Home > Sell On Amazon > What Products To Sell On Amazon (Part 1)

What Products To Sell On Amazon (Part 1)

September 16, 2011 Leave a comment Go to comments

In an earlier post I talked about general product sourcing considerations.  I want to revisit that topic, specifically for selling on Amazon.

When you’re considering selling a product on Amazon, the first question to answer is how well the product sells there already.  Once your business is doing well you’ll want to sell your own branded items, where you’ll have no competition, but initially you’re better off selling name brand items on Amazon.  The product selection on Amazon is enormous, so there’s a good chance the item you’re considering selling is already available on Amazon.

Amazon does not publish sales volume for any product, but they do list on most product pages a ‘Sales Rank’.  Note that the Sales Rank is usually within a product category, not on Amazon overall.  With a Sales Rank you have an estimate of how well the product sells.  Since Sales Rank only tells you how well it sells relative to other products in the same category, and not overall, you can’t translate it directly to a sales volume.  As a very rough guide post, the rule of thumb I use is that a Sales Rank below 50,000 usually means selling less than one per month.  If the product page doesn’t include a Sales Rank for the product, I assume it has never sold on Amazon, even once.

When you’re checking the Sales Rank, make sure it’s in a fairly large category so that the Sales Rank has meaning.  Eg., having a Sales Rank of 1000 among all DVDs probably means there’s a good sales volume of that product, but having a Sales Rank of 1000 among only Bugs Bunny DVDs, where the shows were originally released in 1956, probably means very low sales volume.  Amazon chooses the category for which it displays Sales Rank on a product page, so you need to make sure you check the category as well as the Sales Rank itself to understand the information you’re getting.  When you’ve been selling in a particular category for a while you’ll get a good feel for what Sales Rank in that category means in terms of sales volume, but it needs to be a broad category (like DVDs) rather than a narrow category (like blue and pink shoe laces).

Another piece of vital information Amazon doesn’t publish is how they calculate the Sales Rank, and from my observations it isn’t as straight forward as you might expect.  They seem to give considerable weight to just-purchased items, so something that only sells once every 6 months will leap in Sales Rank immediately after the sale, then the Sales Rank will drift lower until the next sale.  If you happen to check the Sales Rank of a product immediately after it has sold on Amazon, you’ll get an unrealistic estimate of its sales volume.  This happened to me early in my Amazon selling career.  I stocked up on a product that had a good Sales Rank when I checked, but the product didn’t move at all when I listed it myself.  Another check of the Sales Rank showed it was under 100,000, a far cry from its value when I was evaluating the product.  The important point to get from this is that when you’re checking the Sales Rank of a product to see if you want to sell it, you should check it twice, about a week apart, and use the lower of the two as your estimate of how well it sells.

Amazon does provide a list of the top 100 selling items in various categories, which is a good place to see what types of products sell well on the Amazon marketplace.  That doesn’t necessarily mean you want to sell those specific (top 100) products yourself.  You’ll notice most of the brand name products on these lists have a very large number of sellers, Amazon often sells them directly itself, so the price competition on them is enormous.  But these top 100 lists do make good leads for the types of products that sell well on Amazon.

Random Observations

Now that it’s Fall, you may be starting to think about the Holiday season.  For an online retailer, though, preparations for the Holiday season are about half way over by now.  I usually start placing larger than normal orders for inventory at the beginning of July, and cut back to normal order sizes at the beginning of November.

That may seem strange, but that’s how the timing works out.  My sales are strongest from about November 1st through December 18th.  On the tail end, it usually takes about 2-3 weeks to receive merchandise after placing an order with the manufacturer, and another 1-2 weeks after that to get it to the fulfillment center.  I want to have extra merchandise available for at least 2 weeks of the Holiday season, so I need to stop ordering extra merchandise about 6 weeks before December 18th, or right around the beginning of November.

On the front end, I could start placing orders in the middle of September, and most would be available for the start of the Holiday season.  But then I would be swamped with incoming merchandise and I would need to hire additional help to process it.  By starting in July I can spread that mountain of work out over a much longer interval and not have to hire anyone.  Of course, that requires extra capital to hold the merchandise for those extra few months, so it’s a trade-off.

The extra capital is one reason I don’t start earlier than the beginning of July.  The other reason I wait is that I want to see if interest in a product is starting to wane before building up inventory.  It may be selling extremely well in January, but by Christmas customers have lost interest.  I haven’t lost out on too many sales by waiting to build Holiday inventory until July, though on a few occasions I’ve had a good-selling item be out of stock at the manufacturer and missed out on those Holiday sales.  But that’s uncommon, and I’d rather have that happen occasionally than be stuck with a large amount of unsold inventory in slow-moving products.

With large orders ending at the beginning of November, I’m pretty much done with the Holiday season (from a retail perspective) right around Thanks Giving.  From then to the end of the year I make sure merchandise processing is fairly light so there’s more time to answer customer queries.

Before I started selling online I expected strong sales to start the day after Thanks Giving, the traditional Black Friday.  But the pattern I actually see is that sales slow down substantially starting in the middle of October, they’re pretty much dead by Halloween (pun intended 🙂 ), and they take off sharply November 1st.  There’s definitely a big bump on Black Friday, and another big bump on Cyber Monday (when everyone gets back to work after Thanks Giving).  But it’s the big slow down through Halloween followed by a fast ramp up starting November 1st that really surprised me.

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