When I first began selling as an Amazon FBA seller I was cautioned against competing with Amazon. If Amazon was selling an item I was told to stay far away from it. I have since discovered that there are times when it is okay and even profitable to be competing with Amazon. There are several factors of course to consider which I will cover below.
First Amazon does sell out. The product ranking is the key here as to how often Amazon will sell out of a particular item. If it is a high ranking item it’s probably not worth it. If it is a low ranking and hot selling item, I will always take a closer look. Lower ranking items sell fast. This is especially true for the toys and games category over the Holidays. Hundreds or even thousands of an item can ship in a day for hot low ranking items.
Let’s take a look at the following item that I just listed on Amazon. When I purchased it a week ago, Amazon was not listed as a seller. Today when I checked it, Amazon is now selling this item.
The rank on this item is around 17,000 which is pretty good. Though not a fly off the shelf item, it is a fast mover. Note also that Amazon only has 1 left in stock. They will probably sell out today, so what do?
I am going to click on where it says 20 sellers from $19.99 and see if I can position myself at the top of the page and still make a profit. Note, I bought this item for 12 bucks. When I click on this it shows me the following.
If the ranking is on the higher end, I want to position myself in the top spot or one under it as long as I can still make a decent profit doing so. I put it in the Amazon Revenue Calculator that you can find here and if I sell it for the lowest price of $27.97 my profit will be about $8 bucks. That’s roughly about a 75% return on my investment (roi), so I can afford to compete with Amazon in this case.
Note since I began writing this article about 30 minutes ago, Amazon has already sold out.
If the next price in line or the prices in the first few spots on the first page would have been around $19 or $20 it would not have been to my benefit to be competing with Amazon. It’s simply not worth my time to do so for a 1 or 2 bucks.
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