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Are you spending hours each day digging through UPC price lists? Do you call supplier after supplier, but end up with very few profitable wholesale accounts? Do you want to find cheaper Amazon products to sell, but don’t know where to start? Product research is the most time-consuming part of owning any Amazon business, yet the #1 key to success. When I started my e-commerce business five years ago, I spent an enormous digging through Amazon listings, attempting to find products that were both profitable and consistent. Without the right tools, I spent hundreds of hours with very little to show. Sound familiar? Three years ago I was scrolling through a Facebook group when I saw a post that changed the entire business outlook. I learned I could automate my research to find Amazon products by price, ranking and ASIN rather than searching listing by listing. I tried almost every software solution out there, but after spending thousands I dollars I finally landed on ProfitGuru. For me, it’s free features replaced a few different software programs that cost me around $175 a month. Right off the bat, I knew this would impact my business in a big way. This ended up being the most critical decision I made on the road to becoming a 7-figure seller. To illustrate this, I want to show you how I found 50 products with great margins in just 5 minutes. If this sounds too good to be true, it is (at least a little bit). I certainly won’t buy all 50 of these products, but this automation cuts down my research time by about 90%. Tips for picking the right Amazon products to sell If you’re brand new to the selling world, don’t worry -- every Amazon seller -- new and old -- go through this process. Most products have a life cycle, so even the most experienced sellers are constantly searching for new inventory. I can’t emphasize the importance of this market research process enough. Let’s put it this way: If you can make this process more efficient, you’ll have the ability to tap into virtually unlimited growth. First, let’s review what makes a great product. Lightweight: A few pounds may not seem like a big deal, but consider what it costs you on all ends. Your items generally have to be shipped three times: to you, to an Amazon warehouse, and to a customer. With FBA, it’s easy for profit margins to be eaten by oversize fees. When you’re starting to search for wholesale products to sell on Amazon, always aim for items less than a pound and smaller than a shoebox.; Not sold by Amazon: As a company, Amazon has very different financial goals than you do. Sometimes they’ll even take a loss on products just to stay in stock for their customer base. There are very few times you can compete and come out on top, especially as a beginner. Low competition: The buy box is split between each seller on a listing who are within a few cents of the lowest price on the listing. These three sellers have the same price for this game, so the buybox will rotate between them. For example, for an item that sells 100 units a day with 10 sellers, each seller will snag about 10 units a day. This becomes a serious consideration when a listing has a huge amount of sellers, which can vary from 20 to more than 100. Calculate expected volume using a sales estimator and divide it by the number of sellers within $.05 of the lowest price. If the resulting number is less than a unit a week, it’s probably not a great product to start with. Steady sales rank: Amazon sales rank tells you how a product lines up within its category. This rank is displayed in the Seller Central app, as well as the bottom of each Amazon listing. A product’s rank is in constant flux -- it drops each time a sale is made (although it doesn’t update in real time). Two products with the same rank, but in different categories, have a completely different volume. For example, a video game with a rank of 9500 may sell one unit a day, while a kitchen product with a rank of 9500 will sell at least 30 units a day. The video game is the top 10% of all products in its category, while the kitchen product is in the top 1% (because it's a bigger category). You want to pick a product with a sales rank that has been steady over a long time span. This will reduce unexpected fluctuations in sales volume. To view the historical data on any product, find the product in ProfitGuru and click on the “View Historical Data” icon at the bottom of the listing. View Historical Data Now, onto the product search. How I found 50 products in 5 minutes By using ProfitGuru’s product search, I produced a list of 50 popular, low-ranked products in just a few minutes. The best part is, I did all this with a free account. You can replicate this list (with this or any other product niche) and find products you can profit from by following these step-by-step instructions. 1. Select the “products” from the main menu. ProfitGuru dashboard 2. Set filters to find Amazon products by category For this example, the category is set as arts and crafts, along with a specific keyword (beads). This came up with more than 2000 products, so I narrowed my search using advanced filters. 3. Set filter to find Amazon products by ranking There are more than a dozen filters I could have set for the sake of this example. However, still wanted to create a fairly wide list so I didn’t utilize all of them. For me it was important that the rank was under 50,000 (about the top 3% in arts and crafts), there weren’t more than 20 sellers, and the price was at least $8 (any less generally means the profit margin is lacking). 4. Remove Amazon “Sold by Amazon” filter to no, because I don’t want to compete with them. With this step, the list is now narrowed down to 50 products with solid profit margins and good sales histories. I can shrink or expand the list by adjusting any of the 15+ filters available. Set products filter 5 real examples of profitable products Here are a few actual products from my list: Clover Flower Head Pins Rank 13,228 Estimated monthly sales 100 FBA Sellers 9 Net income $5.74 Clover Flower Head Pins Bead Buddy One-Step Crimper Rank 17,499 Estimated monthly sales 90 FBA Sellers 5 Net income $9.11 Bead Buddy One-Step Crimper Perler Bead Bag, Grey (Grey-Black-White) Rank 9,491 Estimated monthly sales 140 FBA Sellers 5 Net income $7.78 Perler Bead Bag, Grey (Grey-Black-White) Alvin Beam Compass Rank 47,355 Estimated monthly sales 30 FBA Sellers 5 Net income $19.11 Alvin Beam Compass A-Z Letter Beads Rank 632 Estimated monthly sales 1070 FBA Sellers 2 Net income $7.74 A-Z Letter Beads Expert advice from another million dollar Amazon seller To close out, multi-million dollar Amazon seller Harris Iqbal shared his best advice on sourcing products: “Don’t delay the process of starting. When we started, we asked ourselves the wrong questions like: What if it doesn’t work? What if we get stuck with inventory? What if we get bad reviews? There will be setbacks but that is all a part of the process. Every failed attempt taught us lessons that put us 10 steps ahead of where we would have been if it wasn’t for those failures. His final takeaway Research proper sourcing channels. Never burn a bridge. Building and maintaining relationships will take you a lot further in this business than any amount of money. Have a written down plan of what you want out of your business. In real estate, the buyer has to meet three criteria: 1. Willing 2. Ready 3. Able. The same logic gets applies here. You have to be willing to risk blind effort, work for countless hours, be ready to take loss, experience failure and have the ability to get back up and ask for more. Execution of these plans is the major 🔑 Stay positive! Know that things won’t work out 100% right away but you will learn and make it better the next time around!”
Would you like to buy name brand items for pennies on the dollar to resell on Amazon? What about $200 for 100 Star Wars Light Up BB-8 Keychains? Or 50 packages of Hanes Underwear for $100? If those don’t float your boat, how does 125 iPads for $4500 sound? All of the aforementioned lots are actual lots that have been sold online in the past month. These products are sold by liquidation companies. These companies purchase the items from bigger companies (like Best Buy, Walmart and Target) and sell them for pennies on the dollar. Most of the products are customer returns, although sometimes these lots contain shelf pulls (slow-moving items a store needs to get rid of to make room for more inventory). Liquidation seems like the ultimate Amazon product sourcing strategy. It doesn’t have the financial risk of Amazon dropshipping or retail arbitrage, the profit margins are fantastic, and the availability of “pallets” is endless. In the time it takes to finish reading this article, you could have a giant truck full of toys, sports equipment, or clothing heading to your door. If you’re thinking there’s a catch to all this, you’re absolutely right. Read on to learn why finding liquidation products for Amazon FBA isn’t something all sellers should do. Amazon ≠ eBay: Proceed with Caution On eBay, you can sell just about anything as long as you specify if the product is broken, untested, for parts, etc. The same ground rules do not apply to Amazon. Anything you sell on Amazon must be complete and in good condition. Even brand new items with packaging flaws must be listed as used. New Product on Amazon must be complete and in good condition Liquidation products rarely come to a reseller without some form of cosmetic damage or use. Even if you’re looking at brand new shelf-pulls, there’s a good chance they’ll undergo some shipping damage between the warehouse and your location. In short, this means every liquidation product you receive should be listed as used. There are a few things that can’t be sold used on Amazon: Beauty Products Clothes Handbags Baby Items Jewelry Health Items Luggage Unacceptable and prohibited items Item is not clean, including signs of mold, heavy staining, or corrosion. Item is damaged in a way that renders it difficult to use. Item is missing essential accompanying material or parts. This does not necessarily include instructions. Item requires repair or service. Item was not created by the original manufacturer or copyright holder. This includes copies, counterfeits, replicas, and imitations. Item was originally distributed as a promotional copy, promotional bundle, product sample, or advance reading copy. This includes uncorrected proofs of in-print or not-yet-published books. Item has passed the expiration date (includes "best by" and "sell by" dates), has an unacceptable portion of its shelf life remaining, or the expiration date has been tampered with or removed. Item is prohibited for sale on Amazon. Source Amazon Seller Central One major issue is rating the condition of these products. Amazon lets you classify used items as like-new, very good, good or acceptable. Just because you think a liquidation product is like-new doesn’t mean your customer on the other end of the sale will think the same way. If a customer returns an item to Amazon with a complaint about the condition, Amazon will automatically mark it the return as “not as described on the website.” Getting more than a few of these in a short period of time can trigger an Amazon warning (or even a suspension!) To check the reason for your customer returns, go to Reports > Fulfillment > FBA Customer Returns. Amazon seller central product returns Is it still possible to sell used products on Amazon? Absolutely. It just needs to be done with a solid dose of caution and a truckload of risk tolerance. Even following Amazon’s rules to a tee still leaves you at the mercy of customers (who can ultimately decide your fate). Here’s our guide to help you decide if liquidation sourcing is right for your business model. Do this, not that (liquidation style) Don’t Buy: Mystery Pallets Never buy a pallet without a list and clear pictures of what it contains. You have no way of figuring out what condition the inventory is in, or if everything beyond the first layer of the pallet is junk. “Assorted” or “Mystery” pallets are often coded for “leftover junk we didn’t know what to do with.” You’d probably have better luck shopping at your local thrift store than buying things sight unseen. Never buy a pallet without a list and clear pictures of what it contains Do Buy: Manifested Pallets Manifested liquidation means the lot has an exact list of what you’re getting (plus or minus 5%). This helps you reconcile with your liquidator later, in case you didn’t receive every item originally listed. A good manifest will tell you each item name, ISBN, retail price and condition. Be aware that most retail prices are inflated, so you should only plan on selling and item for 40-50% of the reported MSRP. A good manifest will tell you each item name, ISBN, retail price and condition Don’t Buy: Customer Returns There’s a reason the customer returned the item in the first place, most likely because of defect or damage. Even in the best-case scenario, the product has likely been opened. Customer returns are time-consuming and risky. Customer returns might be a risky purchase Do Buy: Discontinued Items There’s an enormous amount of money to be made flipping discontinued items on Amazon. Getting them in bulk lots is even better. Because Amazon customers are creatures of habit, they’re often willing to shell out an insane amount of cash to keep their favorite lipstick, chocolate, or perfume on the shelf. There are a couple of ways to find these items. One is to simply google a brand name + discontinued (most large brands list discontinued products on their websites). Another way is to use ProfitGuru’s free Products tool. Simply type “discontinued” in the keyword field, and a list of every product with that label will come up. A word of caution: watch out for discontinued products that were never good in the first place. This can be easily checked by looking at product reviews on the Amazon listing. Amazon discontinued products Don’t Buy: Products from Major Liquidation Websites Buy liquidation from a person, not a website. Liquidation is much easier to navigate when you can ask questions and arrange shipping in person. Until you have a few purchases under your belt, this will prevent you from wasting your money and time. Do Buy From Liquidators in Your Area There’s a huge benefit to being able to see what you’re purchasing beforehand. You’ll be able to avoid bad inventory and negotiate pricing on the good stuff. You’ll also save an enormous amount of money on shipping Don’t Sell: Health and Beauty Liquidation It’s not just food that has expiration dates. More often than not, health products and topicals are discontinued because they’re old. Even items like tissues can have expiration dates. Even If you don’t notice expiration dates, chances are your customers will notice when their lotion smells like rotten fruit. Always take extra precautions for items that enter the mouth or are applied to the skin. Don't sell health and beauty liquidation products Do Buy: Toys and Games Customers may purposely seek out “used” toys to save money, but they’re not likely to do the same for a hairbrush. Sell to an audience that already exists. Don’t Buy: Stuff from Amazon Have you ever wondered what happens to all of your stuff that Amazon loses or breaks? You may think it falls into a black hole, but Amazon actually makes money off of it by selling it in liquidation lots. Don’t buy from Amazon to sell on Amazon. This should be a given. Do Buy: Pallets from Warehouse Stores Some of the best liquidation lots come from stores who move inventory quickly, like Costco and Sam’s club. These warehouses almost always give their lots a letter grade, so you’ll know exactly what to expect upfront. They also sell pallets of brand new products, which is virtually unheard of in the liquidation world. Pallets from Warehouse Stores Liquidation Horror Stories When approached with care, liquidation sourcing can be one of the profitable business ventures to undertake. However, there are bound to be a few horror stories along the way. They say to learn from other people’s mistakes, right? Apparently, this liquidation company had a different definition of “like new.” David, IL You thought your cracked iPhone was bad That’s going to hurt the bank account We pity the cop who finds this A Few Last Words FBA Liquidation Sourcing can be extremely profitable or downright risky. We want to hear your best liquidation stories. If you’ve got a good one, leave it in the comments below. Happy sourcing!
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The FBA Facebook groups have been buzzing this month. With an increasing amount of restrictions put in place by well-known brands, as well as a surge of new Amazon sellers, people everywhere are claiming Amazon FBA is dead. The good news is, anyone who tells you Amazon wholesale is dying doesn’t understand economics. Amazon is simply a platform. As long as there are buyers (which there are, as long as 100 million is enough for you) there is room for you to make serious money, no matter what your initial investment is. Here are the top objections we see from new Amazon sellers trying to find wholesale products: There’s no profit margin! I don’t have enough money to start buying wholesale FBA products. I don’t know how to open a wholesale account. I don’t know know which suppliers to contact. I don’t know where to start. Wholesale - the selling of goods in large quantities to be retailed by others. Keep reading to learn how to tackle these issues no matter if you’re budget is $10 or $10,000. Starting from Scratch: $0 Budget Starting any business, nevermind an inventory-based one, is challenging in the first place. Starting one without capital may seem impossible, but there are a few things to keep in mind. Search for wholesalers who offer net90 terms Search for wholesale suppliers who offer net90 terms based on your personal credit. In short, this means that you don’t have to pay back the supplier for 90 days after you order the product. Don’t think about doing this with shorter terms, as net30 and net60 terms generally won’t give you enough time to receive the product, ship it back to Amazon, sell it, and get paid. Most suppliers won’t give you a 90 day term without being an established customer, but they may be more willing to budge if you have a strong credit history. It never hurts to ask. Search for a short-term lender Search for a short-term lender. Some lenders, such as Behalf, partner with specific wholesalers to offer lines of credit for inventory. Trade services Are you a marketer, web designer, or graphic artist? Hard skills are always in need, and cash-less trades have an enormous amount of appeal to small business owners. This won’t work with huge corporations, but small, local wholesalers or manufacturers may be willing to negotiate a barter agreement. Try to set up in-person meetings over phone calls -- it will be easier to make a deal. Building up: $100 Budget With limited money, your key is to search for small, light products that sell quickly. Even if your profits are small, make sure your margins are healthy -- at least 50%. Let it build-up If you found 100 different $1 products with a 100% margin, reinvesting over 12 months would build to more than $100,000. This may seem outlandish, but the math doesn’t lie. Don’t pay for shipping With a low budget, you don’t have a dime to spare. Use ProfitGuru to search for the wholesalers closest to your location. This will allow you to pick up an order, rather than shelling out freight dollars. Multipack Look for items that you can sell in packages of multiples (replenishable household items are best). Your fees will be lower, allowing you to turn your money more quickly. Small capital: $1000 Budget You’ve got a little money to work with, so use it carefully. Don’t focus on unicorns Right off the bat, you should know there are major brands that won’t want to work with you. We call these unicorn brands because you’re about as likely to see a unicorn in your backyard as you are to land a wholesale account with them. These are generally major companies that sell high-end products (for example Nike, Sony, and Apple). Spend your time searching for mid-size companies, where you can get an accessible sales representative to walk you through creating an account. Invest wide, not deep If you throw $1000 into a single product, it puts your whole business at risk. Only purchase what you can turn in 60 days. The cost of sitting inventory isn’t just lost sales -- Amazon storage fees add up quickly. Ditch the instant approval applications Ditch the instant approval applications: If you can apply for a wholesale account online and have it instantly approved, so can everyone else. As frustrating as it is to fill out pages of paperwork, you’ll get better margins and less competition from companies who put you through the wringer. Big wallet: $10,000 Budget This is the start of the big leagues. You have enough cash to work with 2-3 suppliers and grow your product base quickly. Negotiate The bigger you can order, the more likely a supplier is to give you a discount. These discounts almost never show up online -- you have to ask. With bigger orders spread your inventory horizontally rather than vertically. If you run out of profitable products, inquire about new items that aren’t in the catalog yet. Ask about exclusives Ask about exclusives: If you do order deep on a single product, ask your supplier if they would be willing to sell exclusively to your business. This eliminates competition and provides price stability. Search backwards Find the niche you want first, then search for wholesalers that supply directly to that product category. Many suppliers would rather work with a specialist company than one with a broad Walmart-type mentality. No exclusions In short, it doesn’t matter how much your budget is. Almost anybody can build a wholesale business on Amazon with a little grit and a willingness to learn. Just remember the basics: Choose the correct products Price for profitability Build relationships Master the art of customer service What kind of budget do you have? Drop a line and let us know below.
You’ve seen them plastering Youtube and Facebook with multi-million dollar mansions and six figure cars. Casually walking along their beachfront property, they provide assurance that you too can learn the secrets of how to sell on Amazon by simply enrolling in their $4999 course. Even though we never recommend spending money on information you can get for free, these Amazon “gurus” have the right idea. Amazon won’t make anyone an instant millionaire, but last year Jeff Bezos announced small and medium-sized businesses earn an average of $90,000 a year using the Amazon platform. Amazon holds a massive 50% share of the U.S. e-commerce market, with no signs of slow down on the horizon. If you’re looking for a green slice of the Amazon pie, read on. Finding products to sell on Amazon isn’t dumb luck -- it’s a process powered by good research. Choosing what you want to sell on Amazon is easier than you think, even if it takes a little legwork. ProfitGuru provides a massive amount of data that can help you predict which products are most likely to bring in profits. Even if you have no idea where to start, ProfitGuru gives you the tools to search for products with good profit margins. Best of all, you can (and should!) do all of this research before ever spending a dime on stock. We’ve written a comprehensive guide to products you should (and shouldn’t) sell on Amazon.com. Nobody can tell you exactly what to sell (after all, there are almost 4 million products listed on Amazon) but this Amazon selling guide will help kick off your research. Before we start, let’s get a little lingo down. Wholesale vs. Private Label Long before you even open an Amazon account or make a purchase, you should have a good idea of how you’re going to source your products. Most sellers opt to sources from two methods: wholesale or private label. Wholesale Wholesale is buying pre-branded goods in large quantities from a distributor. For example, purchasing 1000 Barbie dolls from Mattel (or another company who buys from Mattel) would qualify as a wholesale purchase. Private Label Private Labeling is buying a product directly from the manufacturer and branding it with your own company name. This can be a product that already exists in the market or something new you’ve worked with a manufacturer to create from scratch. Most private label products on Amazon are imported from China. FBA, FBM & Seller-Fulfilled Prime Amazon provides a few options when it comes to fulfillment. FBM (Fulfillment by Merchant) FBM (Fulfillment by Merchant): With this method, the merchant ships to the customer from their own warehouse/location. When a customer puts in an order, Amazon tells the merchant how to pack it, ship it, and upload a tracking number to the seller central account. FBM fulfillment fees are typically 10-20% lower than FBA, but we still don’t recommend this method to brand new sellers, unless they have a pre-established warehouse setup. FBA (Fulfillment by Amazon) FBA (Fulfillment by Amazon): With FBA, Amazon takes care of all the packing and shipping of items, and guarantees customers will receive them in two days. All the merchant does is send their product to a few selected Amazon warehouses and Amazon takes care of the rest. With FBA, Amazon also takes care of all customer service issues. Typical FBA fees are around 35% of the sales price of an item, though this can vary depending on weight and dimensions of an item. SFP (Seller-Fulfilled Prime) SFP (Seller-Fulfilled Prime): Seller-Fulfilled Prime is an exclusive program that allows merchants to send products from their own website, while still guaranteeing two-day shipping. New sellers should avoid this program unless they have previous shipping logistics experience. Not only is it expensive, but the metrics Amazon requires can be challenging to maintain. Now that we’ve covered the basics, let’s dive into some basic Amazon product research that will help you narrow down your profitable product choice. Don’t Sell: Heavy FBA Items with a low profit margin. The minimum fulfillment fee Amazon charges for any item is around $5, with extra fees for excessive weight. Once you add in inbound shipping costs with an Amazon partnered carrier, it’s easy to lose money rather than make it. Selling brick on amazon Do Sell: Small, light items Any product in new condition that measures 16 x 9 x 4 inches or less, weigh less than 10 oz or less, and is priced at $7 or less is eligible for Amazon’s Small and Light program. This program cuts fees as much as 50%, and is the only profitable way to sell low-priced items on Amazon. The following product types below are not eligible: Restricted products FBA Prohibited Products Adult products Dangerous good (hazmat) Temperature-sensitive products (such as chocolates) Products with existing FBA offers that use manufacturer barcodes for tracking instead of Amazon barcodes Slow-moving products (ASINs offered on Amazon for more than 90 days that have sold fewer than 25 units in the last four weeks) Selling bracelets on amazon Don’t sell: Items with lots of similar competitors When you’re researching a niche on Amazon, type a keyword into the search bar and see how many results come back. If there are a lot of similar products that have the same basic functionality, the niche will be hard to break into. Garlic Press The exception to this is if you can create a private label product that is better, cheaper, or has a different function than currently exists within the niche. Do sell: Complementary items Search for items that don’t exist, but have a function that compliments another popular item. This will help kickstart your listings from the get-go, because Amazon will pair the listings in search results over time. Watter bottles Don’t sell: Items with high liability Think about the risks associated with your product choice. Can a customer fall off of it? Does it have moving parts? Could it cause bodily damaged if consumed? Is there a risk of recall? Unless you have a multi-million dollar liability insurance policy, low risk products are the way to go. Hoverboard is an example of high liability item Do sell: Kids toys without moving parts or batteries Not only are these products less risky than electronics, but they are generally cheaper and less likely to be damaged in shipping. They also have a built-in audience: many parents specifically seek out traditional toys over modern ones. Wood blocks Don’t sell: Gift “bundles” with restricted items There are thousands of items that are gated or restricted on Amazon. While there is usually an approval process that can remove these barriers, it’s often expensive or time-consuming. Some sellers “bundle” restricted products with allowed products as a way around the rules. This is a quick way to get your Amazon account suspended. Product bundle with restricted products Do sell: Household items in multipacks In some categories (household and grocery) it can be profitable to bundle exact items in multiples. Not only does it save on fees, but customers are more likely to buy multiples of items they need to replace on a consistent basis. This is especially applicable to private label items -- Amazon generally frowns on bundling wholesale items if they don’t come in a multipack from the manufacturer. Spray bottles Don’t sell: Items with a high return rate Clothes, shoes and baby products the highest rate of return on Amazon. When a customer returns an item (even if it’s damaged) Amazon may elect not to reimburse you. Even if they do, you’ll still be out the original selling fees you paid for the item. High return item - shoes Do sell: Ship-proof items If you sell FBA products, your items will go through many hands: An inbound shipping company, Amazon warehouse employees, robots, and a final shipper (to name a few). Choosing products that aren’t easily damaged will save you time and money. When in doubt, do a drop test. If your product can fall from 10 feet without showing any signs of wear or damage, it’s probably a safe bet. Shipping proof item - balls Don’t sell: One of a kind items While Amazon does have a collectibles category, it’s not a great long-term business model to sell valuable memorabilia. Take that Peyton Manning-signed jersey to a professional, or at least attempt Ebay before listing it on Amazon. Peyton Manning-signed jersey Do sell: Popular items you can get on a consistent basis You’re out to build a business, not a thrift store. Spend your hours finding products that can be consistently reordered rather than one-time finds. Think about brands or items your customers use day in and day out. Sponges Don’t sell: Wholesale products with hundreds of other sellers on the listing Customers buy Amazon products using the buy box, which rotates between sellers who have the lowest price on a given product. When you’re splitting the buy box between 100 (or even 10!) different sellers, you’ll only get a portion of the sales you would if you were the only seller. Even the most popular products can be difficult to sell if the competition is fierce. Uno game Do sell: Items from regional wholesalers One of your best resources is a quick Google search to find wholesalers in your immediate area. Not only does this save money on shipping costs, but you’re more likely to find products that may not be easily accessible across the rest of the U.S. It’s also easier to arrange face-to-face meetings to guarantee you’re getting the best price possible. NY coffee cup With more than 350 million products on Amazon, it’s obvious there’s a profit to be made. However, to be a true player in the e-commerce game you must find products with great margins, minimal competition, and limited risk. ProfitGuru makes this process seamless -- give it a test run today. Do you have a product in mind? Follow our blog here to learn how to contact wholesalers, put in your first order, and start selling on Amazon today. The money is waiting, all you need to do is take action.
4 Advanced Strategies for Sourcing Amazon Products
As we’ve said before, the best products are often the hardest to source. This reduces competition as fewer Amazon sellers are willing to go the extra mile needed to source them. We hope you understand this and you’re up for the challenge. If you take the time and effort to source good products, you’re seriously boosting your chances of taking your business to the next level. In this article, we’ll talk about 3 ways to get access to some of the best and most profitable products to sell on Amazon. First, we’ll talk about ungating and how you can get the opportunity to sell products for which Amazon has certain restrictions. Next, we’ll cover what you can do to partner with suppliers who offer great products but are (at first) unwilling to supply them to you. Whether it’s the brand owner or a high-tier wholesaler. Namely, we’ll look at strategies to offer high value to suppliers in exchange for their collaboration. By the end of this post, you’ll have the knowledge to source some of the best products to sell on Amazon. Ready? Let’s go. 1. Ungating When deciding on which products to sell on Amazon, you should be aware that you are not allowed to sell in some categories because they are gated. Gated, in Amazon talk, basically means that they are restricted and if you want to sell in these categories, you will need to obtain approval from Amazon to do so. You may think that there is no point in trying to gain access to gated categories because there are plenty of opportunities elsewhere. Whilst that is true to some extent, gaining access to gated categories should always be your aim. If "Sell this product" button is not available in seller central, it means product is gated One of the main benefits for selling in the gated categories is that there will be less competition because many sellers will not go to the lengths which are required to become ungated. It can sometimes get a little frustrating when you find a product which ticks all the boxes in terms of profit potential for selling on Amazon and then you discover that it falls in a gated category. But don't worry - there are lots of great products for you to sell in ungated categories whilst you are waiting for approval and allowing for your account to mature. To begin with, here’s the list of the ungated categories. Ungated categories Baby (some restrictions may apply during the holiday season). Beauty (There are sub-categories that may still require approval, and an application fee). New & Used Books (not including Collectible Books). Camera & Photo. Consumer Electronics (some products within this category may need approval). Fine Art (but new seller applications are limited). Health & Personal Care (There are sub-categories that may still require approval and an application fee). Home & Garden. Kindle Accessories. Musical Instruments. Office Products. Outdoors. Personal Computers. Pet Supplies. Software (some products within this category may need approval). Sports. Tools & Home Improvement. Toys (some restrictions may apply during the holiday season). Video Games (some products within this category may need approval). You can see that there are plenty of categories on the list above which offer lucrative opportunities and perhaps one of the most surprising inclusions is that of Toys. Most people think that Toys would fall into a gated category which it does - but only in the 4th quarter and only then if the product is being merchant fulfilled (FBM). So, if you are using the FBA program, selling toys is not a problem. You will be able to do so throughout the year which is another excellent reason to join the FBA program. Ok, we have looked at the categories which you can sell. Now, let’s look at the categories which are gated, and for which you have to apply to Amazon for approval to sell in there. List of gated categories. Gated categories Automotive & Powersports. Clothing & Accessories. Collectible Books. Entertainment Collectibles. Gift Cards. Grocery & Gourmet Foods. Industrial & Scientific (the BISS category). Jewelry (Note: Amazon is not currently accepting new seller applications for jewelry). Luggage & Travel Accessories. Major Appliances. Shoes, Handbags & Sunglasses. Sports Collectibles. Watches. If you are asking yourself why Amazon considers these categories as gated, it is because there can be high instances of counterfeiting within these categories and Amazon needs to reduce their risk. Think about it - fake watches, handbags, and sunglasses seem to be everywhere you look in this day and age. The last thing Amazon wants is for these goods to be sold on their platform. There are also some restrictions within certain categories that you need to be aware of. Certain brands will have come to an arrangement with Amazon to have their brand protected, and you will have to get permission from the brand itself to sell their products as opposed to getting permission from Amazon. If there’s one thing to take away here, it’s this: there’s a lot of sense in going through the approval process and sell into a gated category. This will open opportunities for you to generate higher profits and compete with fewer sellers. Please note: The categories listed above are correct as of writing this article. However, Amazon can change them at any point without notice. To get the most up-to-date information, visit Amazon’s official page for restricted products. Now, on to our next strategy for sourcing great Amazon products. 2. Developing a new value proposition to go up in the supply chain Many people will jump straight into Amazon sales without laying the foundations and wonder why problems arise further down the line. But if you take your time and allow your account to mature, the rewards will be there for you to reap. If you would like to take your Amazon business to the next level though, it is important that we take time to look at what is known as the value proposition. Make no mistake, the methods that we are about to talk about will require a lot of time and effort, especially if you are starting your Amazon store from nothing. But also - the rewards can be immense and when you look back they are more than worth the extra work that you will have to put in. The whole point of the value proposition is to work your way up the supply chain so that you can sell the type of products which are not accessible to the vast majority of Amazon sellers. We have spoken about how to get the best deals from wholesale sources and using tools such as ProfitGuru to find those with the best profit potential. But as you will learn, there are methods which you can use which can give you the opportunity of working with top quality brands who will almost always say no to any requests to sell their products on Amazon. Before we go any further, it is important that you understand that most good brands are not at all interested in landing new Amazon sellers. Think about it. All good brands will already be selling their products on Amazon and any new sellers will just be competing with everyone else to win the Buy Box. As long as the existing sellers are keeping an eye on their stock levels and always have inventory to fulfill the orders, they will keep the Buy Box and the number of sales will stay the same. What can happen if a brand allows too many sellers to sell their products is that people start to get desperate and lower their prices, even though this will go against the brand's MAP (minimum advertised price) policies. These lower advertised prices can not only severely damage the brand's reputation but can turn into an administrative nightmare in actually trying to trace the sellers. It is not difficult to realize that, from the brand's point of view, it is far better to just have a few reliable sellers who know what they are doing as opposed to many that they cannot control. If you are interested in working with reputable brands and enjoying the rewards which can go hand in hand with these relationships, this is where the value proposition comes in. So let’s take a deeper look into what is involved. Before you even think about approaching brands and asking for permission to sell their products, you need to look at the approach from a different angle. Thinking “outside the box” would perhaps be a better way of describing it. Start to think of different ways in which you can reframe your approach to the brand owner and what kind of unique value you can offer them instead of “Can I sell your products, please?”. The easiest way to come up with a value proposition is to look at what problems the brand owner may be experiencing with their selling process and offer them solutions. Let’s take a closer look at some potential problems which you could offer solutions to: Offer solutions to problems A product detail page with poor photographs and a description which does not do the product justice. Offer a service whereby you totally rewrite the description and include high-quality product photographs. Poor market share when compared to product competitors? Offer to carry out keyword research as well as setting up PPC campaigns. Sellers paying no attention to MAP policies so that the selling price is all over the place? Provide a monitoring service to ensure that MAP policies are being met. The brand owner may have a website which leaves a lot to be desired? Offer to provide them with a fully functional website which will go a long way in conveying the quality of the brand. If you take the time to go through a brand owner’s Amazon descriptions and their website, you will come across many opportunities in which you can present to them a value proposition. If you are thinking that this looks like too much work, would it give you any encouragement to tell you that we make $20k profit per month from one great supplier we presented a value proposition to, just like the examples we have just spoken about? Before you start approaching brand owners in order to offer solutions to their problems, it is important that you set yourself up in a professional manner. A company email address along with a website which describes the services that you offer are a must. It would be a big mistake to think that these steps are not necessary. If you were the brand owner, which would you take more seriously - an email from [email protected] or [email protected]? A domain name can be purchased for under $10 and if building a website is beyond your capabilities, take a look on upwork.com or fiverr.com where you can get one built for under $200. Keep the content on your website simple and easy to understand. Describe the kind of services which you are able to offer and don't think that you have to cover absolutely everything. It could be that you offer to provide managed PPC campaigns to promote Amazon listings and if that is the case and it is something that you are comfortable with, there is no need to also offer a website building service and a photography service, etc. As already mentioned, most people will not be prepared to go the extra mile and the very fact that you are could make the brand owner sit up and take notice. Here is the website of one of the biggest Amazon sellers - http://www.avalancheind.com/. You can see that their business is based on offering a value proposition. Look at their subheading: “Helping you take your brand to new heights”: They offer copywriting, videography, marketing and photography services and are a perfect example of asking what they can do for a brand owner instead of just asking if they can sell their products. Also, don't forget that you don't have to provide these services yourself. If you have the funds available, it is possible to outsource these tasks just as you would have done with your website if you don't know how to build one yourself. 3. Building credibility in a small niche This method is still based on offering a value proposition but in a completely different way. The way it works is that you build a presence within a small niche and become known as something of an authority in it. Set up a blog and social media accounts which are regularly updated and collect email addresses from visitors to your blog. You have probably read about successful bloggers being continually sent products from companies within their niche so that they can give them favorable reviews to their social media following. This method is exactly the same and if you were a brand owner, don't you think you might be impressed if you received the following email: “I am an Amazon seller and would be interested in selling your product range on Amazon. I have a proposition for you which I am sure will interest you. I am regarded as an authority in (your niche) and if you agree to allow me to sell your product range on Amazon, I will be able to promote your products to my email list of 5000 subscribers, 6000 Twitter followers, and 7000 Instagram followers. From my experience, I know that my audience will love your products and due to the nature of the product range, I would have thought that they will become repeat buyers.” The value proposition in this instance is that you are in a position to drive highly targeted traffic to the products which you have listed on Amazon and this has to be regarded as a win-win situation for the brand owner. As to which niche to choose, it is advisable to go with something that you have an interest in, and obviously one in which there are popular brands which relate to your niche. 4. The brick and mortar solution Another method for working your way up the supply chain is to make an offer to sell a supplier’s products through a physical store. Great suppliers are always on the lookout for additional sales channels. Although they are often reluctant to sell their products on Amazon, they will gladly accept if you have a bricks and mortar store. Even if your premises are completely unrelated to retail, a barbershop or nail salon, for instance, it could give you an opening to sell the products and then be allowed to sell the products on Amazon. Again, it may sound a lot of extra work, especially if you don’t already have access to bricks and mortar stores. But from our experience, if you can get permission from a brand owner to sell their products, the resulting profits will mean that the time and effort spent on setting it all up was worth it. If you don't have your own premises and are not really interested in doing so, another option could be to come to an arrangement with a friend or relative. Ask them to buy the products for you and resell (wholesale) at no extra cost. Of course, it’s a hassle to have other people to get involved but might be worth the effort for some great brands. Conclusion In this post, we looked at some of the best ways to source Amazon products. We discussed ungating and what you can gain from it. We also looked at strategies for helping brands and building a good relationship with them. These involved building a value proposition from scratch such as improving the brand’s product descriptions or photography. Other ways to move up the supply chain include building credibility in a small niche and offering to sell the brand’s products through a physical store. Both of these give the brand owner access to more sales channels that boost their overall performance. We hope this article will help you source your next winning products in no time. You can also learn more in our dedicated article on choosing great products for your Amazon store. Need more guidance? Sign up for our free course on building an Amazon store from scratch for beginners.
7 Ways to Maximize Your Amazon Profit Margins
Most articles online talk about growing your Amazon revenue and that’s often the main success metric people use. However, even if you generate a 7-figure or 8-figure revenue, you could end up making a loss. So it goes without saying that managing your bottom line should take utmost priority in your Amazon business. In this post, we’ll cover 7 ways to increase your sales margins so every new dollar you make in revenue boosts your overall profit. Ready? Let’s go. 1. Use a credit card for purchasing stock It’s normal to generate only a small profit or breaking even when you are just starting out with your Amazon business. But as your operation grows, you will start to generate higher amounts of revenue and overall profits. With that, of course, your costs will also increase. So it makes a lot of sense to use a credit card with cashback or some kind of reward system to purchase products from wholesalers and other expenses. This can indirectly impact your bottom line as you get money back on your purchases. Alternatively, you can earn reward points to minimize other expenses such as business travel. 2. Create product bundles One of the easiest and fastest ways to increase your profit margin is by using product bundles. If you are not familiar with bundling, it is where you offer multiple products in one Amazon listing. The main benefits of bundling are that the profit margins are increased and the competition for the Buy Box is reduced. In most cases, a new listing will need to be created which means that you will be a solo seller for quite some time (until someone else notices that your bundle is popular and has access to the same products). If set up correctly, you can be a solo seller for a bundle for as long as it remains profitable for you to keep on selling it. In a way, bundles are similar to private label selling - only much easier and faster to create. And if some bundles don’t sell, you can always break them apart and sell as single units to get your money back (since you will be bundling popular products). Let’s take a look at a product bundle so that you can see what we are talking about: Sample product bundle The screenshot above is a very basic example but it gives you an idea of what a bundle is all about. It should be a group of products which complement each other. And as it is unlikely that another seller will have packaged together the same products, your bundle will be unique and will win the Buy Box. In your eagerness to put a product bundle together, don't lose sight of the fact that everything in the bundle should be related and consist of products that are in demand. A good way of finding related product ideas is to carry out a search for a product which has a decent Best Sellers Rank (BSR) and then look at the ‘frequently bought together’ products which can usually be found underneath the listing. The body weight scales below are a good example: Sample of frequently bought together items If you scroll further down the page you will see several other items which are listed under the heading ‘Customers who bought this item also bought’: Sample of "Customers who bought this item also bought" This is a goldmine of information which you could use to put together your own bundle. There are a few other ideas which could help you in deciding which items to include in a bundle: Visit your local store and note which products are displayed together. Are there accessories which can be used to compliment the main product in the bundle? Could your bundle be targeted at a particular holiday? You really are only limited by your imagination and Amazon’s terms and conditions as to what kind of bundles you will put together. And as already mentioned, going down this route is one of the easiest and fastest ways to start making a decent profit. 3. Track and react to price changes When you negotiate with suppliers, they are likely to send you their catalogs which contain many thousands of products. It is extremely difficult, not to mention time-consuming, to go through these lists to try and find profitable opportunities. You need to individually estimate the current Amazon sales price and compare with the cost in the product catalog. Then, you need to take into account all of Amazon’s fees and your own operating expenses to calculate any potential profit. Luckily, there’s a way to analyze these product catalogs in bulk and therefore maximize your profits without wasting hours of your own time. With the SupplySpy bulk profit analyzer, it is a matter of uploading the file from your supplier and you will be presented with the products which sell the best and have the highest profit margins. Just sign up and go to the “My Suppliers” section. Then, add a supplier and import their product catalog: How to import supplier products file on SupplySpy Once you have uploaded a supplier’s product file to SupplySpy with the sales rank and profit margin filters set, it is important that you check back on a daily basis to see if there have been any changes. SupplySpy updates the price of products every day so products that weren’t profitable yesterday might show up as something to keep an eye on today. You might be surprised by how often the prices do change, and there are various reasons for this. It could be that a competitor has no stock left or they cannot continue selling at that price. No matter what the reason is, when SupplySpy informs you of the price change, you have a golden window in which to act as quickly as you can and maximize your Amazon profits. The faster you can get your products sent to Amazon after the price change, the better because it will give you the opportunity to sell at a higher level for a longer period of time. We have benefited from this many times in the past when we find a popular product where there has been a price increase. We normally ship around 100 units to Amazon as soon as possible and usually we will sell most of them at a price which gives us a great profit. When the price drops we don't mind the few that we have left selling at break even, or even at a small loss. As long as the average profit is good, we are fine with that. 4. Take advantage of out of stock products Some time spent on finding out of stock products can pay dividends and as you would probably expect, speed is of the essence. You need to find products which are out of stock, but which have a good sales rank on Amazon. If you are the fastest one to react and ship the product to Amazon when the stock next becomes available, you will be able to enjoy some solo selling time during which you will be able to make a good profit. Select "Include out of stock" on Amazon and look for "Currently Unavailable" items 5. Buy all remaining units from a supplier Another good way to get the edge over your competitors and to make a good profit is to keep an eye on how many remaining units your supplier has of a popular product. Some suppliers show the amount of stock which is remaining of a product on their website and if you have noticed that there is a limited number of sellers of this particular product, consider buying everything that is left. You should ask for a discount for taking the remaining stock off their hands but as long as it is a popular product, consider purchasing it anyway. The chances are that your supplier may take some time to restock which will mean that when the remaining sellers run out of stock, you will be left as the solo seller and be able to enjoy the many benefits which go with that status. 6. Use repricer tools You will not need to get involved with repricer tools if you only have a few products. But as soon as your inventory gets to a decent level, using a good repricer tool will pay dividends. There are lots of repricer tools on the market. Amazon offers a free one which can be found in your Seller Central account but the one we use is repricerexpress.com. They offer a free 15-day trial without the need to enter payment details so that will give you enough time to try it out for yourself. If you are not familiar with how a repricing tool works, please let me explain. The repricing process begins when any one of the top 20 sellers for a particular item changes any of the following metrics with the price being the most common one (see list below). Repricing Metrics: price; handling time; shipping time; Featured Merchant; offer condition; offer sub-condition; deleted offer. If there is a change in any of these metrics, a new price is calculated for the user of the repricing tool which will ensure that their products will remain well ranked and visible. When setting up the repricing tool, the user will enter the minimum and the maximum price for each product. If the metrics change, the price of the user’s product will change automatically, ensuring that it is always meeting the optimum requirements. So, as an example, your low-price competitor drops out and you are the only one who is selling at a cheap and unprofitable level. The repricer software that you are using will instantly raise the price which is based on your preset conditions. Something that you should be aware of is that you should not attempt to beat your competitors by $0.01. Set your repricer to match the lowest Prime price and share the profit with your competitors. It seems that so many sellers think that they have discovered the Holy Grail when they first come across a repricing tool, so they set it up to beat their competitors' price by a cent. The problem is that when more than one person is using this repricing tactic, and most of the serious sellers are, the actual price of the product will literally fall like a stone. Before you know it, the price will settle at a level which is extremely unprofitable and this can obviously lead to big losses, depending on how many units of this particular product you have in stock. It is possible to set all prices to maximum levels for a set period of time with your repricing tools. The way we do this is that we set all prices to the maximum during the quietest time of the day which we have found to obviously be the middle of the night. The reason for this is that it gives our competitors’ repricers the chance to follow our lead and raise their prices. Please let us give you an example. Let's say there are three sellers of a product and one of those sellers pushed the price of a product right down. This results in all three of the sellers (who are using repricing software) now selling at the minimum price. Now, let's say that the seller who originally pushed the price down has sold out, so there are now only two sellers left. As they had both set their prices to match the lowest Prime price, they would both be selling at the lowest prices as they are following each other. If we were one of those sellers, our price would go up to the maximum overnight. As the other seller would probably have set his repricer to match the lowest FBA price, the price of the product would go up, resulting in higher profits for both of us. 7. Implement the sold-out strategy This is a strategy that we have seen other sellers use on a regular basis but please note that we haven’t used this technique ourselves so do so at your own risk. When you have been selling on Amazon for a little while, you will start to notice that a lot of popular products get sold out. The idea is to find popular products (or brands with multiple products) that sell out from time to time. Buy those products when available (doesn’t matter if Amazon price is too low to make a profit at the moment), list for sale at a high price (FBM) and wait until all the products sell out on Amazon and your supplier and your competitors drop out. You will often see that these products that are out of stock have a uniqueness about them and are not sold elsewhere. You can check if a product is selling out on a regular basis using the historical data in ProfitGuru. Simply enter a product’s ASIN in the Products section and click “Search” to find it’s details. Search product by ASIN on Profitguru Next, click on the Stats icon in the product summary to pull data about historical price, BSR and Amazon sellers. Click on View Historical Data You will end up seeing a chart like this one: Product historical sales data chart The screenshot above shows the sold-out strategy quite well. This is a well-selling product that has sold out twice during the last 2 months. You can see the gaps in sellers and prices, plus the last gap follows by a higher price than regular (for a short time). So, it's clear that the main seller has sold out and another seller has started to sell this at double the regular price with a very strong possibility that they have sold some items at that higher price. So, after further investigation, if you see that a product sells out quite often, you just need to purchase one unit and set a very high price. The next time that all other sellers sell out of the product, you will be the only seller left and be able to sell at a large profit margin. Don’t come to the false conclusion that customers will not be prepared to pay such a high price because they will. You would be surprised how often the price is hardly even considered when a customer is desperate to buy something. As long as you are selling a popular product and the price is not set at a ridiculous level, there is a good chance that it will sell. Conclusion In this post, we explored some of the best ways to maximize your Amazon seller profit margin. First, we covered why using a credit card for your purchases can have an indirect impact on your bottom line and help you maximize resources. Next, we looked at how and why you should build product bundles if you want to get better profit margins compared to selling items individually. Our third tip covered how to use tools like SupplySpy to keep track of prices and quickly buy stock when there is a new opportunity to make a profit. Similar to the tactic above, you can also track when certain products sell out and try to ship products to Amazon first so you become the only available supplier and win the Buy Box. Our fifth point covered why you should look out for times when your supplier has limited stock. Buying everything that’s left prevents your competitors and supplier from selling the item so you become the only option and, for a time, sell the item at a higher price. While not essential, using repricer tools can also help you automatically update your prices so you’re always at the optimal level for maximizing your profit. Our final tip relates to finding products that frequently sell out and keep available stock to sell using FBM. The next time the item sells out, you can quickly ship it at a higher price as you’ll be the only available seller. So there you have it - our pick of 7 ways to maximize your Amazon profit margins. We hope these will help you in growing your Amazon store not just in terms of revenue but also in profitability. Need more guidance? Sign up for our free course on building an Amazon store from scratch for beginners.
How to Find Wholesale Suppliers and Negotiate Profitable Deals for Your Amazon Store
You may have heard about many Amazon success stories using the wholesale sourcing method. Indeed, we also think it’s one of the best ways to start and grow your Amazon store. But as with anything else worth pursuing, building a profitable venture using the wholesale method involves hard work. There are many obstacles in the way not just for new sellers but for even established Amazon business owners. So why is that? First, it may be hard to understand the Amazon seller supply chain. Should you partner with low-tier wholesalers? Or maybe you should try and work with brand owners directly? Second, finding a decent supplier can be a daunting task. Where do you start your search? And how do you avoid getting lost in the information or being ripped off by “companies” who pretend to be something they are not? Finally, even if you know a good supplier who wants to do business with you, how do you negotiate the best possible deals? Ultimately, your costs will determine if you make a profit or loss at the end of the year. These are the questions we’re going to answer in this guide, aiming to help both novice Amazon sellers and entrepreneurs with some experience under their belt build a successful wholesale business on Amazon. Ready? Let’s go. The Amazon wholesale supply chain for sellers When investigating sources to purchase stock, you will come across the supply chain which, in its most basic form, is Manufacturer/Brand Owner > Wholesaler. You will pay more for the stock from a low tier wholesale than you would from the manufacturer/brand owner, but it is advisable that you start your Amazon business by purchasing stock in this way. More often than not it is easy to open an account, and you will get access, in some cases, to thousands of products which you can sell. From your initial sales, you will be able to determine which brands sell well, and you will be able to investigate ways to bring the cost and price of these brands down in order to make a greater profit. Just breaking even during the early stages of your business is good enough, but you will find that as you gain experience, your business will become more profitable. The biggest disadvantages of working with these low tier wholesalers are that the price you pay will not be the most competitive as it is not difficult to open an account with them. With that, the competition will usually be higher. Your ultimate goal should be to move up the supply chain from buying wholesale to buying from the manufacturer or brand owner. The cost, price and the competition will be lower which will yield greater profits for you. How do you know if a supplier is good? You should be aware that most of the best potential suppliers are those who say NO when you first enquire about opening an account with them. They usually give the excuse that they don't do business with Amazon sellers, but if you see other Amazon sellers selling their products (which is not as rare as you might expect), there will probably be a chance that you can persuade them to do business with you. How can you do that? By providing value to them ahead of time. Things such as optimizing the existing Amazon listing, creating better product photos and descriptions or giving another service for free can go a long way when building relationships with good suppliers. If you make the effort to do these extra steps (which most sellers won't) and open an account with a strong supplier, you could enjoy high profits with low competition for a very long time. How to find a wholesale supplier for your Amazon store Ok, so now that we’ve had a look at how the overall supply chain works, let’s explore finding suppliers for your Amazon store. There is a common misconception amongst new sellers that wholesale suppliers are in some way doing you a favor by agreeing to do business with you. Nothing could be further from the truth and any reason they give for not doing business with you can often be overcome. If you are wondering how to find a reliable supplier, there are lots of methods to find wholesalers and most commonly you are only limited by your imagination. But first, here’s a word of caution for new sellers: There are some wholesalers out there who may not be as credible as they would like you to think they are. Don't even think about investing large sums of money if you haven't taken precautions to ensure that the wholesaler is legitimate. Ask for their business details such as their company registration number and check with places like the Better Business Bureau. Also, check if the supplier has a warehouse where they physically store products. There are many fake suppliers who have nice websites but don't actually have any products. Often they get their list of products from the real suppliers, add their markup, and then pass your order to the real supplier. It may seem like a lot of work to find these details about a company who you might not even end up doing business with. However, if you don't take these steps you may find that it could be a business mistake you will never forget. Now, let’s look at some tried and tested methods for finding great suppliers. Start with a simple Google search A good place to start is by carrying out a Google search for “[insert your product niche] trade shows [insert your Country or Region]”. If you are able to visit a trade show, you will no doubt come across wholesalers who you would like to do business with, but you will also find that trade show websites will list their exhibitors, usually with a link to their websites. Another method which seems a little too obvious is to carry out a simple Google search for wholesalers of the type of product you require, for example: This should give you a good starting point of suppliers to choose from. However, you’ll soon find that researching and creating your own database of suppliers is a very time consuming process. This is where tools like ProfitGuru can help. Use ProfitGuru to streamline the process The ProfitGuru tool has been designed so that it can serve as a general supplier directory, but its real strength is identifying brands and products which are doing well and then finding wholesalers from that information. Based on Amazon metrics, the tool will take into account which products have the best potential. So instead of finding a wholesaler and then looking at the products they have in stock, you can look for the best sellers and then see which wholesaler stocks them. Here’s an example: Once you log in to ProfitGuru, select the Products section and click the “Advanced Filter” link. Let’s say we’re looking for products in the Home & Kitchen category that are selling well. Select the relevant category and enter a minimum monthly sales volume, say 100, and hit “Search”. This will yield thousands of products so we’ll narrow down using a few extra factors. Namely, we’re going to look for products that are not sold by Amazon directly (to avoid competing with them) and we’ll make sure there are between 7 and 10 sellers for each listing. This way, you’ll know the demand for the product is good enough to justify multiple sellers, yet competition is not too high. This will give you a more manageable list of products to review. Once you find an interesting product, click on the brand name in the summary box to get more details about the brand. The Brand page will give you lots of useful information about their products and sellers. On the right side, you’ll see a list of Suppliers that stock this brand. Once you click on a Supplier’s name, you’ll go to its dedicated page where you can see the types of products they supply and their contact details. So within a few minutes, we have a good product to sell and a list of 3 potential suppliers to contact. If you’d like to try this process yourself, you can sign up for ProfitGuru now. How to negotiate deals and maximize your profit Once you’re in contact with a supplier, it is important that you negotiate the best possible price with the wholesalers who you do business with because it is the cost which will ultimately determine if you make a profit or loss. Also, always remember that if you don't ask, you don't get! If you are used to Retail Arbitrage, you will be aware that one of the first things that you do when looking at potential deals is to look for applicable coupon codes in order to obtain a discount. You will be hard pushed to find coupon codes for decent wholesalers but there are a few other methods you can use which could enable you to purchase products at a lower price than the wholesaler is initially asking. The negotiations will be easier if you have other sales channels besides Amazon and here is a great guide on Starting an Online Boutique. 1. Look for competing suppliers Take the time to find other suppliers who are selling the same brand products. If you can find any, use that fact as a bargaining tool when negotiating the price of an order. If your supplier knows that there is a good chance that you will go elsewhere if they cannot agree on a price with you, they will be more inclined to agree with your request because most frequently their priority is getting their sales volumes up. 2. End of month/year discount Just as you will have targets to meet within your own business, so do your suppliers. These could be end of month, end of quarter or end of year targets so you will sometimes find that they are more open to negotiation during these times than they might otherwise be. 3. Discount on volume If you are making large orders, you will have more leverage when it comes to asking for a discount. Don't underestimate the fact that your supplier will need to sell you stock as much as you need to purchase it at a good price so a large order can often persuade them to discount the total price. Discounts can also be available at different pricing tiers when it comes to the buyer’s volumes. In many cases, they are not advertised but your account manager normally has the freedom to give you small additional discounts right away. 4. Cash discount It will obviously depend on suppliers but some will give a discount for cash purchases. Be careful if going down this route and only deal with suppliers who you already have a relationship with or who you know are an established business. 5. Inquire about other offers If you are trying to negotiate the price of a product which is in high demand, you may find resistance from the supplier because they know they will have no problem selling it at the advertised price. A way around this is to inquire if they have any other stock which they could offer a discount on which could be included in the deal. The supplier may have stock of other products which they need to move and will let go at a discount, providing that you purchase the in-demand stock at the advertised price. Check the products that the supplier is offering a discount on with ProfitGuru and you will often find that buying these products at a discount could be a potentially profitable opportunity. 6. Take advantage of NET Terms If you are not familiar with NET terms, it is basically free credit from your supplier. It is usually the case that when you make an order, it is either paid for at the point of purchase or on delivery. With NET terms, you don't pay for the order until a later date. You will see NET terms such as “NET 30” or “NET 60” and the number basically means the number of days you have to pay for the order after the order has been made. Don’t underestimate the value of a supplier who offers NET terms because it is free credit. Using NET terms, you could, in theory, order stock and pay for it after you have sold it. But you should be aware that this technique has been the downfall of many a business. If you don't have the means to pay for the stock and it doesn't sell as quickly as you expected, well, you can imagine the possible consequences. If you are sensible though, taking advantage of NET terms is a great way of making the most of your cash flow. 7. Free shipping Most suppliers are able to give free shipping if pushed even though it is not something which is always advertised. If they do refuse, ask what kind of purchase levels have to be reached for them to offer free shipping. As an example, we were once told by a supplier that we needed to spend $100k in one calendar year in order to qualify for free shipping so we were able to plan accordingly as this would relate to a large monetary saving. We qualified for free shipping and this offer stayed on our account even though we didn't spend that much the following year. Even though you will probably not be spending that amount of money, you should still ask at what level they offer free shipping if they initially refuse your request. 8. Let them remember you for the right reasons You should obviously be polite in all of your dealings with your wholesalers but if you are dealing in large volumes, it could be worth taking a few extra steps. Nothing over the top - get to know them, find out which football team they support and send them a small gift. They will be dealing with a large number of people in the course of their business and they will probably forget most of them. If they remember you for all of the right reasons it could very well pay you dividends in the future. How to analyze supplier wholesale lists Most wholesalers will be able to provide their customers with a product data file which can be analyzed with tools like SupplySpy. If a supplier sends you a huge file with their product catalog, simply head over to SupplySpy.com and sign up for one of their plans. Next, add the supplier name and import the product catalog using the “Import Products” button. SupplySpy will analyze the supplier wholesale price lists and calculate your potential profits in bulk. This way, you don’t have to go through thousands of products manually and check their metrics one-by-one. Even though there will only be a small percentage of products which will meet the recommended selling criteria, they will be easy to find. Watch this video to find out more: Conclusion So we’ve had a look at the Amazon supply chain for wholesale sellers and what you should look for when choosing a supplier. Always keep in mind that the best suppliers are the hardest ones to get. With that in mind, how do you partner with strong suppliers? First, you need to find them. Tools like ProfitGuru can help you tremendously here by reversing the supplier search process. Instead of starting with a particular supplier and sorting through their whole product catalog, we recommend you to find popular products with high demand first. Then, reverse-engineer which suppliers stock these products (using the steps detailed above). This way, you can shortlist great products and get their supplier contact details within minutes. Now that you have a list of good partners, you should try and negotiate the best possible prices for your store. We covered 8 different tactics to do this such as asking for cash discounts and using competitor offerings. But remember that you should always strive to provide value and move up the supply chain, aiming to work with brand owners directly. This is the surest way to get the best prices. So there you have it - our take on how to find wholesale suppliers and negotiate profitable deals for your Amazon store. Need more guidance? Sign up for our free course on building an Amazon store from scratch for beginners.
3 Tips to Choose Great Products for Your Amazon Store
Over the last few years, we’ve tried many strategies and tactics to grow our Amazon store to where it is right now - at over $200,000 in monthly revenue. We’ve experimented with different products, different sourcing methods, supplier negotiation tactics and all sorts of marketing techniques. You can read all about it in our case study post. In the end, things boil down to the two most important aspects of starting and growing your Amazon store - finding great products and sourcing them at a profitable cost. In this article, we’re going to present our top Amazon selling tips to choose great products for your store. By the end of this article, you’ll have a better understanding of the dynamics behind choosing products - without having to repeat the same mistakes we made early on in our Amazon journey. Ready? Let’s go. 1. Check if you can actually sell the product Before you even think about purchasing any stock to sell on Amazon, you need to check that you are actually allowed to list that product. The most common reason why you will not be allowed to list is that the product falls into a gated category. The process to find out if you can list a product on Amazon is simple and straightforward. First, find the ASIN of the product you wish to sell by looking at the product information. Find product ASIN Next, log into your Amazon Seller Central account and click on “INVENTORY”. Amazon seller central user menu From there, click on “Add a Product” and enter the ASIN of the product that you want to sell. If the “Sell this product” button is available, you know that you will be able to list that product. Amazon seller central list new product If "Apply to sell" button is displayed instead of “Sell this product” button, it means that you will not be able to list this product at the moment. Amazon seller central gated product 2. Estimate the price to see if you can make a profit If you can sell the product, the next thing you’ll want to do is check if you can make a profit by estimating the price you can sell it for. Let's look at an example to explain how to estimate the price. To begin with, look at the lowest Amazon Prime (FBA) price of the product you’ve chosen and you can safely assume that this is the price you will have to sell at. If there aren't any FBA prices, you could win the Buy Box by offering a slightly higher price than the lowest non-FBA price. Due to the secrecy which surrounds Amazon's Buy Box algorithm, you don't know the exact price that you could win the Buy Box with. However, it would be pretty safe to say that a price which is 10% higher than a non-FBA price should be enough. To check the prices of the other sellers, look directly under the Buy Box and you will see offers from other sellers on Amazon. There will usually be a link just below these offers to tell you how many are available and what price they start at. View other product sellers on Amazon Click on that link and you will be presented with all of the pricing details. The best price is the first one listed and they usually get more expensive as you go down the page. Amazon product offers It is important to remember that if the product is also being sold directly by Amazon, it is recommended that you don't get involved. Once you have an idea of the sales price, you can check the Amazon revenue calculator and see if the product makes sense for your business. Learn more about maximizing your Amazon sales profit margin. Pro tip: don’t dismiss lower priced products Something that we come across time and time again on Amazon and wholesale buying forums is that you need to look for products that have a minimum selling price of, say, $20. That might be the case for private label and FBM sellers, but it is definitely not true for sellers who buy wholesale and are involved in FBA. While it doesn't really fit in with the advice that the Amazon selling gurus like to preach, we can assure you that most of our profit comes from products that sell for less than $20, and in many cases less than $10. You might believe that there is no room for profit when selling at those prices but think about it for a minute. Let's look at a product which is selling for $5. Amazon fees will be around $3.50 which will leave you $1.50. What if that product only cost you $0.50 to buy? That would leave you with a $1 profit which equates to a 200% return on investment. If you have done your research and the product is popular, you could easily ship 100 units to Amazon and forget about it. So, at this price point, you would make $100 profit on a $50 investment from shipping only one box. But what if you shipped four boxes per day? $400 per day profit with Amazon doing most of the work. Can you now see why we don't agree that you need to sell more expensive products in order to make good money from your Amazon business? 3. Estimate the monthly sales volume So once you know a product can be sold - and it can be sold at a profit - it’s time to check if it’s popular enough to give you a good return on investment (ROI). A mistake that many newcomers make is that they THINK they know what will sell as opposed to KNOWING what will sell. By using tools such as ProfitGuru, you can give yourself a massive advantage over the sellers who can’t be bothered to take these extra steps. The easiest way to get an idea of a product’s sales is by looking at the its Best Sellers Rank in the Product information field. Amazon product best sellers rank In this case, we can see the product is ranked #165 in Computers & Accessories and #13 in Traditional Laptop Computers. The lower the Best Sellers Rank, the better the product is selling compared to other items in the same category. But this is not an actual estimate in terms of monthly sales volume. Rather, it’s a way to compare the product with other similar items. Luckily, tools like ProfitGuru can help with getting an estimate. Once you log in, head over to the Products section on the left sidebar and enter the product’s ASIN. Profitguru search products by ASIN For this example, we’ll use the product “Transformers: The Last Knight Premier Edition Deluxe Bumblebee”. Once you enter the ASIN, click “Search” and look for the sales estimate in the product summary. Profitguru estimated product sales We can see the monthly estimate for this product is 340. However, that’s not the end of the story as the current sales estimate is not enough to determine if the product will sell well in the future. Here’s more on that: Why you shouldn’t rely only on the current sales estimate or Best Sellers Rank The sales estimate might be high at the particular time you look, but that might be temporary. It could be that a large order has been made which caused the sales estimate to go up but without that order, it would be a lot less. This is why you should look at the estimate and Best Sellers Rank in the context of time. This way, you’ll know if a product is selling well consistently or is just a temporary fad. Taking the example from above, hit the Stats icon in ProfitGuru. Profitguru view product historical data This will pull out historical data about the product. You can see how the product’s price and number of sellers have changed over time, but more importantly - you can see the Sales Rank history. Profitguru view product sales stats Once you select a time period (see screenshot above), you’ll be able to get a better view of the product’s performance. In this case, we can see the Sales Rank is consistently going up, meaning that the product’s sales are reducing compared to other items in the same category. That’s a signal that the product is unlikely to sell well in the future. This is why it’s important to check the historical performance. If we judge this listing solely on its current sales, then we might assume it has a decent sales volume and order lots of stock - which can prove to be a bad move considering the steady decline in sales over time. Conclusion In this article, we looked at 3 Amazon selling tips to choose your next best selling product. The first thing we recommend when evaluating a product is to check if you can sell it on Amazon. This way, you won’t waste time researching products that you can’t sell due to it being gated or any other reason. Next, you need to check the item’s estimated price to see if it can be sold at a profit. Again, the reason for this is not wasting your time with deep research and supplier negotiations for products that are impossible to sell at a profit. Finally, we recommend estimating the product’s sales volume to make sure it will give you a good ROI. One important thing here is looking at the Best Sellers Rank and sales estimates in the context of time to make sure you get an accurate picture of its performance. Well, there you have it - 3 Amazon selling tips for choosing great products. We hope that you’re now better geared towards finding and sourcing your next great product. Need more guidance? Sign up for our free course on building an Amazon store from scratch for beginners.
How to Sell on Amazon: The Beginner’s Guide for 2021
Okay, so you've pondered the idea for a while - starting an Amazon store from scratch and turning it into a successful venture. And now you're ready to take the next step. Only it's not clear what that step should be. All the crazy Amazon success stories start with the zillions you can make but often skip the specifics until you open up your wallet and buy a course or two. Don't worry - this is why we created this guide. Here, you'll find all the key information you should know before starting your first Amazon store - without spending a dime. We'll cover everything from the basic lingo and terminology you should be aware of to the most important product sourcing and fulfilment methods. We'll also look into key concepts in Amazon sales such as securing the Buy Box and using the Best Seller rank to your advantage when choosing products. By the end of this guide, you should go from complete beginner to navigating the world of Amazon sales with confidence. Ready? Let's go. Your Mindset - the first step to Amazon success Before we go any further we would like to spend a little time on the subject of mindset in relation to starting up and running a store on Amazon. This is a real business which can reward your hard work in ways like few other online ventures are able to. It’s important you realize that during the early stages of your business you may only be making a small profit or breaking even. However, your Amazon account will be maturing and you will be learning invaluable lessons. There may be times when it seems that you are not progressing as fast as you like and this is when you will be susceptible to “shiny object syndrome”. An email from an internet marketing guru may land in your inbox promising to show you how to earn a fantastic living by using various internet marketing techniques. You may be tempted to take a look at these other opportunities, but we urge you to follow one course until successful. These are exciting times in which we are living and this opportunity can provide you with the kind of lifestyle that you may have previously only dreamt about. Remember one thing - if you think you can achieve success with it, you probably can! Lingo and terminology you should know about We will be using basic lingo and terminology throughout this post in relation to selling on Amazon and you’re likely to find these terms elsewhere. This is why we thought it would be a good idea to list some of them below in case you are unsure of the meanings. Profit Margin The profit margin is a profitability ratio and expressed as a percentage. Take this for example: Title Formula Sample Amount Total Revenue $1,000 Cost of Goods Sold $400 Amazon Fees $300 Net Income Total Revenue - Cost of Goods Sold - Amazon Fees $300 Profit Margin Net Income / Total Revenue 30% * * It means that you make 30% profit on your revenue. ROI Return on Investment is another type of profitability measure. For example: Title Formula Sample Amount Net Income (Profit) $300 Investment/Money Spent (Cost of Goods Sold) $400 ROI (Income / Investment) X 100 75% * * This means that you make a 75% return on your investment. ASIN Amazon Standard Identification Number (a code which identifies a product on Amazon). UPC Universal Product Code which consists of 12 numeric digits that are uniquely assigned to each item in the form of a barcode. FEIN or EIN Federal Employer Identification Number (suppliers may ask for this to prove your identity). Resale Certificate This is a certificate that is issued by the state you do business in which shows your retailer status, also known as, ‘tax exempt form’. Minimum Advertised Price (MAP) The lowest price a supplier or brand owner will allow you to sell a particular product. Manufacturer's Suggested Retail Price (MSRP) The price at which the manufacturer recommends that you sell a product. Quarter This is the period of three months, expressed as 'Q' and a number. For example, Q4 on an annual calendar is from October through December. Depending on the products you sell, there is usually a massive peak in sales during Q4. Minimum Order Quantity (MOQ) Your supplier will often have a MOQ in place which is the minimum amount of product you can purchase in one order. Wholesale Price The product price which you pay to your supplier. NET 15 / NET 30 / NET 60 When establishing credit terms with a supplier, they will typically offer a grace period for how long you can take to make a payment. The number after NET represents the number of days you have to make a payment of the net balance. So, NET 15 = 15 days, NET 30 = 30 days, etc. Amazon fulfilment methods - FBA vs FBM The first decision you will be faced with when running your Amazon business is to decide if you will arrange the delivery of orders yourself or get Amazon to deliver for you. This is known as Fulfilled by Merchant (FBM) or Fulfilled by Amazon (FBA). Different sellers have different views on which method is best, but before we share our views with you it might be a good idea to briefly talk about each one. Fulfilled by Merchant (FBM) In FBM, the seller is responsible for shipping products from their own home or business premises when they have been informed by Amazon that a sale has been made. It goes without saying that this means the seller has to pack the order, make arrangements for shipping, and be responsible for the customer service in relation to the order. The cost of storing the products should also be taken into account as warehouse costs can soon mount up. Fulfilled by Amazon (FBA) In FBA, the seller sends their stock to an Amazon Fulfillment Center and Amazon basically takes care of everything from there. When an order is placed, an Amazon employee will pick the product from the storage so it can be packed and shipped using Amazon’s trusted shipping partners. Amazon will also provide customer service in relation to the products which are sold through the FBA program. This service obviously does not come without charges and this is the main reason why some sellers choose FBM over FBA. Our Advice We have used both methods, and can honestly say that FBA would be our number one choice every time. The big difference for us is that when you sell through FBA, you get access to Amazon shoppers who have Prime accounts which is a massive plus. Nowadays, online shoppers require delivery as soon as possible and Prime customers get 1-3-day free delivery. Also, with FBM, don't underestimate the time it can take to fulfill the orders yourself. Not to mention, the time it takes handling returns and having to provide customer service. These tasks are all time consuming and, in some cases, extremely stressful. In addition, any negative feedback on FBA orders (not product reviews) can be removed. Also, it is often the case that FBM sellers pay higher costs to UPS for delivery compared to the fees charged by Amazon for their fulfillment services. If you want to make the most out of the information to follow, we would strongly recommend that you go down the route of FBA. After you decide on a fulfillment method, it’s time to look at product sourcing. The most common product sourcing methods on Amazon There are several different methods for sourcing products to sell on Amazon with each one having its own advantages and disadvantages. We realize that it can be difficult for the new Amazon seller to decide on which method to go with. It gets even worse when the so-called gurus bring out course after course on retail arbitrage techniques and white label methods which proclaim to make anyone who purchases their courses an Amazon a millionaire overnight! Before we go any further, it would be a good idea to review the most popular sourcing methods so that you can see what they are all about. Arbitrage The word arbitrage originated in the financial markets. Arbitrage opportunities occur when there are an almost simultaneous purchase and sale of an asset which results in a profit from the difference in price. The term has been picked up by the marketing gurus and has been applied to all sorts of marketing techniques. But in other words, it is just buying something in one marketplace and selling it in another at a higher price to generate a profit. When it comes to using arbitrage with Amazon, there are two types - online arbitrage and retail (offline) arbitrage. Let’s take a look at the latter first. Retail Arbitrage If you have ever seen someone scanning barcodes in your local Walmart, the chances are that they are involved in some form of retail arbitrage. Retail arbitrageurs usually download software onto their smartphones. When they scan the barcode of a product, the software will tell them if there is a profit to be made online. They purchase the product at that lower price and then resell on Amazon at a higher price. This method usually appeals to the newbie Amazon seller because it allows them to start selling online with minimal costs. As you can probably imagine, there are downsides to this method of selling. With that in mind, let’s take a look at the pros and cons. Pros: Low startup costs. At times you can find products that are cheaper than wholesale. Possible to take advantage of cashback and credit card incentives. A lot of opportunities in Q4 (October - December) because of the offers which are available to entice shoppers into buying Christmas presents and there is also a demand for them on Amazon. Cons: Many stores do not like retail arbitrageurs and you could be asked to leave. It is very difficult to scale up. If you find a product that offers a decent profit there may not be many available, and you could be limited to how many you are allowed to purchase. Extra costs, such as driving to the locations and time spent scanning can mount up. Overall, this may have a detrimental effect on any profits. The internet connection can be poor in some stores which will cause problems for identifying profitable opportunities. Online Arbitrage For those who are interested in retail arbitrage but don’t like the idea of everything that is involved, online arbitrage could be the answer. Instead of trawling around shopping malls, you search for arbitrage opportunities that are available online. Pros: Coupons and discount codes can be used to bring the price of a product down which will increase the profit potential. There are software tools available which automate the process of searching for arbitrage opportunities. Cons: As with retail arbitrage, this method is extremely difficult to scale. Prices can change quickly and can leave the Amazon seller with stock which can only be sold at a loss. If a claim is made that the product is a fake, it can be difficult to prove otherwise. As you will be dealing with a single or small number of products, the shipping and prep costs can be expensive. It is easy to underestimate the time cost and the result is that many online and offline arbitrage sellers are making far less profit than they think they are. Drop Shipping From time to time on online seller forums, you may read about sellers using various forms of drop shipping with Amazon and making a decent profit from it. If you are not familiar with drop shipping, it is when you advertise a product for sale on Amazon but you don't hold any stock for that product. When you receive notification that a sale has been made, you notify either the manufacturer or wholesaler and they will then ship the product directly to the customer. Our advice would be that if you really want to get into drop shipping, don’t even consider Amazon as the sales platform to use. However, it sounds like an attractive proposition, especially for the seller who has limited funds to invest in stock. So, let’s take a look at the pros and cons of drop shipping with Amazon. Pros: No funds required for stock. You pay the supplier out of the money you have received from the sale. Cons: If there is a problem with the order it is up to the seller to sort it out, and if the supplier does not respond in a timely manner, it can cause big problems with Amazon. The cost will be higher than buying wholesale, which means that there is very little room for profit. Low entry cost leads to a lot of competition, which means Amazon listings get too crowded and prices drop to unprofitable levels. Private Label The simple explanation for Private Label is when you purchase an unbranded product and put your own brand on it. It all sounds very simple, but the process often involves investing large amounts of money with companies in countries like China, and due to language and culture differences it can prove to be very difficult. Let’s take a look at the pros and cons of the Private Label sourcing method. Pros: Get it right and the profits can be substantial. As it is your product, you can control the distribution. Easy to scale. Opportunities to sell offline as well as on Amazon. You will be able to add more products to the same brand. If successful, the brand can become a profitable asset further down the line. Cons: Initial financial outlay can be far greater than any of the other methods. Money has to be spent on marketing if the brand is new. As the brand owner, you will be liable should there be any problems in terms of health and safety. Trademark and patent laws will need to be investigated thoroughly. Can be difficult to sell a brand that nobody has heard of. If working with a manufacturer you are not familiar with, it can take months between initial contact to the point where the product is ready to market. Liquidation Sourcing Method Liquidation or closeout sales are when a company is either closing down and selling off their stock or a company is selling off stock in order to raise capital. You no doubt have seen examples where a retailer or wholesaler is closing down and as a result, the stock is being sold off at a fraction of the retail price. Nowadays, these types of sales are occurring more often than you probably imagine and the potential to make profits from these sales is enormous. Let’s have a look at the pros and cons of this sourcing method. Pros: High-profit margins. Possible to find products which are in high demand but have low competition. Cons: If there are any complaints regarding authenticity, it can be very difficult to prove otherwise. The products which you order may be damaged. Unless you are familiar with the source, there is the possibility of the goods being counterfeit. Hard to scale as you will be buying different products all the time. Wholesale Wholesale sourcing is when you purchase branded stock in bulk at a lower cost and resell it at a higher price on Amazon. This is the method we use because it ticks so many of the boxes when it comes to product sourcing and we know first-hand just how profitable it can be. When the wholesale sourcing model is carried out properly, you can be up and running in under 10 days, selling products that are proven to sell. Even in the worst-case scenario, if the price drops, you will only incur a small loss but more than likely you will get all of your money back. The icing on the cake for us is that you can sell hundreds or thousands of different products so that all of your eggs are not in one basket. Let’s have a look at the pros and cons of the wholesale sourcing method. Pros: Be up and running in under 10 days. The ability to sell products that are already proven sellers. A very small risk to the invested capital. Easy to forecast exactly what the potential profits will be. Very easy to prepare for FBA. Once you have built up a history with your supplier, it is often possible to arrange a credit line with them which will enable leverage of products for sale. Possible to develop relationships with brand owners which will, in turn, eliminate competition. Cons: Some brands will not allow the sale of their products on Amazon. If you are making a decent profit, you will be on Amazon’s radar and they may attempt to approach your supplier with a view to cutting you out of the deal. Profit margins can be smaller but that is more than made up for by the volume of products that can be sold using this method. Ok, so now we’ve had a look at the different fulfillment and sourcing methods. Once you choose which ones are best for you, it’s time to consider the selling fees involved. Amazon FBA fees to consider before starting your store While learning how to sell products on Amazon, you will obviously notice that there are fees involved with selling on Amazon. So it is important to take these fees into account when calculating potential profit margins. To begin with, there is a choice of two selling plans for Amazon: Professional Selling Plan: $39.99 per month. Individual Selling Plan: No subscription fee. The main difference between these two plans is that with the individual selling plan, a fee of $0.99 is payable to Amazon for each product that is sold. With the professional selling plan, there is no per item fee. We would strongly advise that you start off with the Professional Selling Plan as this is a requirement before you join the FBA program. The next set of fees to take into consideration are the Referral Fees. Amazon sellers have to pay a referral fee on each item which is sold. These referral fees vary depending on the category they fall in. You can see a breakdown of the Amazon fees per category on the official Amazon fee schedule. Now, let’s go on to the other types of fees you should consider. FBA Fees There are two types of fees with the Fulfilment by Amazon program. They are the Fulfillment Fee and the Monthly Inventory Storage fee. Fulfillment Fees When one of your items is sold through the FBA program, Amazon’s members of staff have to pick it from storage, pack the order and ship it to your customer. They also handle customer service, as well as any returns. The total Fulfillment Fees depend on the size of the item and you should regularly check the fees as they are prone to change. You can see up-to-date fulfillment fees on the Amazon pricing page for sellers. Monthly Inventory Storage Fees On top of those fees, there is also a Monthly Inventory Storage fee which is priced per cubic foot. As these fees are fixed, it makes it easier to calculate the profit margins when deciding to purchase stock to send to Amazon. You should always check with the Amazon FBA calculator before buying/shipping and it will show exact numbers for a particular item. Here’s how to do that: Go to the FBA Revenue Calculator and find the product by ASIN. Amazon profit calculator - identify product by ASIN. (Amazon Standard Identification Numbers (ASINs) are unique blocks of 10 letters and/or numbers that identify items. You can find the ASIN on the item's product information page at Amazon.com). Next, specify your projected selling price. Amazon profit calculator - enter the sales price This will show you all the Amazon selling costs, Net Profit, Net Margin, ROI and number of potential sales per month for FBA fulfillment method. Amazon product calculator product details Admittedly, it all sounds very confusing and also very expensive but please believe us when we say that it is worth it. Our advice beginner sellers would be to start off with small and lightweight products. The fulfillment charges are lower and offer a huge advantage over large items when it comes to the storage fees. Storage fees can soon mount up if you have a few large items that are slow sellers. Okay, so now that you have a good idea about the Amazon FBA fees and how they are calculated, it’s time to choose your first products to sell. Let’s continue. How to use the Best Sellers Rank to your advantage when choosing products When you are going through the research process and which products to sell on Amazon, wouldn’t it be great if you could get an idea of how many of those products are actually selling at the moment? Well, this is where the Amazon Best Sellers Rank comes in. Even though it doesn’t give you the exact figure, it gives an estimation which can serve as a very good guide. The Best Sellers Rank can normally be found towards the bottom of the product detail page. The best way to describe this rank is that it is a product’s current sales volume when compared to the sales volume of other products in the same category. A point of confusion for many people is if a higher or lower number relates to the better sales rank. To answer that question: the lower the sales rank the more popular the product is. The Amazon Best Sellers Rank below is for the ‘Transformers: The Last Knight Premier Edition Deluxe Bumblebee’ product. Amazon product information It is quite common for a product to have a Best Sellers Rank in more than one category, so in the example above the product is ranked 5,931 in 'Toys & Games', and 348 in 'Toys & Games > Action & Toy Figures’. It is important to note that only the Best Sellers Rank in the root category is what you should be paying attention to because no one has any data on how popular subcategories are. You may be thinking to yourself it is all well good to know the Best Sellers Rank of a particular product, but what does that actually mean in terms of sales figures? Enter ProfitGuru ProfitGuru is a tool which you can use to give you a rough estimate on how many sales a particular product makes in a month according to its Amazon Sellers Rank. Again, using the example of the ‘Transformers: The Last Knight Premier Edition Deluxe Bumblebee’ and it’s Amazon Sellers Rank, it is just a case of entering the ASIN and then clicking the Search button. Profitguru estimated product sales You can see that the estimated sales per month of this product are 570. Why the Best Sellers Rank might not be all that it seems If you look a little deeper in the Amazon Best Sellers Rank you will discover that the figure is actually a snapshot of how a product is selling at that particular time. For obvious reasons, this could be extremely misleading. There could have been a spike in sales if a particular product was popular on Mother’s Day, for instance, but for the rest of the year, sales could be a lot lower. Before you make an investment in stock, it is important that you take a broader view of how a product sells throughout the year. This is why ProfitGuru also gives you a 7-day and 30-day average estimate in addition to the current sales estimate. Profitguru product sales estimator - 7-day and 30-day average estimates If you’d like to get a more detailed view of the historical sales rank, you can click on the Stats icon next to the product name: Profitguru historical product data This will pull out key information about the product’s historical price, number of sellers and sales rank: Profitguru product stats We can see the product’s sales rank is going up, meaning the sales volume is going down relative to other products in the same category. This way, you will know how the item is selling over time and avoid products that are likely to pile up and influence your FBA storage costs. In this particular case, it seems like the product sales are reducing, probably due to the low product rating. The Amazon Buy Box - why it’s important and how to secure it Before we wrap up, it’s time to look at one last crucial element for Amazon sales success - the Buy Box. Some people find the whole Buy Box thing to be a little confusing and that is why we’ll explain it here. All it really boils down to is as follows: In theory, there is only one product page for each product which is for sale on Amazon, so all the sellers who are selling that particular product have to compete for that listing. When you compare this system with eBay, a seller creates their own product listing. If another seller sells the same product, then they must create a separate listing. There are then two listings for the same product, which are completely different. In contrast, look at this Amazon listing: Amazon product buy box To the right of the product description, you will see the Buy Box which contains the ‘Add to Cart’ button. When someone clicks the ‘Add to Cart’ button to make a purchase, they will be purchasing from the seller who has the Buy Box. The only way that this product can be purchased from any of the other sellers is by clicking on the link underneath the description where in this case it says ‘New (30)’. These other sellers have to compete with the seller who has the Buy Box so the benefits of being the seller who has the Buy Box are obvious. Always remember that the customer will choose the easiest option when making a purchase. How do you win the Buy Box? This is a question that has no definite answer because the algorithm which Amazon uses to decide who gets the Buy Box is a secret known only to them! If you take the time to study a number of Amazon listings though, you will see that most listings that win the Buy Box have the same things in common. Here they are: Pricing In our example of Amazon listing, ‘Transformers: The Last Knight Premier Edition Deluxe Bumblebee’, the Buy Box price is $28.70, but if you click on the link to view the other sellers the average price is around $45. Whilst the Buy Box price is not always the cheapest available, it is usually at the bottom end of the pricing scale. Also, when a seller is using FBA, Amazon has far more control over the customer experience in that they control the shipping, the customer service and everything in-between. It, therefore, makes sense that in most cases they will favor a product which is fulfilled by Amazon in the Buy Box as opposed to fulfilled by the merchant. The state of the seller’s account The advantages of using FBA are evident when investigating the state of a seller’s account, which is also thought to be a factor in getting the Buy Box. If you are not familiar, ODR is the key measure of a seller’s ability to provide a good customer experience. It's the number of orders with a defect divided by the number of orders in the relevant time period. An order has a defect if it earns negative feedback, an A-to-Z Guarantee claim that is not denied, or a service credit card chargeback. A poor record of shipping performance and Order Defect Rate (ODR) will decrease your chances of winning the Buy Box, but both are virtually eliminated when using FBA. This contributes to a factor thought to influence the Buy Box of having a high customer feedback percentage. As long as any poor feedback is down to fulfillment or customer service, these will be removed if using FBA. At the end of the day, if you put customer service as a top priority you will be on the right track in keeping your seller account at a high level. Stock availability It is as simple as this: if you are out of stock, you can’t win the Buy Box. Always think ahead and take measures to replace stock when it is running low. It is easy to get caught up with all of this talk about how to win the Buy Box, but when you think about it, common sense prevails. If you are offering products for sale through FBA, as long as they are priced competitively and your customer service is top notch, you will be on the right track to win the Buy Box. You will see instances where a seller has won the Buy Box, but they don’t seem to tick any of the boxes that you would normally expect them to. This might happen from time to time, but don’t let it worry you. Over the long term, a seller who meets the criteria we have just mentioned will stand a far better chance of winning the Buy Box. It should also be mentioned that if several different sellers are equal, have the same low price as well as the same seller ratings, they can all share the Buy Box and ultimately the profits that go with it. Conclusion Well, that was a long post, wasn’t it? There’s a lot to know before you start selling on Amazon and we hope this guide has given you everything you need to make the next step. If something sticks after reading all that, we hope it’s this: selling on Amazon is rewarding but it’s also tough. You need to approach it with a long-term mindset and ignore all the hype about becoming a millionaire overnight. When it comes to choosing a fulfillment method, we’d recommend FBA as the way to go, especially if you’re just starting out. This way, you get a number of benefits such as access to Prime account holders, higher customer satisfaction and a better chance of winning the Buy Box. Before starting your Amazon store, you should also consider the pros and cons of each sourcing method and the types of products you’re going to sell. Our advice is sticking to wholesale and private-label methods which have the potential to give you the highest profit margins. When choosing products, aim for small and lightweight products which cheaper to store and ship, but can still provide you with good profits. A good way to find such products is by using ProfitGuru. The tool can help you find and compare millions of products while giving you access to their suppliers so all of your Amazon research is in one place. You can set up your account in less than 60 seconds here. We hope you’re now better equipped to start and grow your first Amazon store. Need extra guidance? Then sign up for our free course for beginner Amazon sellers.