How to Source the Best Products to Sell on Amazon FBA

Last updated: July 19 , 2023

Are you an Amazon FBA seller looking to amplify your success and maximize your profits? If so, you're in the right place. Different products have different success rates for online arbitrage, so if you're looking to grow your business, you need to know the ins and outs.

Online arbitrage techniques can give you lucrative opportunities to unlock a world of potential profits. At OACheddar, we understand that the key to successful arbitrage lies in sourcing the best products. That's why we've crafted this blog to provide you with the best insights, tips, and expert advice you need to excel in the competitive world of Amazon FBA.

This guide is your compass to help you navigate the world of product sourcing. From identifying profitable product categories and utilizing powerful Amazon tools to evaluating product demand, assessing profit margins, and scouting for deals on online marketplaces, we leave no stone unturned in our quest to help you source the most profitable products for your Amazon FBA business.

So, whether you're a seasoned seller seeking to enhance your strategies or a newcomer looking to embark on a profitable FBA journey, this guide is your roadmap to success. Get ready to harness the power of online sales and take your arbitrage to new heights.

Selling Products on Amazon: The Ins and Outs

New sellers on Amazon have a steep learning curve to contend with. Online arbitrage is a great way to sell products related to all sorts of niches. It involves buying products from other ecommerce sites at a lower price and reselling them on Amazon for profit.

Using Fulfillment by Amazon (FBA), it's easy to turn a profit with online arbitrage. Selling products is remarkably easy and doesn't require a physical presence or expensive storage. As an accessible way to sell on Amazon that doesn't require you to set up your own brand, you can do it from the comfort of your own home.

Online Arbitrage through Amazon has become enormously popular. In the first quarter of 2023, 59% of paid units were sold by third-party retailers. All you need to sell on Amazon FBA is an Amazon seller account and some product ideas to get started. Then, you can cash in on the consistent demand provided by Amazon.

The most challenging part is sourcing profitable products to sell on Amazon. Fortunately, once you know where to look to identify the best-selling products, you'll be on the road to success in no time.

Identifying Profitable Product Categories

Selecting the right product categories is a crucial step in your journey to Amazon success. The categories you choose to focus on can significantly impact your sales, profitability, and overall business growth.

Aligning your business with high-demand, profitable categories is the best way to position yourself for success. Strategic category selection allows you to tap into a ready-made customer base, capitalize on existing trends, and leverage the profitability of top-selling items.

There are several categories that consistently perform well, which we will discuss in more detail below. Generally, the best categories include ones with:

  • A wide customer base
  • Constant demand for products
  • The potential for healthy profit margins

However, simply choosing popular categories is not enough. What about market saturation? According to Marketplace Pulse, there are over 10 million registered seller accounts on Amazon, with 2000 accounts registered daily. To gain a competitive advantage, you must conduct thorough product research and identify a profitable niche market.

You can discover untapped opportunities by diving deeper into subcategories, exploring customer preferences, and analyzing market trends. For example, "instant pot cooking books" is more niche than just "cookbooks." Targeting profitable niches like this is more likely to give you success.

Here are six of the most popular category options FBA merchants use to sell on Amazon.

1. Electronics

Electronics categories present a golden opportunity for those looking to sell on Amazon. They contain some of the top-selling products year-round. Consider Apple and Dell, both of which have their own Amazon Store Fronts. These huge companies are already selling items on Amazon, so why not list your arbitrage products alongside them?

Top-selling items include batteries, speakers, earphones, and cameras. You can also branch out into gaming, computers, and smart tech. However, remember that technology sales spike around the holidays, so you'll need to stay on top of the seasonal trends.

2. Pet Supplies

66% of American households own a pet, making this a huge ecommerce business. Pet owners like to spoil their furry friends, which means the pet supplies category is rife with private-label products catering to every single need.

Top-selling items in pet supplies include food, treats, grooming products, collars, apparel, beds, and more.

3. Home and Kitchen

When homeowners are decorating, there's a big chance they'll look for decor on Amazon marketplace. This gives the home and kitchen category a consistent demand that's unlikely to go anywhere.

Best-selling products in this category include appliances, dining sets, decor, gardening tools, furniture, and art.

Source: amazon.com

4. Games, Toys, Puzzles

Many games and toys feature in the top-selling items on Amazon. Although popular, these are often seasonal products that see a spike in sales during the holiday season. Nevertheless, they make great products to sell on Amazon.

5. Books and eBooks

Did you know that Amazon started as a bookstore? As a result, this product market niche is booming. Amazon sellers can market both new and second-hand books alongside collectibles and first editions. Books experience relatively consistent sales, and they can have good sales margins. While it's relatively easy to sell books, don't expect minimal competition in this niche.

6. Clothing, Jewelry, and Beauty

Clothing is popular on Amazon, but for many FBA sellers, there is too much competition to try and get involved. Often, arbitrage sellers opt for dupes that follow current trends. Since clothing trends change often, this is also a niche market where you need to stay up-to-date and change products often. As a result, selling items can be more time-consuming than other arbitrage niches.

Utilizing Tools and Software for Product Research

Once you've decided on the category and got some product ideas in mind, it's time to source products to sell online. This process can be time-consuming, but there are software options to help you track down the right products and achieve sustainable growth.

The right software can serve as a powerful product research tool. It will help you with the following advantages:

  • Accuracy: Software tools can ensure accurate, up-to-date research on products you sell on Amazon. This includes recent and historical sales to indicate the average price, monthly sales volumes, and other data. Some even have alerts to help you when the average selling price changes.
  • Scalability: Software tools can let you manage multiple accounts and inventory sources all in one place. This helps you plan for the future and scale your Amazon business to increase your profits.
  • Efficiency: Software streamlines the process by providing features like automatic repricing, bulk listing, and more.
  • Competitive edge: Through software tools, you can gain an edge over your competitors by quickly adapting to the marketplace.
  • Automation: Software does all of the above automatically. It can help you track down the best products to sell in virtually no time at all, saving on manual labor. This can save you time, effort, and money, allowing you to focus on other aspects of your business.

Amazon has its own built-in software, but there are also other ways to automate your processes and track down lead lists. Here are some of the most popular options.

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Amazon Best Sellers Rank (BSR)

Every product in Amazon's multi-million product catalog gets a number after it has one sale. This places it on the BSR, a list of the best-selling products on Amazon. The BSR can be a good indicator of how well a product is currently selling.

The product ranked #1 is the best-selling item on the site. Note, however, that the products are grouped by category. So, books aren't competing against MacBooks for their sales. Since some products people sell on Amazon can fall into multiple selling categories, some products have multiple BSR numbers.

The BSR is calculated based on both sales and keyword rankings. So, if an item is in high demand and appears high in the search results for a particular keyword, it will have a better BSR.

Source: amazon.com

Amazon Sales Estimator

Amazon Sales Estimator is a powerful tool. It provides sellers with valuable insights into the potential sales volume of specific products on Amazon. By analyzing historical sales data and other factors, an estimator can give you an insight into how many units a particular product is likely to sell in a given timeframe.

Armed with information about product popularity, you can make more informed decisions when curating your product offerings. This increases your chance of sourcing profitable items.

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Source: oacheddar.com

Evaluating Product Demand and Competition

Even if you use product research software, you must know how to assess product demand accurately. You can conduct initial market research with a simple organic search, telling you how many products are available in the same product category. Conduct keyword research on your products, then type the key terms into the Amazon search bar.

This information can give you key insights into high-demand products, including current trending products in your category. It also allows you to analyze the competition and check out what other sellers are doing.

Consider factors like the quality of listings, pricing strategies, and product differentiation. Research products in more detail to help you decide on selling strategies.

Assessing Profit Margins and ROI

Evaluating profit margins and return on investment (ROI) is crucial for making informed sourcing decisions. Assessing these metrics can help you decide which products to source, their profitability, and how they will affect your business performance.

Calculating profit margins involves various factors, including the cost of goods sold (COGS) and fulfillment fees, alongside shipping costs and other expenses. Here are some tips to help you assess the selling potential of different products:

  • Focus on products with a low buying price but high potential.
  • Consider products with a consistent sales demand and a steady sales history.
  • Evaluate products with low competition, which can boost sales. Conduct thorough research to identify markets with low saturation.
  • Consider products with upsell opportunities, such as complementary accessories or bundles.
  • Analyze market trends to anticipate future demand. Stay updated on industry developments and emerging markets to capitalize on trends early.

Online arbitrage can still take a lot of work, even though you are not making your own products. If you want to grow a profitable product portfolio, you need to put in the work.

Scouting for Deals on Online Marketplaces

When it comes to sourcing products, you should explore various online marketplaces to unearth hidden gems. Beyond the Amazon marketplace, there are a variety of other places to find items you can sell on Amazon.

This includes:

  • eBay
  • Walmart Marketplace
  • Shopify
  • Alibaba
  • Etsy

All of these options offer vast product selections, presenting opportunities to find competitive prices. To find deals, you need effective strategies. First, keep a keen eye on clearance sales and promotions. Heavily discounted items can increase your profit margins when selling items later on.

In particular, seasonal discounts are a great place to find deals, so keep your eyes peeled for seasonal items you sell on Amazon.

Liquidation sales are another valuable avenue for finding deals. Companies may offer bulk quantities of their products at significantly discounted prices, adding a steady supply to your FBA inventory.

Negotiating better prices with suppliers is a skill that can significantly impact your profitability, too. Start by building relationships with suppliers or sellers to foster trust. Communicate your business goals, volume requirements, and your intention to establish a long-term partnership.

Exploring online marketplaces and utilizing effective deal-finding strategies can help you uncover hidden treasures. It gives you cost-effective sourcing options for your Amazon business.

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Implementing a Systematic Approach to Sourcing

Sourcing products for your Amazon marketplace requires a systematic approach. Otherwise, you risk losing out on deals or losing track of your leads. This step-by-step process will help you source products systematically to streamline your workflow and boost efficiency.

1. Define Your Sourcing Strategy

Start by defining your sourcing strategy, taking into consideration factors like your target market, budget, and business goals. Before you start selling products, you need to narrow down the category, niche, and sourcing methods. For example, will you buy wholesale from high-quality leads or grab discounted products in sales?

2. Set Criteria

Establish clear criteria for product selection. Consider factors like profit margins, sales velocity, competition level, and ROI. These criteria will be your guidelines for evaluating potential products, ensuring they align with your business objectives.

3. Conduct Market Research

Dive deep into market research to identify product trends, consumer preferences, and emerging opportunities. Leverage tools and resources to analyze sales data, demand patterns, and competition. This will help you identify which products to focus on.

4. Source from Multiple Channels

Explore various sourcing channels, including suppliers, wholesalers, manufacturers, and online marketplaces. Diversifying your sources increase your chances of finding unique products at  better prices.

5. Evaluate Suppliers

Thoroughly evaluate your suppliers. Look for those with a good track record, reliable shipping fees and options, and quality control measures. Evaluate the quality before selling products, or you risk getting a bad reputation.

6. Negotiate Pricing and Terms

Use your negotiation skills to secure favorable pricing and terms with suppliers. Discuss bulk discounts with suppliers, shipping costs and other arrangements, and other relevant factors that could optimize your sourcing costs.

7. Maintain an Organized Workflow

Organize your sourcing workflow using spreadsheets or management software. This will help you track everything from deadlines to pricing.

8. Continuously Monitor and Refine

Regularly monitor the performance of your business and update your processes as needed.

By implementing a systematic approach to sourcing, you can streamline your operations, minimize risks, and maximize the profitability of your Amazon business. Remember, setting clear criteria, conducting thorough research, and maintaining an organized workflow are key pillars to successful product sourcing.

Unleashing Amazon FBA Success with Better Product Sourcing

If you want your business to succeed, you need to tap into the right strategy. From understanding the concept of profit margins to evaluating the competition, there are a lot of skills you must hone to rank among the best.

Sourcing the best products is key if you want to achieve long-term success on Amazon. If you can position yourself strategically in this market, you can make data-driven sourcing decisions that maximize your profitability and drive business growth.

Consider using tools to help you, like OA Cheddar. With fresh leads and expert advice, we can give you a competitive edge in sourcing profitable products. Join our VIP list to access our exclusive webinars with 7-figure resellers, gaining fresh insights that propel your Amazon arbitrage business to new heights.

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