How fast should your Amazon FBA inventory sell? The “30/60 Rule”

A simple formula for determining when your FBA inventory should sell, and when you’ll get your investment back.

In this article:

• Introducing “The 30/60 Rule”

You’re not alone

It’s normal. As Fulfillment by Amazon sellers new and old, we’re all plagued with insecurity, and regularly wonder:

• How quickly should I expect to get my inventory investment back?
• How quickly should my FBA inventory turn over?
• How do I know if I’m doing this FBA thing right?

What follows is a formula I use as a baseline to determine if I’m “doing this right.”

For newer sellers, the 30/60 Rule will help you answer questions like:

• Am I pricing properly?
• Am I shipping in the right mix of high demand and low demand FBA items?
• Are my profit margins big enough?

Even with some years of experience, I still use the 30/60 Rule to answer a couple of key things:

1. When I’m spending an uncomfortable amount of money on Fulfillment by Amazon inventory, I use the 30/60 Rule to know how long it will be until I get that money back.
2. After I’ve sent in an FBA shipment, I use the 30/60 Rule to measure my minimum expected Amazon payout, based on total net profit (calculated by my FBA listing software).

The 30/60 Rule offers a huge peace of mind, because it relies on simple (and conservative) math to determine how much money you’ll see in your bank account in what amount of time.

Note: This applies primarily to books, and may not apply across all inventory types.

Here it is: The 30/60 Rule

The rule states that, on a shipment-by-shipment basis:

“You will at least double your investment in 30 days, and sell at least half your shipment in 60.”

That’s it.

You can build a whole Fulfillment by Amazon business around these projections, and the Rule will rarely fail.

The 30/60 Rule, explained

The reality is, I do much better than doubling my money in 30 days, and usually sell more than half in 60. But I use this as a baseline figure to predict my returns, and how quickly I’ll see that revenue.

If actual averages are much better, then why don’t I offer a rule that reflects something more accurate? Because you should always make estimations based on conservative figures. With the 30/60 Rule, it’s hard to go wrong.

And “30/60” just sounds cooler than “18/57.” (Supreme coolness is the most important reason for the name.)

How infallible is the 30/60 Rule?

I’ll put it this way: It’s not as immutable as death and taxes, but I hit these numbers even if I don’t reprice.

As in, if I do absolutely nothing after dropping off my FBA shipment at the UPS store, I’ll still (usually) double my money in 30 days, and (usually) sell half my inventory in 60.

Worth noting: It’s much more consistent to double your money in 30 days than sell half your inventory in 60 (but both are pretty consistent).

What if you aren’t hitting the 30/60 benchmark?

Let’s say you’re looking at your last few FBA shipments, and you’re not quite hitting these metrics. It doesn’t necessarily point to any fatal flaws in your Amazon business, but it might.

A few issues that might be responsible:

1. Failure to reprice. Again, I’ll hit these figures (usually) even if I don’t reprice, but being more consistent about repricing will get your numbers up.
2. The poorly-ranked items you’re selling don’t have high enough margins. I’ll ship a book ranked 500,000 in that I can sell for $7.50, no problem. But I won’t ship in a 4 million ranked book at that price. The higher the rank, the higher your expected Amazon payout should be. You’re not going to hit the numbers of the 30/60 Rule if you’re shipping in poorly ranked items with low payouts (which you shouldn’t).
3. Margins that are too low. Another article altogether, but I won’t ship anything to Amazon I don’t expect to get $3 back on for every $1 I invest.

Notice “selling poorly ranked items” is not on this list

Reason is, there’s nothing wrong with selling items via FBA that have a poor sales rank…. If they are high-value. That’s the part many Amazon FBA sellers get wrong.

Will the 30/60 Rule apply to shipments containing really poorly ranked items?

It happens all the time: You create a shipment with an unusually large number of unusually poorly-ranked items. Does the 30/60 Rule still hold?

If the items are extremely low-demand, the “sell half your inventory in 60 days” part will not.

But the “double your investment in 30 days” part should.

Remember, the worse the sales rank, the higher the average payout you should need to see. So whereas with the average item you might have an $8 payout, with a low-demand item you should be looking for $15 or $20+ average Amazon payouts (big spectrum here, depending on how low-demand the items are).

So with these FBA shipments, it will take fewer sales to double your investment. Make sense?

Does this mean the other 50% will sell in the next 60 days?

No.

The half of your FBA shipment that doesn’t sell will be the lower-demand items, that bide their time over many months (or years).

That’s the inventory that is like the FBA tip jar. The money that comes in slowly after you’ve already made a decent profit.

The 30/60 Rule: An example

Let’s offer a simple shipment sample to illustrate.

• Size: 100 books.
• Cost: $100
• Average sales rank: 1 million
• Expected payout for entire shipment: $1,000

Even at this average sales rank (which isn’t bad but isn’t great), you should expect to get at least $200 back in under 30 days, sell 50 books in under 60 days, and get roughly $500 in 60 days.

Wait, $200 after 30 days, but $500 after 60? Why would you make more the second month than the first?

You won’t. These are rough numbers, and very round ones. They’re also conservative. Don’t get caught up on the specifics.

The actual numbers will vary wildly. But they should rarely fall below 30/60.

To recap

The “30/60 Rule” states that, on a shipment-by-shipment basis:

“You will at least double your investment in 30 days, and sell at least half your shipment in 60.”

Simple math. Conservative math. And the peace of mind that comes with it.

Triple-win.

-Peter Valley

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