Educated Sourcing: 5 Things to Consider When Making Buying Decisions [Series] #2

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.

Last week, I shared the ins and outs of sales ranks. If you missed that post, you can find it here.  Today, I'll present how the number of sellers effects my decision to buy an item.

How many competitors are there on the listing?

When you are looking at the number of sellers on a listing, it is showing you your competition. How many other people are trying to sell that item? If you are competing against 2 other sellers you are more likely to get a share of the buy box more often compared to when you are competing with 20 or more. That's basic math.

Where can I find the number of sellers on a listing?

This used to be an easier task. Amazon used to prominently display the number of sellers on a listing. Now you need to follow a few steps to find the same information. You can find the number of sellers by clicking on the “New” Offers link in the “Other Sellers on Amazon” box below the buy box on most product pages. This will take you to a list of all of your competitors for that product both MF and FBA. You can also find the number of sellers on a listing by using any of the third-party scanning apps.

Do Merchant Fulfilled (MF) sellers count?

There are two different figures to look at here – the number of overall sellers and the number of FBA sellers. When I’m looking to sell an item I rarely look at what Merchant Fulfilled (MF) sellers have as their price. This is because there are usually shipping charges and longer ship times with these sellers – both things that many Amazon buyers are looking to avoid. Unofficially, they are not who Amazon FBA sellers compete with. Additional MF charges allow an FBA seller to price their item higher than the MF seller. An item with less sellers is usually a better buy because there is less competition and more opportunity to own the Buy Box.

It is also important to note if there are only MF sellers and no FBA sellers. This could mean that the item is classified as hazmat and can not be sent into Amazon FBA. You could choose to merchant fulfill it depending on the potential return. If the item isn’t designated hazmat it could also mean zero FBA competition and a better opportunity to name your price. You can find Amazon’s hazmat guidelines here.

When I'm looking at an item to sell, the number of sellers is one of the first things I look at. I can determine with some amount of certainty if the item is hazmat (you can confirm by using the Amazon Seller App). Then I can get an idea of how often the item is selling by looking at the sales rank (using CamelCamelCamel or more indepth research). If an item is selling once a day and has only a handful of sellers with a good rank (differs depending on category) then I am going to add it to my card. If, however, the item has a lot of sellers (50+) then I look at other factors before making my final buying decision.

Check back next week! I have more educated sourcing tips coming your way to help you make smart buying decisions in Q4 and all year round. If you aren't already signed up to get notifications when new content is posted make sure you sign up in the right sidebar.