

Freeman’s magisterial history gives you the facts; Vidal’s brilliant historical novel views these developments from the perspective of the Roman emperor Julian II, known as “the Apostate” (360-363 A.D.), who after first embracing Christianity rejected it in favor of the “pagan” Greek philosophical tradition. As in Cicero’s case, a moving account of what happens when a human being stands up for reason and principled debate in the face of overwhelming ideological forces.

The Face of Battle: A Study of Agincourt, Waterloo and the Somme by John Keegan; Agincourt/Sharpe’s Waterloo, by Bernard Cornwell. Military historian John Keegan’s classic describes the battles of Agincourt (1415) and Waterloo (1815) from the perspective of a “grunt” foot soldier in the English army. Historical novelist Cornwell has tackled the same battles from the same perspective, and the comparison with Keegan’s accounts is fascinating. I am not generally a fan of Cornwell’s novels set in medieval times (his characters are often too “modern” in their worldview and therefore unbelievable) but no one can take you inside a battle like Cornwell can.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and host of the PBS television series ‘Money Hunt’.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2014 CLIFFORD R. ENNICO.  DISTRIBUTED BY CREATORS SYNDICATE, INC.

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How to Sell on eBay More Efficiently

By Kate Hornsby | July 10, 2014

We all know that eBay is a numbers game.The more you list each month, the more you make each month. Well, that’s the way it is suppose to work. As you may know, many sellers are complaining because their sales went down for the month of June and no amount of listing seemed to help. Even Lynn Dralle lamented that her sales were down 4-percent for June, so you know that means something is up with eBay and it’s not just that people aren’t buying as much because it’s summer.
Still, I don’t think eBay is dead (well, not yet anyway…). I think sellers are just going to have to really concentrate on their business and become a whole lot more efficient at what they do. This is especially true if you’re opting for multiple streams of income and listing on both eBay and Amazon.
As someone who both writes and sells eBay from home, I know just how easy it is to become distracted and waste valuable time. One minute you’re listing items or working on an article and the next minute….
SQUIRREL!
You end up on Facebook, or loading the dishwasher, or sorting sock drawer. This is why getting organized and finding ways to become more efficient are so important. Here’s a few tricks I’ve recently learned that can help you to stay on track.

 

Take your photos with your eBay App
One of the biggest issues I’ve had with listing is that there are some days when I know I will only be listing a few things. Its always bothered me that I would take a few pictures and then have to take the card out of my camera and load the photos onto my computer. THEN if I wasn’t happy with one or two of the photos after I saw them up close, I would have to put the card back into the camera, take more photos and load them onto the computer again. Very time consuming, especially since there have been times when the husband borrows my camera for his real estate work and then I not only have my photos on there, but photos of houses too.
Fortunately, the eBay App lets you take photos right from your phone and put them into the listings in just a couple of steps. You can then finish your listings on your phone or save them for later and work on them from your computer. Huge time saver for me!

 

Work your listings like an assembly line
I sometimes joke that I have AADD. It may even be true. Regardless, I do know that if I’m not careful I will get three or four listings started and they will all be in various stages of completion. I may then forget that I was working on them if I don’t work on them right away. To get around this, I now work my listings in what some refer to as the “assembly line” process. I first find my items and get whatever I will be listing for the day all in one place. I then photograph the items and take the measurements of each item (I use a notebook to write my measurements down).
Next, everything gets weighed and set near the computer. Since I prefer working on my listings on my laptop, I don’t normally try to list off my phone. I just start the listing, take the photos and save it. Then I start another listing, save the photos and save it. I usually identify the item just enough so I will remember what the item is when I see the photo. I then fill in all the descriptions later.
Make time in your schedule for listing
There are two camps on this. Some people prefer to product source on certain days and list on certain days. Other people like to list a certain amount each day. Neither method is wrong. You just need to schedule the time for listing and make yourself do it. I usually try to take photos in the morning when the light is better (the downside of my phone is that even with a flash it doesn’t take good quality photos if it’s dark inside the house) and then finish the listings in the afternoon.
On the days I am listing, I write it on my schedule and put it on my to-do list. I’m not always perfect with this, but my amount of listings has increased and until the big June slump – my sales were increasing too. The main thing I can tell you is to find a way to handle your listings that works for you and then make a point to stick with it.

 

 

Topics: eBay, Online Business | No Comments »

Amazon seller to take Amazon, Apple to court over account suspension

By Kate Hornsby | July 9, 2014

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Although there are sellers out there who knowingly sell counterfeit items on online marketplace sites such as Amazon and eBay, there are also cases where companies like Amazon are issuing “takedown notices” (which is the email one receives when a merchant is accused of violating a brand’s intellectual property) to good sellers as well.

One of these good sellers is Hard to Find Accessories Inc., who decided to fight back by filing a lawsuit against both Amazon.com and Apple after the company’s account was suspended after Apple reported them for allegedly selling counterfeit Apple products. This caused Hard to Find to reportedly lose over $180,000 in monthly sales.

According to CNET, the products were initially called into question because Hard to Find was reportedly selling the items for a lot less than Apple was. Even though the seller eventually cleared the problem up with Apple, by then Amazon had already suspended Hard to Find from selling on Amazon.

Despite attempts to appeal the suspension, and even after Apple contacted Amazon on their behalf, the online marketplace giant still refused to reinstate the account, forcing the hand of Hard to Find who decided to file the lawsuit.

Although a spokesperson for Amazon has said that they won’t comment on ongoing lawsuits against the company, a copy of the complaint alleges that Apple makes a point of watching Amazon for items sold at what is considered an aggressive price point and that their actions in requesting that Amazon take down the items was both anti-competitive and conspiratory.

The complaint also brings up allegations against Amazon about their withholding payments during the “investigation.” This is similar to a claim made by some small online merchants last year, who filed a lawsuit claiming that by withholding payments for more than 90 days, Amazon broke it’s own terms of agreement.

Where this case ends up is anyone’s guess, but with all the complaints coming out about eBay and the defect rates and Amazon’s recent category restrictions, some online sellers are probably reconsidering their selling options since it seems to confirm thoughts that these online marketplaces aren’t fighting a fair fight against or for the little guy.

Topics: Amazon, eCommerce News, Online Business | No Comments »

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