“Where do you find things to sell?” or “What types of things do you sell?”
These are the first questions we get asked whenever someone wants to know more about our FBA business or how they can get started selling on Amazon.
We’ve tried a lot of different sourcing strategies over the years, with some that have fizzled and others that continue to grow to this day. Things are constantly changing in a business like Amazon FBA, and we’ve seen a lot of highs and lows.
Thankfully, we’ve had a lot more highs than lows!
This business has allowed us to stay home together and make a lot of our dreams come true.
We are able to homeschool our son, go on plenty of family vacations, and, most recently, buy a second home on a lake! We love our work-life balance.
But none of that would be possible if we didn’t know where to find profitable products. And that’s what brings you here!
We love helping people meet their goals, and we understand how overwhelming this business can seem at first.
When we started, we had to figure everything out from scratch — from the details of creating a selling account on Amazon to figuring out how to prep and pack product to ship to Amazon’s warehouses.
Once we did figure it out and had success, we started teaching friends and family how to do the same. And then we created our Amazon Boot Camp to teach even more people our step-by-step system.
But again, it all comes down to finding inventory!
So today we’re going to discuss our Top 5 ways to source product. Please chime in at the end and share your own favorites!
1. Clearance Aisles
This is one of the first sourcing methods we teach because it’s probably the most straight-forward: find product that’s on deep discount, then sell it on Amazon for a profit.
If you’re new, clearance aisles are a great way to practice scanning (using an app that uses your camera’s smartphone to scan barcodes and then tells you how much that product sells for, as well as its sales rank and other info).
You will also find a lot of different types of products in clearance aisles, and will start to figure out what appeals to you.
Maybe you find yourself heading straight to the electronics or to the sporting goods, or you’re drawn to toys. Pretty soon, you begin to recognize the brands that are better ranked and can spot a good price before you’ve even scanned the item.
When we first started selling on Amazon, we found a lot of products on clearance at local drug stores. This is still a great strategy!
I would mix things up by rotating what parts of town I’d visit. When I found a winner at one store, I’d trek to every branch of that chain that I could get to in a day or two.
To this day, I can’t walk into a Walgreens store without heading to the back to find the clearance endcap.
For me, sourcing is all about scanning and analyzing data. I don't think twice about what the product is used for.
This has resulted in some pretty funny stories about me sourcing at drug stores, when I’ve gotten some really awkward looks and my small talk ended quickly once I realized exactly what types of products I was buying!
How to Find Your Favorite Categories
I was lucky in that I could sell in Health & Personal Care, Beauty and Grocery — all categories that require approval now. (We walk you through the category approval steps here.)
I quickly found my niche and became an expert in Health & Beauty items. I learned that stores would follow a pattern in their mark-downs and I could even predict when a certain type of item would be going on clearance again.
This is something you should aim for as well. It might take a little while to figure out, but set a goal to become an expert in a category and then focus on it.
Scan everything in the aisle of a category you’re interested in. You’ll soon notice when one store carries a flavor or variety that others don’t (in Grocery, for example), or has a store exclusive that’s hard to find.
A lot of times, you’ll find product that will sell well even when purchased at full retail — but when you become an expert and find those items on clearance, you’ll know right away to pounce and buy a bunch of them.
2. Liquidation/Surplus Stores
One thing I quickly learned about the Health & Beauty niche was that discontinued products could be extremely profitable. This is true of other categories, too.
People have their favorites and when those products are discontinued, they’ll gladly pay extra for their favorite nail polish or hair color. The same is true in Grocery — seasonal flavors and discontinued flavors can be big money-makers as they become scarce.
The longer something has been off of the regular shelves, the higher the price.
Sometimes, instead of a quick turn (which we typically recommend), we’ll instead hang on to inventory for a little while to command a premium price.
This strategy is more advanced, but consider the possibilities: you might buy something at 75 percent off and sell it for 2-3 times the normal retail. That’s a killer margin!
I wanted to figure out where to find higher quantities of these kinds of products because the drug stores — or any retail store — would only have so much left over by the time they went on clearance.
This is when we learned about liquidation or surplus stores. We teach you all about it in our ebook, Liquidation Gold.
How liquidation stores work
When chain stores have discontinued products, they only keep them on the clearance shelf for so long. After that, the products are sent to a central location where they are then sold to liquidation centers.
Then a smaller mom & pop discount store buys the products by the pallet, paying pennies on the dollar. They mark them at 50-70% off of the original retail price, which is about what they’d sell for on clearance at a local chain store.
The cool thing is, everything at the discount store is marked down. It’s like the whole store is one big clearance section.
Here’s the kicker: it takes time for this process to happen, and by the time it does, some of the products have become scarce! Demand and price have gone up as people realize their favorite toothpaste isn’t available anywhere locally.
So they start searching online and will pay premium prices for that same toothpaste. What they used to pay $2-$3 for, they are now willing to pay upwards of $15 PER TUBE!
Once we realized this, we started making huge purchases from liquidation stores.
Now we focus more on major buys that we can sell for months to come. A typical liquidation haul will cost around $2,000-$3,000, and bring a profit of around $10,000. This is over the course of a year or less.
Here's a fun story about how we turned a date night into $12,000 in profit! (Yeah, our date night included a liquidation store.)
3. Online Sourcing
Although we started out doing retail arbitrage, we soon added online sourcing, or online arbitrage (OA), to the mix.
This became especially convenient as my son got a little older and I couldn’t take him to the store as much. Those of you with antsy children know exactly what I’m talking about!
Instead, I could source while Aiden watched his favorite show — there’s no reason I have to watch it, too! — or at night after he went to bed, or during his naps.
But online sourcing isn’t just for people with little kids. It’s great for those of you who work full-time and can’t physically get to the store to source. Or for those who might have difficulty spending that much time on your feet. Or maybe you live in a rural area with limited choices.
And it’s simply a great way to diversify your sourcing options. Here's a list of our Top 30 Recommended Retail Stores for Online Sourcing.
Our Top Two Online Arbitrage Strategies
We have a couple of ways we go about sourcing online.
One is to “go wide” and buy limited quantities of about 5 or fewer of any one item. We’ll purchase a large variety of products and if something does well, we’ll replenish. If it tanks or isn’t available anymore, we move on.
Buy in Bulk (Sometimes)
Another strategy is to buy in bulk, which is higher risk and not for everyone.
When we find something that’s very discounted and very popular on clearance online, we’ll buy out all available stock — sometimes in the hundreds of items. Then we sit on those items, kind of like we mentioned in the liquidation store example.
We know that, on the right types of items, prices will fluctuate for awhile and then start to increase. Once the price gets to a figure we’re happy with, we start to sell.
One rule of thumb I have with online sourcing is that I can usually find about three profitable products per hour. If it’s less, I usually stop.
It can be a lot of work, but there are plenty of tools to make online sourcing easier.
In addition to the diversity of income, I really enjoy this sourcing strategy because I tend to find some cool new stores and different inventory that keeps things interesting.
If you want to learn more about this approach, check out our ABCs of Online Sourcing course.
4. Outsource/Virtual Assistants
We are big fans of outsourcing work whenever it makes fiscal sense.
For us, this includes hiring virtual assistants to search for profitable product for us.
When I’m ready to place orders, there are a lot of options! I can look at the lists daily or check once a week and place a big order — just like I’d do if I am casually sourcing.
They also don’t have any prejudices when it comes to types of products or stores. They are simply looking for profitable items!
I’ve found that I can reap multiples of my investment by hiring VAs to source for me. They find me a ton of product and leads, and I can use those hours to grow my business in other ways.
We offer a shared VA program, where you can get access to 8+ product leads per day so you can speed up your online sourcing game!
5. Grocery Stores
Again, you need to be approved to sell in Grocery, but once you are, this can be a game-changer for your business!
We love selling in Grocery because it can make us a lot of profit with less work. This is because of replenishables — items that people buy over and over again.
There was one grocery item that we sold for over a year and bought from Target. The great thing was that we'd make a profit of $5-$7 every time we sold it, and we didn't have to do extra work. We'd just pick it up whenever we saw it.
I've always been great at using coupons, too. So when I'm making my own grocery list, it doesn't take a lot of extra effort to check for product that will do well on Amazon. And it's a great way to make money doing a chore I have to do anyway! Just like with our date night, we like to make any trip out a profitable one. 🙂
Also, think about how you can boost your sales when you are able to sell candy at Valentine’s Day, Easter and Halloween. Or put together snacks for college survival baskets during Back to School season.
Here's a great guide to creating profitable product pages.
One great thing about Limited Edition items is that they’ll go on sale at really huge discounts right around the time of a holiday, in order to clear the shelves and prepare for the next holiday.
But a lot of times, those items will still sell year-round. So we’ll buy those special jellybeans at 90% off and continue selling them for months to come … at amazing margins and with no competition!
One thing we recommend in our Grocery Goldmine guide is to scan your local ads each week and go in with a plan. You can also scan the items in your own pantry for practice and to see whether you already buy items that can turn a profit.
And don’t just limit your search to traditional grocery stores. Places like Walmart or Target have hidden gems in their grocery aisles, too. You can source at any store that sells groceries.
More Ideas to Source Inventory
We’ve shown you five of our favorite ways to find product, but we know they aren't the only ones that Amazon sellers are using. If you're looking for other strategies like wholesale or private label, check this post about the The 5 Most Popular Ways to Start (or Grow) an Amazon Business.
One thing I recommend is that you give any new strategy ample time to pan out, or give it up.
There are some strategies that will work great for some people, and not at all for others. There are lots of reasons for this.
Maybe your location doesn’t have certain types of stores or you just can’t wrap your head around the idea of buying online rather than physically holding a product and scanning it. Or maybe you love kitchen gadgets, but health and personal items are like a foreign language to you!
Whatever the reason, don’t beat yourself up if a certain strategy doesn’t work for you. 🙂
Your business will change over time and that’s ok. You might love a niche today and find something much better a few months down the road.
The point is, keep working at it and stay flexible with your approach. Stay focused but also remain open to new ideas as they come along.
To learn more about starting an Amazon business and how to use these strategies in step-by-step detail, be sure to check out our Amazon Boot Camp.
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