This Post is part of the “FREE Wholesale Training Course”. You can view the entire course listing and introduction to the course here.
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Module 2: Wholesale Preparation
- Introduction to wholesale sourcing
- Understanding how the buy box works
- Understanding how Amazon’s Best Seller Rank (BSR) works
- Understanding ROI / Margin
- Analyzing competition and potential volume
- Setting your personal buying guidelines
- Determining your long term strategy
- Distributors / Wholesalers vs. Manufacturer Direct
- Ideal targets for wholesale sourcing
- Tools for wholesale sourcing
You can click on each of the links above to go directly to the area of the module the best interests you. That being said, lets get right into the content!
Want to skip reading the massive wall of text? After the entire course is released, I will make videos for each of the sections for easier consumption. Make sure you are on our mailing list to be notified when it’s released!
Understanding How Amazon’s Best Seller Rank (BSR) Works
One mystery a lot of people have is “how much of an item actually sells on Amazon?” This is a very important thing to know when you are choosing products to sell that you’ve never carried before. There’s no specific way to know for sure without ransacking Amazon’s servers and taking the info. But, there is something that can give us a very good estimation of how many are selling. It’s called…
The Best Seller Rank (BSR)
There is a lot of confusion around what the BSR actually means and how you can use it to estimate sales. We will go into specifics on how you can use the BSR for sales estimations later in this module. In this section, we will focus on understanding what the BSR actually is, and how it functions.
The basic way to explain the BSR is this:
It’s a product’s current sales volume in relation to other products sales volume in the same category, based on a snapshot of time.
That might sound a little wordy, and might not make a ton of sense right now. Lets dig a little deeper for it to make some sense.
First, let’s look at where you can find the BSR of a product. It’s typically on the product detail page. Scroll down near the product description, and you should see something like this:
At times, there may be BSR’s for multiple categories for the same product. Amazingly in some cases, they aren’t even in the right category. In the image, this is the BSR for a game called “Pie Face”. The Pie Face game is definitely not an ornament. Even though that is the case, it is competing against all the items in the “Home and Kitchen” category, and the “Ornaments” sub, sub, sub category. In this exact moment in time, this item is considered the 18th best selling item in the entire Home and Kitchen category. Which has a LOT of items in it. It’s also supposedly the #1 ornament. The most important BSR number is the top level category, which in this case is Home and Kitchen. You can throw away the ornament rank, because it is in a deep sub category, and is totally irrelevant.
Want to get an idea of how many items are in a specific category? Go through Amazon’s standard browse drop down menus, and select the category. Once you are there, type in “()” in the search box and hit enter. You’ll see this, which will show how many items are in that category:
As you can guess, being #18 out of 45,877,613 is a pretty big deal. What you don’t know is how many sales that BSR translates to.
What does “In this exact moment in time, this item is considered the 18th best selling item in the entire Home and Kitchen category.” actually mean then?
Amazon has their own black box for this too. Again, sellers are resourceful, and have come up with the best estimation of what this number actually means.
This number can fluctuate all the time. It’s based on unit sales vs. the unit sales of other items in the category. We are going to make some guesses / assumptions to explain what this means.
Let’s assume today it’s late in the evening, and Pie Face has sold 57 units for the day. That is what has given it the #18 rank. Does that mean #17 rank has 58 units? Does that mean #19 has 56 units? Not necessarily. The #17 rank has likely had more sales today than Pie Face. Or, it may even be tied for number of units. But #17 may have just recently sold a unit 5 minutes ago, and it’s been 20 minutes since Pie Face has sold. How close a sale has happened to when the BSR was generated greatly impacts the BSR itself. It’s not quite as prevalent in extremely high volume items like Pie Face, but you can see a huge difference when you see items that sell once every few weeks.
So how do we interpret this, and how do we use this information? As we mentioned, BSR is just a snapshot in time. Which means if you just look at what the BSR is right now, you aren’t getting a full story. The item might be selling well right this second, but what about two days ago? Ten days ago? Thirty days ago? These things are extremely important to know when making buying decisions.
“Great Chris – but I don’t have a time machine. How do I find that out?”
Awesome question! Luckily someone has created a time machine for the BSR. It’s called Keepa. You can view items directly on their website, or you can download their Chrome extension, which puts Keepa directly on the Amazon product detail pages. I strongly recommend installing the Chrome extension, as it makes things so much easier. Any examples you see going forward regarding Keepa will be from the Chrome extension.
Let’s go back into this time machine for Pie Face, and see what this item looked like in the past. Knowing what an item did in the past can help you predict the future. (Man, too bad Keepa wasn’t a TRUE time machine, and can tell us what the BSR of an item will be on August 25, 2021.)
Holy Cow, there’s a lot going on there. The cool thing is, you can change the time frames on the right, and toggle things on and off. This makes it a lot easier to manage. Watch the video below where I go more into detail on how Keepa works:
Now that you have an idea of how to use Keepa, lets look at the specific BSR graph for Pie Face.
This graph shows the last three months of the BSR for the Pie Face game. You can see it fluctuates at any given time. For this example, it looks like the absolute best BSR over the last 90 days was #1 in the category (Keepa shows the MAIN category, not sub categories typically. There are some exceptions, but this is the general rule.). The worst is #34 in the category. Not a ton of fluctuation, when you are saying there are over 45 million items in the category. This is a good thing – this tells you it is a consistent seller when the BSR doesn’t fluctuate a lot.
Let’s take a look at a graph with an inconsistent BSR:
This Keepa graph is for an entire year. As you can see, there is a massive difference in range with this item. For context, this item is in the Grocery Category, which has only 1,031,516 total listings (much less than the Home & Kitchen category). The best BSR this item has had over the last year is 40,825. The worst? 650,049. Wow, what a massive fluctuation.
What tends to happens when you get into sales ranks that have lower velocity is just one sale can make a massive jump in BSR. For this example, in May one sale made the item jump from 650,049 to 40,825 for BSR. Then, as time went on and the item didn’t sell, the BSR slowly begun to rise. The next sale occurred near the end of July, when you see a massive jump again. What’s happening in the background is there are items buried deep in Amazon’s catalog that very rarely sell. As those random items sell, they leap frog in BSR over other items that haven’t sold as recently.
Totally Hypothetical Example
Here’s a totally hypothetical example to land the point home:
You own 10 items. They are each labeled A – J. At the moment, A is ranked #1 in sales, and J is ranked #10 in sales. All the letters in between are ranked accordingly. It kind of looks like this:
Now, G makes a sale. It makes G’s BSR 1, and bumps everyone else down.
Now, D, H, J all make sales, in that order. You’ll notice because J is the most recent sale, it’s ranked #1, H is #2, D is #3, and G is bumped down to #4. Everyone else that hasn’t had a sale yet just stays in the same order, but moves down.
I’m sure you can start to see what happens now in those situations. Now, what happens if these sales happen in order: D, C, G, D, F, D, H. You’ll notice that no longer is the most recent sale on top – H. The reason is because D now has more total number of sales, which keeps it in the #1 spot. You can also see that H is ranked higher than G, because H’s sale happened more recently, but they both have 2 sales.
As sales continue on, I imagine you can start to see the trend of what would happen. The BSR is a constantly shifting number, and it’s difficult to know exactly how many sales each item has.
Over these images, you can easily see how a rank can shift over time. Just follow item J. This is J’s BSR over the four images: 10,10,1,6. How about G? 7,1,4,3. Or D? 4,5,3,1. Or, lowly I at 9,9,10,10.
Looking at this silly example, here’s some assumptions you could have made (and been totally wrong!):
- Looking at the BSR of H at #2, it must have a ton more sales than #3! (Nope – same amount of sales, the most recent sale just happened to go to H)
- Wow, there must be hardly any sales difference between ranks 6 and 7. They aren’t far apart! (Nope – J has had one sale and is ranked 6. A ranked at #7 is just as bad as I ranked at #10. Neither have sold).
- J was ranked number 1! It must sell a ton! (Nope – it was only ranked #1 for a short period of time, and then it gradually started dropping, all the way down to #6, because no more sales incurred).
Exceptions to the BSR
There are some notable exceptions you will run into when referring to the BSR. Here’s some you may stumble across:
- Some categories have no BSR at all. These categories are a little more difficult to work with to estimate sales volume.
- Brand New items will typically have no BSR until the item sells once.
- Sometimes all you will see are sub-category BSR’s. Be aware of this, as it makes a huge difference when estimating sales volume.
- When a listing has variations (size, color, etc) in certain categories, there is no BSR tied to the individual variation. All the variations sales volume combined adds up to the BSR for that listing. This is very common in the Clothing and Sports / Outdoors categories. Be aware of this, as it makes a huge difference when estimating sales volume.
Hopefully by using real life examples, and a silly example helps cement home exactly how the BSR works. To recap, here’s a few specific points:
- Never take a single BSR number on its face value. Always look at historical BSR when possible to see trends of the past. This can help you predict the future.
- The BSR itself can’t tell you differences in sales value. There are tools we will discuss in later modules that will help you decipher BSR vs. sales volume.
- Some items will not have a BSR.
Now that you know how the BSR works, lets move on to understanding ROI and Margin!