If you can find an area that you have good instincts about (mine seems to be sporty type clothes for women), and maintain your variety in that area, you can do well. One thing I DON'T do is send in more than about 10 or so of a SKU at a time--fewer if they're big, because big stuff has to go out one at a time, anyway.
I don't send in more than a few of any given SKU because with Retail Arbitrage, it's hard to find a ton of stock. That being said there are items I regularly send in 20+ units of.
The other downside on high dollar items is the extra lumpy nature of your cash flow when someone returns a high dollar item.
I am OK with sending in only a few of every item, because I usually send in 20+ new SKUs with every shipment. That's diversification in action.
I am ungated for everything except sexual wellness products. I did HPC, Grocery and Beauty way back when Allen Brothers was still selling to the general public.
What sucks is when someone is low balling something you have $50 or $60 into a few units. Then it can sit. For a long time, unless you drop prices and move it. I would much rather take a loss after 3 months than eke out a small profit after 12 months, because I want to take my cash and reinvest it in something I can make a profit from. You will find that a lot of people focus on turning over inventory.
The biggest issue for newbies, I think, is that they concentrate on big dollar returns, rather than, as El Ingeniero points out, watching for ROI. Buying $500 worth of items with an average cost to you of $5/each and a net ROI of 100% means that you get back a total of $1000 on your $500. You can spend that $500 on two electronic items, and if the price goes south quickly, which happens frequently, you can end up with $350 or less after selling them both, a loss of $150.
I do a lot of shoes and clothing, because the margins are good there. It's a lot of work to prep these things so they can survive the warehouse and offer a nice presentation when the customer opens it.
I intend to use wholesale not to concentrate on one or two items, but to be able to maximize profit on a select few things that I know will sell, over and over, because they are from a trustworthy manufacturer, and are perennially popular.
Using wholesaling to leverage replenishables, bestsellers that you can easily obtain at a profit, is a great strategy. I know a couple of brothers in Michigan that did 1.8 million dollars in 2016, mostly in grocery items with a overall net profit of about 20%. They have a warehouse with a dock, and they get a ton of stuff at Walmart.
Also, and this part is huge, like the lightbulbs, they need to sell cheaply enough on Amazon that people will toss them into their shopping carts as an afterthought. I'm thinking anything with a BuyBox above $25 will not fit that bill.
I tend to look at profit generated per hour of work. For prep intensive stuff, I can process maybe 20 items an hour for shipping to FBA when all is said and done (note that there is no freaking way I could process 20 eBay orders in that time frame). The only way I would send in something that I expect less than $5 profit on, is if I can literally just slap my label on it and chuck it in a box. And I am really looking for $10 of profit or more.
For 2016 my average item sold for $39.28. Would have been higher but I sent in a bunch of Q4 stuff to sell at $20 or so. A $20 item, I would want to pay no more than $8 for, and preferably under $7. That's just me, and that could change based on category and weight/size considerations.