Home / Amazon FBA / An Amazon Seller’s Guide to Buying Inventory That Sells, Doesn’t Tank in Price and Won’t Get You in Trouble

An Amazon Seller’s Guide to Buying Inventory That Sells, Doesn’t Tank in Price and Won’t Get You in Trouble

It’s the little details that are vital. Little things make big things happen.

— John Wooden—

Buying products to sell on Amazon is not as easy as it appears on the surface. Many times, the nice profit number we see in our scanning apps is far from what we end up seeing.There are many factors that affect our purchase accuracy and should guide our buying decisions.Here are all of the major points for consideration when purchasing anything to sell on Amazon.

Remember, there are MANY factors at play in any purchase, so don’t assume what I say below is always gospel truth. This is merely a collection of questions to ask as a quality practice.

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Inspect the Product

As a good rule of thumb, look at all products skeptically at first. Assume that if you find a product that makes money that there is something wrong with it or that you are looking at the wrong item. The difference here is that you will then follow up on these negative assumptions and attempt to debunk them. Too many sellers see a big profit opportunity and they go blind the rest of the factors that need considered.

checkbox-1 Are you estimating the product condition properly? 

It is critical that you pay attention to the product condition. It shouldn’t be an afterthought. This is especially true if you are doing retail arbitrage and dealing with clearance items or items without seals.

  • Refurbished
  • Broken seals
  • Crushed edges
  • Dust
  • Torn stickers
  • Loose components

checkbox-1 Is the product near expiration? 

Remember, if you list a perishable product via FBA it must have a minimum of 105 days shelf life from the date of receipt to the warehouse. If a product is sent in with just 105 days shelf life left, you only have 55 days to get rid of them because no inventory that is within 50 days of expiration can stay at FBA warehouses.

Some products would need to be received earlier than 105 days. For example: a daily supplement that had 240 tablets, the remaining shelf life would be 240 days or greater, however the same supplement with only 180 tablets would have a remaining shelf life of 180 days or greater. (via Amazon)

checkbox-1 Are you positive your product is authentic?

If you have any doubts, don’t buy. Some products are at heightened risk for inauthentic claims.

Tip: If the brand has a their own store in your local mall, they are at a heightened risk. This is my opinion, and everyone likes rules of thumb right? You can of course still buy these products, but you will want to pay extra close attention when buying and listing.

Think brands like Fossil, Nike, Burberry, Michael Kors, etc. If you can picture a shady character trying to sell you them in an alley, be careful.

Verify the Listing

Amazon Inventory Inspection

checkbox-1 Is this a duplicate listing? 

Sellers often make multiple listings of the same product. Be sure that you are basing your decision on the listing that is going to NOT be removed by seller support (all duplicates are eventually removed). This is usually easy to tell.

Avoid the temptation to say “I’ll assume it’s this one because it has higher priced sellers.”

checkbox-1 Is the brand restricted?

This can be very frustrating because Amazon allows these to happen very abruptly. The best thing you can do…

  • Pay attention to your emails for new restricted brand alerts.
  • Check if you can sell the brand on your smartphone app or with a tool like flippin.it or Can I Sell It for online arbitrage.
  • Check if there are multiple sellers on the listing. This doesn’t mean your good, but if there is only one seller and it is the brand owner, you may have a problem.

Remember that the brand restrictions are in constant flux and require you to be vigilant. There are multiple articles that can help you stay on top of the restricted brands as well.

checkbox-1 Can you sell in the category that the product is listed in?

Like the brand restrictions, category restrictions can change quickly as well. They aren’t as volatile though fortunately.

For a thorough understanding of this, check out Amazon’s explanation of all categories and requirements.

checkbox-1 Are you positive the product matches the listing exactly?

When it comes to Amazon, even the most subtle differences can mean huge problems. It is very easy to jump on a product and miss something. Here are a few differences to note.

  • Model
  • Style
  • Size
  • Color
  • Count
  • Condition
Digital product confused for physical product. This is a big issue when you are looking at software. You may scan a physical copy of a video game and compare it accidentally to a downloadable version. 

Review Your Projections

checkbox-1 Does the product fit your criteria?

There is nothing worse than buying something that doesn’t fit your model just so you can feel like you bought something. There is a reason you should have a firm grasp on what level of risk you are willing to handle, how much you’re willing to spend and how much you need to make to make it worth it.

You need to be sure that you have properly calculated profit/ROI after fees. These fees should be visible within your scanning tool (or web program) but there are some you will need to track yourself like sales tax, shipping and handling and your own prep costs (suppliers).

The criteria you should be aware of should include:

  • Minimum net profit.
  • Minimum ROI
  • Sales velocity
  • # competitors near buy box
  • Maximum purchase price

checkbox-1 Is the sales rank an accurate representation of future sales?

I highly recommend that you avoid purchasing based solely on current sales rank. It is much more important that you understand the realistic sales potential of the product.

  • Watch for price drops that may have led to a spike in sales (and surge in sales rank).
  • Note if there was some event (like a Holiday) that just passed.
  • Is this a seasonal item?
  • Ensure that you understand what you are looking at. A “great rank” may be deceptive and actually based on a smaller sub-category. This is why it is better to look at Keepa or CamelCamelCamel for projected sales than just basing your decision on sales rank alone.

checkbox-1 Will a new model (or alternative) come out before you sell out? 

When buying in bulk you need to buy for the near and not so near future.

We lack a lot of information that would come in handy when it comes to new releases, but for the most part, we can know when to expect the new alternative to land.

EXAMPLE: If you are sourcing a product that currently sells 1 per day but you know a newer model is coming out in 6 months, you would need to assume that your average sales velocity will be dropping. In 6 months, you will most likely not sell 1 per day since there is now a better option. So, you shouldn’t purchase a year worth (365 units) if your goal is to turn all of the units before the end of the year.

Prepare for Risk

Amazon race to the bottom

checkbox-1 How visible is the deal or source?

How did you find the deal? Was it very public or relatively private.  Was it regional? Was it a result of savings stacking?

checkbox-1 Is Amazon a seller? 

Amazon is brutal on the buy box. Knowing where they are on an item is important in deciding if you can profit or not.

Can you compete with Amazon on the Buybox

checkbox-1 Is the product being sold over MSRP? 

Items that are purchased at MSRP and sold above MSRP often have heightened risk for tanking prices.

checkbox-1 Is your break even price lower than the all time low sales price? 

Not everyone has the same tolerance for risk, but making purchases of products that you don’t intend to dip below your break even point is a standard decision.

flippin-it

checkbox-1 Is the current buy box owner going out of stock? 

You can view stock levels with the How Many mobile app. For online arbitrage, you can use How Many or another tool like ASINspector Pro or Jungle Scout

checkbox-1 How long has the product been available on Amazon? 

Understand if you have a product that is the real deal or is just the flavor of the week.

Additional Consideration

checkbox-1 Does the product have recent reviews? 

Some products may not have a sales rank, but show a lot of recent reviews. This may be a good sign. You may have a product with a suppressed sales rank.

checkbox-1 Does the product have less than a 3 star average review? 

There is nothing saying you have to sell only the products people love, but if an item has shown terrible reviews, avoid it if you can. This is more difficult for retail and online arbitrage sellers I know, but it will pay off for you in the long run in terms of fewer returns and fewer dissatisfied customers.

checkbox-1 Was the product recalled? 

Amazon does a decent job of alerting you to product recalls, but you aren’t free and clear if a product you sell becomes recalled and you leave it up.

Unfortunately, ignorance is not always good enough for Amazon.

Is it possible to keep track of all recalls? Honestly, no. The best thing you can do is to monitor your notifications and messages very frequently and immediately act on anything that may hint to a safety issue or recall. There aren’t many recalls, but you can track them here.

New Sellers, Grab a Free Copy of My Retail Sourcing Manual

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A quick reference for sales rank, restricted brands and more.

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About Nate McCallister

Nate is the founder and main contributor of EntreResource.com. He is a lifestyle entrepreneur who spends his time building businesses and raising his two kids Sawyer and Brooks with his beautiful wife Emily. His main interests include copywriting, economics and piano.

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