Posting Point
Finding the right inventory to run the Amazon FBA business is an essential element in every successful business. It is a complex process that will require FBA sellers to come to crucial decision-making.
Particularly, sellers need to choose their method of sourcing, locate trustworthy suppliers and study the latest trends in their products.
We’ve broken down these important decisions into five ways to source FBA inventory to help create your Amazon business and increase your profits.
1: Determine the Method of Sourcing
There are a variety of sourcing strategies for an Amazon FBA business owner can select from. Certain prefer using one approach or another, while others utilize an array of different strategies.
How you intend the inventory you purchase will decide the locations from which you’ll get items. 3 of the popular methods to source FBA inventory include:
- Retail Arbitrage
- Wholesale
- Handmade Products
Retail Arbitrage
The retail arbitrage strategy is ideal for the beginning stage of an Amazon seller who is getting started with its reputation and hasn’t yet established a significant base of customers.
The tactic of arbitrage lets you purchase discounted retail items which are then offered for sale on Amazon’s marketplace.
The process can be lengthy depending on the products being procured, but it also is a low-cost expenditure, since the products are purchased at a significant discount and then resold to make profits.
Amazon retail arbitrage could involve looking on the internet for sales on clearance and closeouts in addition to searching for auction items or thrift stores in person.
When you’ve developed a strategy to search for bargains and discover the most reliable products, then retail arbitrage could be a viable method of procuring FBA inventory.
It provides you with an understanding of the most popular products, price-based competitive models, and which products are most popular.
Another suggestion is to utilize Amazon pricing tools. These apps can guide you on how to price resales products in accordance with the demand from buyers and the average selling price that will allow you to remain on top of the game.
Wholesale
The process of sourcing FBA inventory via the Wholesale channel is comparable to selling retail as you’re reselling products made by other businesses.
But, purchasing wholesale typically involves sourcing inventory in greater amounts since there’s usually an order minimum for the products.
Wholesalers who choose to go the wholesale route typically source their products through online marketplaces like Alibaba and Aliexpress however the wholesale purchase can also be done in person too.
The advantage of buying in bulk is beneficial when you need to fulfill the demand for a product. It is also beneficial in testing the success of several different items to determine which is the most profitable.
Remember, however when you purchase an entire shipment of products that do not sell well, you’re in danger of having the excess that leads to high storage costs and possibly lower margins for profit.
Handmade Products
Making your items or working alongside someone else who has a product is another option to look into. Although this approach is becoming more popular with customers and is an effective option, however, it can take time to establish trust on Amazon as well as with customers.
Utilizing this method for sourcing is an application to Amazon’s Handmade section that has strict requirements. It doesn’t permit the sale of bulk items in the same way as retail arbitrage, as well as wholesale strategies.
You can offer and sell up to 40 items each month using a free Amazon FBA Account. This method can be combined with other methods to expand your offering.
2: Find Reliable Suppliers
The reliability of suppliers is vital. When you are sourcing FBA inventory, you need to locate a supplier who can deliver high-quality products on time.
A majority of vendors who are on the FBA platform work with suppliers from China because of the advantages of manufacturing at a low cost.
However, cheaper doesn’t always mean better. Certain items, like supplements for pets, as well as supplements and vitamins, are considered to be more trustworthy when they are made by the U.S. given the higher standards and vetting processes.
Trade shows and online marketplaces are also a great way to connect directly with suppliers and make sure that you have plenty of options regarding products available.
It’s also beneficial to look into areas that are closer than the U.S., such as Mexico.
Suppliers who are located close to the U.S. may have higher quality, speedier delivery times, and fewer limitations than suppliers who source FBA stock from China.
Whatever the location of the supplier’s location is, be sure you do thorough due diligence. You must verify your supplier’s legitimacy company and verify that it can provide all the appropriate business certifications in the correct place.
Also, request to see an example of the product to check the quality yourself. This will prevent you from purchasing large quantities of goods that may not be up to your expectations.
Furthermore, seeing the product yourself can aid in determining if the product is a potential trademark or patent infringement risk. The most important things to think about when looking for reliable suppliers include:
- What is the return on investment when selling the item?
- What’s the competition in this particular product?
- Are these items approved for sale?
3: Diversify Where to Source Products
Diversification of suppliers is as vital as diversifying the product range. Before you begin your research, make contact with several suppliers to evaluate prices, product quality, and logistical benefits.
Find the best options for your requirements and make sure you have a variety of options in case of unforeseen events that can lead to delays for the primary supplier.
4: Calculate Logistics Costs and Timelines
Another suggestion when you are sourcing FBA stock is to take into consideration how the supplier fits within your operational timeline.
What time will it take to complete orders? How long will it take to deliver? Is the vendor always on hand when products need to be ordered?
Consider the ways that these costs for shipping impact your profit. The shipping of items from another country can increase the cost of costs for shipping and freight which could not be the best choice based on the profit margins you wish to attain.
Furthermore, buying products from a different country takes time to clear customs. This could result in damaged or missing products en route.
While several international suppliers have proved to be reliable and reliable, it is important to conduct your due diligence before you choose a company and keep track of the timeliness and quality of the product.
Since you will not have any control over the goods since they’re delivered straight to the fulfillment center being able to monitor the delivery of your suppliers as well as the integration of information with Amazon’s systems for inventory control is essential.
5: Research Product Trends
A constant study of Amazon product trends is essential to anticipate the future needs for sourcing. If there are items that suddenly increase in sales, the competition is likely to be higher, which will affect availability, pricing, and timeframes for receiving products.
A well-organized inventory that is close to the top-selling items can limit the potential surplus of unsold products. This can reduce the cost of storage, packaging, and shipping products.
The outcomes of your product study may alter your methods of sourcing your inventory. When you expand your business and monitor the profitability of your business, you might decide to eliminate certain products or expand your inventory to provide new items.
You can change suppliers or increase your options. Be aware that what you like initially when you first start your FBA business might not work in the long run once your business expands.
Recommended Guide: How to increase sales on amazon.
