Editor’s Note: We brought in Caleb today to provide some insight into the Book category. One of the things I like about Caleb is he’s only been doing this for a year and he’s really learned a lot. He hasn’t ignored the studying and the research, but he also hasn’t ignored putting it into practice. People often fall into one of those two categories and he’s a good example of how to thread the needle. Second, he’ll do $100k in sales this year. It’s a good number because it’s probably more than many of you readers, but not impossibly high. It can be difficult to see how you’re going to hit $10million if you only sold $12,000 this year. However, it’s not that difficult to see that $100,000 could be within your grasps. I hope you all learn a little bit from him and check out his site, http://thebookflipper.com. -mg
I was thrilled when John asked me to do a guest post for the FBAMaster community about how sales ranks apply to books. I’m passionate about collecting data, applying it to my business, and sharing those lessons with other entrepreneurs. Over the past 13 months, I’ve learned quite a bit about how to properly interpret a book’s sales rank and I’m excited to share that expertise with all of you today!
But first, I’d like to share a bit of my background story:
Who Am I?: My name is Caleb Roth and I operate a blog over at thebookflipper.com where I teach other entrepreneurs how to scale their Amazon FBA book businesses. I’ve been selling books via FBA for just over 12 months now and am on track to hit $100k in sales this year! My inventory is 98% books.
Why Do I Sell Books?
- They are everywhere.
- They are (usually) inexpensive.
- They are easy to research, store, process, and ship to Amazon.
Why Do I Sell Only FBA?
- Flexibility – I have the freedom to travel whenever I want and the business hums along seamlessly in the background. Instead of spending time fulfilling orders I can use my time to focus on sourcing more books.
- Scalability – As my business grows I don’t have to lease a warehouse or hire employees to keep up with the growth. I can build a large book empire while maintaining a relatively small footprint at home.
- Pricing – Perhaps the greatest advantage to selling books via FBA is the higher prices I can command for my listings. It’s not uncommon for me to sell a book for $19.95 when the lowest Merchant Fulfilled price is $1.99. This price disparity can be even higher when it comes to textbooks. (Side note: I’m in the final stages of building a software called eFLIP that will help you profit from these price differentials by purchasing cheap MF books and flipping them back via FBA. Learn more about eFLIP and sign up to be notified when the software launches over at my blog.)
Before we dive headfirst into the sales rank discussion, let’s clear up a few of the myths (even flat out lies!) that are floating around out there about how to interpret a book’s sales rank:
- Myth #1: “A book with a sales rank higher than 1 million might never sell again.”
Don’t buy into this philosophy for a second! A sales rank of 1 million means the book sold roughly 5 days ago. That’s not long at all in the world of books. So far this year, 23% of my total profits have come from books with a sales rank higher than 1 million. For a more in-depth look at sales rank, what it means, and how to interpret it, check out this blog post.
- Myth #2: “A book with a sales rank higher than 5 million DEFINITELY won’t sell again.”
My own data would suggest otherwise! Over the past 6 months, I’ve purchased 47 books with a rank higher than 5 million and have already sold 9 of them (19%). I am extremely selective about which of these “long-tail” books are worth adding to my inventory, but some of them WILL sell… eventually. And if you’re going to sell long-tail books, a much higher sales price is necessary to offset the increased risk – my average list price for these books is a hair over $135. This brings us to the final myth:
- Myth #3: “Sales rank doesn’t matter at all. Ignore it. If it’s selling for more than $10 FBA, it’s worth sending into Amazon.”
This mentality can quickly get you into trouble! As an example, let’s say you stumbled across an older nursing textbook with the following metrics:
Number of Offers
Lowest MF Price
Lowest FBA Price
A highly-ranked, outdated textbook that will only net you a few dollars of profit if it sells is not worth the time, effort, and money you’d put into it. Make the decision to keep your business efficient and profitable by avoiding these inexpensive, slow-moving books. As a general rule, the higher the book’s sales rank, the higher the sales price should be to justify the risk of adding it to your inventory. If you want learn more about my book scouting strategy, check out this blog post.
The Bottom Line: Rather than relying on sales rank alone, it is the sales rank history that reveals far more beneficial information about the book. This history can guide you in making a profitable and informed purchasing decision. There’s no guarantee that past sales will in any way guarantee future sales, but you can learn a lot about a book by looking at its past. As President Teddy Roosevelt said, “The more you know about the past, the better prepared you are for the future.” I’m nearly certain that President Roosevelt wasn’t referring to a book’s sales history when he uttered this phrase, but the principles remain the same!
A Real Life Example: Let’s say you were at a thrift store and stumbled across a book with a rank of 250,000 where the cheapest MF offer was $19.95. You could pick it up for 99 cents. Would you snag it? Most likely. But what if you pulled up the historical sales rank chart (either from camelcamelcamel.com or keepa.com) and saw this:
Each “spike” on the sales rank chart indicates a sale, so this particular book has only sold twice in the past year. Will it sell again? Perhaps, but it’s not likely. Especially since the spike in rank on June 1 wasn’t an actual sale. This particular book is one I “gamed” to learn how sales rank worked. I listed two copies on Amazon for a penny each and had my friend purchase them in two separate transactions to see the impact on sales rank. When I listed them, the sales rank was right around 4 million. About an hour after these two sales had been registered on Amazon, the sales rank dropped down to 65,000! (note: The above chart likely only pulls data from Amazon once a day, which explains why it showed the lowest rank being closer to 180,000) Since no sales have occurred since June 1, you can see that the sales rank has steadily increased since then.
Now that you know the book’s sales history, rather than just a selling price with a current sales rank, let me ask the question again: would you be willing to add this book to your inventory?
Here are four categories of charts that you may encounter when looking up a book’s sales rank history:
“The Slow Mover”
This is the same book that I discussed above. If it’s selling rarely, be sure to only select high-priced items with a timeless subject matter. Treat these books like a portfolio of stocks – only a few of them will be successful, but if the reward is high enough it will justify the risk of purchasing it.
Notice that this is a 3-month view of the sales rank history. This book is selling often and seems to have fairly consistent demand. If the sales price meets your threshold, you should feel comfortable adding it to your inventory. You could price it aggressively and look for the next sale (“the fast nickel”) or price higher than the lowest FBA offers and wait for the sale to come to you (“the slow dime”). Either way, this book is likely to sell relatively quickly.
“The Best Seller”
This book has consistently been ranked under 100,000, which indicates that it is likely selling multiple copies each day. In these high-demand situations you can often ignore the lowest prices and usually price closer to Amazon’s new price and eventually get the sale. Even if there are two or three lowball FBA offers in the $4-5 range, look to see how quickly the FBA prices open up. If the fourth or fifth FBA offers are around $12, you could still consider purchasing it.
A sales rank history like this one should get you excited! Notice how the sales rank “hugs” the top of the chart several times a year – usually around August and January. This means that the book experiences extremely high demand when students go back to school in the fall and spring semesters. If you find these books in the offseason, don’t make the mistake of pricing them too low. When the semesters kick off, you could get $30-60 more than the cheapest MF offers if you sell via FBA. Students need to get the books quickly and your $90 copy of that Psychology book may be much more appealing than the $200 copy from the campus bookstore. Price it high and check back on it in the fall and in the spring. Pro tip: be sure to tag these books with the word “textbook” somewhere in your Merchant SKU, that way you can easily find them in your inventory in January and August and reprice them accordingly.
Conclusion: Thanks for spending some time with me digging into this world of sales rank! I hope it has been a valuable experience and that you’re able to put this knowledge to use next time you’re out there scouting for books. If you’re inspired to take your book scouting to the next level and are interested in sourcing books online, be sure to sign up to be notified when eFLIP launches on December 15.
Be sure to visit thebookfliper.com to join the conversation and learn more about scaling your FBA book business!
Catch you on the flip side!