One of the most frequent questions I get in my classes, my blog and online is a variation of “How do I know this is a good deal?” With new sellers in particular there is a natural fear of the unknown. You read up on Amazon FBA and it all sounds great but there is this voice at the back of your head saying “yeah…but…” because it seems almost too good to be true. Before you put down your hard-earned dollars, you want to know that it is going to be worth it, that you are going to get your money back out. While I’ve covered this topic in the past, the fact is there are so many more resources today than when I got started. It is time for an update.
Early on in my Amazon selling career I would find myself standing in front of a shelf somewhat anxious. I was looking at a book or toy and wondering if it was a good deal. I didn’t have anyone to call for a reality check or to think out loud with. So what happened? Sometimes I bought the item sometimes I didn’t. Sometimes it was wonderful and sometimes it was a huge mistake. Through these experiences I learned a lot. I tried really hard to learn each lesson just once…but sometimes I’m a slow learner. Hopefully that is NOT the case with you!
Why are you hesitating?
When I stopped to pick apart my anxieties later I found that there were 10 common reasons why I would hesitate:
- Amazon is selling it for less
- Rank is higher than I sold at before
- It has no rank or, perhaps, wasn’t even in the catalog
- I don’t know how to price it
- Item is oversize
- Item cost “a lot” and is, thus, riskier for me
- Condition is iffy – slight box or cover damage. Can I sell it as new?
- There are a lot of other FBA offers
- There are penny sellers (in the case of a book)
- Analysis paralysis
Today I have a lot fewer anxious moments not just because of experience and good tools, but also because of personal rules I’ve made for myself over time. I will say up front that if you disagree with my rules or have different rules of your own based on experience, we are probably both right. Personal rules are about comfort and about streamlining the decision process for yourself. I offer mine up as a helpful insight, but NOT as a commandment. Only use what works for you:
Amazon is selling it for less
This is not always a deal killer which is why I hesitate. I sell a brand of shower gel, lotions and soaps that is very popular. Amazon sells them for $8-$9 a bottle/bar and I sell them for $13.99-$14.99. I buy them for $3.99. I know from experience that Amazon regularly sells out of this brand and that mine will sell quickly when they do. How did I learn this? I naively bought a bunch and sent them in thinking that Amazon didn’t sell it (this was before tools like CamelCamelCamel – see below). I sold a few units a day and then it stopped because Amazon was back in stock. I waited Amazon out and I sold the rest of my inventory. Today I can see the sales history for an item and know that Amazon sells out regularly. If I’m OK with selling it in bursts every month or so, then great. This strategy works best on low ranked items, obviously.
Sometimes Amazon will have a sale to compete against another retail offer or it is a seasonal thing like when they discount all their calendars in January (don’t worry, it is only for a couple of weeks!). Back in the day, it was a much bigger risk to buy something that Amazon was selling for less. Today I have tools to help me and so I don’t dither. I can see Amazon’s normal price and decide if it is OK for me. I can see how often they have run out in the past. Read on to learn more.
Rank is higher than I sold at before
Sellers who take my live classes get a fairly conservative range of sales rank from me. I want to make sure that the stuff they buy on our trip will sell relatively quickly and that they realize success. New sellers usually have limited dollars for inventory and need to build up before they take on a lot of “long-tail” deals. If your whole inventory is long-tail payoff, you will not be able to pay your bills today, basically. For that reason I’ve usually given them category ranks in the 1%-5% range.
Peter Valley wrote a guest blog for me once about sales rank where he included a chart of suggested ranks that many sellers have found useful, but PLEASE don’t write me and tell me it is outdated. It was outdated the second I published it because new items are constantly being added to the catalog. My suggestion is to use this as a guideline when you are getting started and to update it yourself from time to time. It is easy enough to figure out the top 1%, 5%, 15%, etc., in a category. One last PS to this chart, I rarely buy books over 1 million in rank any more. This is my rule for me. Other book sellers may feel differently.
OK, Cynthia, but what about when you see something with a high rank that you just know is adorable and should sell? Or maybe it is a seasonal item like a textbook or a pool toy or Halloween costume? This is where the anxiety drift begins. Also, if you decide “I’m not selling books above 1 million” and then you find a high-value book for 1,100,000….what then? My first step when I see something with a high return that is outside of my normal comfort zone rank-wise is to check CamelCamelCamel. ScanPower, FBAScan, ProfitBandit and other scanning tools provide direct access to CamelCamelCamel (CCC) from your view screen. You can also type in www.camelcamelcamel.com in to your phone’s browser if you are using a tool that doesn’t have direct access to CCC.
If you’re not familiar with CCC, it keeps track of Amazon product rank and prices over time. To me CCC is like a miracle drug. I’m totally addicted to the data. Yesterday I sold a textbook for $35 that I bought last year for $4.79. When I bought it in September I was fairly confident that it would sell either by the end of September or in January because textbooks are seasonal. But let’s pretend I had no idea and I was totally new to books. I would have still bought this book if I’d checked with CCC first.
CCC shows you first off price history data for your item. It will default to Amazon (green) unless Amazon doesn’t sell it. Then you will see 3rd Party New (blue) or 3rd Party Used (Red) checked. Otherwise you will have to check them yourself. In this case, my book is used-very good so I clicked the red price type. What I note immediately is that Amazon is selling it for $165 and has been selling it around that price since last August. This is good news for me – lots of room to undersell them.
Third-party used has been all over the place. I am not discouraged by the $1.97 price because that is Merchant Fulfilled and I’m going to be FBA fulfilled. When I bought these books (I bought two), there were no FBA sellers at all which meant my offer was the most attractive with free 2-day shipping. I priced both of them at $35 even though one is used-very good and one is good. My customer is impatient.
Why doesn’t my $35 price show up under “Last 5 Price Changes?” My price has not changed, for one thing. It is not the lowest for another. You can see there is at least one MF seller racing to the bottom over the past week. This heavy textbook is going to cost him his shirt. I don’t get it. Why doesn’t my price show up in “Current?” Because it is not the lowest and it is not in the Buy Box. I was never in the Buy Box at the price I was offering because it is used and the Buy Box is for new items (as of this writing). This is one of the ways books are very different from toys or other categories. The Buy Box is not as important. Someone who wants a used book and/or who wants Prime shipping will search by that and not by the Buy Box. I aimed my offer at the impatient Prime buyer not the tight-waddy student willing to wait two weeks to save a few bucks.
Now here’s the money shot! This is the sales rank over the past year for this product. Each spike represents a sale. Some sales are so close together that it looks like a thick green line. Green for money, my friends! Right now the rank on this textbook is around 10,000. History shows us it is likely to drop as low as 5,000 over the next week or two. There are some book sellers who won’t buy a book over 500,000 in sales rank. If they scanned this book on December 2 on 2014, they would have missed out on a really great deal.
CCC is really helpful if you are buying out-of-season items at a huge sale price like I recommend. You’ll be able to see when the peak sales are. It also helps if there is a high ranked item that is out-of-stock. It might be that the rank is so high because there are no units for sale or it might be that it is so high because no one likes it very much. CCC can help you see what a normal sales rank might be.
There is no rank and/or it is not in Amazon’s catalog
CCC isn’t much help if there is no Amazon history. When I’m teaching a class, I’ll usually tell my students to put down an item that has no rank and to look for something else. Again, I’m conservative and I want them to be successful. I’m clear that I do add items to the catalog, but I don’t recommend it for brand-new sellers. The reason for this is that it can take a while for sales to pick up on a new item in the Amazon catalog. Skip McGrath told me once that it usually takes a month to six weeks to see the first sale on a new item that he adds – and he is highly experienced with launching new products on Amazon. Also, there is no guarantee that an item will sell at all. Take the risk when you have some money you can afford to lose.
If an item has no rank, it has never sold a unit on Amazon except for all the exceptions. For example, electronics (CE) is riddled with exceptions where they won’t show you the sales rank or you can only find the sales rank in the sub-category, not in the overall category. Why does Amazon do this? I have no idea. I’ve sat at my computer and looked at the top 100 sellers on Amazon in CE and found all kinds of items that showed no sales rank. Crazy! Usually if you do a CCC search on that item, it will show you the rank unless it is too new to have a history. In that case, I might look at a similar item from the year before for an idea of its potential popularity (think about Dre headsets or a Bose speaker). If you are looking at a name brand electronic item and it shows no rank on Amazon but has offers, dig deeper. I’ve heard that apparel can be like that too.
Maybe the reason no one is selling it on Amazon yet is because it is brand new. When Inkoos were a hot toy, I bought a bunch of different kinds of Inkoos and added them to the Amazon catalog. My other Inkoos were selling well and I was confident that these other versions would sell well, too. And they did. The great thing about adding an item to the catalog is that you are the only seller for a while and so I sold most of my Inkoos before other sellers jumped in with their units.
Another tool that I use from my scanner is eBay completed auctions. This helps me answer the “I wonder if anyone will buy it from me if I put it up there?” question sometimes. If the item has been sold on eBay recently that tells me that there are buyers out there. Pricing on eBay for me is a starting point. Often eBay listings are cheaper than I can price it for on Amazon.
You can also do a Google search on your phone’s browser (or from the scanner) to see the other online sites where it is for sale and what they are charging. If the product is nowhere to be found online, then you have to decide if you think it will sell and if you are willing to take the risk. If you are hesitating, then maybe you should keep looking for a deal that has already proven to sell on Amazon.
I don’t know how to price it
Maybe you are hesitating not because you are worried about selling the item, but because you don’t know what to charge and/or if you’ll be able to get the price you need to make it profitable. I’ve done that before with rare and discontinued items that are hard to find. They were sold out on Amazon and this was before CCC so I couldn’t consult with price history. What I did in that case was I checked eBay sold and Google.
This particular item wasn’t anywhere. It was discontinued and sold out. It was a major brand and I took a chance at $35 each. I started selling at $150 and my first one sold the day it reached the warehouse. I raised my price to $175. Eventually I was selling this Harley Davidson comforter set for $250 each. Each time I found more, they sold instantly. I thought about selling them higher but I felt shy about it. I’m over that now. If I had the same deal today, I’d start at $499 and test my price from there. At the time, I didn’t understand the value of what I had. People really wanted these comforter sets and they were nowhere to be found.
Other times I’ve done my searches and found that it was selling on eBay and other sites. I had to assume that Amazon might come back into stock and decide what I wanted to do. Could I compete close to the prices I was finding online? If not, it was probably too risky.
Item is oversized
I’m not afraid of oversized items, but there’s oversized and then there’s OVERSIZED if you know what mean. The problem isn’t whether or not I’ll make money off it – my scanning tool gives me an accurate net price – but how much it will cost me to ship it to Amazon.com. Will it need a special box? If it is oversized I already know it is going to a special warehouse and that I won’t be able to combine it with smaller items. With all the changes in Amazon’s fees, it is less and less profitable to send in big items.
FBA sellers used to sell large-screen TVs and dishwashers on Amazon just to give you an idea of how things have changed over the past few years. Now the determining factor for me is often whether or not it will fit in one of my boxes. I buy 24 X 12 X 12, 20 X 20 X 20 and 22 X 22 X 22 boxes regularly (along with book boxes). These sizes cover bedding, grocery, appliances, and collectible games. Amazon also sends me a huge supply of smaller boxes that I break down and keep for smaller orders (if they are still in good condition). If I don’t think it will fit one of my boxes, I usually put it down. The cost and hassle factor go up a lot at this point.
Bedding and appliances are well worth the extra costs for shipping and boxes (usually one bed kit fills a box by itself to give you an idea) because my ROI is so high. This is not always true of oversized toys and groceries. I often carry a tape measure with me so I can measure before I bring home an item. If you don’t have one with you, sometimes a store manager can scare one up. My friend Lynn refuses to buy anything that won’t fit in a Walmart moving box. That’s her rule. I buy from Uline and I have more choices, but I also have a minimum number I have to buy to get a reasonable price. Plus the warehouse is at least 30 minutes away. Know your boxes.
Item costs “a lot”
This one is perhaps the hardest one to overcome because it is an emotional rather than analytical response. It comes from a place of fear. What is “a lot” to me is different from someone else. It is purely subjective. You are naturally afraid of losing your investment. It might feel a bit like gambling in the beginning even with all the tools. What I can tell you is that nearly every seller I’ve ever talked to about this topic has told me “I wish I’d started buying more expensive items sooner.” I feel the same way. That is usually where the best profits are to be made. You can buy a $1 item and flip it for $7 and make a few bucks, but for the same amount of time and effort, you can buy a $25 item and sell it for $130, which is way more exciting and makes you money faster.
Here is my suggestion for you. If this is during your first six months of selling and you feel nervous about an item because it costs a lot, put it down. Buy smaller deals that you are comfortable with and get experience selling. It is more work for you to process a lot of lower cost items but you’ll still make money. After you’ve been selling for a few months, make some rules for yourself like, “I will spend up to $25 per item if the rank is X.” I suggest that X be a fairly low rank in the top 1% of Amazon sellers. After you’ve tried a few of these and learned from them, then you should feel more comfortable upping your game. Having a game plan takes a lot of the worry and hesitation out of your shopping trip so you can focus instead on the good deals.
The good news about our business is that there will always be good deals out there. I find that there is more opportunity than I can afford to buy. Don’t feel bad if you miss out on an occasional good deal – another one is right around the corner.
Maybe “a lot” isn’t about the per-unit cost but about the number of units. There are 30 units of what seems like a good deal but I’m hesitating to spend $750 on it. If I don’t buy them all and they turn out to be good sellers – someone else will have probably bought them all in the meantime and I’ll be kicking myself. In most cases I’ll usually buy the items but I won’t send them all in at once. If I send a few up there and they stagnate or a bunch of low-ballers come in and undercut me, then I can easily return the ones that are in my house and use the money for something else. The rule in this case may be “if I don’t sell a unit in two weeks from receiving at the warehouse, I’m returning the rest,” or whatever time frame feels right to you. Obviously this only works in stores with a generous return policy.
Condition is iffy – slight box or cover damage. Can I sell it as new?
If you are asking the question, you already know the answer. Probably not. In Amazon’s world, new is new. Anything else is used or “Open Box” or “Collectible.” Have I covered up small tears in shrink wrap with a sticker? Yes I have. Is a Big Wheels box different than My Little Pony? Yes it is. Large Big Wheels (and other large toys) boxes are meant to be shipping boxes as well as descriptive boxes. A slightly crushed corner is normal. The bottom line for me is if the person receiving it would consider it new, then it is new. If they would think it is dirty, old or slightly damaged put it down. If a Barbie collector would have a fit, put it down. They are only going to send it back. It’s not worth the negative feedback and possibly unhappy customer. Don’t spend too much time with these iffy’s, they’ll give you heartburn.
There are a lot of other FBA offers
My general rule is to put something down if there are “too many” other FBA sellers. How much is “too many?” It varies depending on rank and category. The higher the rank, the fewer competitors I want to see. I have a great repricer in Feedvisor so I feel pretty confident about my ability to compete with other sellers of new items BUT the single biggest problem with seeing a lot of sellers on an item is the race to the bottom. The price might look OK today, but it is like an avalanche. One scared snowflake/seller starts the race and everyone else tumbles down the hill after him.
In books, most other sellers have one or two units at the most. In almost any other category they might have dozens to hundreds of units each. I have some candy that I bought for $1 that was low ranked and only had one other seller besides me and my shopping partner. Unfortunately, this guy didn’t run out for more than four months and he was selling his candy at a stupidly low price. He’s finally out this week and my friend and I are selling our units, but if I’d realized ahead of time just how many units he had, I would have never bought this candy. My mistake. I could have found out before I bought several hundred units but I didn’t. I thought “One seller! No problem!” In this case, a lot was just 1 guy (curse you, Red Baron!). In other cases, I can successfully compete against 4-5 sellers without much concern. I see this in Baby a lot and I think it is because most of us have limited quantities (we are all buying from the same closeout stores) and I have a dynamic repricer which keeps me in the Buy Box a significant percentage of every day.
It is OK to buy items that have other sellers. It helps to have a rule of thumb for yourself about how many is too many. If I see five other sellers at a price lower than I want to sell, I usually put it back down.
There are penny sellers (in the case of a book)
In the past I would look at a book and if there were one or two penny sellers I might still consider the book. Sometimes I might even buy their books and resell them. My thought was that they would sell out and mine would sell at a higher price. It doesn’t work that way as much as I’d like and I don’t sell penny books any more. A penny book is one where the merchant fulfilled price is 1 penny plus shipping. That means an FBA seller could sell that book for $4…right? Nope. Remember that panicked snowflake? I’ve seen FBA sellers sell penny books for $1. They are losing a lot of money on each one and I don’t get it. A repricer gone crazy? Someone who doesn’t understand the business? Maybe. I’m following Nathan Holmquist’s advice on book selling now and I’m much happier about my book sales. I want the MF price to be at least 49 cents and then I’ll look at the FBA offers. He taught me that if the MF is lower than that, there will likely be a lot of FBA sellers. Check out my blog post if you want to learn more about Nathan’s approach and rules around books.
The dark side of having so much data and having such powerful scanning tools is that sellers can get bogged down by analysis paralysis. Using scanning tools, having personal rules, all these things are designed to make your decision-making process easier and more efficient. During my classes I will often see students spending a minute or more per scan. I see this particularly in the programs where you are required to enter your cost in order to get a net price. This is not how scanning is supposed to work. Scanning is all about getting to the “maybe.” The data you immediately pull up on your phone should be enough for you to say “No” in most cases. And in most cases the answer will be no.
If you are using a Scanfob or other Bluetooth scanner then it should be a quick “no, no, no, no [lots more no’s]…maybe.” That maybe is the one that you’ll check out in more detail. If it looks good on my phone, I’ll usually click through to CCC and to see all the FBA listings on Amazon. This way I don’t find out later that there are a ton of other sellers and I get a feel for how quickly it might sell and at what price. After I do that, the answer may still be no. That’s why it is important to scan a lot – hundreds of items in a typical shopping trip – and to have a way to quickly eliminate the many, many deals that don’t fit your profile. If you find yourself spending a lot of time analyzing each scan, check your personal rules and check your tools. You need to streamline your process.
Florida Trip in February
I’ve set my dates! I’ll be in Southern Florida/Fort Lauderdale area on Friday and Saturday February 27th and 28th. I’m tentatively planning on two sourcing classes but can schedule another one on Monday March 2 if there is sufficient interest. My classes are limited to 10 people. I’d rather have two smaller classes than one too-large one. I have gotten emails from 10 people thus far indicating interest so don’t delay. Click HERE to reserve your spot now! I have a special early-bird gift for those who sign up by Sunday.