How to Deal With Price Tankers on Amazon FBA: A Case Study

One of the biggest frustrations when selling on Amazon? The prices of your inventory tanking.

In this Case Study, you’ll see some screenshots for Inventory Management / Profit Data tools. I am using SellerAMP for Buying Data, and SellerFuse for Sales Data. It’s a nice app, which my friend has asked me to test out for him.

It’s annoying when you purchase something, expecting to receive a certain level of profit, only to then be lucky to breaking even when your items are checked in at the Amazon Fulfilment center.

What’s really weird about price tanking, is that Amazon sellers don’t realise the damage they’re doing. I’m half-certain that they don’t understand that they pay fees, hence thinking selling a £10 item for £15 is good profit, when in fact it’s a loss.

It was Black Friday recently, which gave me the perfect idea for a blog post. My Mission? To go out and find an item that’s profitable now, only to tank when all of the stock has been purchased by FBA Sellers.

I logged onto B&Q, finding this little beauty of a deal. The only difference, it was £11 instead of £22.

Black and Decker Sander FBA Example

I’m armed with lots of screenshots for this one, so I’m going to explain step by step, what happened. So firstly, at the time of purchase it was £20 on Amazon but they had no stock loaded. The lowest FBA Seller was £29.99 and for some reason an FBM seller was trying to undercut the market.

Sander Stats Buy Box

Maybe they saw the B&Q Sale and decided they wanted out, which is fair enough. If it was me, I’d have considered doing the same. You can already see the dip on the above graph, so you probably know what’s to come. However, there’s no point me sitting this one out. I needed to stand by my word and purchase the items, to show you exactly what I am going to do here.

I ordered 86 units from B&Q. Within 2 hours I received a call from the Birmingham branch manager, asking me why I needed so many. He basically knew I was going to resell them. I thought it was game over at this point for this whole project/ case study.

I don’t get called often on the phone, but I have one policy. Honesty. I said I was a reseller, but also doing case studies on selling items. I don’t think he was interested, but he ended up advising me that they need to keep some in stock for Click and Collect orders, or walk-ins. However, he let me have 78 items. Free Delivery. Job done, for now.

These Sanders were quite heavy, so I had to grab multiple boxes and ship them individually. The above is SellerFuse, which I am testing for my friend before it comes to production.

He’s actually looking for some Beta Testers in Q1 2024, so if you’re interested let me know and I’ll see if I can get you on the test list.

When packing them up, I noticed they had charged for 78, but delivered 80. Result. This changed the cost price from £11 each, to £10.72.

I had two options now. Get them in and out fast, at the current sell price. This would be over 100% ROI, which I admit, seemed a little too good to be true.

It was. £12 profit just turned to £3, and the stock of this item was only going to increase.

The same day UPS collected my Sanders, the price had already dropped to £18.99. I knew it was going to drop, but I just didn’t know to what extent. How much stock of this was there? Have all of the FBA Lead groups pinged this?

I could only presume that people had absolutely smashed the stores, collecting and sending into Amazon same day. They will have had the upper hand, as I had to wait for B&Q to deliver mine, which took 3 days after ordering.

I was surprised though to see it dip to this price, starting to accept now I might have just written off £800 of stock. However, I remembered, this was all for the case study. It’s not all too bad! Or that’s what I told myself, anyway.

It’s now been a few weeks, and the price has tanked as low as £17.79, which gives Non-Vat sellers a whopping pound profit. If you factor inbound transportation fees and return/refund rates, this is a definite loser for any seller at this price.

You might be wondering, what can you do in this situation. Well, with the sell price at £17, you’ll have no chance at selling yours for £19, yet alone £29. In this situation, you have two options.

  • You can cash out at £17.79, making minimal profit and most likely a loss if you account for potential returns. 2 returns out of 80, for me, would make this a loss.
  • You can wait. If you need your capital back, this isn’t a good option. If you want to make good profit in a month or two, it’s your best option.

I will add to the above, if you need your capital back quick, you shouldn’t be going all in on a single ASIN. It can be a quick way to lose a lot of money! You’ll also have no money to re-invest in new leads you find.

In my instance, I am going to wait this one out. Selleramp tells me this sells 1,600 units per month. If I exclude 800 units from the available listings on Amazon, the price would be £21.99. I’ve accounted for half the units per month, as there could still be some re-stocks of this item.

However, as there’s no deals now at £11, it will fizzle out. I will sell these items for a minimum of £21.

It will cost me an extra £0.10 in storage fees approximately, which is a small price to pay. It’s the best option too.

I’ll be back to update this one in a few weeks, once I’ve had a few sales!

7th December: Quite a Significant Update

Well, probably one of the worst things that can happen with an Amazon listing, has happened.

This evening, Amazon have came on the Buy Box, wiping the buy price down from £18 to £14.99.

Experienced FBA sellers will know, there is no way to compete with Amazon on the Buy Box. Well, at least my plan hasn’t changed, I guess. I was planning to hold these items, so let’s see how much stock Amazon has.

I’m still hopeful for £19.99. Who would’ve thought it’s Amazon to tank the price!

18th December: All Is Calm Once More

It looks like Amazon didn’t have too much stock, as they were in and out of stock almost immediately. There was no cause for concern, as I advised above. This was a great test for the case study, to show you that there’s no need in panic selling.

In addition to Amazon being out of stock, the price has now increased to £19.49. I don’t think there’s much stock about for this at all!

Author
Tom P
Hi, I'm Tom Paddock! An Amazon & eBay seller, who has helped over 10,000 people start their own online business. I provide cutting-edge techniques to help sellers with Online Arbitrage, Retail Arbitrage & Wholesale on Amazon.
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