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.
That’s what I keep telling everyone. No matter how many scanners come through before me I still find valuable books. I work a little harder than most, and have “secret” categories everyone else seems to avoid. They run in, scan the first few textbooks in each row, and leave. While they are out there burning gasoline driving everywhere, I’m scanning and making profit. I’ll stay put as long as the books are coming in even if it’s 3-5 hours. And, I won’t stay if I’m not making at least $100 per hour in retail selling price in my finds. In other words if I can’t clear $50 per hour take home then it’s pretty bad. So maybe then I will move on. I’ve had plenty of scanning sessions in under an hour and walk out with $500-1000 worth of books. With a scanner and fast hands you can really move. Once you stop wasting time looking up books that turn out to be duds, you are now a formidable adversary the other guys won’t keep up with. Best advice, go out and scan everything that is not fiction. If it’s super old I will slow down for some, and always for book sets. Otherwise just get good at scanning super fast. My setup for speed: scanner, scoutly, and ear buds. The earbuds double or triple my speed. I don’t even tweak the profit triggers anymore. If it shows profit first thing I look at is new selling price. If that’s below 20-25 then move on. If it shows dud, quick look at if it ever sells (e-score) , and the selling price. If it tends to sell for at least $30 with less than 2m rank, might be a good one. If it’s a dud that sells for $50+ with a 3m rank, hell ya( e- score 3-10 ish).
One way I stay safe is try to make a net profit at least 3x my spend. PLUS, don’t work for pennies. Making $2-3 is actually a loss if you count listing and repricing. Go for at least $5, but better at $7-10 + . Don’t worry, there’s always another profitable book a few scans away.
If you scan like a madman for a couple weeks you’ll get past the ” this doesn’t work” mind chatter, and you’ll get to where you can’t even believe how much book money is lying around every few feet, anywhere in the world. There’s gold in them there books!
If all you have is a couple hundred bucks, there is no better safer way to start on Amazon.
Peter Valley says
I hope everyone studies this comment to understand how successful Amazon sellers think…
But if 99% of the books in most thrift stores are worthless for FBA—as you’ve always said—then that means—at least in the stores I frequent—that there is not usually going to be more than 1-5 or so books worth buying at any given point in time; not much margin there, especially if competitors grab even a couple of them.
Peter Valley says
The chances of a competitor identifying that 1% is always minimal.
Problem with Peter’s approach now is Amazon limits to your inventory when your turn rate is slow as it tends to be selling books. If you’re a veteran seller perhaps you have more allowance. But if you’re newer, your inventory will be limited to 1000-3000 units. You can do FBM and/or focus on lower ranked (often lower profit) books. Or you can expand to other faster moving categories to maintain a higher inventory amount. The book game has changed on Amazon.
If you can’t make a living with an inventory of 1000-3000 books, it’s usually because tons of worthless junk is being sent in to begin with. I’ve sold only books and only FBA for years with an inventory never exceeding an average of probably 400-450 books. Book quality and ASP trumps a big inventory just for its own sake anytime.
I noted a comment that said scan everything that’s not fiction. That is perhaps a good idea at first, for some venues, and as long as you’re not entirely giving up on fiction as a money-making source. There’s plenty of fiction that’s worth money, but like all else, you have to know what to look for and what to pass over. Learn to think beyond Amazon when it comes to fiction, too. That’s always a good idea.
Peter Valley says
Absolutely. Merely deliniating between fiction and non-fiction isn’t enough. Like you said, its a start, but scanning every non-fiction book in most environments is still an impossible and unnecessary task.
I went to a thrift store the other day that I hadn’t been to in over a week. Found a high-demand textbook with the lowest Merchant price at $200; Prime offers well above that. Needless to say, I bought it. I know other resellers frequent that store all the time, and so I guess they all just missed it.