I hear a lot of Amazon sellers going on and on about how they need to raise their Average Selling Price (ASP). Why? What’s the obsession with this? Well, guys I know who sell big numbers at ASPs on the high side ($40+) touch way fewer units than a “retail arbitrage” seller whose average selling price is closer to $20.
As long as the time spent acquiring and processing the more expensive items is about the same as the cheaper items, and the margins are similar, the guys selling the higher priced items are more efficient. However, I believe there is more to the story of why a higher ASP is preferable.
If you look at Amazon storefronts of new sellers who source their products at retail stores (you can tell they are new because they have less than a year’s feedback) even some of the newbie gurus (seller-marketers who not only sell on Amazon, but also sell selling on Amazon) go relatively shallow on higher priced units than they do on cheap stuff.
Why? You might think it’s because they don’t have the deep pockets of veteran sellers, and that’s a valid point, but I believe it’s a more fundamental force that really drives new sellers to the cheap stuff: Fear.
Fear is what held me back from jumping in to reselling with both feet back when I lacked the confidence and vision to believe reselling was a real job. It kept me in a job making 20% of what I would make in my first year selling full-time on Amazon.
So, think about it, for most people it takes a bit of a leap of faith to do this reselling thing. It’s a fairly unconventional way to make a living (though it’s fairly quickly going mainstream). And if you’re already kind of nervous about playing the game (let’s face it, we are all essentially playing a game of war, in a casino-like setting) and you know your chip stack is pretty light, but you look around the table and see a bunch of sharks, are you going to be ballsy and start by flipping laptops, ipads, cameras etc.? Hell no. You are going to look around your home, as the gurus say, and flip old board games, books, etc. And when these run out, after you’ve developed a little bit of expertise in the books and toys niche, where are you going to source your new purchases?
Used books and toys are going to be your most competitive situations because the barrier to entry is so low, not just in terms of money invested, but also emotional investment.
People love their books and toys and feel comfortable with these lifelong “friends.” It’s fun buying and selling the things you love!
This expertise, in turn, can define you as a seller, sometimes for life! You run the risk of self-identifying as a “book seller” or a “toy seller.” This love vs. fear dynamic sets the tone for probably most new people coming into the game right now. They want to play it safe, and have fun and why wouldn’t they?
I’ll challenge you newer sellers (and some of you niche-y older sellers) to step outside your comfort zone, and past the competition, into something that is a little different, less prone to competitive price erosion and probably more profitable:
I recently made a post in my paid mastermind group about an item that was selling for 60% off retail, readily available online, and available only in limited quantity (buy-outs discourage/obliterate competition). It also has a killer product page! But…
What was the problem? Even with the discount, the item cost $197.98 per unit. The simple truth is most small time Amazon sellers are not going to roll the dice on something that costs this much. This is a HUGE advantage for you as the buy-in eliminates most of the people who have no idea what they are doing from becoming your competitor.
In a future post I will explain how to sell nearly any item for the optimal (and sometimes unimaginable) prices of your wildest dreams. Until then, happy sourcing!