Sourcing Products Check List
Most new Amazon sellers spend a lot of time watching Youtube videos, reading articles and listening to Podcasts. During that time they hear so many different ways businesses like to source for products. They also hear a lot of warning signs they need to watch out for. When they are finally ready to start sourcing they normally forget a couple warning signs. I know when I first started I forgot some of the warning signs which lead me to learn them the hard way.
I eventually wrote down all of the warning signs so I wouldn’t make those same mistakes again. Over time it became second nature while I sourced to look for them so I no longer needed that paper next to me. I hope that this article will be a useful tool that you can pull up and double check while you are sourcing products. As you use this guide it will help you source more effectively while limiting your mistakes.
Building an Amazon business takes a lot of discipline and risk management. You will never find an Amazon business who has never lost money because of a bad buying decision. Some sellers are so afraid of making a bad buying decision that they skip out on a lot of good products. As you use this step by step process hopefully you can feel confident in your buying decisions. I am not saying you will never lose money if you follow this process but it will give you a higher probability that your business stays profitable.
I am writing this article for new Amazon sellers. Some of these warning signs advanced sellers will still buy on. I even buy products that have some of these warning signs but for new sellers it's better to start with the basics until you get a little experience. After you have started buying products and feel comfortable you then can learn the more advanced strategy. I will write another article with the advanced strategy.
Selecting Profitable Products and Warning Signs
Is Amazon on the listing or have they been on the listing in the past?
- If Amazon is currently in stock then don’t buy that product.
- If Amazon is not on the listing then you can use Keepa to look at the history of that product to know if Amazon has sold it before.
- Change Keepa to show All history.
- Check to see if Amazon has ever sold it.
- If Amazon has sold it in the past then check to see when they last sold out.
- If they have been sold out for longer than 1 year you have a good chance they won’t buy it again.
- (I have seen Amazon sold out for longer than 1 year but started selling it again during Q4.)
Sales Rank / Sales Estimate
- If the product does not have a sales rank then don’t buy it.
- If the product is a variation listing then use a software like Jungle Scout Chrome Extension to see if all the listings have the same sales rank number.
- If they have the same sales rank number then each sale for each listing contributes to the sales rank number. This can be hard to figure out which variation is making most of the sales. I would say for a new seller don’t buy.
- If each variation has it’s own sales rank then you can move onto the next step.
- Use a software like Jungle Scout Chrome Extension to see what the estimated sales are.
- If it's less than 30 don’t buy.
- If it's greater than 30 check to see the history of the sales rank using a software like Keepa.
- If the listing was created within the last 2 months then don’t buy.
- (When a listing is first created the sales rank number will not be accurate.)
- Follow the trend of the sales rank number and see how high / low does the number fluctuate compared to the current sales rank number.
- (The estimated sales is based on the sales rank number so if the sales rank is really good right now but for the last 12 months the sales rank number has been bad that's a warning sign.)
- (A lot of times you will notice the price the product was sold at will fluctuate with the sales rank. The lower the price goes the better the sales rank. The higher the price goes the sales rank will decline.)
- After you have a good idea how accurate the estimated sales are then next click to see all sellers on that listing.
- Check to see how many FBA sellers are at the same buy box price.
- If there are 3 FBA sellers at the same price and the listing is estimated at. 100 sales per month then adding you into the rotation ends up at 25 sales each. This is not 100% accurate but it does give you a little better idea of how many sales you might make.
- After checking all of these out you are in a position to decide if you want to continue to the next step or move onto a new product.
- Use a software like Keepa and check the price history.
- As you look at the history what price does it spend most of the time at?
- I normally want to make sure that 70% or more of the time the product is selling at or higher then the price I want to sell at.
- If the majority of the time it’s selling below the price you want then there is a good chance it will drop to that level again. Product history a lot of the time will tell you what the future will look like.
Another red flag if you notice the brand owner has an Amazon account and is selling the product then check with your distributor or brand and make sure you are allowed to sell it on Amazon. I have noticed if the brand has invested in creating an Amazon account they normally are more aggressive with trying to kick other sellers off. I try to stay away from getting IP complaints or any Amazon Policy Violations.
After you have gone through this check list you are now in a position to make an educated decision. Sometimes your gut feeling is the best way to know what to do. If you are still not sure what to do then add that product onto an excel sheet with others you felt the same with. This will help you not forget about them but also not feel pressured to buy when you are not sure. I like to go back to that list and sometimes I buy products that turn into great investments. It also does seem like the majority of products I lose money on end up coming from that list.
I hope you have learned some new strategies and look forward to hearing about your success. Feel free to leave comments below.