Sourcing Product For Amazon: Case Study
When it comes to sourcing products for FBA, how much research are you doing before making a wholesale purchase? Here’s a short case study provided by a Product Sourcing 101 Facebook member….
Here is an example of how I evaluate an item for possible sale on AMZ via FBA.
I found this item listed on H & J Closeout’s web site. It screams AMZ private label (PL), so I checked AMZ, and sure enough…
This is clearly a PL item from an unfortunate FBA seller who could not make it work and so liquidated before LTSF hit on 2/15/18. I can see that the seller now has only 4 left in stock.
Keepa graphs show me that the sales rank is rising despite lowering price. Right now the rank is around 35,000 in Baby (up from around 12K, when it sold for $18.99), which would be 40-50 sales per month. This indicates the seller was spending heavily on PPC to get sales. This is a quick way to lose whatever profit may have been there, which could be why s/he decided to liquidate to: H & J Closeouts
H & J is selling the item “wholesale” for $6.00, and also selling it themselves on AMZ for $19.95 (their AMZ storefront is liquidations4you).
My next step was to plug the ASIN into the FBA fee calculator, which shows that after AMZ fees, I would net $10.54 on my investment of $6.00, not a great ROI . Sometimes I can work with the vendor on price, and it is possible I could negotiate a price of $5.00-$5.50 each if I bought a decent quantity. Then my ROI looks better.
The real problem, however, is that there is A LOT of competition around this product (see “sponsored products related to this product” at bottom of AMZ product page), and competitors have many more reviews than does ThinkVivo. Any new seller would have to spend heavily on PPC to get sales, resulting in little, if any, profit.
And even if I could establish this as a viable product with decent profit, once I sold whatever quantity H & J bought, where would I get more?
For all of these reasons, for me, this is NOT a buy.
NOTE: None of this is to dis H & J. I have ordered from them and find them to be all-around good guys.