There are a lot of factors that go into picking the perfect product. The most obvious is how well (fast) does it sell. But, beyond that, there are many other things to consider that affect profitability when selecting a product. So, what are some of the factors that go into selecting the ideal Amazon FBA product?
- Lightweight and Small – the perfect product would weigh less than 1-pound to fit the standard size guidelines. The smaller the size, the lower the FBA handling and storage fees. If the item is not oversize, the handling fees is $2.41 (For example, the handling fee on small Oversize is $8.13+ $0.38/lb. above first 2 lb).
- High Average Selling Price – The ideal product would sell for over $30 because all standard size items have a fixed handling fee ($2.41). If you sell an item for $9.99, that $2.41 fixed fee is 24% of your margin. But an item selling for $29.99, that fee is now only 8% of your margin.
Remember that the fixed fees become a lower percentage of your cost as the price of an item goes up. (See the example above). Although I sell a few items (very few) for under $20, the average price of all my items is closer to $40. Thirty percent of the items I sell on Amazon are priced over $75, and ten percent are over $150. Sellers should be sure that they understand the fees involved when selling on Amazon and using FBA, as Amazon customers get the same customer service on FBA orders as they do for actual Amazon orders. This means you could have more returns that when you fulfilled your orders yourself. Be sure to build a return policy is into your margins.
- Few Competitors – The perfect item is one where you are the only seller. This way you win the buy box every time. You can’t always find items with zero competitors, so what you want to find products that have as few competitors as possible.
- When Up Against Non-FBA Products – If you are the only seller in FBA, then it is much easier and more profitable to win the buy box (or at least the sales). This is a little complicated so read carefully. When Amazon selects who wins the buy box it is based on the total price including shipping. However, if the item is in Amazon’s warehouse (FBA items), then Amazon assumes the item will qualify for either Prime or super saver free shipping and considers your shipping price to be zero.
For example, a non-FBA seller is selling an item for $39 + $7 shipping (total $46.00). Since Amazon considers your FBA shipping price to be zero, this means you can price your item in FBA for $44.95, and still be well under his or her price and you will win the buy box as the lowest price seller