Amazon Purchasing Guidelines and the Profit Bandit App

Amazon Purchasing Guidelines and the Profit Bandit App

I have had a few requests from readers of the blog to do a post that covers how I decide what to buy to resell on amazon, so that is what I will be posting about today.  There is an app called “Profit Bandit” which I use that I find very helpful in providing information that I find valuable to make decisions on whether or not to purchase inventory.  Just to be clear, I am in no way affiliated with Profit Bandit, and I will not receive any compensation if you buy the app or click on any of the links herein.  It is simply a service that I use, and I find it to work well for me.  Profit Bandit can be downloaded for a one time fee of $15.  I also should note, that I have a Samsung Galaxy S3, which is an android phone.  So, if you are one of the millions of iPhone users out there, the screenshots included herein may not be exactly what they will look like on your phone.

UPDATE 3/21/2015: I now use Scoutify by InventoryLab as the scanning app for my business.  The remainder of the information in this post remains an accurate representation of how I would use a scanning app to make decisions on what to purchase to sell on amazon.  If at anytime you want to see the most up to date listing of the products and services I am using, you can find it on this page on my site:

You do not need the profit bandit app to sell on amazon, and there are other apps out there that provide similar services with a large range of prices.  Before I started using the profit bandit app, I used the amazon mobile app when looking items up in stores.  Both of these apps have a bar code scanner that allows you to use your phones camera as a bar code scanner for any products with a bar code versus entering information manually.  This scanning feature is a huge time saver! Below is a comparison of a screenshot from each displaying what comes up if you look up the board game “Wits & Wagers.”  This is a very fun game, but it is just being used for an example today.  Here is a screenshot of the amazon mobile app (HERE is a link to the app):

Amazon Mobile Screenshot

Amazon Mobile Screenshot

And, here is a screenshot from the profit bandit app (HERE is a link to more info on the app):

Profit Bandit Screenshot

Profit Bandit Screenshot

As you can see, the amazon app is designed more for buying products through the app, and the profit bandit app is designed to provide the information you need to make a buying decision.  There are a few features of the profit bandit app I will be pointing out throughout this post, but if you want to see all of the features, the maker of the app has put together this guide HERE.

The key information from the app that I use is the selling price information and the sales rank information.  The price information is available on the amazon mobile app, but the sales rank does not display unless you look the item up on the full site.

In general, I look for items that I can make at least 100% return on my money on.  This means that if I spend $10 I want to be left with at least $10 in profit after paying for the item and all shipping costs and amazon fees.  A rough guideline that is often given to new sellers is “the 3X rule” or “the 3 times rule.”  This “rule” states that you should look for an item that will sell for at least triple what you pay for it.  So if you paid $10, $10 would go towards shipping and fees, and $10 would be left over for profit.  Please be advised that this is NOT a hard and fast rule, and is simply a guideline to consider when starting out.  The takeaway here is, in general, that I look for a 100% return or better when purchasing inventory to resell on amazon.

Another main component that factors into my decision is the sales rank of the item.  The sales rank is a number provided by amazon for certain categories that ranks an item based on the last time that it has sold.  The lower the number the better the sales rank.  It is not a best sellers rank where the #1 item sells more than all the rest, although an item with a sales rank of 1 could be the item that sells the most.  Here’s an example that will hopefully add some clarity: A Sony DVD Player has a sales rank of 20,000 in electronics on November 1st, from November 1st through November 15th there are no sales of this DVD Player, the sales rank on November 15th is now 52,000 in electronics.  Now on November 16th someone purchases one of these DVD players, on November 17th the sales rank of this item is 8,500 in electronics. On all of these days the item was exactly the same, but the sales rank varied between 8,500 and 52,000.  Just make sure you understand that it is an indication of the last time an item has sold, and is not strictly a best sellers list.

I prefer not to hold on to items for more than about 2 months so I look for items that are below a certain sales rank number based on category (amazon has many different categories).  Here is a table showing the ranks I want items to be below (have a lower number than) for me to make a purchase by category for the main categories that I purchase in.  The “other categories” section is for categories I don’t generally purchase in, but will on occasion if I find a good deal.  sales rank tableThese are the general guidelines I look for in terms of sales rank when purchasing items.  I do not always follow these 100%.  For example, if I find an item with a 2,000,000 rank in books, but it is available at a thrift store for $1 and the lowest price on amazon is $50, this is something I would most likely buy.  If the potential return is very high, I am willing to accept a higher level of risk that the item will not sell.  So, these sales rank numbers are my guidelines, not hard and fast rules, that I use when purchasing items to sell on amazon.  You will also want to consider seasonal factors that may be causing items to have an abnormal sales rank.  For example, if you look up Christmas Lights in the home category in December, they are likely to show a much better sales rank than if you looked them up in May.

The sales rank number is one of the main features of the profit bandit app that I find very useful.  Another big benefit is that it shows the FBA offers separately from the non-FBA offers.  This gives me an idea of if I can make a better return by merchant fulfilling an item, or using FBA.

Here are 2 other features I particularly like.  In the bottom right you can adjust your “buy cost” for the item and have an updated profit calculation for the item based on the current lowest used or new price available.  Then if you click on the profit number it shows you how the calculation is done.  Here’ s an example:Screenshot_2013-12-09-00-08-31There also is a box you can check and it will show you the FBA profit calculation.  The costs displayed are estimates, and your costs may vary, but it is great for getting a quick idea of your potential return.  The other feature that is very helpful is the ability to search for the same item on many other sites.  You can look up the same item on eBay, or view the exact amazon detail page to verify the information, among other sites.  Here’s a screenshot: Screenshot_2013-12-09-00-08-48 To get this screen, you simply tap to the right of the image of the item.  I find this to be helpful to obtain further information about a potential product to purchase for resale.

This post covers the main information I use when deciding whether to purchase an item for resale or leave it on the shelf.  To recap, I generally look for a 100% return on my money and a sales rank better than are shown in the table above.  If you do not have profit bandit, you can look up items on the full site and obtain the sales ranks this way.  If you need help with this, leave me a comment and I will explain.

Hopefully this gives you some insight as to how I make my purchasing decisions for selling on amazon.  If you have questions please let me know in the comments! Also, if you have topics you would like me to write a post about PLEASE let me know, as that is how this post came to be.

Thanks for reading!

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