*Editor’s Note: Lynn was the one who knocked it out of the park with the Free OA Hacks article a few weeks back. This topic was given as a challenge to Lynn and I have to say that I couldn’t agree more with the post (I think I even mentioned it on Periscope the other day). Enjoy it and ask some questions :)*
I started my Amazon FBA journey like most new sellers. I could only list products in ungated categories like sporting goods, toys, home, kitchen, etc. As I sourced, I scanned items in other categories and soon realized, I needed to get ungated . First, I became ungated in Health and Beauty and thought this is absolutely my favorite category because the items are usually small so they are easy to prep and ship. I soon decided to get ungated in grocery but realized after the best way to profit is to create multi-packs. For me, that was too much work.
I was planning on getting ungated in shoes and clothing last year but had put off creating the flat files necessary to get ungated in those categories. While I’m not adverse to flat files since I’m a data scientist by training, I just had a hard time finding the time to go through the ungating process. I was about to use a service when I saw Chris Wilkey post in the Facebook group that Amazon was doing automatic ungating in a bunch of categories. I quickly signed up for all categories and started sourcing shoes which is now my favorite category!
Many people have heard about the benefits of selling in the shoe category and they are all true. The best part of selling in the shoe category is low competition and high average selling price. The latter, of course, can be a barrier to entry for some because a high average selling price usually means a higher cost to purchase. If you have the capital, however, I highly recommend selling shoes.
The downside to selling shoes is the amount of returns. My experience so far has been the return rate is 15%. This is very high but most shoe returns go right back into inventory so you don’t experience a loss except for the $4 return fee.
Other than returns, there really isn’t a downside to shoes. In fact, I’ll give you an example of my experience for the last 30 days. One thing to note is I haven’t been selling shoes for very long as I was just ungated in November.
The statistics are for 30 days from with 75 pairs of shoes sold.
Average Sale $92
Average Cost of Goods $31
Total Amazon Shoe Profit $2,464
Average Profit $33
Average ROI 116%
You can see the ROI is excellent so even if you are getting charged $4 per return, the ROI more than makes up for this on shoes sold.
Besides the overall numbers, I also did an analysis of rank when I purchased the shoes and number of reviews when I purchased the shoes.
This is the rank of the shoe when I purchased it. Many people like to buy shoes at a rank of < 30,000 because they feel it results in a faster turn. As you can see, only 41% of the shoes sold had a rank < 30,000. In fact, I sold more shoes in the 30,000-100,000 rank range.
Did the shoes in the < 30,000 category actually turn faster? On average they did but the difference was small. Shoes ranked <30,000 sold in 31 days on average while shoes ranked 30,000-100,000 sold in 37 days on average.
I believe the reason for this is because the shoes ranked less than 30,000 have a lot more competition than those ranked higher so although the velocity is higher, more sellers means it takes awhile to sell.
This table represents the number of reviews when I purchased the shoes. While some people like to see at least a couple of shoes, I made purchases when there were no reviews. This occurred often when I purchased a show ranked 30,000-100,000. In many cases, I saw there were a lot of out of stock shoes so even if there were no reviews, it looked like the shoe was selling so I made a purchase.
I know my data is sparse currently for this type of detailed analysis, but now I am collecting this data on a regular basis so I’ll come back with an update in the future to see if these trends hold.
As I mentioned at the beginning of the article, shoes are now my favorite category and clothing is a close second.
If you have any questions, please leave them in the comments below!