Selling on Amazon can be a lucrative business opportunity. However, to set yourself up for success and ensure a profitable venture, you need to carefully consider what you want to sell - and where to buy it in bulk.
With millions of potential customers at your fingertips, it's essential to understand the steps involved in effective product sourcing, as well as the nuances involved with various Amazon business models.
In this article, we’ll discuss how to find and select the right products. We’ll also provide you with tips for identifying high-quality suppliers.
Key Takeaways
- Sourcing the right products and suppliers is vital for a successful Amazon retail business.
- Understanding the steps involved in product sourcing and adapting to Amazon's business models ensures smooth operations.
- Conducting thorough research, being prepared, and selecting the appropriate suppliers are key aspects of running a profitable business.
What is Product Sourcing?
Product sourcing is the process of finding and acquiring products to sell on platforms like Amazon. When sourcing products, you are essentially looking for the perfect balance between quality, supplier reliability, and profit margins.
Let's break down the key aspects of product sourcing for Amazon.
- Research. Before you can start sourcing products, you must conduct in-depth research. Identify your target market and product niche to determine what kind of items will be profitable and in demand. You also want to closely analyze your competition to determine pricing strategies and areas of opportunity.
- Find the right supplier. Once you've identified your product niche, you'll need to find a suitable supplier. Three common options are:
- Wholesale: Purchasing large quantities of products from manufacturers or distributors at a discounted rate.
- Private Label: Customizing a generic product with your branding.
- Dropshipping: Partnering with suppliers to ship orders directly to buyers, eliminating the need for inventory management.
Keep in mind factors such as shipping times, communication, and returns policies when selecting a supplier for your business.
- Cost management. Next, you want to negotiate the best price when purchasing products, without sacrificing quality. Be mindful of additional costs, such as shipping, Amazon fees, and customs duties, to ensure a lucrative profit margin.
- Sample products. It's essential to request samples from your suppliers to ensure the products meet your quality standards. This will also allow you to gauge the shipping times, packaging, and overall customer experience.
Why Quality Matters When Sourcing Products
Your product sourcing decisions directly impact your brand's reputation, customer satisfaction, and ultimately, your ability to generate a profit. Here’s why Amazon retailers need to prioritize quality:
- First impressions matter. When customers browse through Amazon listings, they form initial opinions about products based on the quality of images, descriptions, and reviews. By sourcing high-quality items, you can create a positive first impression that entices buyers to learn more about your offerings and encourages them to make a purchase.
- Greater customer satisfaction. By offering top-notch products, you will receive higher customer satisfaction rates. Satisfied customers are more likely to leave positive reviews and ratings, directly influencing your sales and rankings on Amazon.
- Fewer product returns. A lower rate of product returns signifies better quality products. This reduces the time and resources spent on processing returns and refund requests.
Additionally, Amazon values sellers who prioritize quality and rewards them with better visibility in search results. This increases the possibility of potential buyers finding your products and purchasing from you.
A Two-Step Approach to Finding the Best Products to Sell on Amazon
Step 1 - Research Products to Sell
Understand Your Customer's Preferences and Needs
To find the best products to sell, you must first understand your customer's preferences and needs. Put yourself in their shoes and think about what kind of products they would benefit from. Consider factors such as:
- Demographics: Age, gender, location, and income.
- Interests and hobbies: What are their preferences and passions?
- Needs and problems: What challenges do they face, and how can your products help them?
By better understanding your target audience, you can also identify the most relevant keywords for your product research.
Use Amazon's Tools
Amazon offers various tools to help you research and identify potential products. Some popular ones include:
- Amazon Best Sellers: This list displays the top-selling items in each category. It can give you an idea of what's popular and in high demand.
- Amazon Movers & Shakers: Here, you'll find products that have seen significant sales growth in the past 24 hours, which can reveal emerging trends.
- Amazon's 'Customers Also Bought' section: By browsing items similar to your desired product, you can get an idea of other related products that may sell well.
Using these tools, in conjunction with relevant keywords, can help narrow down your search.
Read Product Reviews to See What's Missing
Analyzing product reviews can provide valuable insights into what customers like or dislike about existing products. Pay attention to recurring complaints as they may indicate a gap in the market that your product can fill.
For example, if you notice several reviews mentioning that a specific item is too small, you might consider offering a larger option.
Turn to Google and Reddit
Finally, utilize other resources outside of Amazon, such as Google and Reddit, to broaden your product research. Conduct searches on:
- Google Trends: This can give you an overview of the popularity of specific keywords and help you identify potential trends.
- Reddit: Search for relevant subreddits and look for discussions about products and customer experiences. This can give you a better understanding of what consumers want and need from the products you sell.
Step 2 - Start Your Supplier Search
Do Your Homework
Start by making a list of potential manufacturers and suppliers, focusing on their reputation for quality, reliability, and timely shipping. Investigate their production capabilities and whether their inventory can match your demand. You can use resources like Alibaba, Global Sources, or Thomasnet for this.
Contact Potential Suppliers
Once you have a list of potential suppliers, start reaching out to them for quotes. Compare their prices, shipping terms, and minimum order quantities. It helps to prepare a spreadsheet to track and compare these data points. Lastly, don’t forget to inquire about their turn-around time to make sure it's compatible with your schedule for product testing and launch.
Sample Before You Buy
Before committing to a large order, request samples from your shortlisted suppliers. This allows you to verify the quality of the products and assess their packaging. It is essential to ensure that the products you receive meet your expectations and that the supplier is capable of providing consistent quality.
Check for a Product-Market Fit
Compile a list of key features, target price range, and desired quality level for your products. Next, analyze whether there is a demand and need for your product in the market. This can help you make better decisions regarding suppliers and inventory.
Test with Real Consumers
Once you have settled on a product and supplier, run a pilot test by offering the product to a few real consumers for feedback. This helps identify any potential issues or improvements that might be needed. Address any concerns that arise and implement improvements before investing in large-scale inventory and shipping efforts.
Amazon Business Models to Consider
Wholesaling
In wholesaling, you purchase products in large quantities directly from manufacturers or distributors at a discounted price and then resell them on Amazon.
To succeed in this model, focus on finding reliable suppliers and negotiate better deals to increase your profit margin. Keep in mind that Amazon FBA can be ideal for managing inventory, storage, and shipping using this business model.
Arbitrage
Arbitrage involves sourcing products from retail stores or online retailers at a lower price and then selling them on Amazon for a profit.
This model typically requires a lower upfront investment, but you need to be diligent in identifying profitable deals. Remember that both online and retail arbitrage strategies can work, depending on your local opportunities and personal preferences.
Private Label
With private labeling, you create your own brand and sell products manufactured by others. This involves selecting a product, identifying a supplier, and adding your branding to the product.
A key benefit of this model is the ability to maintain control over pricing and your brand's identity. Utilizing Amazon FBA can streamline fulfillment and allow you to focus on growing your private label business.
White Label
White labeling is similar to private labeling, but the products you sell are generic and can be sold by multiple sellers. In this model, you source products without branding and add your own packaging or labeling.
Despite the similarities, white labeling provides less control over the production process, and you might face more competition compared to private labeling.
Direct Sourcing
In direct sourcing, you work directly with manufacturers to create a unique product. This strategy offers more control over the design, materials, and features of your product but also requires a higher level of investment.
Developing strong relationships with your manufacturers and incorporating Amazon FBA services can help streamline your direct sourcing business.
Dropshipping
Dropshipping involves selling products without handling inventory, as the products are shipped directly from the supplier to the customer.
Adopting this model on Amazon will require strong supplier relationships and prompt communication to ensure timely order fulfillment. Keep in mind that you shouldn't rely solely on dropshipping, as Amazon tends to prioritize its own FBA-fulfilled products.
Print-on-Demand
Print-on-demand (POD) revolves around selling custom-designed products, such as t-shirts, mugs, and posters.
With this model, a POD company only creates the product when a customer places an order. You need to focus on unique designs and target niche markets to stand out from the competition. Collaborating with reliable POD partners and integrating their services with your Amazon business is crucial for a seamless customer experience.
5 Tips to Help You Find the Right Supplier
Define Your Product Selection
Before you can find a supplier, you need to know what you want to sell on Amazon. This can be achieved by researching trends and identifying products with high demand and low competition.
Use tools like Google Trends, Amazon Best Sellers, and competitor analysis to make an informed decision. Create a list of potential products to source, keeping in mind that you will need to balance quality and price.
Try Reverse Sourcing
A useful strategy for finding suppliers is reverse sourcing, which involves identifying competitors on Amazon who sell similar or identical products to what you want to sell and then finding their suppliers.
You can use tools like ImportGenius to view the suppliers of your competitors, enabling you to potentially source from the same organization.
Prioritize Logistics
When finding a supplier, don't overlook the logistics side of the equation. Consider the following:
- Shipping costs: These vary depending on the distance, weight, and size of the products. Compare different suppliers to find the most cost-effective option.
- Delivery times: You want to meet customers' expectations of quick delivery, so choose a supplier with efficient lead times.
- Minimum order quantity (MOQ): Some suppliers require a minimum order quantity, potentially tying up your capital in inventory.
Understand Pricing
It's crucial to understand the pricing structure of different suppliers to ensure you can maintain healthy profit margins. Here's a quick breakdown of costs to consider:
Vet Suppliers Thoroughly
Finally, by vetting potential suppliers thoroughly, you can minimize risks and ensure you are working with a reliable partner. Here are a few steps you should take:
- Read through reviews: Check online reviews, testimonials, and any available information about the supplier's reputation.
- Request samples: Order product samples to assess the product quality, packaging, and shipping times.
- Verify documentation: Ensure your supplier provides all necessary documents, such as compliance certificates and invoices.
- Communicate clearly: Establish direct communication lines with your supplier and make sure they understand your expectations and requirements.
By following these tips, you can effectively find a supplier that suits your needs and helps your Amazon business thrive.
How to Price Your Products on Amazon
As we wrap up this guide on product sourcing for Amazon, it's crucial to underscore the importance of strategic pricing. Understanding your costs and competitively setting prices is key to long-term success on the platform.
This is why Profasee's automated AI repricer can be a game-changer. This tool helps sellers effortlessly adjust prices in real-time, responding to market changes, competitor actions, and consumer trends automatically.
With Profasee, you can maintain that critical balance between attractive pricing and healthy profit margins. Our customers often add 6 figures (and more) to their bottom line by simply using our software.
Why not book a free demo right now and see what Profasee can do for you?
Frequently Asked Questions
What are the most effective Amazon product sourcing methods?
There are several effective product sourcing methods for Amazon sellers. Some popular ones include:
- Retail Arbitrage, where you buy products from retail stores at a discount and resell them on Amazon;
- Online Arbitrage, which is similar to Retail Arbitrage but involves online stores;
- Wholesale, where you buy products directly from manufacturers or suppliers in large quantities.
Additionally, many sellers choose Private Label, which involves creating and manufacturing your own branded products.
Which tools do successful Amazon FBA sellers use to source inventory?
Successful Amazon FBA sellers often use tools such as Jungle Scout, Helium 10, and AMZScout to help with product research and sourcing. These tools offer features like product tracking, demand analysis, and sales estimates. Additionally, Keepa is a useful tool for tracking price and sales rank history, while Tactical Arbitrage is popular for online arbitrage.
How do beginners find profitable products to sell on Amazon?
Beginners can find profitable products by researching existing products on Amazon and analyzing their sales ranks, reviews, prices, and competition. Tools like Jungle Scout and Helium 10 can help with this process. It's also essential to focus on high-demand and low-competition niches and consider profitability factors such as product weight, size, and the fees associated with Amazon's fulfillment services.
What is the best approach for sourcing products in bulk for Amazon FBA?
When sourcing in bulk, you need to establish a relationship with manufacturers or suppliers, ensuring you receive the best prices and higher profit margins. You can research and contact suppliers directly or leverage B2B marketplaces like Alibaba or Global Sources. Remember to negotiate prices, confirm product quality, and verify supplier legitimacy before placing large orders.
Which stores and websites are ideal for finding items to sell on Amazon?
For retail and online arbitrage, major retailers like Walmart, Target, and Best Buy are good places to find discounted products to sell on Amazon. Online retailers like eBay can also offer discounted items. For wholesale sourcing, consider B2B platforms like Alibaba, Global Sources, or even local trade shows. Keep an eye out for clearance sales, liquidation deals, and end-of-season discounts at various retailers.
How can I identify the most profitable products to sell on Amazon?
To identify profitable products, focus on items with high demand and low competition. Use product research tools like Jungle Scout or Helium 10 to analyze sales data, reviews, and competition levels. Consider costs such as Amazon FBA fees, shipping, and product procurement to ensure you maintain a healthy profit margin. Additionally, look for trends and niches where there is growing demand yet limited supply, giving you an opportunity to establish and dominate a market segment.
