Starting any business involves a great deal of planning. Analyzing and calculating all ins and outs and building up a budget. ?
In the case of selling on Amazon and Amazon FBA, the main part is choosing the actual product that you will sell and making sure that it will perform well. Unless you see selling on Amazon as a side-job that will bring you some cash, research and planning are essential. Because you do not want to blindly invest in something that will flop. ?
We have compiled this research guide for Amazon to give you an idea of what is involved in this inevitable and important process.
What is product research?
Building a business on Amazon today is not as simple as it may seem for a newcomer. Setting up a seller account is a more or less effortless process and you can start off even without having any inventory ?️ by just selling a few items that you no longer need, like old books, for example. But sooner or later you will run out of old books to sell and you will need to find something new. That’s when products research comes into play.
Amazon product research is the process of analyzing the data from the marketplace and other sources to locate the niche and particular products that will sell well and bring high profit.
Product research is an essential part of private labeling which is the method of selling products that you produce and distribute under your own brand.
Over the years, private label selling has become the most widely used method of selling on Amazon because it proved to be a success. ? And product research has become a very complicated process that involves many steps.
Why is it important?
Amazon operates about 3 billion different products worldwide and more than half a billion of them are sold on the US website. With such a wide range of products on the marketplace and their sheer amount, there are a lot of variables involved in selecting the best products for selling. ?️ Superficial calculation of possible margins just does not cut it.
After you select the item, you need to find a supplier, make an order (almost always in bulk), pay the money, ship the products to Amazon or your warehouse. That is when, hopefully, the item will become a success and will generate a lot of orders and sales. Unless your pockets are quite deep, you cannot afford to make the mistake of selecting the wrong product to sell.
What to look for in a product?
Here are some general guidelines for selecting a product to sell on Amazon.
Impulse purchase price range
As a beginner, you want to look into selling products with the price up to $50-100. Firstly, the initial cost of producing and shipping such products is much smaller. Plus, it is unlikely that customers will do much comparing before buying an inexpensive product or have to consult with their spouse, for instance, as opposed to a more expensive purchase.
Small and light
Go for products that are not bulky or slow-moving. This will give you the opportunity to save on shipping costs and avoid the hidden fees with FBA. Amazon charges more for processing bigger items.☝️ Additionally, there is a fee for long-term storage of slow-moving items that you also want to avoid.
No complicated or fragile items
The fragile part speaks for itself. First of all, the packaging for such products requires special consideration and naturally more money. Additionally, if you sell on Amazon FBA, you do not have any say in how your products are shipped and packaged, so it might result in the overall time or money loss. Overly complicated items might also become a headache, especially during the stages of production.
Do not take on too much competition
When you get an idea of an item that you want to sell, check how many merchants on Amazon sell similar items. Do not opt for niches that are already over-saturated with other offers. ? It will be hard to stand out among the competitors and your new listings might just drown on the last pages of search results because they do not have any reviews.
Check the bestseller rank (BSR)
To find a product that sells often go to Amazon’s best sellers page. It can give you an idea about how high the demand is for this particular item on the market.
If you are a beginner, go for items that have BSR of 5000 or lower. To find the actual BSR of a product, check the Product Details in the description. The main focus is on the # that comes first, this is the product’s rating in the main category. On the screenshot below it is “Kitchen & Dining”.
?Going for products that are already popular with customers is a great way to gain momentum from the beginning.
As a beginner, do not try to chase products with a BSR below 1000 as it is sure to be populated by more experienced sellers with great ratings.
For beginners in general, it is better to avoid selling seasonal products. Festive seasons are a highly competitive time, a lot of sellers want their share of the sales and you will risk not selling your inventory and getting stuck with unwanted items for the rest of the year. ? Look for the items that generate a good amount of sales throughout the year.
It is not to say that seasonal products are not profitable at all and should be avoided at all costs. ?♂️ To be exact, investing in nothing more than seasonal products can be pointless. Again, you need to find something that will work for you and try to calculate all outcomes.
Product research guidelines
Below are some strategies for finding the Right Product.
Try to be creative ?
Do you have the eye for inventions and innovation? Do you already use some product that you think can do with some improvement? If so, you can start by actually taking this product and making it better. Then find a manufacturer who can bring these improvements into life. You can test your ideas with a focus group of your friends and family.
Optimize your listings ?
If you check for competitors and find that their products sell well but the product listings are not up to standard this is your chance. You can create better listings and have your products rank higher. For some ideas on listing optimization check this article.
Do your keyword research ?️
Finding a keyword that will increase listing visibility is a very important step not only for product research but for selling on Amazon in general. There is a huge number of tools on the market created specifically for keyword research, like Jungle Scout, Helium 10, or SellerApp.
The main point of finding what people look for on Amazon is to find your niche. For instance, you see that thousands of people run searches for a particular keyword. But the top items that dominate the search results generate just dozens of orders. That means that people actually do not find what they look for on Amazon. And that might be the market that is worth exploring.
999 Method ?
It is another trick in the book that might help in the later stages of selection. Namely, it can show how well some particular product performs with your competitors. Although, it is quite a known move in the industry it can still be useful.
There are a few steps:
- Identify your competitors and among their listings find the product that you plan to sell.
- Add the product to the shopping cart.
- In the cart change the quantity to “10+” and then to 999.
- Then you might see the message that will tell you that “Only 149 items are available from that seller”, for example.
- Remember this number and repeat the process after a week or so.
This way you can check how many items were sold within some period of time.⏱️ This can give you the general idea about what you can count on when selling the product yourself.
You will need to do this with every competitor to get more exact data. Unfortunately, this will not work for any item or any competitor because some sellers set up a maximum number of items that you can add to cart.
Mistakes and products to avoid
Undifferentiated products ?
These are products that a customer can easily substitute for a similar product from another supplier. The items that you sell on Amazon need to stand out. So, unless you can offer a great price or have the top seller ratings, find products that are not identical to others.
Uncalculated margins or too low a price ?️
If you do not keep track of the ratio between your margins and Amazon’s fees you will lose money. The same goes for deciding to set up a lower price to stand out from your competitors. This way you just put yourself in the disadvantaged position from the start.
Not improving your items ✨
If you see that the item that you chose already has a lot of negative feedback in the listings of your competitors it is pointless to go forward. You have to improve the product first. Otherwise, you will just end up with the same results.