Selling Gourmet Foods on Amazon and eBay

A recent article in the Auction Bytes blog was about Amazon sellers selling expired foods on Amazon, and asked the question: “should food products be sold on Amazon at all?”  I suspect most sellers who violate this policy are Merchant Fulfilled sellers who buy from flea markets and other non-professional sources.

For FBA sellers, Amazon’s rule is any product you send to an Amazon warehouse must have at least 90-days remaining sell-by dates. Once an item reaches a 50-day sell by date it will be destroyed (see below for details).

We sell gourmet food items in highly niche markets –and it is one of our best-selling and profitable categories.  Here is how we go about it:


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The Legal Stuff

This post contains statements and claims relating to how much money one can make using these methods. Please understand that these are estimates and projections. The exact amount you can make will depend on your talent, your experience, and how hard you work at it.

New Federal Trade Commission (FTC) regulations  require that if I state any amount of money I have made, or someone using these methods has made, then I have to state the “average” amount of money that everyone who read this blog post made.  Well, as you can imagine, I would have no way of knowing that!

So to comply with the law, let me say that although myself and other people have made differing amounts of money with these methods:  “The ‘average’ person who read this post made less than one-cent ($0.01).”

I have no way of knowing if you are ‘average” or not. So as you read examples about the amount of sales and money made, please keep that statement in mind.

All websites and URLs in this post are current at the time of publication. However, websites change, may be taken down, or moved. The publisher and the author are not responsible for the content contained in any website mentioned or featured, nor shall they be liable for any loss or damage arising from the information contained in this post. As with anything you do in life there is no substitute for good judgment.

This book may contain links to websites that may offer products and/or services for sale. Some of these websites pay me a commission if you make a purchase through my link. However, I wish to assure you that I only recommend products and services that I use, or have used, and ones that come with a complete refund. If you ever have difficulty getting a refund from any product I recommend, please contact me and I will assist you. My policy on affiliate links is: “If I wouldn’t recommend it to my mother or my sister I won’t recommend it to my readers.”

Amazon, eBay and the Amazon & eBay logos, and any other logos are the property of those companies. All references to Amazon and other trademarked websites or properties are used in accordance with the Fair Use Doctrine and are not meant to imply that this book is endorsed for advertising or other commercial purposes or properties.


 

Introduction

The Gourmet Food category on eBay & Amazon is huge and growing.   This is an excellent niche for a small seller with limited start-up funds.  There are several ways to source food items.

  • Retail Arbitrage – buying from local stores such as Trader Joes, Supermarkets, Sam’s Club, Costco and Big Lots, etc.
  • Buying from local suppliers at Farmer’s Markets and Street Fairs
  • Buying from local Food Distributors
  • Create your own food product

Locally Sourced Gourmet Foods

I have written before about how I negotiate exclusives on eBay and Amazon thereby insuring no competition for the buy box.  One of the easiest products to do that with are gourmet food products that you find locally from small entrepreneurs.  They can be jams, cooking sauces, hot sauces, packaged nuts or trail mix, jerky, spice mixes, honey, olive oil, dried mushrooms –almost anything that is packaged, bottled and not fresh or frozen.  (I look for items with very long expiration dates)

Farmer’s markets are known as the place to find fresh, local produce –but almost every farmer’s market I visited there have been several vendors selling locally-made bottled or packaged food items.  I have also found packaged/bottled food vendors at street fairs and flea markets.

The idea is very simple.  You approach the vendor and ask if they sell wholesale.  If they say yes (and most of them will), you offer to be their exclusive rep on eBay and Amazon.  You could offer to do it on consignment, but I prefer to actually purchase the product in case lots and sell it myself.  And most vendors will not be interested in consigning product without cash up front.

Here are just a few of the products I have found locally that I am now selling on eBay and Amazon:

 

I honestly don’t know why, but for some reason buyers will pay insanely high prices for gourmet food items on Amazon, when they could find them locally for much less if they just shopped around.

At the moment I have a total of 30 different products from 8 different local vendors on Amazon and I am also selling seven of the items on eBay.  Why only seven?  I tried all the products on eBay and only seven of them sold after several attempts – but those seven products do fairly well.

Retail Arbitrage

This is nothing more than buying from local retail stores such as Wal-Mart, Big Lots, Costco and Sam’s Club and Trader Joes and turning around and selling them on Amazon.  I know some folks believe this doesn’t work but it does – I have done it.

Look at these this next  screenshot.  I did a search on Amazon for Trader Joes

The first page (1-16) showed the top-selling items for Trader Joe’s products.

 

Buying Wholesale from Local Food Distributors

Every large city and most medium-sized cities in America have local food distributors.  The best way to find them is to Google “food distributor + name of city.  For example, I googled Food distributor Pittsburgh and got the following result:

And that was just the first page of results.  The listings went on for several pages.  Once you get results, call them and ask what type of products they carry.  If they sell meat , or other perishables, then thank them for their time and move on to the next on. (NOTE:  Their phone number will usually listed under the Contact Us section of their website.

The idea is to contact them and find out what lines they represent.  Then look up those lines on Amazon and decide what to buy.

One thing you need to know about buying from food distributors is many of them usually ship freight –not by UPS.  So you do need a place that will accept freight shipments for you.  In our town, we have a U-Haul storage locker place that does that for us for a small monthly fee.

 

Selling Strategy

Notice that in all of the listings, I am selling two or more of each product.  The reason for that is so I make a larger sale.  Remember that two of Amazon’s FBA fees are the $1.02 pick & pack fee and the $1.00 order-handling fee (That totals $2.02).  If I were selling one bottle of the Sesame Ginger sauce for $9.99, those two fees would represent 20% of my selling price.  But at $19.99 for two bottles, it’s only 10%.  I have some products where I take this a step further and sell three, or even four, of each to kick up the price thereby increasing my margins.  My goal is to get my price point as close to $20 as I can.

Finding Out What Sells

Besides selling locally sourced foods, you can also source gourmet food products from food distributors.  Just Google gourmet food distributor and the name of your city.  For example: Seattle gourmet food distributor.  This will bring up both large and small distributors in your area.  Some of the larger ones will not work with you, but most of the smaller ones will. I have two such small distributors here in Seattle near where I live that I can buy from in one-case lots and they ship right to my door.

It’s easy to find out what is selling on Amazon.  Of course, if you have a specific product you want to check you can just type it into the search box.  But if you want to know what the best selling products in any category are, just select the category and leave the search box blank and hit Go.

I did this for Gourmet Foods and discovered that where Amazon used to just list the top 100 best selling items in the broad category of Grocery & Gourmet Food, they are now delivering up a selection page, where you have to select the sub-category of food item you want to view.  This makes it easier on the shopper, but it really sucks for doing seller research.  Now you have to click on all the sub-categories to view the best selling products.  Anyway, I did this. I clicked on the sub-category of oils (since one of the products I sell is olive oil) and got this result.

Amazon always serves up their search results to display the best-selling products that relate to the search term a customer types into the search bar.  As you can see 5 of the 6 top selling oils are Coconut Oil and the other one is Walnut oil.  So guess what I just ordered from my local gourmet food distributor in Seattle?  I am waiting for my first shipment of Coconut oil. (The listing for Walnut oil is mine as I am already selling it).

As for eBay, first browse the Food & Wine sub-category, which is under the main category of Home and Garden.

 

This will show you what others are selling, but not how well the product does.  But it’s a good place to start to get a feel for what is working on eBay and what, if any, competition you may have.

Once you have a product in mind that you can source locally, type that into the search box.  I did this for my smoked tuna product and got about 6 results. But then I did a completed item search and not one had sold.  So, I still may try a listing just to see what happens, but if I don’t get any bites, I won’t waste any more money on listing fees.  The other tool you want to use for eBay is Terapeak.  Terapeak is a third party research tool that can tell you what items are selling, which are the best items selling by category, the best keywords to use and the best form of selling strategy. Terapeak is optimized for eBay but I find the results correlate to Amazon quite well.

 

Things You Need to Know

Licenses – You do not need any special type of license to sell gourmet food as long as it is already in a retail package.  You only need licenses if you are manufacturing or bottling the food.

Sales Tax – One of the big advantages of selling food is that practically every state in the US exempts food from sales tax.

What You Cannot Sell – Amazon has a restriction on glass jars that contain liquids that are larger than 4-ounces (volume – not weight) being shipped to Amazon.  So, for example, if you found a locally made hot sauce that came in 8-ounce bottles, you can sell them merchant-fulfilled, but you cannot send them to FBA.  Amazon has had this rule a long time but was not enforcing it.  They now are, so I am in the process of recalling some items I have in FBA and changing them to merchant-fulfilled. (NOTE: This restriction has recently been changed to allow up to 12-ounce bottles as long as they are doubled sealed, such as with shrink wrap.)

Shipping – One advantage of sourcing locally is that you can simply arrange to pick up the product at the Farmer’s market or drive to the supplier and pick it up.  This is a real advantage, as some products such as sauces tend to be heavy and costly to ship.  If you buy from a distributor, then you will need a commercial address to ship to.  This can be a mailbox rental place or many storage locker and/or U-haul places will do this for a small monthly fee.

Pricing your product – As I mentioned earlier in the article, both Amazon and eBay buyers will pay high prices for gourmet food products.  This is truer for Amazon if you use FBA, because of free super-saver shipping on items over $25.  When I find a product I want to sell, my rule of thumb is 1/3rd for Amazon, 1/3rd for product cost and 1/3rd for me.  So if your product cost is say $6, then you would want to sell it for $18.

Expiration Dates – Expiration dates are not required by law in many states but are considered good practice in the industry.  Amazon announced a policy in August 2012, that all food items sent to Amazon FBA must have an expiration date at least 90-days out, and once a product reaches the 50-day mark, Amazon will pull and destroy the inventory with no reimbursement to you.  (Amazon will, however, move the inventory to unfulfillable for a couple of weeks to give you time to submit a removal request before they destroy it).

Products that can melt – You have to be careful with any product that can melt at high temperatures.  Amazon actually has a policy regarding chocolate.  Amazon will not accept any chocolate products into an FBA shipment during the summer months.  But products can melt at other times.  (I once had a chocolate product shipped to a Phoenix, AZ, warehouse in January,where it apparently sat on a loading dock in the sun for most of a day) Arizona sunshine can still be hot even in January.

Dietary and Allergen-Free Claims Policy – Any dietary or allergen-free claims (such as Organic, Kosher, Gluten-Free, Dairy-Free) must also be present on a products packaging in order to be listed in the title and/or on the product detail page.

Price Per Unit (PPU) Data Policy – As announced in October 2014, accurate Price Per Unit (PPU) data must be provided for all new product listings. For more information, see How to determine Price Per Unit:
https://sellercentral.amazon.com/gp/help/201618190

 

Packing and Shipping

If you are selling a single item, you can just place your unique product label over the existing UPC codes and pack all the items in a well packed box packed in such a way the items will not break in shipment.

If you are bundling items, what I like to do is wrap each item in one layer of bubble pak, wrap a couple layers of shrink-wrap around them and place them in a zip lock bag.  Then I put my label on the zip lock bag. If you want to go a step further, you can put them in a box, seal the box and place your label on the outside.

  • Make sure ALWAYS cover any existing bar codes on products with your generated bar code On the shipping boxes , use a heavy black marker to mark through any bar codes.  If you fail to do both of these things, Amazon may credit themselves, or a different seller
  • Do not use loose Styrofoam peanuts in your shipping boxes, as Amazon does not allow this.  This includes putting your peanuts in a zip bag and use them as void fillers in your boxes.
  • Amazon has a service whereby they will label items for you.  NEVER USE THIS as Amazon warehouse workers often make mistakes.

Conclusion and Final Advice

Gourmet Food is a great little niche that anyone can do.  I know the final values are not that high, but you can make some excellent margins.  On most of my items, I make between $7.00 to $15.00 profit after shipping and Amazon FBA fees.  But the quantities I sell are excellent.

Here is an example – Look again at the White Lightening Hot Pepper Sauce that I sell for $16.99. After FBA fees, my net on that product is $13.25.  My cost on the two bottles is $3.44 – so that is a profit of $9.81 on each sale. That is almost a 300% markup.  During the holiday selling season from November to December, I actually raised the price to $17.99 and completely sold out.

 

 

Here is an olive oil product I sell where my cost is $14 for two bottles and I am selling them for $39.00.

 

My net is $30.03 after shipping and fees, which is a profit of $16.03 per sale.  This product sells about 4 to 5 per week –more in the Fall, as we get close to the holidays.  In last year’s run-up to Thanksgiving, I was averaging over ten sets per week and we were completely sold out by Christmas.

Those are two of the products I am now changing over to merchant-fulfilled because of the aforementioned FBA 4-ounce rule.  They were still available at Amazon when I took these screenshots.

I have been showing you Amazon listings so far, but here is an example of an eBay listing for one of my products:

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