Sourcing Products to Sell on Amazon: Understanding the Amazon Customer

by Lisa Suttora on November 6, 2011

As ecommerce competition heats up, great product sourcing skills are the name of the game for online success.

While Marketing skills and knowing how to sell your products online are also of paramount importance, without in-demand products to sell,your business won’t get off the ground or thrive.

The best marketing in the world won’t sell a product that people don’t want.

Fortunately, there are millions of products to sell online, with new products coming into the marketplace every day.

Product innovation is moving at a more rapid pace than ever before in history. And global reach has opened up untapped pools of buyers hungry for products in marketplaces that are saturated here in the U.S.

In this three-part series, I’m going to explain how Amazon customers shop, give you tips and strategies for sourcing great products to sell on Amazon and options for places to source them.

In part-one we’ll look at “Understanding the Amazon Customer”.

Understanding the Amazon Customer

With 44% year-over-year retail growth, Amazon is known for attracting the web’s best customers.  Amazon’s customers tend to have a higher household income and more education than eBay or Walmart customers.

Amazon’s Prime customers (as stated by Amazon) are their best shoppers, coming back to shop at least once a month. (See chart below.)

Quantcast Data on Amazon shoppers also reveals that:

  • 29% earn between $60-$100K per year
  • 31% make over 100K per year
  • 63% have no children
  • 16% are “Amazon Addicts”

Amazon Traffic Frquency

In fact, a  recent report from CBS Money Watch explains the impact that demographics have on buying habits. Shoppers under age 34 make up half Walmart’s customer base.

Fewer Walmart buyers went to college or earn over $100,000 per year compared with Amazon’s customers. 48% of Walmart’s young customer base have children. (Kid costs take a bite out of your discretionary spending.  I know, because I’m raising two. :) )

These are all factors that play into c0nsumer’s disposable income and the need to find a bargain.

Are You Sourcing for the Amazon Buyer?

Once you understand who your Amazon buyer is, you’ll be in a position to figure out what they want to buy.

The specific products they’ll buy in each category are different. But there are common traits that apply to the products that Amazon buyers want to  buy.

Amazon buyers don’t want cheap, low quality products. They are looking for quality products and are willing to pay for it.

They are not looking for rock bottom prices. Amazon buyers, especially prime customers are willing to pay more for quality as well as  the trust, safety and confidence that comes with buying from Amazon

Amazon buyers are looking for the “best in category.” When a buyer goes to Amazon, they aren’t looking for the cheapest price.  They’re expecting to find high-quality products including those that are the best in their category. The high-end, higher-ticket items.

Amazon buyers are early adopters. They buy leading-edge products. High-income, well-read consumers with disposable income know what’s new, what’s the best, what’s up and coming in the market.

They replay their existing products with more frequency. This type of buyer is more likely to replace their cameras with the latest and greatest, buy the “it” toys for their kids, and shop for the latest fashions. They come to Amazon expecting to see the latest models, styles and colors.

What this means is that the products you source to sell on Amazon must appeal to the Amazon buyer.

To summarize, what are Amazon buyers looking for?

  • Quality
  • Selection
  • Leading-edge
  • Better products

So how do you identify these  in-demand products that Amazon buyers are shopping for? We’ll talk about that in my next blog post…

There is one other aspect of world-class sourcing that we need to talk about here.

And that’s the age-old struggle for successful retailers. It’s understanding that you are not your customer.

You both have different wants, needs, values and very possibly, different bank accounts.

Source for Your Customer, not for Yourself

In the light of our recent recession, most everyone has felt a financial pinch.

According to the financial reports, the only group that didn’t feel the pinch quite so much are those with incomes of 100K+ per year. Their spending stayed about the same, and they were the first to start spending more after as soon as the recession started to ease up.

If you’re a small business owner, you’ve likely felt the financial pinch as well.  And your own disposable income may have taken a hit.

But even if your income has taken a hit, you still have to get into the Product Sourcing Mindset and source for the Amazon customer.

Don’t get into the “I must find cheap products to bring to the Amazon marketplace and price them as low as possible.” mentality.

eBay’s John Donohoe recently said that all buyers care about is price. Nothing could be further from the truth.

If that was the case, Amazon.com, Nordstrom, and Apple would all be out of business. Instead their sales are surging.

The money is still there. And it’s being spent on Amazon.

But to grab that customer spend, you have to supply the Amazon marketplace with they type of products their customers are looking for…

So take a look at your “Product Sourcing Mindset”r.  If things have been less than rosey for your business  these past couple years.  Maybe you’ve been selling in another marketplace where low prices are the name of the game…

You can’t bring that mentality into your Amazon sourcing. It will only hurt  your sales and your profits in the long run.

Give it some thought until my next blog post this week!

-Lisa

Are YOU Ready to Join the Amazon Revolution?

If you haven’t yet integrated Amazon into your business model, now is the time.

Learn  about the revolution that’s happening on Amazon…

{ 12 comments… read them below or add one }

1 Marianne Severtson November 8, 2011 at 2:25 am

As usual, your blog is so helpful. I appreciate all the knowledge you share. I have been feeling that eBay (and John Donahoe especially) are not supporting me and the small seller. When Donahoe didn’t bother to show up for eBay on Location this year (after the record changes they were putting into effect), I was worried that my eBay sales were in jeopardy (my only sale site). I started selling on Amazon with your encouragement this summer and my business is growing. I qualified to sell toys for Christmas and I’m thrilled. I am still selling on eBay and I’m proud to be a multi-channel seller. Thank you so much for the info and encouragement. I look forward to your blogs and webinars. Marianne Severtson

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2 Serena November 8, 2011 at 3:39 pm

Thanks, Lisa! As usual, your insights are very helpful. As a relatively new AMZ FBA seller (I started over the summer), I am still learning all the ropes. I’ve taken a different tact with AMZ than I did with eBay, where I primarily sell unique, OOAK items; I’m just going all out and looking at all types of products from any and all outlets, online and in brick and mortars and doing my research and buying and experimenting. A lot of experimenting. I’m still learning, but having a lot of fun doing so. AMZ has been a shot in the arm for my business overall, including my eBay business. It’s freeing to know that not all my eggs are in one basket, sales-wise.

BTW, great post about selling Halloween items!

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3 Lisa Suttora November 12, 2011 at 1:27 am

Hey Serena!
Glad to see you have expanded to Amazon. There are a lot different opportunities on Amazon that you can capitalize on. When you add FBA into the mix, it gives you the ability to scale your business quickly because you can focus on sourcing and not shipping & operations.

It’s great that you’re experimenting with sourcing all kinds of products. That’s the benefit of the Amazon marketplace. It’s a product transaction market – no need to find a niche, just source products that are in-demand, for as long as they are in demand and profitable.

Thanks for sharing the update on your business!

-Lisa

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4 Clayton Hay November 14, 2011 at 2:54 pm

Lisa,
Thanks for the blog. I started selling on Amazon FBA last August, 2011 and have done better there than I ever did on eBay. The trick is to keep Sourcing and shipping to FBA.

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5 Lisa Suttora November 20, 2011 at 5:40 pm

Hi Clayton,
Exactly! The money is in the sourcing when it comes to Amazon. They take care of bringing in the Internet’s best customers, the marketing and the shipping (with FBA).

This frees up time to focus on great sourcing skills, which is the key to selling successfully on Amazon. (That AND using Amazon FBA.)

The latest sales figures on Amazon reported 44% year-over-year growth, with 38% of those retail sales being made by 3rd party merchants. Amazon is the first online marketplace to reach 100 MILLION monthly unique visitors in Q3 of 2011. And Amazon continues to grow rapidly.

So for independent online merchants, having an Amazon sales channel is key to sales growth in 2011 and beyond!

Keep sourcing and doing FBA!

-Lisa

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6 Andrew Chevalier November 17, 2011 at 12:12 pm

Lisa,
Recently our small business decided that we would like to get more traffic by selling with Amazon as well, but we are not having any results. The product we sell is a high quality LED strip, however since this is a fairly new market and there are so many different qualities of LED strips out there the amazon market is flooded with cheap and poorly made LED strips and they are having great success, with negative feedback that doesn’t seem to affect them. I have been struggling to find ways to make my product be recognized as a better product and draw more traffic. To give an example there is a strip sold by “the competition” for $14.00 that is garbage and most the time fails, we have a product that appears similar but is actually a far better product that will last and outshine the competition. What can I do to make the customer recognize that cheaper is not always better when products are similar?

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7 Christie November 22, 2011 at 6:29 pm

Hi Lisa!
Loved your email about Cyber Monday search terms ! Will you be having any Cyber Monday Specials on your Coaching rates ? I sent you an email on your other website customer service ticket thingy …. Hope one of these reaches you! have a great holiday!
~ Christie

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8 Joseph January 24, 2012 at 11:18 pm

Thanks for the good article, Lisa. You’re right, to be successful selling on Amazon you have to have a crystal clear idea of who your customer is, and what products they need (or prefer) to buy online. There are many products that you can sell on Amazon, but knowing your customer is the difference between filling an unmet need, and selling a collection of random stuff.

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9 Ed June 7, 2013 at 7:40 pm

Great, now once we decide what the customers want how do we go about getting these items, buy in bulk directly from the manufacturer?

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10 Lisa Suttora June 17, 2013 at 4:30 am

Hi Ed,
Product sourcing is the #1 most important part of your ecommerce business. No matter what you sell or where you sell it.

Unfortunately, people spend far too much time on jobs they can delegate (shipping for example) and not enough time on sourcing.

We have two sourcing resources that will help you take those next steps at:

http://lisasuttora.com/amazonsourcing
http://powerof10productsourcing.com

-Lisa

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11 Ed June 23, 2013 at 7:28 pm

Great, now once we decide what the customers want how do we go about getting these items, buy in bulk directly from the manufacturer? LOL

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12 Lisa Suttora June 23, 2013 at 7:34 pm

Ed, there are many ways to source inventory. Arbitrage, wholesale, closeout, thrift stores, importing, private labeling.

Where you sell and what you sell depends on how you source it. It also depends on what type of business model you want to have.

-Lisa

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