A Guide to Product Analysis: The Secret to Amazon Wholesale and Product Sourcing

Published on: Wed Feb 03 2021

Written by Tony Do

A Guide to Product Analysis: The Secret to Amazon Wholesale and Product Sourcing

08 - A Guide to Product Analysis The Secret to Amazon Wholesale and Product Sourcing
A Guide to Product Analysis: The Secret to Amazon Wholesale and Product Sourcing

Your Amazon Seller Central account is set up. You’ve established a separate bank account for your Amazon Business. You have decided the wholesale route is the business route for you. You’ve completed the mandatory and legal business tasks including acquiring your resellers permit. In this article, you will learn about product research 101, reverse sourcing wholesale, the fundamentals of the Amazon Buy Box, and how to scope out your competition.

First, you need to learn the fundamental methods of product analysis. When identifying potential products to add to your catalog, you need to ask yourself a series of questions. What makes a product have good sales performance? How can you know when a product is going to be profitable? Amazon selling should not be a guessing game. You certainly don’t want to blindly pick products and “hope” you get a return on investment (ROI). Fortunately, there are some seller tools and tactics that you can deploy to find the best, proven products out there and unlock profits.

Become the Ultimate Amazon FBA Seller with Reverse Sourcing Wholesale

First things first, you need to figure out which products have the most successful stories on Amazon. What does that mean? Well, you want to find branded products that are in high demand, are selling quickly, and have excellent product ratings. The key here is “branded products.” Brand name products provide their own marketing. Strong brands have established core values, customer bases, and name recognition. By utilizing brand name products, sellers have a higher chance of selling more products and increasing sales. Once you determine what products are doing well, move onto the next step which is to contact the brand owner of that product directly to set up a wholesale account so you can buy bulk products, build your inventory, and resell on Amazon.

A product with a good story is one that:

  • Sells hundreds or thousands of times each month
  • Has high product reviews (4 stars or more)

This is called reverse sourcing wholesale. Instead of creating a product, bringing it to market (or finding a distributor), and hoping it will sell, you’re finding an already successful existing product. Then you take that product, stock up on the same product, and resell the products individually (with the brand owner/manufacturer’s blessing). Reverse sourcing can be extremely helpful to small-time Amazon sellers to build their business and reputation over time. Small sellers can start with a small inventory and continue to build their catalog until they become a titan of Amazon selling.

As an Amazon wholesale seller, you’re volunteering to be a distributor for the product. That saves the brand owner time (and money). The more you can establish a strong buy/sell relationship with reputable brand owners, the more likely they will sell their products to you in bulk for your Amazon reseller business. And, if you continue to have a proven track record of good sales, the brand owner may even make you their exclusive or limited exclusive reseller! If you would like to learn more about wholesale sourcing and tracking stock from wholesale suppliers, check out our last article on “Super Tracking: Develop Your Own Superpower to Find Amazon Top Sellers, Products to Sell, and Wholesale Suppliers.”

Remember, business is all about relationships, so it’s vital to show your value proposition and build these relationships.

The Amazon Buy Box Unleashed

What is buy box and why does everyone want to win it? When consumers are browsing for products on Amazon, there is a section, add to cart, on the right side of their page that allows customers to place products directly into their shopping cart. If there is more than one seller in the product listing, who will take the market share and win the sales?

Amazon created a merit-based rotation system known as Buy Box. To “win” the Buy Box means the product you are reselling shows you like the default seller in the “add to cart” section, thus prominently placing it for consumers to see it right away and most likely purchase due to convenience.

This is what we call the Buy Box. To “win” the Buy Box means the product you are reselling appears in the Buy Box, thus prominently placing it for consumers to see right away and most likely purchase due to convenience. This is why all Amazon sellers should create an Amazon buy box strategy to try to climb the rankings. It is kind of like when you create a webpage and have all the right performance metrics and keywords for your page. Google’s algorithm bots pick up on your high performing website and when people search for things relevant to you, your page comes up in the top three search results or ranks on the search engine results page (SERP). The higher you rank, the more traffic and traction you are to get in sales.

The Buy Box is a great product research tool and a great place to start for product analysis. There you can see who the competition is for specific products. You can get a sense of seller feedback and buy box rate estimations for in-demand products. Sellers can in turn use this information as a growth estimation and to determine what products you may want to pursue to resell.

Scoping Out Amazon Top Sellers with Rank Tracking Tools

It is okay if there are 5,000 sellers for the same product. But, if there are about 50 competitive Buy Box sellers for that same product, it is an entirely different story. Determining which existing sellers are competitive will change the way you analyze products on Amazon. Once you’ve identified your competition, it is time to return to your personal business goals.

You can also use intelligent software solutions that allow you to track your products and your competitors to gain a profitable edge in the e-commerce marketplace. This should include Amazon market research software, product sourcing tools, and an inventory management system. One tool sellers can use for product analysis is Sellgo’s Profit Finder. The Profit Finder tool will enable new and experienced Amazon wholesalers to super filter winning products with key performance indicators (KPIs) including profit margins, ROIs, and more. After finding proven products with high sales potential, go back to the Buy Box and see how competitive the sellers are. Sellgo also offers the Product Tracker tool provides inventory insight so you know what items to resupply or drop products that are not selling. By using effective FBA tools and strategies to conduct product analysis, sellers can obtain valuable advantages that will help win buy boxes and create profit funnels.

Building Your Amazon Inventory and the Cost of Production

How much money are you willing to spend on your Amazon Business? Your limit will help you determine which kinds of products you should purchase and the quantity of inventory to purchase from the supplier. One aspect to note is that all wholesale manufacturers will be different and offer different price points depending on the quantity of your purchase. This is known as the product cost or the cost of production.

Be sure to factor in the cost of processing each unit so you can include that in your product pricing to ensure a return on investment. Some suppliers will factor in a Minimum Advertised Price Policy (MAP) or a Minimum Order Quantity (MOQ). If you don’t have the capacity or resources to buy the minimum amount from the supplier, this will greatly impact which manufacturers will be willing to source their product and the price per unit.

If you’re wondering how much inventory you should purchase when first starting out, we recommend at least 24-26 days worth of inventory. With that guideline, you’ll need to determine how much money you want to spend on your products from the brand owners. Note that it is perfectly fine and secure to start off with a smaller Amazon inventory and grow it over time. The best part about owning your own Amazon wholesale business is that you’re the boss! Take your time to make well-informed, conscious decisions. We discuss inventory management in more detail in our article on “A Beginner’s Guide to Selling Wholesale Products on Amazon: How to find “Winning Products”?”

Assemble Your Tools and Become an Amazon Business Seller

Remember, every reseller journey is going to be different for everyone. There are some electrifying practices you can emulate in your business strategy for the best results, but at the end of the day, it is up to you to choose the products that best fit your financial goals. The best Amazon third-party sellers take advantage of every tool in their arsenal and use them effectively. You can too. Check out Sellgo to start building your toolkit.

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