How to select winning products to sell on Amazon FBA
Here we explain how to select profitable products to sell on Amazon and the criteria you should always use. This should help you to find success with your Amazon FBA Online Arbitrage business.
What to look for in a winning product
This will vary by category but a general rule would be to try and stay under 50,000 and preferably under 20,000. If you have a product under 20,000 in a popular category you would hope to sell at least one unit per day. Make sure you are looking at the overall category rank, not a subcategory rank.
We have full lists of sales rank for the US, UK and EU here.
A lot of sellers focus purely on ROI when selecting products. We have always focused on profit per product sold. You can achieve 100% or more ROI (we have some products running at 150%) but I would probably look at a minimum of 30%.
Profit Per Sale
You are probably best using a combination of ROI and profit per sale. If you are making a minimum of $10 per sale then that is ideal and gives you room to move when other sellers drop their pricing to compete. If you are only showing a profit of $5 or less then when you list the product you will probably find someone drops their price and wipes out your profits.
ROI and Profit Per Sale will most likely be dictated by how much cash reserves you have. If you are cash rich then ROI becomes less of a factor.
Amazon products fall into two categories – Standard and Oversize. If you are starting out and doing your own prep of the products then I would stick to smaller items. They are easier to handle, cheaper to ship to Amazon and also the storage costs and fees will be less. If you need to store any in your home then they will take up less room and returns are easier to deal with.
Gated brands and categories
You have probably heard that a lot of brands or categories are gated. This means you cannot sell them without getting permission. If you are a new seller you should focus on the products you can sell and try and make this work first. Also a lot of the brands in the gated categories you are not able to sell anyway.
Use the Amazon Seller App or ‘Add a product’ on your PC to find out.
You can view our full gated and restricted brands list here.
If you do want to open up more categories there is a course available that will take you through all the steps to get ungated in multiple categories for Amazon UK;
Lots of new sellers are getting suspended for selling these high-risk brands. These are brands which Amazon will allow you to sell but the brand owner does not. They will take action to try and get you to stop selling the product.
Please do not get suspended. It is definitely worth reading our guide on how to identify these brands as once you are suspended it is often impossible to get your account back. If you are at all suspicious that a brand might not be safe then remove it from your shortlist and move on.
I would recommend staying with products that you can write off if required. So if a customer returns it and you have to dispose of it then your business is not damaged. The ideal price range you should be looking at is about $10 – $40 with a profit of $10 – $20. When you are more experienced you can aim for higher value products. I would avoid going over about $100 though.
TOP TIP – Some products increase in value once they are no longer manufactured. Buying these products gives you a built-in safety measure if your stock does not sell as expected. You know that if you leave it at the FBA warehouse it will eventually sell for a good profit.
Low returns Rate
Some products have returns rates of 10% or more. Returns cost you money. You need to avoid products which are likely to be returned and particularly ones that cannot be fixed up and resold as new once opened. The way some products are packaged means customers will have to damage the packaging to even look at the product. You need to avoid these as they will have to be disposed of or sold at a loss if returned. Look at the reviews on a product and avoid buying product with less than 4 stars or complex products.
TOP TIP – Aim for tough well packaged products. This means they won’t get damaged in the warehouse or shipping to the customers and you are less likely to get complaints and possible negative feedback.
Which Categories to aim for
Most people start with Toys. Toys are simple and usually have a low returns rate. They are also normally low value. Electronics is a good category but you get more returns and problems.
This is not personal it is business. However, having an interest or passion in the products you are selling will give you a slight advantage. You will have a ‘feel’ for the products and therefore be better at spotting good deals.
Price History/ Buy Price
Say you have a product with an RRP of $30. It is selling on Amazon for $25 and the Keepa charts tell you it does so most of the time. If you want to protect yourself from sitting on dead stock you need to buy at a price where you can sell at the average selling price and still at least break even.
Appeal outside of your main selling platform
This is not completely necessary but it is a bonus if your product will sell on other platforms like eBay or other Amazon marketplaces. This means if your account does get closed down or the product is not selling you have options. For UK sellers you want to get products that will sell in the EU. Read our guide to selling in the EU.
Amazon and other competitors
People often ask if they should avoid selling the same products as Amazon. Amazon will share the Buy Box so I would not be put off if Amazon is a seller. If your price and seller metrics are good then Amazon will let you have the Buy Box. Sometimes they will even share the Buy Box when your product is more expensive. Your main competition is from other FBA sellers. You can normally be about 10% more expensive than non-FBA sellers and still get the Buy Box or get a sale from customers looking to buy with Amazon Prime.
How to read Keepa charts
Keepa is a chrome extension which will load directly on the Amazon listing page and provides many insights into a product’s pricing and sales history.
If you are selling new FBA products then you want to remove the ‘Used’ sellers and make sure ‘Amazon’, ‘New’ and ‘Sales Rank’ are showing. You can view the the last 3 months but we also look at the entire life of the product as this provides even more important insights.
Keepa chart example showing 3 months sales
The green line shows the rank and as you can see this can change massively. As a product goes up in price the rank usually gets worse. Also when a product is first released it has a better ranking but usually this coincides with a lower price. The example above perfectly demonstrates what happens when Amazon runs out of stock. The price immediately starts to increase as other sellers take advantage of the scarcity. The sales rank also gets worse as the price increases.
You may also see that in the run up to Christmas the price will increase if stock becomes scarce. This means that this product might be good to buy in bulk now to sell at Christmas. Even though you cannot make a profit now sometimes it will sell for 3 or 4 times its usual value in Q4.
The main things you are looking for to spot a good buy with Keepa
1. Is it something to stock for Q4 – does it increase significantly in price?
2. Is the current price a temporary blip? What is the normal selling price over the last 3 months? You may have found a product that on the face of it looks profitable but the current selling price may only be there for a few days and when it reverts back to the regular price you make no profit or even a loss. A lot of new sellers get caught out by this.
3. Is the product regularly out of stock. If Amazon runs out of stock quite often, which is shown by the clear areas, then it might be an opportunity to buy the stock now ready to sell at a higher price when Amazon runs out. If all sellers run out of stock regularly this is even better as it means you can sell in these gaps probably at a much higher price.
4. Is the product discontinued? If Amazon has stopped selling the product completely and the price is gradually increasing and the number of sellers decreasing then it usually means this is no longer manufactured. If you can still find the product cheap then there should be an option to stock up and sell for a good profit.
5. Spot the lowest price Amazon tends to sell at. If you are going to buy the product from Amazon themselves to sell back on Amazon or a different marketplace then look for when the orange line dips. You can then set a price alert in CamelCamelCamel or Keepa and they will email you when they next drop their price. You can then buy stock to resell later.
Working out how fast a product is selling
Nobody except Amazon knows the exact figures. There are a lot of factors like selling price, FBA vs MF, time of year, stock levels, seller rating which will dictate the amount you actually sell. There are ways of getting a better idea though. On slower selling products changes in rank on the Keepa charts can often indicate a sale.
As you can see if you test the same ASIN in all three they give varied results so you may need to take the average.
Do the opposite to find profitable products
Most new sellers are probably choosing products that meet these criteria and I would recommend you do. If you can make money on these products then you have made Amazon FBA work and can start looking at additional strategies. However, if you are confident and already have some experience selling online you can do the opposite of everyone else so there is less competition. Not many sellers will want to deal with large bulky products or high-value electronics for example.
OUR CHECKLIST FOR THE PERFECT PRODUCTS TO SOURCE
1. Sales Rank under 50,000.
2. ROI over 30%.
3. PPS (profit per sale) over $10.
4. Size – smaller the better. Avoid ‘Oversize’.
5. Gated Brands or categories – avoid until more experienced.
6. High-Risk Brands – any doubts then avoid.
7. Value – between $10-$40 is the sweet spot.
8. Product that will maintain value or increase in value.
9. Low returns rate – look for a rating of at least 4 stars.
10. Categories – start with Toys and build from there.
11. Buy price – ideally below RRP/SRP or the average sale price over the last 3 months – and still be able to break even.
12. Wide appeal – bonus if you can sell on other platforms like eBay.
13. Can beat other FBA sellers on price and stock levels.
Being successful selling on Amazon will mean using the right tools to find the right products and then using the right strategies to sell those products. We have a full guide to the right sourcing tools here. You will need at least one of these tools or you will waste a lot of time. We currently use and recommend FBA Wizard Pro to source products for online arbitrage.
Hopefully, the checklist and criteria above will also help you focus in on winning products.
If you have any suggestions for other strategies or product criteria not mentioned please take the time to post a comment below. This will help fellow Amazon sellers make the right choices.
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