Amazon FBA: This Leads to Failure When Reselling
Summary
TLDRThe video discusses strategies to prevent deals from crashing, with a focus on analyzing and sourcing products effectively. Key points include considering the break-even point over a year, avoiding common sources where competition is high, and ensuring products have good sales velocity. The speaker emphasizes the importance of checking multiple data points to confirm sales, avoiding easy-to-copy deals, and using smart repricing tactics. Additionally, a mindset shift towards long-term sourcing success through brand focus and identifying the best suppliers is recommended for sustainable profitability.
Takeaways
- 📈 Focus on sourcing deals that are profitable 11 out of 12 months to ensure a majority of the time you're making a profit.
- 🔍 Avoid buying from well-known stores during sales where competition is high, as this can lead to deals crashing due to over-saturation.
- 🛒 Consider the ease with which others can copy your deals. If it's too easy, expect high competition and potentially short-lived profitability.
- 🛍️ Utilize strategies like voucher codes and end-of-line items to maintain an edge and prevent deals from being easily reverse-sourced.
- ❌ Avoid aggressive underpricing with your repricer as it can lead to a price war and quick depletion of profit margins.
- 📊 Analyze sales data comprehensively, not just one metric, to understand true sales velocity and avoid false positives from misleading data.
- 📈 Look for products with a history of steady sales and positive reviews to ensure ongoing demand and profitability.
- 🏷️ Be cautious of products that may have been part of a variation listing, as they may not reflect current sales performance accurately.
- 🔑 Prioritize finding the best suppliers for brands that are consistently profitable, and maintain a close relationship for ongoing stock and pricing advantages.
- 🔄 Regularly check stock levels and negotiate with suppliers to secure better deals and stay ahead of the competition.
- 🚀 Adopt a long-term mindset in sourcing that, while more challenging, will lead to more sustainable and less crash-prone deals.
Q & A
What is the main problem that 52% of the community mentioned in the transcript?
-The main problem mentioned is deals crashing, which refers to the failure of a deal to be profitable or successful.
What is the significance of the break-even price in the context of sourcing products?
-The break-even price is the price at which the cost of the product equals the revenue, ensuring no loss. It's important to ensure profitability for the majority of the year, with minimal periods below this price.
Why is it important to zoom out to a one-year view when analyzing a product's price history?
-Zooming out to a one-year view allows for a more comprehensive understanding of the product's price fluctuations and profitability over time, helping to identify trends and make informed decisions.
What does the speaker mean by 'profitable 11 out of 12 months of the year'?
-This means that the product should be profitable for most of the year, with only a small period (1 month) where it might not make a profit, ensuring overall profitability.
Why is buying from well-known stores during sales problematic for resellers?
-Buying from well-known stores during sales can be problematic because many other sellers are also buying from these sales, leading to increased competition and a higher chance of deal crashing.
What is meant by 'fastest setting lines' in the context of sourcing deals?
-Fastest setting lines refer to products that sell quickly. When buying during sales, it's important to focus on these products to ensure they sell out before market saturation occurs.
How can the ease of reverse sourcing affect the longevity of a deal?
-If a product can be easily reverse sourced, meaning other sellers can quickly find the same product at a similar or lower price, the deal may not last long as competition increases, potentially leading to deal crashing.
What is the issue with setting a repricer to underprice the competition by 1 cent or 1 penny?
-Underpricing by a small margin like 1 cent or 1 penny can lead to a price war, causing prices to drop rapidly and potentially hitting the break-even point or below, which is not profitable.
Why is it important to consider multiple data points when analyzing product sales?
-Considering multiple data points, such as sales rank, historical sales data, and stock movement, provides a more accurate picture of a product's sales performance and helps avoid relying on potentially misleading single metrics.
What is the significance of the review count trend in assessing a product's sales performance?
-An increasing review count trend indicates that the product is selling and gaining popularity. A slowing or stagnant trend may suggest reduced sales or market saturation.
What is the recommended approach for sourcing products for long-term success in the reselling business?
-Focusing on brands, finding the cheapest suppliers for those brands, and maintaining a close relationship with them to ensure access to the best prices and stock availability.
Outlines
📈 Analyzing Deals to Prevent Crashing
The speaker addresses a common issue in their community regarding deals crashing and introduces a method to analyze sourcing effectively. They use an Oral B product as an example, setting buy and sell prices with a break-even point. The importance of zooming out to a one-year view on price charts is emphasized to ensure profitability for most of the year. The speaker warns against common pitfalls such as buying from popular sales events where competition is high and suggests looking for products that are not easily reverse-sourced to maintain profitability and avoid deal crashes.
🔍 In-Depth Product Analysis for Amazon Reselling
This paragraph delves into the intricacies of analyzing products for Amazon reselling. The speaker discusses the importance of not relying on a single metric, such as sales rank, and instead considering multiple data points. They highlight the need to verify sales velocity, check historical sales data, and assess the ease with which others can replicate one's sourcing. The paragraph also touches on the risks of underpricing with repricing tools and the significance of sales history and review trends in determining the viability of a product for resale.
🛒 Long-Term Sourcing Strategy for Profitability
The final paragraph focuses on a long-term sourcing strategy for Amazon reselling. The speaker advocates for a mindset that prioritizes finding the best suppliers for specific brands and maintaining a close watch on stock availability. They stress the importance of negotiating deals and understanding the supply chain to gain a competitive edge. The speaker concludes by emphasizing the value of this approach in ensuring the sustainability and profitability of one's reselling business, despite the increased effort required.
Mindmap
Keywords
💡Deals Crashing
💡Sourcing
💡Buy Price
💡Sell Price
💡Break Even
💡Profitability
💡Sales Velocity
💡Reverse Sourcing
💡Repricing
💡Sales Rank
💡Brands
Highlights
52% of the community's biggest problem is deals crashing.
Sourcing deals should consider five key factors to prevent deal failures.
A method for sourcing that can reduce the likelihood of deal crashes is introduced.
The importance of analyzing buy and sell prices with a break-even point is emphasized.
Zooming out to a one-year view on product charts is crucial for comprehensive analysis.
A product should be profitable 11 out of 12 months to ensure consistent profitability.
Deals can crash if bought from well-known stores with high competition.
Avoid buying fast-selling lines with great prices due to high competition.
Ease of reverse sourcing can affect the longevity of a deal's profitability.
Using voucher codes and limited stock availability can create an edge in sourcing.
Repricing strategies should avoid undercutting the competition by 1 cent or penny.
Sales velocity and competition should be considered when analyzing deals.
Sales rank and historical sales data are vital for assessing product demand.
Multiple data points should be considered for a comprehensive product analysis.
The importance of testing purchases to verify sales data is highlighted.
Focusing on brands for sourcing can lead to long-term success in reselling.
Identifying the cheapest suppliers for popular brands is a key strategy.
Staying on top of stock availability and negotiating deals with suppliers is crucial.
Finding a cheaper supply source can give a competitive edge in pricing.
Transcripts
I asked my community what their biggest
problem was right now and 52% of them
said deals crashing I want to go through
five things to look at when sourcing and
how to analyze your deals prevent this
from happening I'm going to share you a
way of thinking about sourcing that's
going to really help you get much better
and stop deals from crashing going
forward okay so I just turned into a
product and it's an Oral B product right
now and I've put in some buy and sell
price and what you might realize is that
my Buy price is 45 and I've put in sell
price of 80 and the one key number I'm
looking at is break even £60 now you can
see on here this product has been down
to 90 it's even been up to 100 so if
you're looking at this product right now
you're thinking well hey I'm going to be
in the money and a lot of people do
analysis like this now the one big issue
that you're not doing is going to have
to make you think about how you do your
analysis is to make sure that you zoom
out so we want to click out to one year
now whenever I'm doing my analysis on
keeper charts I want to make sure that
the product that I'm buying is
profitable 11 out of 12 months of the
year what do I mean by that I'm not
going below my break even so my break
even right now is about £60 you can see
here £60 is probably going to be around
here and I can see it's gone down below
here 55 53 after that it's always been
Above So for about 1 month of the year
between you you say December and January
I was going to lose money on this
product but after that I'm always going
to be making a profit based on the
history of the product now this is
really important because when you're
buying the market is moving up and down
and you're not really too sure is it
right time to buy is it not generally
you always want to be making sure that
you're making a profit the majority of
the time in that one month just make
sure it's not going too far below your
break even but really crushing to the
floor for me it's only going to be £7
and I could probably wait until it comes
back up again so this would be a good
deal now one the biggest reasons I see a
deal crashing is because we are all
buying from the same places if you're
going to go to a well-known store for
example here in the UK you've got Argos
and if they're going to have a sale on
for example right now half price and
selected toys then what you're going to
find is lots of other sellers are going
be going to these sales now whenever you
are buying these products what you want
to be looking at is thinking that hey
everyone and their vas and everyone in
their dogs is going to be buying these
products so just be mindful that you're
buying only the fastest setting lines
with the great price and again we're
going to be thinking about is this price
a good price based on the history of the
product over the last year or is it a
good price right now because you've got
to expect there going to be lots of
competition now if you are buying
products in a well-known sale you've got
to make sure that the products you are
buying are has good sales velocity and
you've got to expect a lot of
competition because everyone is going to
be buying now the next one you need to
be thinking about whenever you're doing
analysis on your products is how easy is
it for someone to copy me one of the
biggest problems I think about within
Amazon reselling especially in your M
Arbitrage space is that everyone is
being taught to storefront stalk they're
looking at your listings and trying to
find them if you're buying a product
right now where you can find it
Simplicity by right Mouse flipping and
looking on Google then you've got to
expect that that price isn't going to
last very long and that probably even if
you reorder you'll be lucky to maybe get
another extra fail in there so for
example if you're here right now and we
found a deal on this Lego Product now
you've got to ask yourself if I just
reverse source that product would I find
my supplier and if I the answer is like
hey here for example1 1599 or 1680 if I
can see it really easily and maybe it's
on page one maybe even page two then
I've got to probably say that that deal
is probably only good for one purchase
I'm not going to be able to get a
reorder and if I do try and reorder and
it's probably going to crash because
it's too easy to reverse source and what
you see is so many listings whereby it
works the first time when you come to
reorder the new sell account goes up why
because there's an army of vas who've
got your storefront and they're trying
to reverse Source your deals in OA there
are some hacks that you can use to get
past this and what you want to think
about is voucher codes you want to think
about Limited stock availability from
suppliers end of line items if you have
a special way of purchasing products
that you can't reverse Source even in
whol good at this then that's just going
to give you an edge means your products
Do Not Crash if you are repricing wrong
it's going to cause you big problems
what do I mean if you are setting your
repricer to Penny underprice or 1 cent
underprice or any form of underpricing
it's going to cause you a big problem a
lot of sellers are going to match the
buy box so they're going to try and
match you now if you are always under
cutting by one p or 1 cent versus the
competition this basically just means
that your price is going to go 1 cent
under they're going to match you you're
going to keep going down down down and
you're going to hit your botton really
really quickly so what can I recommend
do not set your repricer up to be 1 cent
or one penny under pricing the
competition either match or even if you
see them you say going down maybe even
hold slightly higher this just means the
prices are going to stay higher and
those products are going to remain
profitable for you now the next check I
think you need to be doing in your
analysis is around sales and I want to
show you a product someone asked me how
many should they buy of this product
this product right here when you look at
it and I'm going to say right now now
it's got unknown sales and when I come
down and look at the keeper chart I'm
thinking wow this product actually is
selling quite well perhaps maybe want to
be buying I don't know five 10 units and
if you don't know I'm looking at the
sales rank particularly that green line
movement now the one thing I would share
with you is that whenever you're doing
your analysis don't just take one metric
for as gospel you've got to consider
lots of different options so I'll run
you through the things I look at right
now to make sure the products I'm
analyzing are actually selling I'm going
to show you something about this product
which basically tells you that this is a
complete lie what you'll see right now
with the sales rank let's go through so
whenever I'm coming into do my checks I
am looking at number one I generally
look at my tool to see how well it's
selling this is saying unknown which is
a bit unusual number two I'm always
going to be checking here to see if I
can see like 50 sold 100 Souls per month
for example if I come back to the Oral B
that we looked at a minute ago this has
got 50 bought in the past month you can
notice on this product it hasn't got
anything so right now it's not selling
more than 50 per month but what I can do
is scroll down to keeper and have a look
just below this part here and that will
show me the last time anything showed up
for example 50 or 100 sales per month
now if I do again on Oral B 50 sales per
month and scroll down you can see on
keeper here it says bought in the past
month 50 last updated just now so that
tells me that that has records it
whereas here this is never sold more
than 50 per month so I've got to keep
that in mind the next one I generally
look at is a sales rank and hence why I
looked at this and was like ah must be
selling but the next check that I do
after that because I'm looking for
multiple data points is data offers tab
particularly what I'm looking for is how
many units are being sold from the
people on the listing so let's have a
quick look through now first thing I
always like to do is turn Prime on and
when I looked at this listing I noticed
you can't actually turn Prime on which
is a bit strange I always turn on
historical sellers because if someone
sold out I want to see that they' sold
out and I'm going to look at this stock
history graph I'm just going to scroll
down and what I'm really looking for is
evidence of products selling now we're
going to look for staircases and if I
give you a good example let's go to the
or be let's go to data let's go to
authors tab now straight away if I even
just look you can see this seller right
here and if I just zoom in you can see
this set had 24 going down down down
down down back up again down down down
down so that's giving me confidence that
this product is probably selling because
his stock is going down in a nice even
orderly manner whereas when I look here
I'm not seeing anything at all selling
and I've got all the historical sellers
on so what I might do is I might say
actually let's go out to all time can I
see anything sold there and when I look
at it I'm seeing the person come on with
some stock disappearing but also as well
they're always going to be fbm so it
means it could sold off Amazon this guy
had 10 now he's down to three this guy
had 10 down to two three again it could
be off off Amazon it's not Amazon
selling when I look at this product I'm
thinking hey this isn't really selling
that's a big red flag for me I thought
it was setting really really well let's
go back to the price history and the
other thing that I'm going to be looking
at is the review cam now if I see the
review cam going up significantly I'm
going to be like fantastic now I can see
right now this product actually
increased around here but it's really
slowed down since around October so I'm
sure it's sold some but not that many
now the reason why I bring this up is
because for me you might want to buy if
you were going to buy this like one or
two items tops but this is selling so
slowly that I would personally walk away
if I show you something else and what
happened here this is the big part if I
go back to all year you'll see right now
the sales rank gone from selling selling
selling to nothing this big line right
here is the reason why it caught my
attention and this is really interesting
why because this product was probably
part of a variation listing and then
actually got pulled apart and now it's
not sold anything since pretty much May
the fifth so you can see that there it's
just a straight line and this is really
the whole variation setting not this
actual individual one so for you
whenever you're doing your analysis
looking at your products make sure
you're checking that they're actually
selling and specifically what we're
looking for is not just looking at any
one data point like sales rank or
anything else or just the the sales
chart here always look at all of them to
make sure it's actually s sing and then
even if you're not sure test purchases
to see the true sales data that's what
I'd recommend now I did say earlier on
that I'm going to share about our
approach which I want to talk about
right now and I want to explain how we
approach sourcing for long-term success
now this isn't going to be a hack it's a
mindset and it works but it will make
your life harder however it will ensure
that your products remain profitable
because it's harder for the competition
so let's go through it now now number
one what you want to think about
whenever you're doing sourcing is
focusing on Brands that's the key
consideration certain brands are going
to sell their products to suppliers at
specific prices which work versus
selling them on Amazon for a profit for
example they're not going to sell on
Amazon for cheaper than they would on
Walmart or Target this focus on Brands
is what you really want to be doing in
the whole reselling game and this is
what other sellers are doing all the
time now once you find brands that other
sellers are selling and you want to look
at their storefront which is so
important what you want to be thinking
about is where can you buy those brands
for a cheapest now it could be Nike or
it could be Lego but the whole game
around this is about finding where the
brands are sold the cheapest and
figuring out who has the best pricing
this could be online Arbitrage retail
stocks or even wholesale and ideally
identifying those best suppliers you've
got the best prices for those Brands and
staying on top of them with checking
with things like vas once you found the
best suppliers you're going to keep
going back checking what stocks they've
got in and even calling them up trying
to negotiate deals maybe ordering more
you're going to ask questions about
what's going on around when they're
getting stock back in and this is going
to give you an advantage first everyone
else now I'm always looking at the 12
months graphs which I sh you in this and
what I want to be doing is ensuring that
I'm buying products at a good price over
the last year not just today now one
thing I will say to you if you find
someone on your listing who has got
constantly cheaper prices and they're
selling cheaper than you are it's
probably because they bought the price
cheaper not because they're crazy and
your job right now is to go and find
that cheaper Supply fire because once
you get it you're now going to join them
at the bottom and no one else can touch
you so keep looking for those products
now hopefully you've enjoyed that and
that's helped you think about the five
things you should be thinking around
your Amazon reselling business to make
sure you don't fail that's the last
thing I want to you and what I'll do is
I'll drop a video around here that's
going to really help you out check that
out
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