If you are serious about FBA, you have to sell your own products. Retail arbitrage does not scale and takes too much time. In the hour it takes you to drive to the store (most likely buying clearance Frozen dolls) and back, I can find and contact 10 new suppliers.
The reason I can find suppliers so quickly is because I have a checklist in my head of what works and what doesn’t for fulfillment by Amazon. Here are the top mistakes I see rookies make when they are looking for new products to source and sell.
1. The first mistake I see made is not having a high enough retail price. The retail price needs to be over $20. Best case scenario the product has a retail price of $100 or over. If the product only sells for $20, the maximum profit you can ever achieve per item is $14 if you include fulfillment fees.
2. The second mistake rookies make is sourcing a product with a ton of moving parts and electronics. It is very hard to find a supplier who manufactures quality electronics. An on and off switch is the most risk I am willing to take when it comes to electronics. The more moving parts and the more electronics, the more there is a chance that something will go wrong. Products with moving parts usually have a lot of customer support that goes along with them, and I HATE talking to customers.
3. The third mistake rookies often make is entering a market that is too competitive. I cannot tell you how many times people have come to me wanting help to sell their “Meat Claws”
If you search Amazon now, you can find about 30 people who are selling the same exact meat claws with their own brand name on it. This is a super competitive niche that will most likely end in a race to the bottom. Stay away from products like this. There are soooo many other niches that are not competitive at all!
4. The fourth mistake I often see rookies make is finding a product with no complimentary accessories or products. You want to find a product that has many other products in the same niche. This will give you room to grow in the future. Once you have maxed out the sales velocity of your current product, you can expand in to complimentary products. This way your customers can buy multiple products from you at once since they all fit under the same niche umbrella.
The best way to do this is by finding a supplier who makes many products in the same niche. That way when you are ready to choose your next product you can work with the same supplier. This makes life much easier because they already have all your information and this speeds up the sourcing process. I have 1600 or so SKUs at the moment. My job would be nearly impossible if I had +1600 suppliers. Instead I have around 20 awesome suppliers.
In the end there are many other mistakes you can make while looking for suppliers on Alibaba.com, but if you can avoid these crucial four mistakes it will keep you from looking like a rookie.