Product Scouting

You are at the point in your Amazon voyage where you need to pull up anchor and head out to shore, where incredible once-in-a-lifetime bargains await. You’ve got to be equipped so you’re prepared to RECOGNIZE a bargain when you see it.  Before you start rummaging through the treasure trove, remember to put on your thinking cap.  Question for you: what sort of items do you think would be best? Do you have any ideas?  “Absolutely!” you might say. “I am only going to pick up products which have already been selling well on Amazon.”  Exactly.  Glad you’ve been paying attention.

“OK, so I am fully aware of what Amazon’s sales rank is,” you say.  “Thanks for the lessons!”  (You’re most welcome!)   “But, Navarro,” you continue “I need to apply what I’ve learned, don’t I?  I’ve selected my categories, and now I’ve got to load up on the products I need. Tell me specifically what to buy.”

You’ve got it. Let’s go product scouting, my friend!

amazon-product-scouting-fbaOne of the main Product Scouting lessons is to stick to items that have a proven track record. Now let’s analyze what we mean by a proven track record:

If we had to narrow it down to two main areas that you should be focusing on, they would be: items you’ve noticed have been selling REALLY WELL on Amazon, and items that have a decent history AND that have a sales rank stability.

Also, there’s something called product sales MOMENTUM that you should be looking for; it’s got to be moving at least a couple of units. Even one unit, if all other systems are “go”, would be acceptable.  Go back to your self-made table or the one that we provided in the previous chapter, and pick out items that are in the top 1% through 15%, sales rank-wise.  Be careful to select products that fall safely into your risk level range.  As a brief reminder, we talked about “the safety zone”, which is the arena where the sort of products which are particularly suited to YOUR merchant personality-type are located!  OK. Let’s move on.

In this section:

  1. Product Spec Essentials
  2. Protecting Yourself from Products That Might Be More Trouble Than They’re Worth
  3. On Your Mark, Get Set: Start Googling And Using E-Tools

Product Spec Essentials

You’ve also got to know the specs, or specifications, that make a product salable. In other words, focus on the sort of items that sell well on Amazon.  “I know what sells well,” you’re thinking.  “We’re already determined that, based on the sales rank, haven’t we?”  Not entirely.  You know what product CATEGORY would sell well, not what SPECIFIC product within that category you’d do well to stock up on.  Now we’ll launch our lessons on how to find the perfect product type:

Price Counts:   Over and Under a Certain Amount.

Let’s switch shoes for a moment. Think back to the last time you were shopping online, perhaps on Amazon, because you were trying to purchase a mid- to higher-priced item.  As you compared prices, I’m sure you recall how you started to look elsewhere when a price was $150 or closer to $200.  Suddenly, you were wondering if you could get it wholesale, right?  So if YOU felt that way–no matter the value and quality of the product–you can rest assured that many of YOUR customers will feel that way, too.

Let’s switch shoes for a moment. Think back to the last time you were shopping online, perhaps on Amazon, because you were trying to purchase a mid- to higher-priced item.  As you compared prices, I’m sure you recall how you started to look elsewhere when a price was $150 or closer to $200.  Suddenly, you were wondering if you could get it wholesale, right?  So if YOU felt that way–no matter the value and quality of the product–you can rest assured that many of YOUR customers will feel that way, too.

Of course,  plenty of merchants make a good living selling items a couple of hundred and over. And there ARE customers who can afford the mid- to higher-priced items. If you feel called upon to play in that sandbox, by all means, take off your shoes and grab your pail!  But tell me, first. Have you socked away the necessary capital to sell these higher-priced items?  (You’ll have to lay the money down first.)  One more caveat:  Higher-priced items are a riskier business. Why?  The potential loss is higher.

Now, let’s look at the opposite end of the spectrum: lower-priced items. This may strike you as odd, but did you know that, in the case of products that are priced lower—under $50, for instance—you’ll have an even more difficult time of it than you would for higher-priced products? Yep!  Now, why is that? Well, first of all, the under-$50 markets which produce large quantities, or volume, will, nine times out of ten, be overseen by huge, well-entrenched outfits—usually importers with substantial capital. Because of the volume, these big guys might not flinch at settling for low profit margins.  So you’ll have the challenge of that sizeable and perhaps lower-priced competition. Also, the lower price range in most markets might not produce the necessary sales quantity or volume to make it worth your while.

If you have examined all the above variables and STILL opt for a mid- to higher-priced OR lower-priced item, than go for it. Give all of us other Amazon buyers a run for our money! (A positive mindset is a powerful ally!)

The Income that Keeps On Giving!

Surely you’ve heard of the gift that keeps on giving. Well, HERE you are actually looking for a slight deviation of that delightful term…you need steady, consistent streams of income.  If you had your druthers, in fact, you’d want a few items that you just KNOW will sell steadily, consistently… 365 days a year.  And while we’re at it, let’s go a bit further…you need something that will sell year-in and year-out.  OK, so you’ve got to shift your thinking a bit.   What do I mean?  Think long-term.  If you happen upon a terrific price on the latest model of some game or gadget, it may not be worth it. Dragon Ball or Xenoverse isn’t guaranteed to sell past the year in which it’s introduced. (Well, it’s not EVER guaranteed to sell, but if you’ve watched buying curves you know that recently released high-tech ware sells pretty well; aficionados and self-proclaimed geeks make it a point to have “the latest”.)  That means that the investment you so carefully plotted will steadily diminish sales-wise; there will be a smaller and smaller buying base for such products. Similarly, seasonal paraphernalia—like decorations or even very summery or very wintery stuff—has a short “shelf life’.

Set Your Sales Price Much Higher Than Your Purchase Price.

There are e-commerce merchants that won’t even consider purchasing an item if it cannot be sold for a 100% markup; that means you’d be looking at a 50% margin. Many vendors base their decision on what they expect to make in any given time frame.  If, after factoring in your costs and labor for YOUR particular time frame, you decide you can live with less in your pocket than a 50% margin, just remember to calculate those “empty” periods when there will be either slow sales or no sales. Have enough of a cushion to support yourself during a spate of slow times.

Physical Specs:  Think Tiny and Light.

Why?  Don’t forget that you’ve got to ship the item—if you’re not an FBA customer yet.  And since we’re of a customer service mindset here, you know that you must think ahead.  There MIGHT be returns.  Finally, of course, you do need to store the items.  So let’s say you’re planning on “housing” about 50 items.  All other things being equal, do you feel more comfortable bringing in 50 TV sets, or 50 cosmetic cases?  (Note: if you don’t have anyone to help with manual labor, will YOU be able to handle/lift the items in question? And remember that repetitive lifting is an additional strain if the object is heavy. If you have pulled your back lately, you might have to consider the infeasibility of ordering larger bulk items.)

Protecting Yourself from Products That Might Be More Trouble Than They’re Worth

As a business-savvy merchant, you will sooner or later recognize that there are products that simply are not worth your while to store, sell, ship or handle returns for—or to have Amazon handle for you, through their FBA program. There are always a few clues that will alert you to whether an item falls into this “potentially not worth it” category. Rather than have you find out first-hand, let’s save you the trouble and provide some tips on what to look out for:

Avoid Manufacturing and Mechanical Pieces

If you’re handy around the house, you will understand that electric saws and other items that Popular Mechanics readers consider the perfect Christmas gift (but that you, perhaps, don’t) are potential problems.  Such items, when they sell for a low price, have limited capabilities and are bound to result in complaints. They may also require much repair—depending on how much they are used—and may have pieces that fall off or break. Also, these tools require new add-ons which are constantly rotated by retail stores, and customers might contact you with the purpose of keeping their power tool or leaf blower up-to-the-minute. If your customers ask about such handy dandy items, recommend that they consider renting them!

Avoid Items that are Breakable, Fragile and Require Extra-Special Wrapping and Shipping

It’s worth noting that these sorts of products are, for the most part, not accepted by Amazon’s FBA program, nor are they routinely allowed into Amazon’s warehouses.  In this case, you would have to ship. A worst case scenario might revolve around your failing to put sufficient padding around a glass or ceramic or porcelain collectable figurine which is of inestimable value to your customer.  It only takes one jolt or jostle in a box with just enough empty space for the product to move around unprotected, and crack. You might wish to save yourself the hassle of having to take such precautions or of having customers contacting you with tales of woe that originated with your fulfillment.

Avoid Products Also Sold In Huge Retail Outfits

Try to stay away from items that are imported or handled by very large retail chains.  There won’t be any benefit to your customers to purchasing through you if your prices aren’t on a par. You want to be able to price lower than the selling price. Additionally, large retail outfits have eons of fans; they like the one-on-one contact. You’ll need to concentrate on lowering the risk element and on sticking to folks who, according to The Journal of Electronic Publishing, make up the “deep niche”.  This segment is “the percentage of people who, on any given day, because of a passing fancy, or a new career, or a new experience, are interested in (and potentially willing to pay for) affordable high-quality content”  (With thanks to http://quod.lib.umich.edu/j/jep/3336451.0010.206?view=text;rgn=main.) You’ll also need steady buyers.

Respect (and Steer Clear of) US Trademarks

You’re better off not purchasing anything with trademarks.  Unbeknownst to you, this could result in counterfeit products.  Remember that there is (stickerless) co-mingling involved in some Amazon fulfillment practices. How would you be able to prove beyond a reasonable doubt that the “new” CD or Video you purchased and shipped to Amazon for delivery will indeed be the one that is delivered? Things usually work out well, but there are tales of folks who have not been able to resolve counterfeit issues satisfactorily.  If you do decide to purchase trademarked items, you have to be careful and know how to look out for fraud.  Read this for more information: http://www.cpcstrategy.com/blog/2014/05/commingling-amazon-fba/

In Amazon’s own words:

“When you choose to commingle inventory, your products become interchangeable with the same products from other sellers for both order fulfillment and removals.” – Amazon

Avoid Items that Are Already “Doing Well” Without You

If you select products that are doing a phenomenal business and have numerous sellers and are doing a steady, large-volume business, where’s YOUR niche?  You need to rethink the practice of buying such popular items.  It’d be best to purchase what ISN’T already being sold by numerous sellers…and, while you’re at it, select products that are selling steadily.

Remember that the above pointers are just there to help you get your feet wet. Don’t be a slave to what others say—even what you find here!  Keep a sense of exploration and have fun with your business; there are probably exceptions to every single e-commerce rule!

On Your Mark, Get Set: Start Googling And Using E-Tools

So how do you find distributors or manufacturers selling products similar to the ones mentioned above? Easy: one word – Google.  You can’t go wrong “Googling” for the category you’ve decided is the one for you. Experts suggest that you first enter the category and then type in one of the following phrases:   “retail account”;  “distributor account”; “wholesale account” or “open wholesale account”.

Those who have been at this a while have discovered software systems and other e-tools that might help you in what is often termed the product discovery phase when you’re starting to grow your inventory.

Product Scouting Tools You Might Find Handy.

Profitbandit – This tool has a huge fan base.  Basically, you scan the item you’ve considering buying (and it doesn’t matter where you are buying it from, from thrift shop to trade shows) and type in the item’s cost, whether it’s collectible, used or new, and find out the price the item is selling for. Next, type in the cost and the selling price and Profitbandit will calculate your profit based on 15 different criteria. You can determine the local sales tax as well as the item’s sales rank!  It’s $14.95—a one-time fee, and there aren’t any monthly fees.  A good starting-out app.

Scanpower – Their site explains that they show if Amazon is a seller, as well as Amazon’s price; also, seller feedback ratings and counts. Apparently, they also can show the lowest 5 FBA offers. Additionally, you might find it convenient to know the minimum number of FBA sellers, to get a total overall picture, and Scanpower can show this as well.  The site also bills their service as being an “Arbitrage Tool”, which helps you arrive at a profit scenario when there is a price difference between two or more markets.  Scanpower charges a regular service fee.

Teikametrics – This Boston-based app will help you filter the information you’re interested in by your own specifications.  You’ll be able to see a listing of popular new inventory. Among the features of Teikametrics are a product scouting tool that allows you to use your own pricing strategy to scour for, or scout new products.  Their site indicates that you will be provided with Amazon consultants and data analysts.  You can request a free demo.

Ahoy, mates.  Happy bargain-hunting.  Enjoy your stop-over while the boat refuels.

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