The rise of the internet — and the smartphone, in particular — has made way for a whole new world of money-making opportunities.
The trade of driving taxis is now open to any driver with a car and a smartphone. Babysitters and dog walkers no longer have to post flyers on telephone poles to advertise their businesses. And reselling items you’ve previously purchased is no longer relegated to yard sales and flea markets.
Buying goods and selling them online for a profit is also known as retail arbitrage, and one of the most popular platforms for making money through retail arbitrage is Amazon, specifically Fulfillment by Amazon (FBA).
But how do you know what to sell? This guide will share some strategies to help you decide which products to sell on Amazon, plus we have the best products to sell on FBA this year.
How to Choose Products to Sell on Amazon FBA
You’d be surprised at the things that sell well on Amazon. If there’s a product, there’s always at least one person willing to buy it.
However, if you’re getting into retail arbitrage, you’ll want to sell products you can move quickly to keep your cash flow strong and get that near-immediate return on your investment.
So how do you know which product to sell? When selecting items for resale during your ventures out to the clearance racks, keep a few things in mind:
Look at the Amazon Best Sellers List
If Amazon is your marketplace of choice, then the best place to start is the Amazon Best Sellers list. This list is incredibly helpful because it allows you to narrow your view down by category, from Toys & Games to Electronics to Movies & TV and beyond. Items that rank high on the best sellers list are selling fast so you’d be wise to get in while it’s hot.
You should also do some research into Amazon’s Best Sellers Rank, or BSR. Products are assigned a rank (starting at #1) per category. So if an item is ranked #1 in Home & Kitchen, it is currently the very best seller in that category.
Does that mean you should only invest in the #1 best sellers? Absolutely not. In fact, you may have a harder time selling that product and making a profit since it’s in such high demand, but you should still pay some attention to BSR.
If you list an item that has a BSR of 100,000, you can expect to sell roughly one unit of that item a day, according to Just One Dime. If the BSR is 50,000, you’ll likely sell two units per day; if it’s 25,000, three units a day; and so on.
One caveat: This is not an exact science, and it does vary from category to category. Your likelihood of selling also depends on how well you optimize the listing and the price at which you list each item — and whether your competition is undercutting you.
In addition to the Amazon Best Sellers list, you can check out sites like Keepa or CamelCamelCamel to determine a product’s sales history. This allows you to see how popular an item is so you can determine how quickly you might be able to move that inventory.
Beware of the Extremes
Selling in an untapped market can be highly rewarding — but it’s risky. Chances are good, if a product isn’t already available on Amazon, it’s likely because there isn’t a great demand for it.
Before investing in 200 copies of Troll 2, maybe purchase one, list it on Amazon and see how long it takes to sell. If you’re sitting on that inventory for more than a month, it’s likely not worth purchasing the other 199.
At the same time, buying a bunch of products in high demand can also be unwise. If you buy dozens of popular frying pans, for example, you might face stiff competition from other sellers on Amazon who may undercut you on price. That means you could be sitting on those frying pans far longer than you’d like. Hope you like eggs.
Check Out the Restricted List
While retail arbitrage is legal, brands often “gate” their products, which means you’re restricted from selling them. For example, if you see a bunch of Nikes on the clearance rack at Designer Shoe Warehouse, that doesn’t mean you can go and list them on Amazon as new and sell them at full price.
Amazon also has gated entire categories of products. If you want to sell those products, you’ll need Amazon’s official permission to do so.
Navigating gated brands and categories can be overwhelming, but if you’re going to successfully sell on Amazon, you need to play by the rules. The Selling Guys offers a great resource to get you started.
If you’re using the Amazon Seller app when scanning potential products at the store (highly recommended), you’ll immediately be notified if you’ve stumbled upon a gated product.
Remember Shipping Costs
If you take part in FBA, you’ll pay a fee to ship your products to Amazon. And when you’re not selling through Fulfillment by Amazon, you’re on your own to coordinate all your shipping.
Either way, you’re going to have to pay to ship your products. That means you should look for items that are lightweight, and thus cheaper to ship and better for your profit margin. You also want them to be durable, so you’re not selling a product that could break during shipping and wind up being returned.
This makes clothes, jewelry and small kitchen items especially appealing to sellers.
Best Products to Sell on Amazon FBA
While it’s useful to have the tools and strategies above when determining which product to sell on Amazon FBA, you can also lean into certain categories that have long been popular on Amazon and that are expected to remain popular for years to come:
Clothes are among the best items to sell because, well, everybody wears them, and that’s probably not going to change any time soon.
Clothing and shoes can be very lucrative on Amazon if you find them on sale, perhaps because they’re out of season. Brand names are likely to sell for high prices to the right buyer.
Exercise attire and undergarments tend to be more popular. That’s because athletic wear and underwear are clothing that most people want to buy new (no one wants used spandex or undies from Goodwill), so those have a larger market than the kinds of clothing many people are comfortable buying used.
Here are a few things you should remember:
- Clothing and shoes are one of Amazon’s gated categories. You’ll need to build up a history of selling via Amazon FBA in other categories before seeking approval to sell in this category. But once Amazon grants approval, you’ll be competing with a much smaller group of sellers, meaning you’ll sell more and can list at higher prices, as long as you abide by the rules of selling within a gated category and with gated brands.
- Expect more returns. Because buyers won’t know for sure if they’re keeping the clothes until they get them and try them on, you should expect a slightly higher degree of returns in this category.
- Offer multiple sizes. If you offer multiple sizes, many people will order the same item from you in a new size. You can sell the returned clothes to another buyer.
Everyone loves to get their hands on the latest gadgets. In fact, they’re probably researching your products on one of their new electronics.
Because the world of tech is always evolving, there’s usually high demand for new phones, tablets, computers, smartwatches and accessories like chargers and protective cases.
This category also has a lower-than-typical Amazon commission fee (just 8%, compared to the average 15%), meaning you retain more of the revenue.
Say what you will about e-readers and attention spans when it comes to reading, but books are still among the best products to sell on Amazon FBA. (Remember, books were how Amazon got started!)
You can find cheap books at used bookstores and library sales. When you get a box of books for a few bucks, you have the potential for some serious ROI, even if you buy some books that never sell.
4. Baby Gear
People have had, are having and will have babies for a very long time, and that means there’s a huge market for baby items, from pacifiers to baby clothes to diapers to bottles.
The best part of the baby market? Babies grow rapidly, meaning your customers regularly need to buy new stuff, like clothes and diapers that fit, toys that educate in an age-appropriate way, potty supplies and even different baby foods.
5. Sporting Goods and Outdoor Equipment
Sports and outdoor activities are seasonal, which means you’re more likely to find baseball gloves, swim trunks and grilling tools on clearance in early fall, while you can find an abundance of sleds, hats and gloves on discount in the spring. Scoop these up at the right time, store them until next year, then list them at full price.
Our guide to the best times to buy almost anything will help you figure out the right time to get even more things on sale, which you can then turn for a profit.
6. Holiday Decorations
It’s a similar story for anything holiday-related. Halloween and Christmas in particular are popular among online shoppers, and their related items — Christmas lights, Halloween costumes, things like that — are typically available at great discounts at Walmart, Target and Big Lots a couple days after the holiday has passed.
7. Home and Kitchen Goods
People want quality items for cooking in the kitchen and plenty of accent pieces to upscale their living areas. That means kitchen appliances, utensils and decorative home goods. Think: accent pillows, throw rugs, knick-knacks, succulents, etc.
Items like these sell well on Amazon. These typically have BSRs that make purchasing them worth the investment.
Parents are increasingly turning to the internet for toys, especially when it comes to Christmas shopping. Buying discounted toys after Christmas and listing them during the next year’s fall season could help you net a tidy profit.
If you come across a toy store that’s holding a going-out-of-business sale or you see toys from a popular movie franchise on clearance after hype has died down a bit, you could stock up, then list the toys for sale later, perhaps right before the movie’s sequel is about to premiere and people are talking about the characters again.
Jewelry is in high demand, but it’s also a saturated market on Amazon. The best way to succeed is to find unique jewelry that lends itself to long-tail keywords when tagging the product. Doing so will help you find more niche buyers in a less competitive segment. When you do find the right product for the right buyer, you can typically achieve a high ROI.
Timothy Moore is a market research editing and graphic design manager and a freelance writer covering topics on personal finance, careers, education, pet care and automotive. He has worked in the field since 2012 and has been featured on sites like The Penny Hoarder, Debt.com, Ladders, Glassdoor and The News Wheel. He lives in Ohio with his partner and their three-legged dog.
This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers nationwide to make smart decisions with their money through actionable and inspirational advice, and resources about how to make, save and manage money.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.