Not to be dramatic, but I feel the worst thing to ever happen to Amazon sellers is sales rank charts. These are charts that show you what percentile a particular product is in, in terms of how frequently it sells. This is intended to help you to determine whether or not you should buy a product to sell on Amazon. You will often see pictures of them shared on FBA forums, and many people will say things such as, “I always stay below 3-5%.” Then the argument ensues over whether or not somebody should buy something with a rank over 10%, or something like that. I always feel the need to step in when I see these charts and their arguments, because the people having them don’t have a solid understanding of how sales rank works, and how you can use it to determine sales velocity.
Here are a few things about sales rank that you must know:
The sales rank number in the Amazon seller app is what’s called a momentary number, which means it reflects the item’s sales rank at that very moment, not over time. True sales rank changes over time — minute to minute, hour to hour, and day to day. Think of it like your speed in a car. If you started your journey, then a few moments later looked down at your speedometer and saw that you were going 20 MPH, you would not assume that your speed for the entire trip would be 20 MPH. Your speed will change over time: You will stop, you will go on a highway, and things will happen that will change how quickly your car is going. The same is true with sales rank. Outside factors will determine how well a product sells.
To show this point, I’ve attached a really great sales rank chart that I got using a service called camelcamelcamel. This is a free tool that I use every day, and this chart displays how a particular product changes its sales rank over the course of just three months. If you look right before October 7th, this product had a rank of about 60,000. Most people would not purchase this product in the grocery category. It’s ranked in about the top 15% in grocery… pretty poorly ranked. But if you look about a month later, it’s at around 8500. That’s in the top 2%. Most people who use ranked charts would think that’s a great buy.
Now look at the chart over the course of five years. You can see that there is a definite trend in which the product peaks in sales rank between the middle of October and the beginning of December. This is a very interesting product because it happens to be available pretty regularly, at least in my area, at liquidation grocery stores. It seems that most grocery stores don’t want to hold this product in the summer months. However, come fall, it’s going to sell very quickly. This is a great product that you could make a lot of money on if you were able to purchase it in August. Then you’d really only hold it for a month or two, and sell it in late fall. I came across a similar product that I was able to pick up for $1 per container in late August. The sales rank was nearly 100,000, but I knew that towards the end of fall, the rank would move up to between 2,000-5,000. I ended up selling nearly 10 units a day for over a month straight.
You can see that if you used sales rank charts in December, this would look like a really hot item to buy. However, the sales rank quickly drops off, and you would be stuck holding this product, potentially for months. In August, the sales rank is terrible. In a couple short months though, it will explode, making this a great item to have waiting in your inventory.
what in the world you can use sales rank for:
Of course, you’re probably now wondering what in the world you can use sales rank for. Fortunately, there are a few ways to really constructively use the sales rank given on Amazon. The best way is to use a service like KEEPA or camelcamelcamel to give you an idea of sales rank over time. I have attached some links to the product that I discussed in the chart above, in KEEPA and camelcamelcamel so you can get an idea of what you’ll see by using these services. If the sales rank goes down in value, that means that the product has sold. Conversely, the sales rank going up means that it’s not selling as much, just like golf. Beware: Looking at these charts is still only part of the equation. Sometimes a rank will range from very high, such as in the top 1%, all the way down to the bottom 50%. One of the determining factors could actually be the product going out of stock. Simply put, the item didn’t sell for a long time because it wasn’t there to be sold. If the product was not available for Prime shipping, it could sell less. In this way, sometimes you can look at a product that seems like a dud, but really isn’t. If you see that there’s only sellers using merchant fulfillment (MF — see post Should I Buy This? for a brief explanation if you’re not sure what that means), you may be able to get more sales simply by using Fulfillment by Amazon (FBA).
Another thing to look at is the price of the item in correlation with the rank. If an item goes out of stock, and there is only one seller, that seller may jack up the price much above retail. For example, I was recently shopping and I found a product that had a terrible sales rank. It turns out that the only seller of it had the price at $50. When the item was in inventory from other sellers, the price was around $20 and it sold very well. I was able to take advantage of that and I actually priced my item at $30 for a little while. It worked out for me and I sold quite a few of them very quickly.
Personally, I always check a sales rank service like camelcamelcamel or KEEPA before I purchase a product. When I first started doing this in-depth check, it was very cumbersome. However, I soon became very fast at it, and I feel that I make such good buying decisions that this extra check is well worth the time it takes me to do it. By the time I get to the point in which I’m looking at sales rank charts, I usually have determined that there’s a lot of money in a product. I’ve found that the number of bad buys I make went down considerably. That increases my profit, which lowers the time it takes to make as much money in the long run.