What Rank Do I Look for When Buying?

Out of all of the questions I get on Facebook, this is by far the most common (Number 2, if you were wondering, is I just made my first shipment and Amazon wants me to send things to 4 different warehouses across the country, what did I do wrong?).  First, a little background:

The Best Seller Rank of an item is a snapshot in time of how popular a particular item is selling in a particular category.  It is a number that ranges between 1 (absolute best seller in the category) to X (where X is the total number of items in a category).  These numbers change every hour and they reflect what is happening recently in an item’s sales volume.  So, if an item was on sale, it is going to have a lower (ie. better) sales rank.  If an item is currently out of season or out of stock, it’s going to have a higher (ie. worse) sales rank.

Because a rank is only a snapshot of current activity, it is subject to fluctuations and even manipulation.  For this reason, I prefer to almost ignore the exact rank that an item holds and try to envision an “average” rank at which an item sells. Thankfully, there are some tools that allow us to get a more historical perspective on rank.

Two options:

Keepa Chrome Extension — Overlays a chart on Amazon product pages that shows the price of an item over time,  the rank of an item, whether Amazon has been in stock, etc.

CamelCamelCamel — A website that allows you to look at the price and rank history of an item, as well as to set alerts.  CCC also has a chrome extension called the Camelizer.

In the picture above, the green line is the sales rank, the purple lines without shading are third party sellers, and the shaded region is when Amazon is in stock.  If we looked at this item on September 8th, we’d see that the item is about a 500 rank.  But, notice that this is really only an accurate reflection when Amazon is in stock and at $29.99.  When Amazon is out of stock and we’re selling the item at $50+, you can see that the rank is more in the 1500-2000 range.  On this item, it doesn’t appear to change much, meaning there is strong demand for the product at both price points, albeit higher demand when it is $29.99.  Nevertheless, if I wanted to consider the rank of this item, I want to think of it as a 1500 ranked product, even if I happened to look at it on September 8th and say #537.

So, Step #1, make sure you have an accurate rank.  (An important note here: We are talking about the Category rank.  Occasionally [or frequently, if you deal with electronics] you will come across a rank that is actually a sub-ranking.  Something that is #3356 in Pet Supplies > Fish & Aquatic Pets > Food is actually #390,673 in Pet Supplies.  If you happened to think that this item was ranked 3356 instead of 390,673, you’d get entirely the wrong impression.  So, with everything that we are talking about here, we are referencing the top-level, category rank.  If an item does not have a category rank [and assuming it isn’t an electronic item] then you can generally assume it is not a popular seller.)

Step #2, realize that rank is NOT the only factor.  This is the hardest thing to explain to newer sellers (and some who are not so new).  When I buy an item, I’m concerned with ROI, or Return on Investment.  To make this calculation, I need to know the Investment amount (how much I paid for the item), the Return (how much I profited), and the Time frame of the investment (10% in a month is obviously not the same as 10% a year).  Rank can help us make projections about that third point, but we cannot ignore the first two points.

In your mind, you need to visualize a see-saw where ROI and Rank sit opposite one another.  The better the ROI, the more willing you should be to tolerate high (ie. bad) sales ranks.  Conversely, the thinner your margins are, the lower (ie. better) rank you need to demand of your products.  This is intuitive if you pause for just a second.  I might have absolutely no desire to sell an item that makes a 25% ROI if it only sells once a month, but if I am going to sell 14 per day, then it starts looking pretty attractive.

Because of this, I can’t give some hard and fast rule.  However, I get asked for this so frequently that I feel compelled to provide some sort of general reference.  I think that the best way to do this is to look at what sort of rank I would accept at 50% ROI, 100% ROI, and 200% ROI.  This is NOT going to be exact (there are even more factors I haven’t mentioned.  For example, it is mid-September, should I favor a 30,000 sunscreen or a 30,000 sore throat lozenge? Since summer is ending and cold-season is coming, I’m probably going to prefer the latter.).  It’s also not meant to be a prescription for anyone else.  I have a business model that works for me, but my business model is NOT the end-all-be-all.  Finally, it’s not going to be exhaustive.  I’m not going to go through every single category; I’m just going to hit the major ones.  If you’ve been around long enough to sell Jewelry and have gone through the lengthy process of approval, you probably don’t need me to tell you what a good rank is.

** Note: Particularly with items like Shoes/Clothing that always have parent-child relationships (but other categories too), you have to be careful.  The rank applies to the parent item.  So, the more child listings there are, the more diluted the rank is for any one child ranking.  In other words, a 1000 rank shoe with 12 colors that each have 16 sizes is not nearly as good as a 3000 rank for a shoe that has 1 color and 6 sizes.  This can be hard to quantify, and it is just something that you get a feel for over time.  However, as a general suggestion, all else being equal, prefer items that have fewer child listings.  There’s a second caveat here.  You can’t just assume that all child-listings sell equally well.  In other words, not all variations equally contribute to a item’s rank.  Price and Popularity are major factors.  Believe it or not, the bright-yellow size 14 men’s casual shoe isn’t going to sell as many as a size 9 black shoe.  Again, this is something that takes experience and common sense.  I hesitated to even include shoe rankings in this chart, because I could do a whole other post on shoes.  You can probably expect a sequel!

I have a final note for you and then some resources.  This isn’t some chart that I have printed out and carry around in my wallet.  I just made it this morning.  In fact, if you dig through enough Facebook posts, you can probably find slightly different answers somewhere else.  This is just designed to give you a generic sense of things.  There are multiple factors, some of which are not quantifiable, that go into every purchase.  Over time, I’ve learned exactly what I want to see in an item in order for it to warrant a buy, and not all of those factors can fit nicely onto a cheat sheet.  In time, you’ll learn to do the same.  A year from now, you’ll be trying to explain it to someone else who can’t figure out why yesterday you wanted to buy the 60k item at 80% ROI and today you’re passing up a 55k item at 82% ROI.  They’ll press you for an answer, and maybe all you’ll be able to say is, “I don’t know.  I just have a bad feeling about that item.”  Our goal is to give you a starting point to which you can later add intangibles into the mix.

Some resources that might be helpful for you to create your own chart:
FBA Toolkit

JungleScout Rank Table

As Always, Best Wishes

Mike