Calculating Potential Profit Instantly With RevSeller

by Brandon | Last Updated: September 12, 2021

Overview

Today, let’s talk a little bit about setting up your Amazon FBA business and how we’re going to start evaluating products to buy and sell using Revseller.

Now, hopefully by this point you have your Amazon Seller account all ready to go, if not…go back and read my first post on getting started with selling on FBA.

As you get going with your journey to selling on Amazon, you’re going to be asking yourself several questions, and one of them is going to be…can I make money on this item?

You may see an item selling for $20 and you can buy it for $12 and you think wow, $8 profit on a $12 item is not bad. But there are many costs you have to consider.

• Amazon commission percentage, which is 15% for most products.
• FBA Pick and Pack fee, which is basically the cost for the Amazon Warehouse to ship it to the customer that purchased your item.
• Storage fees…these are next to insignificant if you have a fast moving product. But they can certainly add up if you get stuck with a product that doesn’t sell. And as a new seller you’re going to make some bad buying choices…it’s just the way it goes.
• Costs associated with sending your product to the Amazon Warehouse. This could be boxes, tape, packing material, item labels, shipping labels, etc. You will be able to re-use a lot of boxes and packing material from product that gets sent to you but you will still have some of these costs from time to time.

DO NOT GET DISCOURAGED

Even though I just mentioned you’ll make some bad decisions with the products you go after, this is something that happens to EVERYONE. Even years into the game, it still happens to me. (I’ve been selling on Amazon since 2014.)

There are several factors that can contribute to this.

One is maybe the product was too readily available at retail so it was selling at a good price when you saw it, there was profit in it, but by the time you sent it in the price tanked. Supply and demand is a huge part of the process you’ll learn. Markets are efficient and, like water, will always find their level.

What that means is the price will always equalize to the point where supply meets demand. If there is a large influx of products from sellers, there is not enough demand willing to pay higher prices. So you will see sellers trying to get rid of their product and undercutting the next seller by pennies or maybe even dollars to try to chase that buy box. Eventually the price will stabilize.

You may have to hold the product longer to be profitable, and that is OK. It happens. I’m going to show you some things in future articles that I’ve learned to try to minimize these instances though.

Anyway, let me get back on topic here.

RevSeller Chrome Extension

The easiest way to check if an item will be profitable or not is to use the RevSeller Chrome Extension. So, you will need the Chrome or Brave browser for this extension to work. It’s probably also important to note this only works on Desktop versions. I’ll go over some mobile options that do some similar things in later articles (in case you’re out and about and want to scan in store.) But for now, we’re going to be working mostly on desktop anyway.

I highly recommend using your Chrome or Brave browser for all things Amazon seller related. It will work better with the extension we’re about to install.

So head over to the Revseller site and sign up. They offer a free trial, I believe 30 days, with no credit card needed. Then you can try it out and decide if you like it or not, it’s only $99 a year if you decide it is as good as I believe it is.

Now, for example, here is what an Amazon listing looks like with no Revseller extension installed. If you want to play along at home, here is the link to the same listing I’m using.

Now, let’s take a look at the magical transformation to this listing when we get Revseller installed.

Alright, cool. We’ve got a nice little box that popped up to the right of the image section.

RevSeller Box Explained

So, what the heck are we looking at? Well, let’s take a gander at my awesome photoshop skills where my lovely wife just taught me how to draw boxes and arrows.

Breaking down the image above we have…

1. Rank

You may also see this mentioned as a Best Sellers Rank (BSR) or just Sales Rank. The rank is different for every category (the box with #2 is the category) and it is on a scale of basically 1 to infinity.

A lot of people will say something like “the higher the rank the better” which leads to some confusion. All you need to remember is the closer to 1 the better and faster this item sells.

Rank also changes seasonally too. For example, obviously the Toys & Games category does better around Christmas. So even an item with a rank of 100,000 is going to do well that time of year…multiple sales a day. But, let’s say in June maybe a rank of 100,000 only gets you 1 sale every few days, especially when competing with multiple people.

A 13k rank at the time of this writing (in September) is probably doing about 30-40 sales a day. There is a free tool that will give you some estimates, the Jungle Scout Estimator, but I find it is a little on the low side usually.

When looking at rank, it is important to understand what is affecting the rank the most. Is it because Amazon has been in stock at a lower price? This usually will ramp up sales velocity because of the cheaper price or people like  you and me buying to resell. We’ll want to look at what the sales rank is like when Amazon is out of stock and the price goes higher.

If the item can maintain a lower (closer to 1 sales rank) even when Amazon is out of stock for a while then we’ve basically found gold.

In summary, this is #1 because it is the most important thing to pay attention to when making a buying decision.

2. Category

When you are a new seller you should be very excited to start making money. So you might be tempted to sell anything you can find across many categories. I recommend that you should probably hold up and pick ONE category and stick to it for a while before you start venturing off into other categories.

There are a lot of nuances that come with selling on Amazon, and even selling in one category. It’s best to learn your selected niche pretty well before moving on to other areas. Don’t worry, you can make more than a full time living just operating out of a single category.

So, as you can see the category showing in box #2 is the Toys & Games category. I almost exclusively play in this category because it is the one I chose in the beginning and have stuck with it.

Why Toys & Games? Well, there was a particular sub niche I was interested in: LEGOs. (Fun fact…did you know that on average LEGO sets appreciate 20% a year after they retire? That’s a little teaser for a future article I’ll be writing.) Also, toys sell all year round but ESPECIALLY well at Christmas. Duh. With all the supply chain issues going on in the world now and news outlets talking about toy shortages I’m expecting Q4 2021 to be historical for resellers.

3. 90 Day Averages

We can see that this item is in the top .16% of sales for the Toys & Games category. That’s really good, anything under 1% is interesting to us.

Next we see the 90 day average price is $24.06 by 3rd parties. This tells us Amazon hasn’t been in stock and the price has been higher.

Also, when Amazon has been in stock, their average price is $19.25. You may think this is odd because the current price is only $13.03. But, what happened here is Amazon was selling at $27.67 just recently but then some competitors offered it for cheaper.

For example, Walmart is the first one to offer this item at $13.03, so once Amazon found this out they lowered the price to match it. And Amazon also stuck an order limit of 3 on the item. So, in this case it’s actually better to order the item from Walmart.

An average rank over the last 90 days of 39,753 is still really good. This means that even when Amazon has been out of stock the rank is staying under 100k for the most part, which means there are still sales to be had.

The number of drops over the last 90 days is an indication of changes in the sales rank by more than 3%. I really don’t use this number in my considerations a lot.

4. FBA Sales Calculation

The box highlighted with #4 is where we’ll get our down and dirty pricing metrics and see if we can actually make some money. Now, it defaults to the price of whoever has the buy box or the lowest offer. We’re only concerned about the side I have highlighted for now, which is FBA. The section to the left under FBM is Fulfilled By Merchant, IE if you were sending direct to the customer on your own. It certainly has it’s place and time to be used but let’s just focus on FBA, OK?

So we can see that it inputs $13.03 in the top box, the Sell Price, because that is what Amazon is currently selling for. And, even if we got the product for free and tried to compete at this price we’d only profit $4.89 after fees.

So clearly we need to sell for a higher price to recoup our initial cost + fees to ship to Amazon + fees for Amazon to ship to the customer and still have some profit left over to make it all worth it. More screenshots with detailed calculations coming up after I finish explaining the other highlighted sections.

5. Can You Sell This Item?

This is actually one of my favorite parts of the RevSeller extension. Remember when I said you’ll want to use Chrome for your Amazon Seller Central account also? That’s because you’ll actually be able to link RevSeller to your Amazon seller account with a secret API key.

Once your two accounts are linked up, you’ll be able to see at a glance whether or not you can sell this item.

As a new seller, you’re probably going to be “gated” in a lot of items/categories. Amazon does this to limit shady sellers (they still get through) so we have some work to do to get your account unlocked so to speak and be able to start selling. I’m going to cover getting ungated in Toys and Toy Brands because that is what I focus on and what I know best. There is plenty of information on getting ungated in other categories/brands also which I’ll share as well.

Sometimes, even though you’re ungated in a brand, Amazon will still restrict who can sell on a particular item. For example, I am ungated in Toys and I can sell this Moana toy in the example, as you can see by the green “Sell-New” in box 5.

However, I am ungated in Toys and LEGO but I still cannot sell certain LEGO sets. There is no concrete reason on why Amazon does this. They can also change it at various times. The example I am about to show you is a LEGO set I purchased and then was restricted afterwards. I’ve also seen restrictions lifted here and there, though rarely. So what can I do now that I purchased these LEGOs? Well I can hold them and hope the restriction goes away, or I can sell them on eBay. I haven’t decided yet.

6. More Details – 90 Day Averages

The Arrow with the #6 next to it that points to the little plus sign is something you can click to pull up even more data. There’s really only one thing in there I care a lot about and I will discuss it with an example in the next image. That is Amazon OOS (out of stock) rate over the last 90 days. You want to see if Amazon has been having trouble staying in stock. If they have, this creates an arbitrage opportunity for you to buy this item, resend it to Amazon and sell it to customers once Amazon has sold out.

It’s important to remember that Amazon may have more stock on the way. It is very hard to tell how long they will be out of stock. I’ve even seen them slow roll stock too. So it will say “only 7 left” and once those 7 are gone the listing may then switch to a day later delivery date and they now have 27…buy those 27 and it will switch again to another delivery date and Amazon has 43 now. It can be an endless game trying to find out how much they have sometimes. 😉

In the above image you see that Amazon has been out of stock 59% over the last 90 days. So out of the last 90 days, Amazon has only sold on this listing for 47 of those days. It does not mean it was 47 days continuous, it could have been segments where they were in stock for 10 days, then out of stock for 20 days…it can vary like that.

If you want to learn how to see exactly when they were in stock and for how long, there is another awesome tool that I will do a deep dive on called Keepa.

But, for now, I want to bring your attention to the right side just above the Add to Cart button where I have highlighted that Amazon only has 1 in stock remaining. This is actually something that Keepa supplies and is extremely useful info. So we can now start to assume that Amazon is about to go out of stock again. For how long? Who knows…they may have a container coming into the port now and will have 5000 in stock next month. But we can make an educated guess they probably won’t.

Calculating Profit With RevSeller

Alright, alright, let’s finally see if we can make some money. Look at the picture above where I highlighted the FBA Sell Price/Buy Cost box again.

We can see that the next sellers in line after Amazon goes out of stock are selling this item for $27.57, so I’ve entered that in our Sell Price box. We also know that we purchased this item for $13.03 each.

Now we see Revseller gave us some new info under these boxes…the NET PROFIT of $4.21, it also tells us that our ROI is 32% and our Margin is 15%. NICE!

So, if you click the little “i” in the circle where I have the red arrow pointing to you’ll now see some more information on the fees associated with selling this item and how we achieved the Net Profit amount. It does factor in a month of storage to sell through which I think is fair. You can always change this number if you want.

IMPORTANT NOTE

This calculation does not factor in the cost to actually send the item to Amazon’s warehouse. Nor the shipping materials, if needed. (IE Boxes, Tapes, Packing Material.) This is another nuance you will need to learn.

Here is my rough guide for figuring on shipping small items like this.

I like to factor $1 per item. Walmart will let me buy 12, so I’m going to ship 12 together. I’ll probably have to re-box them. Shipping will probably be around $9 or $10. I’ll re-use air bubbles from previous shipments. So around $12 total, or $1 per item.

What does that do to our profit calculations if we change it to $14.03? Hopefully by now you’ve got the extension installed and are trying it out to get the hang of it. But if not, here is another screenshot.

Well, bummer, we dropped all the way down to 23% ROI. But, this shows you how important it is to factor in all of your costs.

It’s also not the end of the world, because we can also just wait for some sellers to sell through their inventory and the price will increase.

I generally try to get a bare minimum of a 30% ROI on any product to make it worth my while. That’s just me. I like to look long term. My labor costs something…researching products, packing products, taking the risk that the product has to sit for a while if it doesn’t sell right away, storage costs; they all add up. Especially if you ever want to scale this business and hire people.

So 30% to me is the bottom line. For Christmas season I expect at least 50% returns. (And I aim for 100%, which is completely possible.)

Using RevSeller To Price This Item

Using historical data I can see that this item actually hit a price of $60 before (not for long, though.) And it has hit $39.99 a couple times. So being that historically speaking we know this has already hit $39.99 before and I will be selling these during the Christmas season, I will be pricing them at $39.99 and monitoring the listing.

If they start to sell quickly I will adjust the price upwards a $1 or $2 at a time. If they sit for a while but I can see that maybe I can move them for $37.99, I will consider moving the price down.

I’ll spare you looking at any more screenshots and just tell you that if I sell at $39.99 the ROI will be 98% ($13.77 profit) and if I drop down to $37.99 that will still be an 86% ROI ($12.07 profit.) I’m very happy with these numbers.

Final Thoughts

Well, this certainly turned into a longer article than I imagined but I hope you found some value in it. Revseller is a very powerful tool to have in your arsenal. After Revseller, you definitely want to learn how to read Keepa charts.