Avoiding Amazon Failed Products with Dani Avitz of Algopix

Learn how to avoid Amazon failed products, on how to resource dead inventory and more. Algopix gives a full analysis and shows the most profitable products.

How to improve Profitability 

Sourcing - if you don’t buy well, you won’t win (“Profit is made when you buy”)
Reducing dead inventory 

Dead inventory
Biggest pain points of dead inventory

If you buy some products based on intuition and they don’t sell, there are several downsides:

You’ve spent money (sometimes the bank’s money so you’ll pay interest on the debt)
You missed out on another opportunity (opportunity cost)
Usually, when we fail, it’s hard to admit we failed 

They say we are going to pay an analyst and “make sure it will sell” - so now we pay more money
Instead ask this guy - here is the good inventory I based on data, now how to expose more customers to this.  

In Dani’s previous agency, they had some great successes, while some products didn’t move at all. 

Clients called them asking why this was so and what they were doing with the slower-moving products. 

Response - “We don’t do magic. We take good products and help you with infrastructure.”

If you’re the brand owner - 

You pay money, you brand your product, and if you do a good job, you might succeed. 

The no. 1 rule 

Make sure you manufacture good products with demand (Creating demand is different from fulfilling it)
Get it produced at a reasonable price 

Look at competitors
calculate your expenses
Reverse engineer and get the price right 

Data is king
Creativity is important but the data is king to avoid amazon failed products. 

Let someone do the heavy lifting on the data though to save you time. 
How else to reduce slow inventory?
There are two aspects: 

Before you source, understanding the market - make a small bet

Maybe you can tell it won’t be a killer but it has some traffic and demand. 

It’s a bet -but if you bet on the product based on data you are in a safer position when avoiding amazon failed products. 

In addition,  if you bet on a product based on only modest sales data, you should be ordering an appropriately modest order size.  

If you are a PL seller, work with a factory that has a lower MOQ (Minimum Order Quantity). 
When you have a product already that is slow-moving. 
If you will have a decent chance to sell. 

Perhaps the answer could be international expansion. 

However,  maybe you’ll understand that demand is low and the only way to get rid of slow-moving inventory is to sell it for cost price. Bear in mind that demand varies and that maybe next month it will be easier. 
Is it important to assess taxes etc. as part of keyword or market choice?
Taxes are part of the game these days. 

Algopix produces a tax estimation. It is only an approximation but you may need to add about what it predicts. 

At this point, you might need to discuss with your CPA or accountant if you need more precise figures. 

Back in 2011, when Dani had started an agency, he visited big companies in UK, EU. 

90% of the time he sat with the CEO. 

The CEO would say “I know I can sell sunglasses on eBay. They are selling on eBay for $80, I can buy it for $20”

But Dani’s response would be: 

Somebody offered it for $80. You don’t know if it sold. 
Maybe it did sell but went for $60, not $80 
You don’t know the cost structure. 

Return rate
Compensation for people who leave negative feedback (eBay) or review (Amazon)

You need to take care of all these factors before you can make any decisions!
Logistics estimation for FBM or own shipping
Since having product size and weight. 

This can only be an estimation which is pretty accurate. 
Amazon store audit
You should analyse your competitors’ overall offering if you are to realise understand the competition. 

What products sold, which one did not etc. 
Price points