If you’re selling on Amazon nowadays, especially as a reseller of other brands, competition has gotten tough. And chances are your profits aren’t like they would have been in the early days of Amazon when anyone could throw up a listing and have zero competition.
In the following article, we’re going to dive into 7 types of purchase criteria that should greatly improve your profits – and hopefully, help you choose more profitable ASINs over time!
So let’s dive right in.
1. Leverage Historical Data
Step one in choosing consistently profitable ASINs is to leverage historical data. In our amazon update tool, Sellonaut, we often look to 90-day historical averages to do this. Sales rank and profit should be consistent over 90 days for your best performers.
You can look into 90-day rank averages, 90-day ROI averages, or 90-day profit averages.
Historical data can be extremely powerful – as most sellers are looking in the now rather than the past. Taking a look into the historical data of an ASIN can show you if it’s consistently great, or only great for 3 or so days at a time. This will help eliminate risky items from your portfolio that are a rollercoaster in terms of pricing.
2. Check Review Counts
Lower review count items may carry a higher risk. You may want to go for items that have a higher review count, as they’re significantly more established in the Amazon ecosystem – in terms of ranks, sales velocity, etc.
Additionally, some lower review count items may be being advertised by a particular seller to temporarily boost the rank. If that seller ever hops off the listing, the ads will likely stop, leaving you with a stale inventory.
3. Check Review Ratings
Review ratings should also be a factor. Lower-rated items can result in unsatisfactory buying experiences for your customers, and of course, higher return rates.
Returns should 100% be factored into your purchase criteria, as even if an item has a great profit and ROI, its return rate may burn your profits over time. Try looking for items with a 3-star or higher rating.
4. Aim for Lower-Rank Items (if you’re a smaller seller)
If you’re small, keeping inventory moving quickly is especially important. Larger sellers often go for slower-movers over time to diversify their portfolios, but as a small seller, your job is to diversify your portfolio of fast-moving items. This ensures that you turn inventory at a faster rate and grow quickly.
Larger sellers are able to justify higher-rank items more often due to the lack of availability of lower-rank items (they’re selling all of them already!). But as a small seller, you risk being left with stale inventory, which quickly becomes a nightmare.
We recommend staying on faster-moving ASINs, and when the time comes to liquidate, liquidate. Keep your cash flowing as much as possible so that you can move onto the next opportunity. And of course, don’t wait for prices to go up for too long, as you need to remember the lost opportunity cost of what you could be purchasing.
5. Consider the Wholesale Price
Considering the wholesale price per unit is also a major factor – especially for smaller sellers. You may choose to go for higher-ROI, lower dollar amount items as a way to grow quickly on a budget. Consider limiting your wholesale price to under a certain price point.
These higher-ROI, lower dollar amount items allow you to diversify your portfolio over several faster-moving ASINs, without taking a huge cost hit. Additionally, if one of these ASIN’s profits goes down, you can quickly liquidate without taking as big of a loss if the cost per SKU was say, $100.
6. Ignore Retail Arbitrage
Retail Arbitrage carries its fair share of risks, and ultimately, your Amazon account isn’t worth risking. Consider opening legitimate wholesale accounts with legitimate brands and distributors to build a sustainable business over time.
7. Ignore Listings with Amazon as a Seller
Many experienced wholesalers will note that competing with Amazon as a seller isn’t worth it – ultimately as you will not be able to get the buy box within a reasonable percentage.
We recommend ignoring any listings that have Amazon as a seller in the last 90 days if you’d like to be extra safe. However, you can also consider listings where Amazon may have a low in-stock percentage as a potential way to lower your risk factor.
We hope these tips and tricks will help you grow over time as a seller, and ultimately, improve your profits!
David M. has been selling online for 10 years, and on Amazon for 5+. He the co-founder of Sellonaut, a UPC to ASIN conversion tool that enables resellers to automate their purchase orders.