Want to start selling on Amazon? No doubt that first-time sellers desire to stock up on as many products as possible to maintain their inventory and top organic keyword rankings.
To begin selling, you must choose a product and stock up. But the main question is: how much inventory do you need to sell on Amazon?
Amazon does not mandate a minimum number of units to start selling. However, we recommend starting with 300 to 500 units to keep risks low at the start and sustain your business in the long run.
While there is no required minimum inventory to start selling on Amazon, choosing the appropriate number of units is necessary. Here, we discuss more the minimum requirement, the suitable number of units to invest in, and the sustainable strategy in the long run. Read on!
Minimum vs. Ideal Number of Units
Before we tackle the strategy fit for starters, we need to clarify the required number of units and the ideal inventory you need to never run out of stock.
As mentioned earlier, there is no minimum number of units required by Amazon to begin selling.
Some sellers who want to test a new product send just 1 unit to Amazon FBA through a third-party logistics service (3PL). Unfortunately, this method has raised shipping fees and lower profitability. But for testing, sending a lower number of units is okay.
Once you order products, it normally takes around 30 days to manufacture and 40 days to ship the goods. So, overall, the lead time could take about 75 days.
For instance, if you sell five units per day multiplied by 75 days lead time, you would need 375 units for your inventory. You must consider the stock for the first two weeks of your launch. Thus, you would need 445 units on your first order.
Say, each unit costs $15 to $20. So your total investment would amount to $6,675 to $8,900.
You may not want to risk this much money if you are still starting your business. Thus, we recommend this strategy only if you have someone to guide you through the journey.
The Sustainable Strategy: Lower Your Risks
Not running out of inventory is convenient. However, you must have a sound strategy to sustain your business in the long run.
Yes, ranking on Amazon and not running out of products to sell would be awesome. But in reality, choosing the right product as a first-time seller is difficult and risky.
Creating an asymmetrical risk-reward strategy is essential. Thus, we recommend starting with 300 to 500 units. This number is just enough to get started without increasing your risks way too much.
Going all in for your business seems lucrative. Yes, ranking sounds fantastic, and never running out of stocks is ideal.
However, it would be more detrimental if you chose the wrong product. And it would lead you to catch up selling the products, thereby increasing your risks and reducing your rewards.
Frequently Asked Questions
Can Small Sellers Sell on Amazon?
Yes, Amazon is a fitting place for small sellers. Small-to-medium-sized stores account for over half of the sales on Amazon.
Does Amazon Pay Sellers Immediately?
Amazon payouts include earnings from 14 days of orders successfully delivered at least a week prior. Amazon pays you every two weeks.