Day 1 – 14 Day Amazon FBA Challenge
Welcome to Day 1 of the 14 Day Amazon FBA Challenge. The purpose of this challenge is to send in a shipment of at least 25 items to Amazon in 2 weeks. If you are experiencing slower sales, one way to combat this is to continue to send in shipments on a consistent basis.
My name is Adrienne Dupree and I am from Maryland. I have been selling on Amazon since November 2014. I also sell on eBay. I do Retail Arbitrage, Online Arbitrage, Wholesale and Private Label. I would love for you to join me in this challenge.
So let’s start. In the comments, please do the following:
- Introduce yourself and tell everyone where you are from
- How long been selling on Amazon?
- Do you sell on other platforms? If so, which ones?
- What methods are you using in your Amazon business? Retail Arbitrage, Online Arbitrage, Wholesale, Private Label
Day 2 – 14 Day Amazon FBA Challenge
FBA stands for Fulfillment By Amazon. Amazon FBA is a program that allows you to buy products, ship them to Amazon fulfillment centers, sell them and have Amazon ship them to the customer.
You may think that this is impossible to buy products and make a profit, but it is not. You would be surprised at how much some products are selling for but there are a lot of reasons for this. Some products are seasonal which means they are not always available. A lot of seasonal only products may be hard to find in stores. Some people in rural areas do not live close to stores so it is easier to buy things on Amazon. Also, some people like the convenience of shopping online and getting their merchandise in 2 days.
With Retail Arbitrage, you go to stores and find products that are selling low enough that you can make a profit by selling them on Amazon. Online Arbitrage is similar to Retail Arbitrage except you are shopping online instead of physically going to stores. A lot of the brick and mortar stores have an online presence as well.
Some people do not like to go stores to shop, so Online Arbitrage is a better option. Also, you can send online orders to a prep company. The prep company will prepare the shipment and send it into Amazon on your behalf.
I love Retail Arbitrage because I like the hunt. I also do a lot of Online Arbitrage as well. The one thing I like about Online Arbitrage is you don’t have to deal with stickers which can be a pain. Have you ever tried to get multiple clearance stickers off without damaging a box? It is definitely an art to it.
What is your favorite, Online Arbitrage or Retail Arbitrage? Tell us why. If you are not doing either one, which one will you start with and why?
Day 3 – 14 Day Amazon FBA Challenge
Products that you sell on Amazon are broken down into categories. Some of these categories are wide open and some require you to get approval before you can sell. You must get approval for the categories that have a star. Below are the categories:
- Clothing and Accessories*
- Grocery & Gourmet Foods*
- Health & Personal Care
- Home & Kitchen
- Luggage & Travel Gear*
- Office Products
- Patio, Lawn & Garden
- Pet Supplies
- Sports & Outdoors
- Tools & Home Improvement
- Toys & Games
Even if a category is not restricted or you are approved in a category, there still may be products that you cannot sell. There are some brands that you cannot sell until you get approval. Most of these approvals require you to turn in some number of wholesale invoices. There may also be a letter required from the manufacturer as well as an application fee. In some cases, the entire brand may not be restricted but there may be products that are restricted. However, if you are restricted for a particular brand, sometimes the approval is automatic so always try.
Ungated is a free Chrome Extension that shows you the categories that you are already approved in as well as provide you with information to make the process of getting approved in restricted categories easier.
What are you favorite categories to sell? Mine are Clothing, Groceries and Toys. Start thinking about the what categories the products will be in that you send in to Amazon.
Day 4 – 14 Day Amazon FBA Challenge
In order to find profitable products on Amazon, two things that you need to understand is the Best Sellers Rank (BSR) and sales velocity. BSR is based on Amazon.com sales and is updated hourly to reflect recent and historical sales of every item sold on Amazon.com. This number is by Amazon categories. The lower the number, the better the item has sold. For example, a BSR of 1 is better than a BSR of 1000. However, the lower the BSR, generally the more competition you will have.
You also need to take into consideration the category. For example, a BSR of 100,000 in Home & Kitchen is better than a rank of 100,000 in Toys & Games. There are approximately 61,195,359 products in Home & Kitchen and approximately 5,708,201 products in Toys & Games. A rank of 100,000 in Home & Kitchen is in the top 0.2% and only in the top 1.8% in toys. You can download a complimentary Sales Rank chart and even get on a list to receive an updated chart monthly.
Sales velocity is the rate at which a product sells. This is usually measured by the month, the week or the day. Typically, products with a lower BSR have a higher sales velocity but you must also take into consideration the category. Some categories are more popular than others. You can download a complimentary Sales Velocity chart.
Two free tools that help you interpret sales rank history and sales history are Keepa and Camel Camel Camel. To ensure you make the best buying decision you want to evaluate all the information that is available to you. Not only do you want to look at the current information such as BSR but you want to look at a product’s price and sales rank history. CamelCamelCamel is a site that allows you do to do this. You want to make sure that you just don’t have a temporary spike in BSR or is this a product that has been performing over time. It can also help you evaluate seasonal products. Keepa is another tool that has comprehensive price history graphs as well as price drop and availability alerts. This tool will even show if Amazon is in stock.
If you want to learn more about CamelCamelCamel and Keepa, I recommend Stephen Smotherman’s course, The Reseller’s Guide to How to Keepa Camel: Using Amazon Sales History to Make Smart Sourcing Decisions. This course will break down exactly how to use CamelCamelCamel and Keepa to make smart sourcing decisions. There are also some complimentary videos on Sales Ranks, CamelCamelCamel and Keepa.
I like to stay in the top 5% of the sales rank in a category but will go to 10%. You need to determine what you are comfortable with. Please study the sales rank and sales velocity charts so you are familiar with the percentages. I suggest you take a copy when you go shopping or save it to your phone.
Day 5 – 14 Day Amazon FBA Challenge
Outside of checking the Keepa and Camel Camel Camel charts to determine if I am going to buy a product, there are some other factors such as:
- How many other sellers
- Amazon on listing
If there a lot of other sellers on a product, then I tend to stay away from it unless it has a very low rank. I like to typically stay under 10 to 15 sellers. If Amazon is on the listing, I move on. Some people like to compete against Amazon but I am not one of them. Lots of people will tell you that Amazon shares the buy box but that has not been my experience. You need to determine what is the lowest profit you are willing to take as well as the ROI?
Now there is a difference between Profit and ROI or Return on Investment. Revenue is your sold cost or how much you sold the item for. Profit is your Revenue or Sold Cost minus your Costs of Goods Sold. Costs of Goods sold includes how much you paid for the item plus sales tax if applicable. Some people also include the cost of shipping materials such as polybags and shipping to Amazon. I do not.
- Revenue = Sold Cost
- Profit = Revenue or Sold Cost – Costs of Goods Sold
Profit Margin is a measure of profit over cost. It is calculated once your initial investment is recouped.
- ROI = (Revenue – Cost) / Cost
Would you buy if Amazon was on the listing?
How many is too many other sellers?
Do you have a ROI that you use when making purchases?
Do you have a Profit Margin that you use when making purchases?