Monday, February 24, 2014

5 Myths About Selling Groceries on Amazon

Selling groceries on Amazon seems to be a hot topic right now around the blogosphere and on seller networking groups. Unfortunately, much of the advice being dispensed is really not the best advice for sellers, nor are the people offering the advice really very experienced in this niche. I'd like to take a moment to shed some light on some bad information floating around so that other sellers really can be successful.

I've been selling consumable grocery, baby, and health and beauty items online since 2007. I started this venture selling on eBay UK. Several eBay sellers offered consumable grocery, baby, and health and beauty items as order fillers. In other words, we created listings for products we could buy at regular retail from Costco, Sams, Wal-Mart, Target, CVS, Walgreens, and other stores. About twice a week, I would make the rounds to purchase items that had been ordered on eBay and ship them. This business model was great because I was able to use the customer's money to buy product and there weren't a whole lot of other sellers doing it so we didn't see the "race to the bottom" on pricing. (Click here to see posts about my eBay UK selling experience and how it worked back in the old days.)

I've learned a lot about selling locally-sourced consumables online since 2007. My philosophy has always been to make money as efficiently as possible and to find items that can be easily replenished that sell with an acceptable profit margin. Why reinvent the wheel every time, right? Figure out a product, sell it over and over again until it becomes unavailable or the market no longer supports the desired profit margin. So I come to you with this list of 5 myths about selling groceries on Amazon with a pretty informed and experienced perspective.

Myth #1 - You Should Sell Heavily Advertised Seasonal Food Products.
This is the absolute worst advice out there. Right now the heavily advertised seasonal foods are Easter items - marshmallow Peeps, brightly colored M&Ms, cake and cupcake mixes with spring colors, Pop-Tarts, Hershey kisses, Oreos with pastel colored icing, etc. If you see a big display of any of this kind of stuff at Wal-Mart, Target, or your grocery store as soon as you walk in - GUESS WHAT? So are hundreds of other Amazon sellers. What might look good now will be impossible to sell in a few weeks. A bunch of sellers will send in those products, the market will be flooded, and no one can make any money. This strategy used to work, but now too many people are getting into this business, the newbies flock to the seasonal foods on the big obvious displays, and the products are covered up with FBA sellers very quickly. There are plenty of opportunities elsewhere. Leave the Peeps and M&Ms to the people who don't know any better.

Myth #2 - You Can't Find Any Groceries to Sell on Amazon at Wal-Mart.
I wish I had a dollar for every time I have read this comment on a message board. The problem is not Wal-Mart, it is the seller making the buying decision. May sellers are much to focused on sales rank and they pass over items that will absolutely work. About 50% of the grocery items I sell come from Wal-Mart and they are NOT national brands, and they are NOT on sale. Sellers have become too rigid in their decision-making process and are passing by opportunities right and left. See this video, Amazon FBA Smarter Scouting Tips.

Myth #3 - You Should Sell Items on the Amazon Movers and Shakers Reports.
No, no, no! The Movers and Shakers reports show the top 100 gainers in sales rank in the last 24 hours. Most of the items are sold by Amazon (whose price you cannot beat most of the time), or they are covered up with FBA sellers. Remember, the more sellers on a product, the more opportunities to be out-priced and the more likely you will lose money or your product will expire waiting for sales . Use these reports to study and identify product trends, but don't try to sell the exact items. You will be frustrated, disappointed, and lose money.

Myth #4 - You Have to Buy on Clearance to Make Money Selling Groceries on Amazon.
Referring back to myth #2, most of you are looking for items on sale. I guarantee there are products out there you can buy at regular retail 100% of the time and make a good profit. For example, I sold this lemon tuna for a year before my grocery store stopped carrying it. My cost was $36 and it sold for $67.97 for a profit of $17.53 per unit. Here is a sales snapshot:

I sold 50 orders over the course of a year (some customers bought 2 sets), and total profit was $1,034.27, on a single product sourced at regular retail. And guess what? This came in other flavors and I sold those, too. That tuna was a good friend and I was sad to see it go away. This is only one product that I sourced at regular retail - so imagine this scenario multiplied 10 or 20 times a month.

Myth#5 - You Have to Live in a Big City to Make Money Selling Groceries on Amazon.
I hear this one a lot, because I live in Atlanta and people like to make excuses for my success. There are many other ways to source groceries other than standing in a store scanning like a robot all day. I am not talking about ordering from huge grocery wholesalers or ordering junk from China. You don't have to travel to trade shows or go to scary bad neighborhoods to shop at liquidation stores. There are many other ways to source groceries and consumables that are convenient, safe, and only require some time at the computer.

I hope these ideas will give you a new perspective about what is possible. There are huge opportunities in the grocery niche and enough room for anyone who wants to play. Check out my course, The ABCs of  Selling Groceries on Amazon for more in-depth information about all of these concepts and many more strategies about making money in the grocery niche.

Related Articles:

How Kraft Foods Made a Mortgage Payment for Me in 2012

Top 3 Grocery Items to Sell on Amazon

Small and Mighty - Pay Attention to Little Packages


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Linda Shields said...

Thanks for your great blog, Suzanne. You always have such a level head and common sense advice. You are much appreciated.

Anonymous said...

how did you ship that lemon tuna?isnt it frozen?

Suzanne A. Wells said...

Bronzee, no the tuna wasn't frozen. See the picture of all the tuna? It was on the regular self in that section.

Juggernaut 2.0 said...

You said Many sellers are much to focused on sales rank. How should sales rank be looked at?

Suzanne A. Wells said...

Hi, Paul,

This video helps explain more about how to use sales rank in the inventory buying decision process.