Selling small, low-priced items: is it worth it with Amazon FBA?

lastreporter

9 years ago

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DWolfe 9 years ago

Lastreporter is dead on. By the time you list the product have Amazon ship them and Amazon takes their percentage you will loose money.

You may want to list them on E-bay but by the time you ship them and compete against others there. It may not be worth your time and effort.

You have to figure that out. You will need to move a lot of volume and make a profit at the same time. Your Competition may use key chains or other small items to get a lot of sales to boost them to a top rated seller.
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- Silas Hart 9 years ago
  
  I don't think there is profit for anything under $5, but I could be wrong.
  
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kjamesnv

9 years ago

It hard to make money on orders under $10. Yes, there are some exceptions but in general it's better to focus on products that have a decent profit margin.

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malia

9 years ago

I did sell an item that was under $5 on Amazon. I didn't do it for the opportunity, I did it because I would buy a case of 144 to send to FBA. It was a consistent seller and it was an accessory to a product line I was already involved in. I think my net, after fees and cost, was between 0.50-0.75 per unit. The items didn't require UPCs and they didn't require individual labels at that time. When Amazon switched to wanting labels, I stopped. It was an item already listed in the Amazon so I didn't see it being a big deal to pack a case for $70 profit.

In your case, I wouldn't consider it unless it met the above criteria.

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DSGDSG 9 years ago

I see folks selling products I too sell, on amazon fba for like $3. I just don't see how economically it's feasible. Even if they got the products for free you're still paying shipping to the warehouse, for labels, and storage fees, plus your time. Then add in their commission plus fees they charge per order? I can't wrap my head around it. I understands the concept of loss leaders but that doesn't apply for these products. How can it be worth it?
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- garyisonline 9 years ago
  
  $35 can be a sweet spot for things to sell because of the Amazon free shipping level non-prime.
  
  If you sell low cost items they could end up being add-on items, which means Amazon won't ship them by themselves.
  
  Loss leading doesn't really work on Amazon, because you don't control where the lead goes...and it's a good chance it'll be into the arms of another merchant.
  
  One idea is to take small items and bundle them into larger items. Granted for FBA you'll need to pre-wrap the bundle, cover any exposed bar codes, put a "ready to ship" sticker on each and then the FBA product sticker. Each unique bundle you create will need its own UPC code, which you can buy from a reseller pretty cheap.
  
  You will also need to be a pro merchant to be able to create ASINs.
  
  No matter what you do, you should always be asking if it's worth it. Keep those that are, fire those that aren't.
  
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Auctiondebteliminator

8 years ago

I'd agree with Silas.

Here's the thing, though. Amazon doesn't consider shipping as part of the price - and they often charge it when you're selling without your control. UNLESS you fill certain criteria.

On eBay, though, you can always do free shipping.

So, translate that into Amazon's philosophy against eBay's.

You CANNOT sell anything for a price you choose. It has to be what people are willing to pay. Is that 5 dollars? In total? Or is it 5 dollars plus shipping, say, 5.00?

That is 10 dollars then.

5 dollars plus 5 dollars in shipping is the same as 10 dollars and free shipping.

Unfortunately, Amazon doesn't publish sold prices (and I don't think they will since the prices fluctuate so much.)

eBay does - you're able to calculate the total market worth, thereby accurately predict the price it will sell for.

ALSO, you're able to calculate the total profit prior to listing.

I do not recommend selling small products. It doesn't matter the price people pay for an item so much as what is your profit on the items?

Also - your turnover isn't determined by the price either. It's the demand AND the rank.

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agmccall 8 years ago

there is a calculator on your sellers page in which you input the selling price of a product you want to sell and it will yell you how much you will receive from them minus all their fees (estimated of course) then you can see if it will be profitable or not.

For low cost items it might be better to sell a multi-pack or bundle

al
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- garyisonline 8 years ago
  
  One of our modules that sells product on Amazon just got double whammied in October.
  
  1) Amazon raised their commissions in our category. We don't get any more for that raise...it's just because they can...and could do it again any time they want.
  
  2) Two Competitors jumped on our detail pages. One didn't sell much so he thought he could get the buy box by cutting the price by 1/3. Yes a THIRD! He could have accomplished the same result by reducing his price by a penny, but he wanted to slit his own throat, I guess. Needless to say, he didn't sell any more. And now because of his freaking brain fart, whatever he does sell will be at a slashed price.
  
  Then guess who followed suit. The other competitor - he slashed his prices that same 1/3 to meet competitor number 1. Did it increase his sales? Nope...not a single one...but it did slaughter his profit too. Another genius amongus!
  
  Moral of the story --- Amazon and eBay are side marketplaces and should NEVER be used as your main source of business/income. NEVER EVVVVVER!
  
  Set up your own property that you control. Use other marketplaces as lead generators and places to get rid of your liquidation stuff. Bundle your stuff at $35 or more.
  
  And ALWAYS avoid working with (or for) or competing with morons by following them into their zombie cesspool.
  
  There you have it.
  
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DWaters

8 years ago

Personally I try to stay away from products that have a selling price under $20. Actually I prefer the over $50 range. It is just too much work for too little profit on the real low priced products. Of course if your low cost item is selling at a high volume that is a bit different. The bundling option makes a lot of sense. Perhaps bundle it with a product that it may go well with or sell in multiples such as a "3 pack", etc.

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MisterMusk

8 years ago

Amazon will pay you shipping credit of around $4 if I'm not mistaken. USPS postage is $2

So you'll make about $1 per transaction minus COSG.

If it's possible to somehow sell the item for more I'd do it if it's reasonable. If you can manage to make $1 net off each product, then focus on volume.

My 2 cents..

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Auctiondebteliminator

8 years ago

Originally Posted by MisterMusk

Amazon will pay you shipping credit of around $4 if I'm not mistaken. USPS postage is $2

So you'll make about $1 per transaction minus COSG.

If it's possible to somehow sell the item for more I'd do it if it's reasonable. If you can manage to make $1 net off each product, then focus on volume.

My 2 cents..

The labor alone doesn't justify the profit.

I don't want to work for 10-15 dollars an hour. I'd rather sell fewer high-profit items and do WAY better. I've been teaching this for years - mostly because it works way better than high-volume.

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Silas Hart 8 years ago

I do sell small low cost items with very little profit that I know moves very quickly. It's mostly to improve my metrics and keep them high. Amazon FBA cares a lot about things such as turn over rate, and I want to stay higher than 30% - which means if I have 100 items at a FBA Warehouse, 30 of them will sell that month. I maintain 50%, and that is very good as I have over a quarter of a million items at Amazon.

When I went to an Amazon meeting in Seattle about a month ago, they said the most commonly sold price on Amazon was $12.51 - people are almost at the point where they don't even think about making a purchase or not.

Also, another key factor in having high sales volume on Amazon is when you contact specific companies to become a distributor, they can approve you based on Amazon metrics if your statistics are good.

Lets say you are sourcing from thrift stores and garage sales though, and you find a mid-rank item that is selling for a $2.00 profit, I wouldn't touch it unless I had a lot of the same one and could somehow speed up the packing and shipping process, and if I spent very little on the items. If you have 1 or 2 of an item, and it takes you 8 minutes to place it down, grade it, scan it into you inventory, quickly describe the condition and price it, prep it for FBA, and place it in the box - then you are really only able to process 8 items an hour at the most this way. If your average profit is $1.00 per item, then you are looking at a whoppin' 8 bucks an hour.

But lets say you don't have thousands to buy higher profit inventory in bulk, and you are buying books for 25 cents a piece and you are making a $1.00 profit selling them on Amazon this way after all of your fee's, and your hourly income is at $8.00 an hour and you have a really high turn over rate and everything is selling within the first month - then I could maybe see doing this to yourself if you are planning on doing this for 12 hours a day, 7 days a week, for 3 months so that you can eventually build up the money you need to do other things. Otherwise, you are essentially killing yourself because chances are your turnover rate is not 100% every month and chances are, your profit is less than what you think.
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DavidScarpitta

8 years ago

Originally Posted by Auctiondebteliminator

The labor alone doesn't justify the profit.

I don't want to work for 10-15 dollars an hour. I'd rather sell fewer high-profit items and do WAY better. I've been teaching this for years - mostly because it works way better than high-volume.

I agree wholeheartedly. In no way can you survive in a US economy making $2-4 per sale after all the headache and work "even if you aren't stocking it yourself".

Laws of diminishing return are always in play.

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Silas Hart

8 years ago

Originally Posted by DavidScarpitta

I agree wholeheartedly. In no way can you survive in a US economy making $2-4 per sale after all the headache and work "even if you aren't stocking it yourself".

Laws of diminishing return are always in play.

In Profit?

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Jason Jacoby 8 years ago

Just a thought...maybe you can sell a much bigger item then put the keychain as a freebie? It seems that selling the keychain is not profitable because of the label cost and the profit that Amazon gets from your product.

The bottom line is that Amazon is a place where people are already coming/intending to buy something. When they search for something on Google, they searching for information about something...Google is a "search" engine. But Amazon, Ebay, etc, are places to buy, and they already know and expect that. If they are shopping for what you are selling on there, they will buy it if the numbers are right.
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