Tag Archives: Inventory Lab

How to Find Profitable Inventory for Amazon FBA Sourcing

In the course of just one week (or even a day!), it is possible to come across thousands of items you could potentially resell on Amazon. Obviously, not all of those items are going to make the cut and end up in your shopping cart. Some items are a no-brainer purchase. Some are definitely NOT something you should buy for resale. And some items are kind of iffy – should you buy it or not?

How do you know whether to buy an item or just pass and move on to the next item?

For the rest of this article, I want to talk with you about how to find profitable inventory to sell on Amazon – more specifically, I want to show you my thought process when I’m deciding whether or not to buy an item.

First things first: I want to make sure you are using the right tools when you are sourcing. When I am doing retail arbitrage (RA), I always use the Scoutify app on my smart phone to scan inventory and see all the necessary numbers to make a smart sourcing decision:

  • Sales rank
  • Price
  • Fees
  • Profit
  • Number of competitors
  • Historical sales rank and pricing

Some sellers choose to use only the Amazon Seller app for doing RA, but I have found the info it returns to be incomplete. I prefer to have more information at my fingertips when I make a sourcing decision, so I use the Scoutify app that comes bundled with the listing software Inventory Lab.

OK, now that we have that covered, let’s look at my thought process when I’m making a sourcing decision. This process works whether you are doing RA, OA, wholesale purchasing, or any other type of sourcing for Amazon FBA.

I typically ask myself 4 main questions when I’m making a sourcing decision:

  1. What is the ROI? We’re all in this business to make money, so we want to make sure the items we’re sourcing have a good ROI, or return on investment. When you are first starting out at Amazon FBA, I recommend finding items that have a 100% ROI. If you have a higher percentage ROI, you have a lot more wiggle room to make some mistakes and adjust your price if necessary. As you gain more experience and confidence, you can begin sourcing items that have a lower ROI. Some sellers stick with 75% and above, while others stick with 50% or above. If you find an item that will sell very quickly, you can even go as low as 30% ROI. The main point here is to find items that have a good ROI, whatever the parameter is that you’ve set. If you can’t make money on your investment, you want to move on and look for different inventory items.
  1. Am I approved to sell the item? Some categories are gated for certain sellers, and some brands are restricted to sellers. The second thing I look at when I’m making a sourcing decision is whether or not I am approved to sell an item. If I can’t sell it, there’s no point in continuing to consider it. You can see whether or not you are approved to sell an item from within the Amazon Seller app, but Scoutify also has a link to show you whether or not you are restricted for the item.
  1. What is the sales rank? The sales rank of an item is how I can tell whether or not the item will sell quickly on Amazon. Amazon tells us the current sales rank of every item in their catalog, and we can see that information when we scan an item with a sourcing app. You want to make sure, though, that you are considering the average sales rank when you make a sourcing decision, not just the current sales rank. Amazon updates sales rank frequently throughout the day, so you need to know how much that sales rank varies over time. You can look at graphs on CamelCamelCamel and Keepa to figure out the average sales rank in a glance; both Camel and Keepa have quick links through the Scoutify sourcing app. I recommend checking out an Amazon sales rank chart to make sure you know what is a low or high sales rank for the category of the item you are looking at. Our blog offers a monthly updated sales rank chart for subscribers. You can use the chart to see if an item’s average sales rank falls in the top 1%, 3%, 5%, 10%, or higher for its category.If you’re interested in learning more about sales rank, we offer an affordable mini-course called The Reseller’s Guide to Sales Rank: Understanding Amazon Best Sellers Rank for Maximum Profits. I’ve included in the mini-course everything I know about sales rank to help you get started with making smarter sourcing decisions.I make my sourcing decision based on how high or low the sales rank of the item is. If an item has a low average sales rank, it is a faster selling item. If the average sales rank is high, the item will sell more slowly.
  1. What is the competition?Unless no one else is selling a particular item, you are going to have competition if you sell that item. There are two main competitors you need to consider: Amazon and other third-party sellers. When it comes to competing with Amazon, I generally choose not to buy items that Amazon sells. I always look to see if Amazon is in stock on an item or has been in stock recently. If so, I typically pass on that item unless I can price it significantly lower than Amazon. As a general rule, Amazon does not tend to share the buy box, and since the buy box is where over 70% of Amazon sales come from, I don’t want to risk buying inventory where I will never have a chance to get that buy box. To see the history of Amazon being in stock or out of stock on an item, I check the Keepa graph for the item through the Scoutify app. I also like to look at the other third-party sellers who are priced competitively on the item. I’m only interested in those sellers who are priced within 1% or 2% of the buy box price. Anyone priced higher than that isn’t truly going to be my competition.I want to make sure there’s a relatively low number of sellers priced competitively, so that I can be assured of getting time in the buy box. The higher the sales rank, the fewer competitors I want on the item. If the sales rank is lower, I am more willing to tolerate a relatively higher number of competitors – with a low sales rank, the item will be selling fast enough that I can still get time in the buy box and make my sales.

Those are my four main deciding factors when I am making a buying decision for my Amazon FBA business. As with anything, there are some exceptions that come up when I’m looking at this criteria. The more comfortable you are with your experience at making these decisions, the more you will be able to see when there are exceptions to the buying parameters you set up for yourself.

There are other less important factors I sometimes consider, as well, such as number of reviews and whether or not they are positive. I tend to use other factors in my decisions when I’m on the fence about a buy.

Do you use similar buying criteria as the ones I’ve covered above? Is there anything else you absolutely must look at before making a buy for your FBA business? We would love to hear your ideas in the comments!

How to Use Inventory Lab to Track Supplier Profitability

Inventory Lab, Track, Supplier, Profitability

Let’s talk profitability, shall we?

You’ve likely heard us mention that we use the Inventory Lab software package to streamline our process of listing inventory on Amazon FBA and for sourcing inventory through the Scoutify app. Today we want to share with you another feature of Inventory Lab that we’ve come to depend on: the ability to track supplier profitability through Inventory Lab reports.

175_InventoryLabSometimes it’s easy as a reseller to get caught up in the rush of sourcing for inventory, sending it in to the FBA warehouse, and seeing the pending sales in Seller Central. Honestly, isn’t the thrill of the hunt and the excitement of the sales one reason we all do this business?

But if we stop and dig a little deeper into those sales, would we still be as excited about the raw numbers? Sales numbers can be deceiving at times, and if we don’t take the time to look at and think about our actual profit, then we don’t really know if our business is as successful as we want it to be.

Inventory Lab allows you to enter the total cost of an item when you list it on Amazon. Inventory Lab then takes that cost, your sales price, and associated fees to calculate profit and return on investment (ROI). You can see the projected profit and ROI for a batch when you’re listing through Inventory Lab, but you can also run reports to show you the actual profit and ROI based on payments from Amazon for your inventory items.

Supplier Profits

The circled area is where you input the data to help Inventory Lab calculate supplier profitability. Some areas of the screen shot have been blurred out for business privacy.

Prices may change from the time you enter a batch to when the item actually sells – it’s fun to think about a batch having 150% ROI when you send it to the warehouse, but it’s more useful to look at the ROI when you are actually paid for the sale of those items. From time to time we need to stop and analyze our numbers and ask ourselves, “Am I making the ROI I want/need on my inventory? How do I need to tweak my business to get the ROI I want?”

You can take the profitability question a step further by entering not just your total cost for each inventory item, but also the supplier. Then the question becomes, “How do I need to tweak my sourcing from each supplier to get the ROI I want?”

We currently use the supplier profitability report in several ways:

  1. To track how much commission on sales we need to pay our helper who sources for us
  2. To track the profitability of our online arbitrage subscription services
  3. To track the profitability of our retail arbitrage sources
  4. To track the profitability of our wholesale sources

Enter Supplier ProfitsIn order to run the supplier profitability report, you will first need to enter a supplier at the time of listing an item. Inventory Lab comes with many retail sources already listed as options for supplier, but you can easily add your own. For instance, we use our helper’s initials as the supplier when we’re listing items she has sourced for us. We use other abbreviations for tracking each of the OA subscription services we use (e.g. Cyber Monkey Deals is CMD, Gated List is GL, OAXray is OAX, etc).

After this info is entered and enough time has passed to have generated some sales, you can run the supplier profitability report by following these steps:

  • Go to the top menu on Inventory Lab.
  • Click on Reports.
  • Choose Supplier Profitability.

(Note: You will see there are several other useful reports you can run to analyze your inventory’s profitability.)

The default selection will be for the last month, but you can click Advanced Search to choose more date range options. You can choose within the last 1, 3, or 6 months or the entire date range since you started tracking. You can also choose a specific date range from a drop down calendar.

Reports menu

Once you’ve pulled up your report, you can sort by supplier, units sold, revenue, % of revenue, profit, ROI %, and on hand (number of units currently on hand in your inventory).

Suppliers all dates

Depending on the circumstances, each of the fields might carry a different weight for you as a seller in your decisions for how to adapt your business to improve those numbers. Some sellers like to have 100% ROI on everything they sell; others have a business model that supports 50% or even 30% ROI. The point of running these reports isn’t to compare your numbers to someone else, but to look at your own results and see if they meet your own business model’s criteria.

Let’s look now at practical ways that we use our supplier profitability report.

  1. To track how much commission on sales we need to pay our helper who sources for us

At the beginning of each month, we run the supplier profitability report and look at the line with our helper as the supplier. We look at the dollar amount for the previous month under the Profit column, and we pay her commission out of that amount.

  1. To track the profitability of our online arbitrage subscription services

We also look once a month at the lines for each of our subscription services as the supplier. First, I look at the profit and make sure it’s more than the amount we’re paying for the subscription. This is an easy way to put solid numbers together to show yourself whether or not it’s worth it to pay for that particular subscription.

roiI also will look at trends as far as profit and ROI go. I don’t rush to cancel a long-standing subscription if I randomly have an off month, but I do look at whether a service seems to be deteriorating for me over time and make my decision whether to keep subscribing or not.

I also don’t rush to cancel a subscription if I think that I’m the problem rather than the service. For example, a while back I saw in my monthly report that my units sold and ROI for OAXray were not what I would prefer. A quick look back over my schedule for the previous weeks reminded me that I hadn’t been spending the same amount of time using OAXray each day as I had in the past. Of course those numbers are going to go down! If I’m not prioritizing my time to use the product as often as I should and actually send in items I sourced with it, the problem is me, not the product. So I made some adjustments to my schedule, made more time each day to use OAXray, and the numbers the following month were back up where I wanted them.

We’ve also started using Inventory Lab to track supplier profitability for retail arbitrage sources as well as our wholesale sources. Are there other ways you use the supplier profitability report in Inventory Lab? We would love to hear your ideas and experiences in the comments!

Inventory Lab Review – Why We Use Inventory Lab For Listing Amazon FBA Inventory

As Amazon FBA resellers, we’re all looking for ways to save time and money in processing our inventory. One of the biggest ways I encourage FBA sellers to save time by spending a little money is to use a third-party listing service, rather than listing your FBA inventory directly through Amazon Seller Central.

The fewer times you can touch a piece of inventory as you process it, the better. By listing through Seller Central…and then printing your labels on a sheet of 30…and then separating the items out into the various fulfillment centers, you are spending a lot of time touching each inventory item over and over and over again. This doesn’t include the time it takes to sort your products after you bring them back from sourcing, removing any stickers, and prepping the products with poly bags or shrink wrap.

The best way to streamline the listing process is to use a third-party listing software so that you can scan the item into the software, print and attach the individual label, and sort the item into the correct fulfillment center’s box – all in one step.

For our Amazon FBA business, we use the Inventory Lab inventory management software. We love how it helps us streamline the process of listing our inventory, along with several other useful functions that we use on a regular basis. It is well worth the monthly fee to pay for this software and save a ton of time, not to mention gain access to useful reports for our business (we’ll get into that a bit more below).

Here are the reasons we find Inventory Lab to be a beneficial program to use in our Amazon FBA business:

  1. Inventory Lab is a feature-rich listing service.

We use a barcode scanner to scan an item into the system, and Inventory Lab pulls up the item with all the information we need to price it. It shows the FBA, Merchant Fulfilled, new, and used prices, as well as whether Amazon is selling the item and who owns the buy box. It gives quick links to CamelCamelCamel and Keepa for the ASIN of the item, so we can check out sales rank and price history as we’re pricing the item.

Inventory Lab List

Inventory Lab also lets us know the item’s current sales rank, category, size tier, and any prep needed, like poly bagging. We can also enter our buy cost and the supplier for each inventory item, so we can later generate reports to help us keep track of things like return on investment or the profitability of certain sources.

As we enter in the items, we always choose “Live” for “Workflow Type.” This way Inventory Lab lets us know which fulfillment center each item is assigned to, so we can sort them into piles or boxes as we go, no need to go back and sort them later — they are already in piles ready to be boxed for shipment.

  1. Inventory Lab is packaged with the Scoutify sourcing app.

Photo Apr 15, 10 23 15 PMWe use the Scoutify app when doing retail arbitrage. We can quickly scan the barcode of an item and have all the information we need at our fingertips to tell us if the item would be a good buy for resale: competitors’ prices, whether Amazon is in stock, potential profit, and links to CamelCamelCamel, just to name a few. You can see our detailed review of Scoutify in this recent blog post. It’s great to be able to pay one package price to get our listing service and our sourcing app together.

  1. Inventory lab has accounting capabilities.

We are still in the process of learning everything that Inventory Lab is capable of doing in the form of bookkeeping, but so far we have found it to be helpful. If you want to make your Amazon FBA business profitable, you have to know your numbers. You can’t just assume because you’re getting disbursements from Amazon that your business is actually making money. You have to know where your money is coming from and where it is going.

Inventory Lab Accounting

You can use Inventory Lab to keep track of your buy prices, sales prices, return on investment, inbound shipping costs, money going out for refunds, money coming in from reimbursements, and more. You can even track your mileage with Inventory Lab! These are the types of numbers you need to know in depth for your business so that you can make better decisions for sourcing, for repricing, and for other services you might need to purchase.

  1. Inventory Lab shows us reports on profitability, profit and loss, and sales tax.

One of the really cool features of Inventory Lab is that you can generate reports about profitability of your inventory. You can see the profitability of an entire category in your inventory, a particular ASIN, or a SKU.

Inventory Lab Analyze

If you entered in a supplier during the listing process, you can generate reports on supplier profitability. You can use the supplier profitability feature several different ways:

  • to keep track of inventory purchased by different sourcers you’ve hired
  • to see if certain stores or wholesale accounts are more profitable than others
  • to analyze how profitable an online arbitrage deal list is for your business over time

You can also generate reports about your profit and loss and your sales tax. Again, the more you know these types of numbers for your business, the more you’re able to make good decisions for your business.

Inventory Lab175_InventoryLab has so many features as a program that we’ve really just scratched the surface in this review. Like I said, we’re still in the process of learning all the ways to maximize this software in our business, and we’re more impressed with its usefulness every day.

If you’re interested in learning more about Inventory Lab, we recommend doing a 30-day free trial. You can play around with the features, send in some shipments, generate some reports, and see how Inventory Lab can work for you.

Do you use Inventory Lab? Is there anything you love about it that we didn’t mention here? Please let us know in the comments!