<-- Resources

Analyzing a potential opportunity

Can we get the item?
Can we list the item?
Pricing
Competition
New suppliers
Reporting findings
Glossary

Can we get the item?

Even if the supplier’s spreadsheet says they have it, we need to check that we can actually get it. If they don’t have it, then I don’t spend time considering it. I move on.

I try to check their website first, because sometimes the item will appear in their spreadsheet and not on their website. In that case, I haven’t actually contacted anyone yet to figure out if they have an item in stock that isn’t on their website.

Check the supplier’s website for the item.

If they don’t have the item, then stop and move to the next item.

A good idea: call them. If it’s a really good item, then we can check it out.

Can we list the item?

Is the item from a legitimate supplier? Not all invoices are accepted. Everyday Supply Co emailed me back and said, “Amazon does not accept our invoices.” Basically, if Amazon “doesn’t like the invoice” for whatever reason, then they can restrict us from listing the item. This is one reason why legitimate suppliers are important.

Attempt to list the item using its ASIN.

Stop if it asks for an invoice.

Leave the application in draft mode.

Pricing

Analyze the item’s pricing.

Use the Amazon Revenue Calculator.

  1. Compare the cost against the sell price in the spreadsheet to see if it makes any sense.
  2. Profit per unit: Ideally this is greater than $10 after the full COGS has been estimated. The biggest reason is that we want to make more money. Another reason is to have a buffer against price changes that affect profitability. So if the market price drops by $5, then we’re not losing money if we go down and match it.
  3. Margin: At least 12% net margin. This is flexible. Check the profit first.
  4. Keepa data: is the price stable? fluctuating? is it high right now? or low? By how much does the price need to drop to break even? When do we start losing money?
  5. If there are variants, then the sales volume for a variant can be estimated as a percentage of that variant’s reviews in Analyzer Tools or Jungle Scout.

Consider the following costs. Some are calculated automatically in the Amazon Revenue Calculator.

If the item price is not listed then use the 90-day average price from Keepa.

  1. Cost of goods sold. This is one of the cells in the Amazon Revenue Calculator. It’s the price in the supplier’s list.
  2. Miscellaneous: $5.50. It could cost between $5–10 to get it to Amazon.
  3. Amazon fees at 15% of item price.
  4. Fulfillment.
  5. Storage.
  6. Shipping to the 3PL warehouse.
  7. Labeling.
  8. Shipping to Amazon.

Competition

An item may have 20 or 30 sellers, however not all are competitive. There may be only 2 or 3 that are actually competitive.

Determine how many merchants offer the item Amazon Prime and New.

There can be many other sellers, however they’re not competitive on price. For example the knife sharpener. Let’s look at the pricing and see if we can beat other sellers. Then we don’t have to worry too much about how many sellers there are. Unless there’s a price war.

New suppliers

When finding new suppliers, look for items that don’t have variants. This means no clothes, shoes, bedding, towels, phone accessories, eyeglasses, &c.

Really good items are small, light, and highly marked up. Examples are gun sights and jewelry.

Reporting findings

US-based winning product: [title]

ASIN: [ASIN]

Featured offer: [amount]

Unit cost: [amount]

Profit per unit est: [amount]

ROI: [percent]

FBA fee: [amount]

Misc cost est: [amount]

Source: [source]

MOQ: [units or dollar amount]

Sales per mo est: [number]

Listing Status: In addition to the above items, verify our ability to list the item. Go to List your products and observe the results when attempting to list the product. Possible outcomes include instant approval (ideal), invoice required (minimum of 10 units), request for transparency labels, or other conditions that may arise during the listing process.

Glossary

3PL.     Third-party logistics. An intermediary entity we pay to do tasks like labeling, repacking, creating kits, storage, order fulfillment, &c. We have accounts with a few 3PL warehouses around the country.

FBA.     Fulfilled by Amazon. The item is in Amazon’s warehouse. They are responsible for sending it to the customer and the customer service.

FBM.     Fulfilled by Merchant. We are responsible for sending the item and the customer service.

WFS.     Walmart Fulfillment Services. The item is in Walmart’s warehouse. They are responsible for sending it to the customer and the customer service.

White label a.k.a. private label.     A generic term for developing your version of an existing product. “FBA Black Label” is the name of a video-based training series on how to white label.