Do you ever feel like you have a love-hate relationship with Amazon? One day, you’re easily finding super profitable inventory and those “Amazon has shipped” emails are steady flowing. But, the next day you find inventory that you can’t sell or you are running into “issues” that are slowing down your sales volume.
I have felt the same way, and still do! And there are 4 particular scenarios that can make selling on Amazon frustrating. But hey, when Amazon hands you lemons, you can definitely make lemonade. So, let’s get to squeezing! 😉
1) Sold by Amazon.com
While a pretty basic, and increasingly prevalent scenario, it is worth note. Yes, even though Amazon has millions of sellers feeding their machine, Amazon.com also likes to take on some sales activity too.
Typically, Amazon.com likes to get involved when a product just kills it in sales, has an issue with supplier quality or has a reputation for counterfeits. So, they start selling the product too.
The issue here, is that listing against Amazon.com can hit your profit margin and slow down your sales velocity. That’s because Amazon.com’s seller’s metrics are PERFECT, so they will almost always win the Buy Box. Not familiar with the BuyBox? Check out this article.
The good news is, if Amazon.com is selling a product that you deem viable, you can feel pretty confident that there is a good sales history behind the product.
NEVERTHELESS, there are 3 ways for you to have success even when Amazon.com is selling.
A. Gunning For The Buy Box with the Lowest Price
Like I said, it will be hard to win the Buy Box. The more beefed up your seller metrics are, the better chance you will have to win the Buy Box.But even if you’ve been selling on Amazon for 10 years and have 15,000 5 star reviews, you still won’t outpace the Amazon machine.
However, you can typically win on price. If you price your product low enough you can snag the Buy Box right up. Depending on how much the product sells for, it could mean a $1 dollar or $10 difference.
For example, I just listed a product in the Home Improvement category for $113.95 and Amazon.com’s price was $114.38. While I was in the mini Buy Box at $113.95, Amazon.com was still winning the main Buy Box, which gets the majority of the sales.
But after lowering it down to $112.95, I am winning the Buy Box. (And I sold the product as I was writing this post.) So, it can be a matter of a couple of dollars sometimes. Which in this case, doesn’t impact me much because my profit margin on this product is over 80% to begin with.
Now, while undercutting Amazon can earn you the Buy Box, it can also start a “price war” which you won’t win. Yes, Amazon will eventually catch up with you and revise their price to win the Buy Box back and start racking up some sales.
B. Settling For the Mini BuyBox
I should mention that if Amazon.com is selling the product, you could price your product for a few pennies less and hang out in the mini Buy Box on the right side of the sales page and wait for one of those savvy Amazon shoppers who will take any savings they can get.
Although the vast majority of sales goes to the main Buy Box, you will still catch some sales hanging out there in the corner. AND, Amazon rotates the Buy Box too, allowing all sellers worthy of the Buy Box to get a piece of the pie. That is, if your price is competitive.
C. The Waiting Game
Do you know how much inventory Amazon.com has?
If you are selling a product that has a really strong Best Sellers Rank, and Amazon only has 5 units left in stock, just wait for Amazon.com to sell out and you will jump into the Buy Box in no-time.
I know, I know. There are many instances when the product pages do not show the number of units that the BuyBox seller has. And of course, you would think that Amazon would keep a healthy inventory of their products, but this scenario does happen.
And I have benefited from this strategy. Currently, I have a product listed for $189 and Amazon.com is selling it for $159. I’ve sold over 10 units of this product in the past 60 days, and my sales have come when Amazon.com runs out of inventory. (Which they seem to do often. Don’t forget, a good portion of the product we buy is discontinued by the manufacturer. So at some point, inventory will be fully depleted. Just a matter of time.)
For example, if Amazon.com has the lowest price, and the next lowest price after that is $15 higher, once Amazon.com runs out of inventory you can sneak into the BuyBox at the higher price and get some sales while Amazon is waiting to replenish inventory.
It really boils down to your Amazon seller’s philosophy.
Buy and Hold or Quick Flip? You can see find out more about these types of philosophies in our article “Why We Are Patient For Profit: Slow Flips Over Quick Flips.”
2) Restricted Categories
When you’re first starting out with Retail Arbitrage, it is inevitable that you will find products that you just cannot sell yet. That’s because Amazon has placed selling restrictions on categories like Beauty, Health & Personal Care, Grocery, Automotive, etc.
Amazon does this, because they only want truly serious and reputable sellers to be active in these categories. Items like Beauty Products and Groceries have even higher quality requirements. Amazon wants to be sure that the products sold aren’t already past their expiration date, haven’t been tampered with and aren’t counterfeit.
AND, this is something that you should be happy about. Why?
For most people out there trying their hand at Retail Arbitrage, they will see a restricted category and just pass entirely, instead of going through a few basic steps to get approval.
That means these categories are less saturated, and there is an amazing opportunity for you to rapidly grow your Amazon FBA business.
Sound interesting? Check out our method to getting approval here.
And so far, we have been approved in Beauty, Health & Personal Care and Grocery all by using this method. Not to mention the fact that we have earned over $1000 in profit in the first 2 months selling in these restricted categories.
3) You Cannot Sell This Product In New Condition
While you probably already had a grasp on the last 2 scenarios, this one you may not have encountered yet.
With certain products, Amazon will restrict ALL sellers from selling the product in New condition, except for Amazon.com. This very likely because there were an abundance of buyer complaints from the product they received or the manufacturer requested that Amazon be the only authorized seller of the product in “New” condition.
I found this out the hard way, kind of. On this one arbitrage run, I found 10 units of this power tool on clearance for $9.80, down from $69.99. It was selling on Amazon for $75, and my profit per unit would have been $50!!! Lastly, the rank was 12,000 in Home Improvement and under 100 in the Drill Drivers sub-category.
All frantic, making sure no one touched my inventory, I rounded up and bought all 10 of these power drills. $500 profit!!! Whatup!!! Excited as ever, I went home and started to process the shipment. And no sooner did I come to find out that I could not sell this product New. 🙁
Thinking that this must have been an error, I contacted Seller Support and they advised me that the Amazon sales team has the ability to place “condition” restrictions on select products. So they can basically take a product that is a top seller, for instance, prevent any other sellers from selling the product new, and they can dominate the Buy Box with a juicy price. Makes cents…
Blinded by the kick ass numbers and this mountain of clearance merchandise sitting in front of me, I didn’t think to look for the warning signs. Unfortunately, it said pretty clearly in my Amazon Seller’s app that “You cannot sell this product in new condition.” Yup, Amazon Seller Support was right.
Now, my first thought was to return these products to the store. But then I thought about it some more and here’s what I did.
First, I analyzed the Used-Like New competition. Even though there were almost 20 sellers selling the product Used-Like New, the lowest price Prime was $39.99 but they didn’t have any condition notes or photos. So, I listed my product at $44.99, took some photos of the condition of the packaging (which was brand new), added some comments about how this product was brand new, and sent 5 of the 10 units off to Amazon FBA.
I only sent 5 to start, because I wanted to see what sales would be like under the “Used-Like New” condition. Then, if I started to see some sales I would send in the rest. Or, if I wasn’t generating sales I would just return the 5 to the store.
The second thing I did was, Double Dip! No, I wasn’t chomping down a bag of chips with salsa. I mean, I also listed this product on eBay and utilized Amazon’s Multi-Channel Fulfillment to fulfill any eBay sales. If you’re not familiar with this strategy, I suggest you read this article about using Multi Channel Fulfillment.
Within 2 weeks, I have sold 2 on Amazon and 3 on eBay. And I have shipped the remaining 5 products to Amazon’s FBA warehouse.
Although this product won’t make me rich, my profit margin is $20/piece. So I’ll have made $200 off of this arbitrage batch. And my profit philosophy is to think in terms of the month and year, not transaction to transaction. Repeat this 10 times in a month and you’ll be a Thousandaire!!!
4) Not Currently Eligible For FBA
For certain products, Amazon will restrict you from selling it FBA. I’ve found this scenario arise for Hazmat products, certain perishables, fragile products, etc. If you’d like more detail, check out this article from Amazon.com’s seller help page. Hazardous Materials, Dangerous Goods, and FBA Prohibited Products
Most recently I found this bottle of Avocado oil that would have netted me $10 profit/unit and it wasn’t even on clearance. I guess Avocado oil isn’t as prevalent in other parts of the country as it is in California. (It’s our state fruit after all. Did you even know Avocado was a fruit?)
I imagine that they had a number of instances where this item was “warehouse damaged” and they decided to pull it from being sold FBA to avoid the issues. However, it doesn’t hurt to contact seller support because there are instances where the item is just “under review” and it may just be eligible for Amazon FBA sooner than you know it. (We’ve had the pleasure of this happening before.)
If it’s already a closed book on FBA eligibility, you’ll just be stuck selling Fulfilled By Merchant (FBM). While there is nothing wrong with this, Nessa and I are ALL ABOUT FBA (FBA vs FBM). We want to set it and forget it.
With FBM you need to ship each order as the product sells. And the only time I would consider this, is if the profit margins are exorbitant and the other factors are in good order. We’d also suggest you pass on these situations too and stick with FBA, unless you find that diamond in the rough.
What other kinds of issues are you running into with your Amazon FBA business? Post your struggles in the comments and let’s see if we can turn those lemons into lemonade!