When you're frantically scanning products while doing Retail Arbitrage, there are probably two things that you're checking on your scanning app before anything else: profit and sales rank.
With the free Amazon Seller App, that's about all you have to go by. And it's certainly a good starting place.
If you're using a third-party scanning app like Scoutify, you have a little more information at your disposal. You can probably quickly find a Keepa chart, the number of FBA sellers, and ROI.
Even if you're doing product research at home for Online Arbitrage or planning for a future RA trip, you might be checking for the basics: rank, average rank, profit, stuff like that.
But this information skips an important piece of the Amazon selling puzzle: sales velocity.
Sales velocity is an estimate of how many sales a particular ASIN gets each month on Amazon. Typically in the Amazon world, it's private label and wholesale sellers who are concerned with sales velocity.
But Retail Arbitrage and Online Arbitrage sellers could also benefit from understanding a product's sales velocity, especially before deciding to go deep on an item.
There are actually two things to consider when analyzing sales velocity on a potential buy:
- Estimated monthly sales
- Inventory levels of other sellers
I'll explain why you need to know both of these numbers to make a confident buying decision. And I'll show you an example of how rank and number of sellers don't give you the full picture.
I've even been experimenting with a fun new tool that makes checking these two numbers fast and easy. Don't you just love technology? 🙂
If you're ready to start analyzing Amazon FBA products like a pro, then keep reading!
Prevent Bad Buys by Understanding Sales Velocity
Now I know you're probably thinking, “Great, just what I need, more work to do before buying a product.”
And I know how sometimes the process can feel so slow.
But if you're considering making a big buy with Online Arbitrage or going deep on a Retail Arbitrage or liquidation find, then these extra steps are worth the (minimal) effort.
Let me show you an example of an item that looks good on paper….until you dig in a little deeper.
I recently spotted this Elmo game. It looked pretty incredible when I scanned it. Here's a quick overview of the stats (as shown in RevSeller):
I highlighted the most attractive parts of this game:
- The rank is incredible (currently 6,018 in Toys)
- There are only 8 FBA Offers (pretty low competition)
- The net profit is above $5
When I click through to view the other offers (which if you have RevSeller installed, you can click the “FBA (8 Offers)” link), it's still looking pretty awesome!
If you're hooked on making extra profit like I am, your head might be right where mine is….
- The 2 lowest offers are Used from Amazon Warehouse (not my competition, so I can skip them)
- 2 sellers have this in New condition around the $15.82 price point
- That means there are two nice price jumps (up to $17.97 and then $21.89) right away!
- Maybe I could price at $20.99 and wait them out….with a rank of 6,000, that shouldn't take long, right?
Let's tap on the brakes here.
Something told me I should do some more research before snagging this deal. You can call it gut instinct. Or you can call it 9 years of Amazon selling experience 😉
I decided to add that first New offer at $15.82 to my shopping cart. Here's what happened:
Yuck. I seriously hate when that happens.
And I bet you hate when you see that, too….especially when you see it on an item you've already bought.
That's what we're trying to avoid here!
The “wait out the low offers” thing doesn't work when the low offer has over 1,000 in stock at Amazon FBA warehouses.
Even at a rank of 6,000, this is probably more than a month's supply (we'll check on that later!) and I have a hunch this seller can get more directly from a wholesale source.
So, if you've ever been burned on a buy like this before or if you're new and want to make sure this doesn't happen to you, let's take a look at easy ways to analyze sales velocity.
Calculating Estimated Monthly Sales on Amazon
There's no “official” way from Amazon to determine how many times an item sells each month. But there are several tools available (both free and paid) that will calculate the estimated number of monthly sales.
Estimated monthly sales are usually calculated based on an ASIN's sales rank and category. Better estimators go by an average rank instead of a current rank.
Think about it, if you checked estimated sales on a grocery item that was ranked 50,000 today but is usually ranked 150,000, you're not going to have a clear picture of sales velocity. This may cause you to buy too many units.
Here's something important to remember: the estimated monthly sales of a product isn't the number of sales that you'll have each month. The number shown will be the number of sales for all sellers on a listing.
If an ASIN sells 500 units per month and there are 5 sellers, then each seller could expect 100 sales per month (assuming a perfectly equal Buy Box rotation).
Viewing Inventory Levels for Amazon Offers
The other thing you need to know, as shown in the Elmo example, is how much inventory your competitors have in stock.
Adding 999 of an item to your shopping cart is one way to check. This works, but you have to remember to do it and it takes a few steps.
There are also some Chrome extensions and other plugins that monitor inventory levels. There's a feature you can turn on in Keepa to show stock levels, but it doesn't work very well for quantities greater than 20 (which sort of defeats the point!).
Helium 10 for Sales Velocity Evaluation
I have been loving a tool called Helium 10 lately that quickly handles both estimated monthly sales and inventory levels.
I've always heard great things about Helium 10 from Private Label sellers. Helium 10 is a software suite with lots of different components. Many of them are specifically for Private Label sellers (keyword research and tracking, for example).
Like a lot of the popular all-in-one Private Label research tools, Helium 10 is a paid monthly subscription. So I was shocked and excited to find out that they have a free plan and Chrome extension that work for the needs of Retail and Online Arbitrage sellers.
The Chrome Extension offers the two tools you'll need to avoid ending up with excess inventory:
- Xray Tool: Calculates monthly sales
- Inventory Levels: Checks inventory levels for all sellers on a listing
One extension. Two clicks. And all the info you need to make an informed decision.
Helium 10 Xray
Let's take a look at the Xray tool in action. With the Helium 10 Chrome Extension installed in my browser, I head to a product page on Amazon.com, click on the extension, and select “Xray.”
Here's how the Xray looks for the Elmo toy. It reveals that this product sells about 500 units each month.
The Xray tool brings back a lot of information. But all we're really looking for here is the “Sales” number which is the number of estimated monthly sales for this item. Helium 10 actually calculates this off of a 30-day average rank.
You can run the Xray feature on a single product page or on a product search results page. That means even if you're looking at a page with lots of products on it, you could quickly see which ones have a high number of monthly sales.
Helium 10 Inventory Levels
It's great to find a product that sells 500 each month. But not if 10 other sellers on the listing all have 1,000 in stock!
Let's see what the Helium 10 Inventory Levels tool shows for the Elmo game.
Yep, there's our seller with 1,000+ units in stock.
So I know that this seller has at minimum a 2-month supply of this toy since it sells 492 units each month. I think I'll pass!
Getting Started with Helium 10
It was super simple to get my Helium 10 account up and running. You can start with the Free account and use it for as long as you need.
Of course, if you ever want to use the paid features for Private Label or other research, you could easily upgrade your account. When you do, make sure you use coupon code THESELLINGFAMILY50 to get 50% off the cost of your first month!
But to start experimenting with Xray and Inventory Levels, you can join for free (no need to give a credit card). Here's how easy it is.
Head over to the Helium 10 website and click “Get my Free Account!”. You'll be taken to a sign-up page that asks only for your name, email address, and a new password.
Once you're signed up and logged in, go ahead and get the free Chrome extension. There's a nice big Install Now button that will install the extension for you.
Go ahead and watch the video to learn how to use the Helium 10 Chrome extension.
And that's it! The extension will now work on the Amazon website and you'll have access to Xray and Inventory Levels on any product detail page. Plus, coupon code THESELLINGFAMILY50 saves you 50% on your first month of any paid plan.
Just remember to always compare the estimated monthly sales (in Xray) to the quantity of inventory that other sellers have in stock (Inventory Levels).
If an item sells 500 a month and your competitors combined have only 250 in stock, then you're going to see some sales. But if the other sellers have thousands in stock, you're going to have to share the buy box or risk waiting them out.
Avoid Expensive Mistakes
Having excess inventory in Amazon warehouses can really kill your profits. Not only do you pay monthly fees and LTSF, but you can't recoup the cost of that inventory if it's not selling. This can totally stall your growth.
I'm generally fine with lowering my price (even if it's a loss) to get rid of inventory if I've made a bad buy. But I'd much rather prevent the bad buy altogether!
Helium 10 would be a great addition to your Online Arbitrage workflow. You could make checking Xray and Inventory Levels a part of your research process.
And even though you can't use the Chrome extension in stores for Retail Arbitrage, you could still check out the results before you go deep on an item. I'm a big fan of doing as much Retail Arbitrage research as possible at home (where I have more tools at my disposal).
I definitely could have used a simple tool like Helium 10 in the past. It would have helped prevent costly mistakes like going too deep only to find out that it was a slow-moving product or that other sellers had hundreds in stock.
So tell me, have you ever found the “perfect” product, only to discover that your items were never going to sell? Do you think a tool like this would help you avoid similar mistakes in the future?
Let me know your thoughts and stories in the comments below!