Educated Sourcing: 5 Things to Consider When Making Buying Decisions [Series] #1

Not everything you scan will be worth sending into Amazon for resale. How do you know which items are?
 In this series, I'll discuss the top FIVE factors that I use to decide whether or not I purchase an item for resale. Making educated sourcing decisions is important for the growth and survival of your business. Incorrect decisions can lead to holding onto inventory for too long which can lead to limited capital to reinvest. This can start a snowball effect. So let's start off making smart buying decisions from the start using the information available at our fingertips.

In this post, I'll present the factor that most sellers gravitate to first when making a buying decision – Best Seller Rank (aka Sales Rank).

What is Best Seller Rank (Sales Rank)?

Amazon's Best Seller Rank (BSR) aka Sales Rank is a number that lets you know if there have been any recent sales of the item. It is only a snapshot in time. See below for a detailed example.

Where can I find the Best Seller Rank (BSR) for an item?

You can find the BSR of an item by scrolling down on an Amazon product page and finding the Product Details section (see below).

A BSR will show up ONLY if an item has sold recently. This is also a figure that all of the Amazon sourcing apps (Amazon Seller App, Profit Pandit, Inventory Lab, Scanpower) display prominently. There are also Chrome extensions that will show you the BSR when you doing research on Amazon. The one I use is AMZ Seller Browser.

10,000 Rank! WOO HOO! Clear the shelf! ….. NOT SO FAST!

Just because it's easy to find and reference, doesn't mean the BSR is the only factor you should consider. Let me give you an example of why.

The graph above is from the on-line tool CamelCamelCamel (CCC) and shows the sales rank history for Verde Olive Oil Hand & Body Lotion (2.5 oz) over 3 months. If you scanned this product on March 1 when the rank was 20,000 in Beauty you would be excited but if you scanned the same item a few days later the sales rank climbs up to 180,000. Not as impressive. In general, the lower the sales rank the better. However, sales rank is always fluctuating depending on the sales velocity of an item. Below is a chart that depicts how often this item sold over a 30 day period. Each spike represents one or more sales of the item.

Referencing charts like this to better understand the BSR of an item is important to make educated buying decisions. There are different plugins to add to Google Chrome so that you have access to CCC on your desktop. The one put out by CCC is called The Camelizer. Profit Bandit, Scoutify, and Scanpower also have buttons worked into their apps so that you can easily access charts like the one above when you are out sourcing.

Is a 50,000 BSR or less good in every category?

Sales rank means different things in different categories. This is because each category has a different number of listed products. For example, the current number of listings in Toys is 3,792,821 while the number of listings in Baby is only 764,000. An item ranked 68,000 in Toys is a decent buy (especially during Q4) while an item ranked the same in Baby isn't an item I would buy to resell based on BSR alone. I pulled these numbers from the Sales Rank PDF available on Stephen Smotherman's FullTimeFBA website. If you would like an up-to-date sales rank chart, head over to FullTimeFBA.com to download a PDF with all of the main Amazon categories.

For another example, let’s look at a 130,000 rank in clothing. This item would be in the top 1% of the category because there are over 18 million items in the category. Compare that to the Grocery category where an item with a rank of 8,000 is in the top 1%. That is due to the fact that there are only 847,000 items listed in that category. These examples show that determining what a good sales rank is in a category depends on the number of items being sold in that category.

While it is beneficial to know how a product ranks, it can not be the only piece of information used in making a buying decision because it is just a snapshot in time of the current sales velocity and it constantly changes. It’s only a small part of a the decision. Over the next several posts, I'll be sharing additional factors that are important to consider when making educated sourcing decisions.