This seems to be the million dollar question…
What products should I sell online and where do I find them?
Great news! There are millions of products to sell on Amazon and even more places to find them. Figuring out what Amazon business model is right for you will determine what types of products to sell and where to get them. Which model should you choose? This is a more important question than the previous one. We will address this question in a minute but first, let’s get to finding products aka product sourcing.
[Getting started] The Basics of Product Sourcing
Determining if you should sell an item on Amazon isn’t a guessing game. You need access to data to help you make informed decisions. This data will help you determine if a product will be profitable or not. To start, download the Amazon Seller App and log in. NOTE: You need to open your Amazon seller account BEFORE you can login to the app.
Within the app you will use the camera icon to hover over any product’s barcode to scan it. Instantly, sales data will appear including:
This is what we refer to as “scanning an item”. A similar method can also be used online using the FBA Revenue Calculator if you are conducting online research.
There are four major product sourcing methods we will introduce you to. Each has its own set of rules, pros and cons. From here you can determine what is best for you, your budget and your goals of starting an Amazon business. We will also give our top recommendations based on where you are right now and where you’d like to end up down the road.
This product sourcing method is simple. You find products in your own home, thrift stores, yard sales, flea markets and similar places to resell online.
Arbitrage is the act of buying items from one source and reselling them in another market for a higher price in order to take advantage of price difference. The two arbitrage methods most commonly used by Amazon sellers are Retail Arbitrage (RA) and Online Arbitrage (OA).
Retail Arbitrage (RA) is entering any retail store, scanning products with your sourcing app and looking for potential profit. Profit is found when the item being purchased is being sold for more on Amazon than it can be purchased in the store. Online Arbitrage (OA) works the same except instead of entering retail stores, products are sourced from retail websites.
Regional Pricing - Prices fluctuate by location so one man's expense is another man's bargain.
Regional Availability - Not all products are available everywhere. When there is no supply but demand still exists for a product, sellers win.
Sourcing Window - With online arbitrage the ability to source products day or night from the comfort of your own location.
Limited Supply - access to replenishable supply of products is very limited. Is the item in stock or not?
Equal Access - With online arbitrage everyone has equal access to all the same websites increasing competition.
Lack of Scalability - hard to scale over time as business grows.
Buying wholesale products is standard practice for all retail stores both online and off. Wholesale items are generally sold in larger quantities direct from manufacturers and distributors at a reduced cost. This builds in profit margin for retailers.
Limited Access - wholesale manufacturers do not sell directly to consumers and require business to business relationships. This requires you to be set up as a legitimate business in order to place orders with them.
Planning Ahead - access to seasonal merchandise in advance
Higher up front costs - most wholesale suppliers require the purchase of case quantities (6, 12, or 24 of an item) at a time
Longer lead times - waiting for the product to ship to your before sending it to Amazon
Backorders - Vendors now having items in stock when placing orders
A private label product is made by a third-party manufacturer and sold under a retailer's brand name. This can be either a white label product, using the same product with a different brand name, or a brand new product a seller brings to the marketplace. It requires most of the work to be done and paid for up front and the profit comes much later. The great thing about private labeling is that if done correctly can be extremely lucrative with minimal competition and more control over your products. The downside is that this method is time consuming and expensive. It generally takes six to twelve months to get a product from idea to marketplace and in turn ties up a lot of capital and time while you are walking through the process.
Where should you START?
If you have never sold an item on Amazon you need to learn the process of finding, preparing and shipping products into the Amazon fulfillment centers without spending a lot of money up front. By starting with inexpensive or free inventory you can learn the process with minimal investment. This will give you time and space to make mistakes and learn from them without losing your entire savings.
Our Top Recommendation
Start with books. Books are easy to find and very inexpensive. You can become familiar with the Amazon seller app, sales rank and other selling factors and ship in your first box without breaking the bank. The goal of your first shipment is to become familiar with the process and to practice it. Once you’ve sent in your first shipment, all bets are off and we recommend diving right into wholesale bundles for your most profitable selling experience. If you have already begun your Amazon selling journey and you have sent in your first shipment here is your next step.
If you are ready to start finding profitable products, download the Amazon seller app and begin scanning products you can send in as part of your first shipment. The last and final part of this series is sending in your first shipment. You can learn more about it here.
Ready to get started NOW?
You’ll be prepared for your first sale on Amazon in as little as two weeks with the Start FBAToday™ program. Fast track your learning curve so that you can start earning money on Amazon faster than ever.