E-commerce sales are slated to pick up in the coming years and by 2023 they are anticipated to hit $6.54 trillion, according to Statista. This means that currently the time is prime for you to source reliable products from China to sell on Amazon.
If you are unsure of what your strategy should be to find reliable products in China, here are seven smart tips that can guide you.
Seven smart tips for sourcing reliable products in China
#1: Evaluate profitability
For every product that you are interested in selling on Amazon, evaluate if the cost of sourcing and shipping the items to Amazon is significantly lower than your Amazon selling price.
The rule of three is one of the tools you can apply to find out if a product is profitable. The sales proceeds can be broken up into three components: one-third of sales goes into fees, one third in landed costs and one third is the profit you make. For instance, if a product sells for $21, you should anticipate a profit margin of $7.
The landed costs refer to collective costs to manufacture and ship your product to the warehouse and includes:
- Cost of inventory
- Custom duties and taxes
- Shipping
- Inspection fees
The costs also include the referral fee, which is the “commission” that Amazon charges for each item sold on the e-commerce platform. The typical fee is 15 percent of the product’s selling price that you pay when a product is sold on Amazon. There is also a selling plan fee for professional Amazon sellers which is $39.99 while individual sellers who sell less than 40 units in a month need to pay $0.99 per item sold.
Fulfillment fee is a per-product fee that covers the costs related to Amazon FBA packaging and shipping. This cost varies depending on the volume or weight of the products. Additionally, there is also a storage fee that FBA sellers pay. This can be a long-term storage fee or a monthly payment.
Retail price
Many experienced Amazon sellers recommend finding a product that has a retail price of $25 and not more than $50 USD. This price range enables sellers to recover direct costs that include Amazon fees and advertising costs. Products that cost more than $50 can mean a drop in conversion rate and the number of customers who view and buy the product.
Low seasonality
It makes sense to choose reliable products that are not seasonal on Amazon. You can make optimum profit by selecting products that sell year round.
Product reviews
For top sellers, the number of reviews are under 100 while the best product niche to choose are those with reviews below 200.
#2: Evaluate if the product is easy to ship
When you are looking to source reliable products from China, a key factor to remember is that lightweight and small products are easier to ship, less susceptible to transit damage, and cost-effective. These products are also easier to ship through air freight which means they reach the warehouse in a quicker time, allowing you to start selling them immediately.
Ocean freight is typically needed when you are shipping large volumes or when the product is heavy or bulky. This can result in a delay in shipment, apart from raising the risk of the products getting damaged due to weather/humidity fluctuations.
#3: See if there is room for improvement
Suppose you source complex or very high value products from China and your customers' feedback or reviews are not favorable. In that case, it may be impossible for you to get these products modified by the China manufacturer. Choose products that are malleable for improvement based on user reviews. You can read the reviews for products listed by your competitor in your niche to get a feel of what products are easy to modify/improve upon.
#4: Easy to produce
Extremely complex products, electronics, or glass can be difficult to manufacture, require a high level of technical expertise and may have manufacturing and quality control issues. When you start out as an Amazon seller, it is best to avoid such products that are not reliable.
#5: Demand for the product
The key component of a reliable product that you can sell on Amazon relates to its demand. Evaluating if there is a demand for the product on Amazon is the first step to determining what product to sell on Amazon and formulating your China sourcing strategy.
Research on whether people are looking for the product on Amazon and determine if it is in high demand from customers. The sales figures on Amazon can help you understand what type of products are in demand.
Some of the products that sell the most on Amazon are in these categories:
- Home and kitchen
- Toys and games
- Sports and outdoors
- Beauty and personal care products
- Baby care
- Household and health care
- Clothing, jewelry, and shoes
- Home improvement
- Garden equipment
- Tools
