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Four Most Useful Tips That Help Professionals Optimize Amazon Inventory Sourcing

What do you precisely think about before buying certain items from this or that vendor? What is your algorithm for making robust decisions in this case? In the article, we will suggest to you how you can find an interesting inventory that your customers will be fond of. While it is scarcely possible to provide exact guidelines, the process of profitable thinking of the top merchants can be easily exemplified. Analyze the steps that we provide and try to adapt them to your particular real-world situation.

We suggest using the application for smartphones called Scoutify. It can automatically scan the inventory of your interest. Besides, it gives you all the necessary numbers of the goods proposed. You will know the sales rank, the price, profit, fees, competitors, history of pricing, and sales ranking. Such a scouting procedure is called retail arbitrage being something that is a must-do for everyone at the competitive marketplace.

The standard Amazon application for performing arbitrage is somewhat incomplete, based on our experience. In turn, the Scoutify tool is distributed with the listing software 'Inventory Lab' and works a way better.

In the following, the thinking process will be depicted, step-by-step. Below are summarized four principal questions that you must address to yourself before making any purchase from the inventory.

Question Number 1. Are You Allowed to Distribute This Sort of Products?

Not all brands and not all categories can be sold by any seller at the Amazon marketplace. It is essential to open the Amazon merchant guidelines and attentively check whether you are entitled to do what you are going to do. This will be based on your location, account type, and other possible restrictions that change over time.

If you are banned from distributing certain items, just stop with their investigation. In that way, you will save a lot of time for more useful and lucrative endeavors. The world changes every day and there are always a lot of outstanding opportunities appearing around.

Question Number 2. What is the ROI?

ROI stands for return on investment. It is always provided in per cents. What we recommend for beginners is to select a 100% ROI. This number can be higher than 100%. In that case, you will even have some room to make mistakes. Over time, when you become more experienced, you are welcome to try smaller values of ROI. This is totally up to you what to select. For instance, some salespersons do not buy anything with ROI below 75%, whereas others are brave enough to go down to 50%. If an item belongs to bestsellers and seems to be highly popular, even a 30% ROI might be a reasonable choice. Anyway, the general point is to find items with a higher ROI, especially if you are still a novice. If it happens to be hard to make money on your first investment for any reason, the only option is to take a pause and try different goods.

Question Number 3. What is the Sales Rank of the Coveted Item?

This information has to do with the quickness of selling goods of the given type at Amazon. When we scan the inventory with a good sourcing tool, we obtain the sales rank among other valuable details. A bit of advice is to consider an average rank rather than just an immediate one. The sales ranking gets updated regularly, a few times per day, at the Amazon marketplace. Therefore, you can derive the standard deviation parameter and find out how much the number fluctuates over time. The plots available on CamelCamelCamel and Keepa have proved to be very useful to monitor an averaged sales rank.

Keep in mind that sales rank importance is different for different categories. For instance, there is no need to be number one in ‘Books’ to succeed, whereas something like phone chargers is a way more sensitive to the rank acquired. People just do not want to risk when shopping. They tend to choose the most praised distributor who obtains nearly all the benefits. However, any merchant gets out-of-stock sooner or later. Track the situation and do not miss such a chance to become a new Amazon star.

You can find plots that show if an item rank is in the top 1%, 3%, 5%, or 10% for the category specified. In most cases, we suggest avoiding distributing goods with a high sales rank. Seasonal items can be a perfect exception though.

Question Number 4. Who do you really compete with?

It is a normal situation at Amazon that many merchants sell the same goods. Therefore, competition among them is unavoidable. Your eventual prosperity will depend on how efficiently you compete for the attention of your prospective customers.

Consider two categories: Amazon itself and third-party salesmen just like you. It is naturally better not to compete with Amazon unless you are totally sure about your victory. For instance, if you can boast of a very robust supply chain or Amazon is out-of-stock, you may try the challenge. Amazon does not tend to share the 'Buy Box', so keep this in mind before making trading decisions.

It is essential to in-depth examine other third-party merchants that offer the same goods to customers. It makes sense to consider only those of them whose prices fall within one or, perhaps, two per cents around the ‘Buy Box’ price. If you can provide an item at a lower than average price, you may succeed in any category. Besides, if the product sales rank is small, you can stay profitable even if your price is not so cheap.