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.