Sourcing With Mike

Today I’m going to do some sourcing.  I’m going to go through a few listings and share my thoughts with you.  Nice and simple and certainly not for everyone, but I get asked frequently what I think about when I look at a potential buy.  I hope that this will help elucidate that process.

 

Step 1.  I’m headed to some Price Drop sites.  There are a lot of them out there and over time you’ll figure out the ones that work best for you.  Some of the most popular include Keepa Price Drops and The Tracktor Price Drops.  I have to admit, I’m a little bit out of practice with this nowadays as OAX Sourcing has really become my go-to option, but I know that not everyone has access to that, so I’ll leave that for another day.

 

Step 2.  I’ll start on Keepa and Set it to Sort By Sales Rank and I’ll set the ranges to at least 50% drop, at least $5 drop, and Max Sales rank at 200,000.

After scanning a few video games that look decent (and finding out that they are just digital products) and some promising groceries (that are Pantry) I move to an Office product listing:

 

My initial thoughts:

  1. Okay, they’re price matching Target which provides some explanation for the low price.
  2. Kinda hard to believe that a single notebook would sell for $15+ though.
  3. Rank doesn’t look very promising when price is high.  I want to stay under the 50k range in office.
  4. Definitely some upside here, and looks like worst case scenario I could get 7 and basically break even.
  5. Let’s check products people bought when they also looked at this listing.

notebooks

 

So, I noticed a few things here:

  1. Selling price of other colors range from $2.79 to $9.75 up to $12.55
  2. Red notebook that is $2.79 is the same price match.
  3. Hmm.  That 3pk has three colors and I already know that I can get at least Blue and Red for 2.79.  Let’s check.

  1.  While I’m here, I check target and I find I can get black for 2.79 also.
  2. I see ranks that I really like.  Under 50k for the most part and under 1000 during the hot summer months before school  (Hint: If you’re planning products for St. Patrick’s Day or Easter right now, you’re doing it wrong.  Retail is a game that requires you to think ahead a bit.  What are the big products going to be in a couple months?  Maybe those water guns that your WM is clearancing? Shorts? Tank-tops? Sports Bras. Patriotic Stuff.  BBQ Stuff.  Etc.  If you want to take your game to the next level, I suggest trying to think beyond what the best possible flip is and start trying to incorporate some mid-range strategic planning into the mix).
  3. I sold college/school products pretty hard last year and did well.
  4. At 17.07 I’m really only breaking even.  If AZ sells out and it goes to 25+ like it did last year, I’m making 100% ROI and I could sell dozens of them a week.
  5. There are only 5 sellers on the listing.  It is out of season so that explains part of it, but this is a bundle and requires a bit more work than other listings, so that adds a slight barrier to entry.  With so few sellers, I probably only need to get the buy box for a couple days and I think I can sell dozens of these.
  6. I ultimately decide to hold off because 1) I think that I can find other bundles like this that might be better and I don’t think this deal will disappear.  I decide to use it for inspiration rather than a buy, plus I want to share it with the FBAMaster audience!
  7. I set some bookmarks and return to Keepa.

 

I return to Keepa and scroll for things that look like the price drops are substantial, the ranks are reasonable, etc., and I come upon this product:

cymbal

  1.  Amazon + 2 sellers looks good.
  2. WM retails at $149 which is a pretty decent price gauge if you have little to go on.
  3. I can profit about $25 if it sells at $109.
  4. Amazon only has 2 left in stock.
  5. I check the Keepa to see how often Amazon runs out.

cymbal1

 

The chart pulls me in two directions:
1.  Amazon is frequently out.  They haven’t been consistently in stock since June.

2.  On three occasions in the past few months, they’ve sold for under $25.

 

I think that it would be pretty reasonable to just buy both at $60 and sell them for a profit.  That said, I don’t love the rank for Musical Instruments and if I’m going to have a product that is slightly slower moving, I’d rather have a solid ROI, so I decide to set a Price Alert on the item and hope to scoop some up for under $25 at some point.

 

Finally I come across some Scotch Magic Removable Tape, Matte Finish and I see this chart:

fooledyou

So I immediately bought!

 

Just kidding! Look at that solid purple line on the bottom of the chart.  That should be a warning sign! 3rd party sellers have been basically giving this product away. Warning sign #2 should be that scotch tape doesn’t cost $60.  Third warning sign is that this Keepa chart is only showing a short term history.  As much as I love charts and can make solid decisions from them, they are not the end-all-be-all.  You have to apply some common sense to every purchase.  You have to look for things that don’t make sense.  You have to slow down and consider all of the factors and as broad of a history as possible.  If we start to look at the pricing of the third party sellers, the historical price trends, and the average retail price elsewhere, we immediately figure out that this is a terrible product.

 

Hope those three products give you just a tiny glimpse into how I think through products that I buy, plan to buy, or reject.  Until next week…

 

As Always, Best Wishes

Mike

4 thoughts on “Sourcing With Mike

  • March 4, 2016 at 8:55 am
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    Hey, thanks for the amazing content.
    It didn’t get clear to me for example:
    You find a toy in Toy rus and it’s $5
    Then you find out that the same toy is $25 on Amazon with 5-6 FBA sellers (inlcuding Amazon)
    The rank is good, the charts are perfect.
    If amazon never run out of stock can you be sure that you will sell anything at all? (if you match amazon price?)

    Reply
    • March 4, 2016 at 11:42 am
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      That would be a really easy buy for me. Even if AZ never runs out of stock BECAUSE there is plenty of room for profit if I have to undercut AZ on Price. Now, if AZ was selling at $12.50, I might pass even though I could make a dollar or two (in theory), because there isn’t much room if I have to undercut AZ.

      Reply
  • March 4, 2016 at 11:10 pm
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    Thank you so much for this post…it was great. Thank you

    Reply
  • March 5, 2016 at 7:09 am
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    I read this article for the reason I watched Chris Wilkey video rant yesterday about he and his dad’s “love hate relationship with you”. Which is an interesting sidebar that came to light. Anyway, starting into my 2nd year with FBA. Your insight for sourcing products is educational as you explore the historical sales price along with whom is on the “buy box”. I am currently assisting someone who lost her job as a graphic designer and learning the ropes about FBA. FYI, I am currently mentoring four other people about FBA. Glad to part of FBA Masters group.

    Reply

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