Amazon FBA: This Leads to Failure When Reselling

Summary

The 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

00:00

📈 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.

05:02

🔍 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.

10:03

🛒 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.

Keywords

💡Deals Crashing

Deals crashing refers to the failure of a business transaction or investment to proceed as planned. In the context of the video, it specifically pertains to the collapse of deals in the Amazon reselling business. The speaker mentions that 52% of their community reported deals crashing as their biggest problem, indicating that this is a prevalent issue among resellers.

💡Sourcing

Sourcing in the video refers to the process of finding and securing products to sell, particularly in the context of online retail. It is a critical aspect of the Amazon reselling business, as it involves identifying products that can be bought at a low price and sold at a profit. The speaker discusses strategies for effective sourcing to prevent deals from crashing.

💡Buy Price

The buy price is the amount a seller pays to acquire a product. In the video, the speaker uses the example of an Oral B product with a buy price of £45. This price is crucial for determining profitability, as it sets the baseline cost against which potential selling prices are compared.

💡Sell Price

The sell price is the amount at which a seller lists a product for sale. The speaker mentions a sell price of £80 for the Oral B product, which is the target price at which the product is intended to be sold. The difference between the buy price and sell price is what generates profit.

💡Break Even

Break even is a financial term that describes the point at which total costs and total revenue are equal, meaning there is no net loss or gain. In the video, the speaker highlights a break even price of £60 for the Oral B product, indicating that this is the price at which the seller neither makes a profit nor incurs a loss.

💡Profitability

Profitability refers to the ability of a business or investment to generate profit. The speaker emphasizes the importance of analyzing a product's profitability over a 12-month period, ensuring that the product remains profitable for most of the year, which is crucial for the success of the reselling business.

💡Sales Velocity

Sales velocity is the rate at which products are sold. The speaker advises that products bought during well-known sales events, like those at Argos, should have good sales velocity to ensure they sell quickly and generate profit. This is important because high competition can drive down prices, affecting profitability.

💡Reverse Sourcing

Reverse sourcing is the practice of finding the original supplier or manufacturer of a product by searching online or through other means. The speaker warns that products that are easy to reverse source can lead to deals crashing because competitors can quickly find the same suppliers and lower prices, making it difficult to maintain profitability.

💡Repricing

Repricing is the strategy of adjusting the selling price of a product in response to market conditions or competitor actions. The speaker cautions against setting repricing algorithms to underprice competitors by just a penny or a small amount, as this can lead to a price war and ultimately to deals crashing.

💡Sales Rank

Sales rank is a metric that indicates how well a product is selling relative to other products in the same category. The speaker uses sales rank to analyze product performance, noting that a high sales rank can be misleading if it does not correlate with actual sales data, which is why it should be considered alongside other metrics.

💡Brands

Brands are companies or products that are well-known and recognized for their quality or reputation. The speaker suggests focusing on brands when sourcing products, as certain brands have established pricing strategies that can be profitable for resellers. Identifying where these brands can be bought at the lowest prices is key to successful sourcing.

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