For example, let's use a popular item on Amazon FBA and AliExpress dropshipping platforms – bamboo marshmallow sticks. During the peak months in the fall time, they'll sell about a thousand units per month. The slowest months are January and February, at about three or four hundred units per month. This isn't that seasonal if we compare it to, say, Christmas lights, which are only going to sell well for two or three months leading up to Christmas. That makes it really tough for inventory forecasting and makes it bad for cashflow.
A great free resource to check the seasonality of a certain product or niche is Google Trends. It will show you how high it is during the peak months and how slow it is during the low months.
Take into account Amazon FBA fixed fees when pricing your product
I get quite a few requests from people asking me if I can privately consult with them, the truth is that I don't have time for this so I, unfortunately, had to turn them down. However, a friend recently reached out to me to let me know that her mother-in-law was successfully private labeling and then using the Amazon FBA program to fulfill their orders and she asked me if I could consult for her. I agreed to consult with her and give her advice on her seeking product that she was going to sell.
One of the things that we did discuss was that when she was sourcing her next product, she was going to have to find one, it had a higher average price point. You see, her first product was selling for just ten dollars a unit. Obviously, it would be nice to sell a product that had a higher price point just because you get to make more money per sale, but it's a little bit more complex than that.
The Amazon fees were four dollars and 52 cents, leaving her with just five dollars and 48 cents to manufacture the product, ship it to Amazon and market it. She was making a profit, but it was just about two dollars a unit.
The thing that I explained to her was that her profit would exponentially increase if she increased the average selling price for her next item, because of the fact that Amazon has fixed fees.
You see, the $4.52 fee is made up of two parts: the first part is the variable Amazon Fulfillment fee – this is a fee-based upon the selling price of your unit. For her item, it had a 15% referral fee for that category, so she was paying $1.50. The second part, though, is a fixed price Amazon pick and pack fee, which is based on your weight. In her case, she was paying $2.99, because of the fact that her item was the least account plus she was paying a three cents storage fee so her overall fixed fee was $3.02.
As she increases her price, the referral fee is going to increase, but the fixed fee is not. I explained to her that as she increases the price of her next product that the amount of money she makes is going to increase exponentially: At a $10 price point, she had a 54.8% profit margin after fees and at $12 – she had a 59.8% profit margin and at $15 she had a 64.87% percent profit margin, so by selling an item that had a higher average selling price, not would she make more money per sale, just because she's charging more, but she would also be paying a smaller percentage to fees which means in the de profit margins would increase.
Generally, I recommend that you should be looking for an item that has at least a 15 dollar price point so that you're not paying more than 35 percent in fees.
I get quite a few requests from people asking me if I can privately consult with them, the truth is that I don't have time for this so I, unfortunately, had to turn them down. However, a friend recently reached out to me to let me know that her mother-in-law was successfully private labeling and then using the Amazon FBA program to fulfill their orders and she asked me if I could consult for her. I agreed to consult with her and give her advice on her seeking product that she was going to sell.
One of the things that we did discuss was that when she was sourcing her next product, she was going to have to find one, it had a higher average price point. You see, her first product was selling for just ten dollars a unit. Obviously, it would be nice to sell a product that had a higher price point just because you get to make more money per sale, but it's a little bit more complex than that.
The Amazon fees were four dollars and 52 cents, leaving her with just five dollars and 48 cents to manufacture the product, ship it to Amazon and market it. She was making a profit, but it was just about two dollars a unit.
The thing that I explained to her was that her profit would exponentially increase if she increased the average selling price for her next item, because of the fact that Amazon has fixed fees.
You see, the $4.52 fee is made up of two parts: the first part is the variable Amazon Fulfillment fee – this is a fee-based upon the selling price of your unit. For her item, it had a 15% referral fee for that category, so she was paying $1.50. The second part, though, is a fixed price Amazon pick and pack fee, which is based on your weight. In her case, she was paying $2.99, because of the fact that her item was the least account plus she was paying a three cents storage fee so her overall fixed fee was $3.02.
As she increases her price, the referral fee is going to increase, but the fixed fee is not. I explained to her that as she increases the price of her next product that the amount of money she makes is going to increase exponentially: At a $10 price point, she had a 54.8% profit margin after fees and at $12 – she had a 59.8% profit margin and at $15 she had a 64.87% percent profit margin, so by selling an item that had a higher average selling price, not would she make more money per sale, just because she's charging more, but she would also be paying a smaller percentage to fees which means in the de profit margins would increase.
Generally, I recommend that you should be looking for an item that has at least a 15 dollar price point so that you're not paying more than 35 percent in fees.
Be data-driven, not “gut feeling” driven
I can't recommend enough to make data-driven decisions in your business. It scares me when I talk to new sellers and they say things like: “my gut feelings tell me this product is going to sell well or my buddy recommended to me or my mom said she's been searching online and couldn't find this”.
Those are very risky pieces of advice to be making business decisions off of. Use the hard numbers to judge demand and competition. Jungle Scout and the free tools and resources couldn't make it easier to make these data-driven decisions. Don't put your hard-earned capital at risk – go off of the numbers.
Those are my tips to help you pick the right product a private label and sell, using the Amazon FBA program.
I can't recommend enough to make data-driven decisions in your business. It scares me when I talk to new sellers and they say things like: “my gut feelings tell me this product is going to sell well or my buddy recommended to me or my mom said she's been searching online and couldn't find this”.
Those are very risky pieces of advice to be making business decisions off of. Use the hard numbers to judge demand and competition. Jungle Scout and the free tools and resources couldn't make it easier to make these data-driven decisions. Don't put your hard-earned capital at risk – go off of the numbers.
Those are my tips to help you pick the right product a private label and sell, using the Amazon FBA program.
