A two-part test to prove your local Amazon seller competition has no idea how to source profitable inventory, and aren’t a threat to your business.
Video: The Two-Part Test To Beat Your Amazon Competition
If you prefer videos to text, here’s my video version of this article:
Repeat After Me: 99% of Amazon Sellers Have No Idea What They’re Doing
All Amazon sellers have been there: We’re at a lucrative source, on our own “turf”, and you look over and see someone else scanning items.
A healthy and reasonable response would be to introduce yourself and trade knowledge, or quietly wish them well.
I’ll admit it: I am neither healthy nor reasonable.
When I see a foreign Amazon sourcer at one of my spots, I perceive them as a hostile adversary. (I’m not proud of it, but I know I’m not alone here).
Whether you’re sourcing books, clearance merch, or literally anything on Amazon – you’re always keeping an eye on your local Amazon seller competition. I don’t care if you’re the Dali Llama – when you know someone is getting to items you could resell before you do, it stings a little.
There is a pie (in the form of profitable inventory that can be resold on Amazon), and every competitor sourcing on your turf leaves you with a small piece.
What you’re about to learn
This article is about two things:
- Why you should (almost) never care when you see another Amazon seller on your turf.
- The two-part test to confirm they have no idea what they’re doing (without talking to them or hacking into their Amazon account).
The Three Categories Of Amazon Seller Competition
I put all my local Amazon-sourcing competitors into one of three categories:
1. Amateurs: The resellers you see “now and then,” but they’re either too inconsistent or too low-tech to be full time Amazon sellers, or pose a threat to your business. A couple of tells that someone is in this category: 1. Low-tech equipment (they haven’t invested in a barcode scanner, for example). 2. Inconsistency (they don’t consistently appear at the most obvious events that every serious Amazon seller should be at, such as library book sale).
2. Core Competitors: The resellers you see consistently, who have demonstrated themselves to be more than weekend warriors – these are real Amazon sellers who have the motivation and skill to impact the slice of your pie. They are both ever-present, and have invested in adequate Amazon-sourcing technology.
3. The Trespasser: The new sourcer you’ve never seen before, and have yet to categorize. Are they visiting from out of town? Are they a fly-by-night Amateur? Or will they evolve to become your Core Competition? These sellers put you on high alert.
Now, I’ll share a trick I personally use that will put you at ease. When it comes to competition, you (almost never) have anything to worry about…
A Two-Part To Prove Your Amazon Seller Competition Is Nothing To Worry About
The other day I was at one of those thrift store outlet stores (if you know, you know…), and I saw him: An Amazon seller. An enemy. A foreign adversary. A Trespasser.
I’d never seen this person before, and I instinctively classified him as a threat – another Amazon seller reducing my piece of the pie.
He was at the far end of the row, scanning a bin of books. So I did what I always did: Eyed him from a distance while placing a curse on him and his Amazon seller account.
Right now, you’d be right to be thinking: “Peter Valley started by telling me my competition is nothing to worry about, but two paragraphs later, he’s talking about encountering another Amazon seller like his favorite source just got invaded by Al Qaeda.”
It seems like a contradiction (and it kind of is), but even if my reflexive reaction to seeing another seller is a combo of fear and a declaration of war, I (almost) always am reminded in a few minutes that they are nothing to worry about.
How? The two-part Competition Elimination Test…
Competition Elimination Test, Part One: The Visual Test
This is where I size them up from a distance. Most “competitors” immediately eliminate themselves as a concern with this test. Here’s how it goes:
- Analyze their equipment: If they’re scanning items with their camera phone, or keying in items manually, they are irrelevant.
- Analyze their scanning style: (Applies mostly to books, but may apply to other Amazon categories as well) If they’re scanning every book, they’re irrelevant. Any semi-experienced Amazon seller knows how to filter out books that have a high likelihood of having no Amazon resale value, and focus on the ones that have a higher likelihood. If they haven’t developed this ability yet, they are either newer, or aren’t growing as a seller.
Like I said, the vast majority of Amazon sellers eliminate themselves as serious competitors with the Visual Test.
Competition Elimination Test, Part Two: The “Going Over Their Leftovers” Test
So now we’re in the danger zone. You have an Amazon reseller on your turf, who passed the visual test. They have solid equipment and seem to be methodical in their sourcing style.
This second test will eliminate 90% to 100% of everyone as a serious threat.
I repeat: Almost no Amazon sellers have any idea what they’re doing.
Here’s the test…
- Sit back until they’re done scanning a specific area and are out of sight.
- Walk over and scan their leftovers.
- Be completely floored at how much value they left behind.
I’ve been running this test for years, and I still can’t believe how consistently I find TONS of profitable books where I just watched another seller scan.
Knowing that almost every Amazon seller has no idea what they’re doing doesn’t stop me from having minor heart palpitations anytime I encounter a new sourcer at one of my spots, but I’m almost always put immediately at ease when I scan their leftovers.
Most of the time, in under 30 seconds, I’m left to wonder: How did they miss this book? (And this one, and this one and this one….)
Back To The Trespasser At One Of My Sources…
He passed the visual test. He had a barcode scanner and seemed to be deliberate in the way he scanned some books and not others. Unfortunately, he passed the Visual Test.
He finished scanning the bin and left for the register with a few books. I swooped in for Part Two: Going over his leftovers…
What he left behind was insane: Textbooks ranked 150k with $45 Merchant Fulfilled value (I didn’t even pay attention to the FBA price). Newer titles on subjects that every trained seller should hone in on (a decent collection of recent personal finance books), a audiobook (why do so many sellers ignore these?), and more…
No matter how many times I see a competitor and run this test, I’m blow away each time at how much value other Amazon sellers leave behind.
Repeat: Most Amazon sellers have no idea what they’re doing…
Why Are 95% Of Amazon Sellers So Bad At Sourcing?
How do we explain Amazon sellers literally staring down profitable inventory, and walking away?
Its not exactly fair to declare other Amazon sellers as “bad,” just because I found value where they didn’t.
This phenomenon is more accurately either 1. Yes being bad at Amazon selling, or 2. Amazon sellers having different buying standards.
Here’s a short list of the reasons our competition can have profitable books (or anything) in front of them, and leave it behind:
Why Amazon Sellers Leave Behind Profitable Inventory
- They’re bad at Amazon selling. Let’s get this one out of the way: Yes, they might just be totally incompetent on how to source profitable inventory to sell on Amazon.
- They don’t understand Amazon sales rank (“BSR”). They may be wildly misinterpreting Amazon sales rank, thinking that “good” (might demand) ranks are actually “bad” (low demand). Very common among novice Amazon sellers.
- They have more conservative Amazon sales rank (“BSR”) criteria. They may understand Amazon sales rank, but be more risk averse, and stick to sourcing only the most high demand inventory. Personally I have no problem buying books ranked 5 million (or worse) when there’s profit there, but there’s Amazon sellers on the other end of the spectrum who stick to 500,000 or better (or even 100,000 or better).
- They’re Merchant Fulfilled sellers: If you’re an FBA seller (I am), you know there’s tons of Amazon inventory that has no Merchant Fulfilled value, that does have FBA value, They’re not leaving value behind, its just not valuable for them.
- They have more conservative profit margin standards. They’re looking at the same numbers you are, but simply need more profit to invest in inventory than you do.
- They don’t know how to spot value. They’re standing in front of profitable inventory, but don’t scan it because they don’t know what to look for. Since you usually can’t scan everything, they’re giving their attention to the wrong items.
Recap: Why You Should (Almost) Never Be Deterred By Competition
- Most sellers have no idea what they’re doing.
- Most of the rest having different buying standards than you.
- You can quickly put yourself at ease by practicing the two-part Competition Elimination Test.
Your competition is irrelevant.