Today, we will go over sales rank and why you should use it to gauge what items you should stock up for your Amazon FBA retail arbitrage business.
1) What is Sales Rank?
Sales Rank refers to data about the popularity of a product on Amazon. Knowing the sales rank of an item will help you determine whether or not you should buy that item – or a similar item – to sell on Amazon.
Understanding the meaning of sales will also help you to identify products that are on demand, as well as those that are not so you can avoid them. The best way to interpret sales rank is in terms of best seller, such that a Sales Rank of #1 implies that it is the best selling product in that category. The higher the number, the less popular that product is.
It is easy to check the Sales Rank of any item by simply scrolling down to the product details section. It is also identified as “Bestsellers Rank”.
Nearly every item on Amazon has a sales rank; however, there are some instances when it is not shown, or the product is given a zero. This may mean one of the following:
• If there is no sales rank shown, probably a very long time has passed since the product last sold. It could be months or years. There is no definite way of knowing
• If the listing is completely new and has not sold a single unit yet.
• If the item is listed in a subcategory whose main Amazon category does not have a sales rank (usually for the electronics subcategory)
Sales rank is not a predetermined or static number!
The item you scan has a specific rank, perhaps 100, at the time you look it up on Amazon. It changes from time to time and may be higher or lower the next time you check, considering that Amazon updates the sales rank number each hour. The rank only gives you a rough idea of a product’s popularity.
It is claimed that Amazon resets this ranking every 60 – 90 days to keep products visible. So if a product does not sell within 90 days, its ranking can easily plummet to a number greater than 100k.
It is advisable to watch the sales rank of a product of interest over time to see how it moves. For instance, a product with a sales rank of 50 may bounce around based on increased sales or diminished sales. This fluctuation is particularly significant if you can source the item locally and sell it regularly, for you to identify the popularity of the product and the frequency of a purchase.
Actually, sales rank only tells you the products that have sold recently. So, it cannot adequately tell you if a certain item is good or bad. If the rank of a product you are interested in is outside the desired range, it probably means that consumers are not purchasing that item on Amazon at this time.
2) Sales Rank Safety Zones
Sales rank is vital information as it helps you make decisions about:
• What to purchase
• How many units to buy
• How many units to ship to Amazon at one time
• What to leave on the store shelf
Here is what fbamastery uses to guide you whether you should buy something based on ROI and risk.
When sourcing an item to send into Amazon for fulfillment (FBA), it should ideally be within the 1 percent Bestsellers Rank (BSR). As a rule of thumb, you should check the 3 month average for an item to determine whether it has a “good” or “bad” BSR.
For instance, if the average (3 months) sales rank for a product in the Toys and Games category is 30,000, and has fluctuated between a sales rank of 70,000 and 10,000 within this time, its average is still within the top 1% BSR (50,000), which makes it a good sourcing item.
A BSR of up to 5% is not necessarily bad; it just means that it will take longer for you to sell, possibly with bigger margins.
Sales rank safety zones are personal, and within a range that you find comfortable depending on how fast you want to sell. Still, it is best to aim for the top 1%, taking into consideration other factors. Smaller ROI for quicker sales is a good strategy for most FBA sales.
You should note that there is almost always a trade off between profit margin and BSR%. This is with the exception of special items that offer a fantastic sales rank and sizeable margins.
3) Profit Margin and How Fast an Item Sells
Sales rank is not an indication of how fast an item will sell, though the fastest selling product will have a ranking of #1.
It is wrong to make generalizations that a product will sell within a week, fortnight, month, or any specific timeframe based on its rank. Sales also depend on other factors such as:
• Demand versus supply – whether there is a scarcity of the product
• The number of competitors you have
• Time of year, etc.
That said, a product with a 1% BSR is likely to sell faster than one with 5% BSR. It all depends on how urgently you need to make your returns and adversity for risk.
Someone who’s solely dependent on FBA sourcing for income will be best sourcing for items well within the 1% BSR, taking into considerations other factors to choose a fast selling category. On the other hand, a person looking to invest their savings – as opposed to keeping money in the bank and gain minimal interest – may choose to source products with a high sales rank but considerable margins, perhaps 5% BSR, and be contented waiting for the inventory to sell.
4) Using CamelCamelCamel to Determine What To Buy
As already established, simply looking at a product’s Sales Rank does not give you the whole picture. This number does not tell you whether the product has just started selling after a long hiatus, perhaps because it is only popular during holidays, or whether it is a fad whose popularity is waning.
CamelCamelCamel is a tool that shows you a product’s price and Sales Rank history. It is a resourceful tool that provides price drop alerts and keeps you informed about trends in product pricing, as well as the current prices of items you are considering buying.
CamelCamelCamel allows you to visualize the past performance of a specific item by simply searching for the product’s title or ASIN. The result is a graph displaying the product’s price history and sales rank for a period of 1, 3, 6, or 12 months, or even longer.
It is free to join and use the pricing and ranking services on CamelCamelCamel. You can:
• Monitor the price of items you are interested in
• Browse items by purchase popularity and recent price drops
• Review history charts for product pricing to identify trends
• Create and receive price drop alerts for products you are interested in
The price history is important information as it allows you to view the price imposed by other sellers in the past, so you can have a good idea of your ideal price range.