Are you looking to find a product to sell on Amazon but finding it difficult to decide where to start and do the amazon product research?
Finding a product that sells well and fast is a daunting task at best. There are so many different niches, markets to sell in and, not to mention, the variety of products that you can sell.
Failure to sell a product that isn’t profitable or in large market will lead not only to loss of investment but waste of significant investment in time as well. As a result, finding a correct product to sell on Amazon is the most important part of the process of selling on Amazon. It is a very good predictor of success or failure of your Amazon business and makes sense to do the product research in depth and thoroughly.
In this Part 1 of the blog, we will cover requirements and intuitions needed for a successful product research and selling on Amazon. We discuss general rule of thumb intuition and provide order of importance and detailed rank and reason. We cover 8 of 16 requirements/intuitions here and a follow up blog will cover the remaining intuitions/requirements.
Amazon FBA and Private Labelling
In essence, selling on Amazon involves finding a supplier that will make our product for cheap. This usually entails finding a manufacturer in China or other countries where products can be sourced relatively cheaply. The easiest and fastest way to establish an Amazon business and make profit on Amazon is through private labelling a product.
The best way to approach this is to find a product that is already selling on Amazon and then finding a supplier that is manufacturing the product in question. Leverage the fact that this product is working well with customer demands and create your own label and packaging for the product. This strategy has the main advantage in that you are piggybacking on an existing product instead of attempting to invent a new product line which can be risky and possibly a high chance of failure.
Moreover, the product that is selling and profitable can be differentiated by making some adjustments based on customer feedback (reviews) and marketing it better can lead to a successful product selling on Amazon.
The basics of Amazon FBA is to find a supplier through Alibaba and aliexpress etc. Once we find a supplier, agree upon a product, features, packaging, adjustment to design etc., the product will be shipped to an Amazon warehouse in the United States. Upon receipt of our products by Amazon, we can begin listing it live on Amazon and start selling.
Product Research is the Most Important Factor in Determining Successful Amazon Business
In pursuit of finding a product that sells well and makes profit requires strategy based on some intuition as well as analytics based on how Amazon works in selling products, customer trending in terms of their preferences, what customers are buying and what sort of reviews they are providing for products.
It is vital that you spend a significant amount of time finding the right product that will give you the best chance for success.
Initially, Amazon Best Sellers List is a good place to start your product research:
Here you will find across different departments which products are most popular by sales. Browsing this will give you a very good idea on which products are performing well across a broad range of categories by sales. However, this is an hourly snapshot which means that you must keep checking to see which products continue to dominate sales over a good length of time. Only with continuous checking you will get a good idea that some products are well matched with customer demands but it is still an insight based on short history.
Subsequent to an initial Amazon research, the need to apply some smart tools to help you speed up your research and find a product to sell is very advisable. There are various online tools available and I highly recommend Product Spy Pro. The product Spy Pro’s suite of analytics tools is a very powerful software that will make your life much easier in helping you do all the research you need to find profitable products – it is well worth the investment.
General “Rule of Thumb” for Narrowing Down Products to Sell on Amazon FBA
In finding a product to sell, it is well worth leveraging experience of others who have tried to sell Amazon. Following are important products requirement/intuitions that seems to work well:
• Average Product Sale Price Between $5-$45 and have at least a 30-50% profit margin.
• Lightweight (Preferably under 2-3 pounds). Make sure the product is light and relatively small (not more than a few pounds), as this will make a big difference in the cost of shipping your product.
• Similar Products have a 5,000 Best Seller Rank or Smaller in Main Category.
• No Brand Names within Product Category/Niche.
• Find a product that is simple and won’t break easily or have complications, as otherwise it can result in refunds or customer complaints.
• 2-3 Products with less than 50 reviews on first page.
• Product can be made for 25% or less of sale price. Find a product that is relatively inexpensive to make (this will depend on your budget).
• Room for improvement and optimization of current listings
• Product is easily outsourced in China or equivalent
• Year-round seller (not seasonal)
• Similar products being sold on eBay
• Ability to expand your brand with related products
• Can make a superior product over similar products in the market
• Product encourages recurring purchases
• Multiple product keywords
• Pick a product that can stand out some way in the market, or find a better product to sell on Amazon in that market.
• Find a product to sell on Amazon for which you personally feel passionate.
• Think about your 2nd, 3rd, and 4th product. Think about the bigger picture, the market and niche you want to get into, and ultimately the brand you want to create.
Order of Importance for “Rule of Thumb”: Rank and Reason
1. Price Range for Products Must Be Between $5-$45
The selling price for a product is extremely important and it is something you must know in advance before you place an order. The $5-$45 price range is the sweet spot for pricing because people will make impulse buying decisions for products in this price range. To make a buying decision for this price range, customers most likely will not shop around, compare different vendors, weigh decision before buying etc. since they can take the risk of buying the product even if it does not entirely meet their expectation. In contrast, think about extensive research time spent before making a large purchase such as new appliances. People don’t want to make an impulse buying decision when buying those items because they cost so much and that is why we want to keep our product selling price within the range of $5-$45.
Furthermore, we want our products to be in this selling range because many items within this price range will be simple products. For instance, an ice cream scoop is a very simple product and low price compared to electronics items such as a laptop that is expensive with numerous moving parts that potentially develop faults.
Finally, the price range of $5-$45 allows for a lower barrier to setting up your Amazon business and entry into the market. Primarily, lower priced items are usually much cheaper to manufacture in China than higher priced products. To illustrate, let’s take an example of two products with differing prices:
• Product X has a selling price of $15 and it can be made in China for $2 per unit. For an order of 1000 units your order would cost $2,000 excluding shipping.
• Product Y has a selling price of $125 and you can get it made in China for $30 per unit. For placing an order of even 500 units would cost $15,000 excluding shipping.
As you can see from the example above that choosing a product within the selling range of $5-$45 will be inexpensive, makes it relatively easier to enter a market and helps you keep your initial investment down to a more manageable level.
2. Product Must Be Lightweight
Ideally you want your product to be as light as possible. It makes sense to keep the weight of the product below approximately 4 pounds which includes product itself, packaging and the shipping box.
It may be difficult to know the shipping weight of the product in advance of placing an order with a supplier. The easiest way to find an estimated weight of your product is to find similar products with a similar size using tools such as Product Spy Pro.
The users can do a keyword search using simple spy search and compare the weight of the similar products as depicted below.
The weight is important because it plays a big role in the shipping cost from your supplier to the Amazon warehouses. The lighter the product the cheaper the shipping cost which in turns means higher profit margins for you.
You can use Product Spy Pro analytics platform to determine various fulfillment costs. This can be done using the FBA calculator.
Overall, the weight of your product plays a large role in your profit margins and the success that your product will have in terms of sales.
3. The Best Seller Rank To Be Approximately 5000 0r So For Similar Products in its Main Category
It is not always easy to estimate how well a certain product is selling on Amazon but there is some information provided by Amazon in the way of Best Seller Rank (BSR).
The BSR enables you to gauge how well an individual product is selling within its category. In Amazon, the lower the sell rank, the better it is selling. For example, a product with a BSR of 8,000 is going to sell significantly less than a product in the same category with a BSR of 500.
This is extremely valuable information for an entrepreneur because we can determine if there is demand for this product in the market or not.
We want to avoid selling a product that will only sell 1-2 units a day but aim for a product that has higher customer demand in the market. Complementary to the BSR is the Product Spy Pro’s Sales Estimator:
The sales estimator gives an estimate of number of units that will sell for a given Amazon Sale Rank number. The estimate is based on tracking long history of what has been observed on Amazon for the category in question. The BSR gives currently what is BSR for a product while Sales Estimator from Product Spy gives a historical view of a category of interest. Using the BSR value and plugging it into the Product Spy Pro’s Sales estimator gives you the best that you can possibly achieve in terms of units sold.
The more products below 5,000 Sale Rank the better it is. This proves that there are a ton of people buying these products which means that if you can get into the same position as these products then you will be able to sell a ton as well.
4. Do Not Compete With Brand Names Within Product Category/Niche But Sell in Low Competition Niche
The main strategy should be to avoid competing with brand names to sell our product. Instead, every attempt should be made to compete with no-name brands that carry no weight with their name at all.
A well know brand product is a “comfort zone” for customer when they are deciding to purchase. They are more likely to choose a brand that they know rather than a unknown brand and it does not make sense to complete against them. We want to compete in a market where there is at least a level playing field.
A good way to check to see if a brand dominates your product category is to search for your product keyword in Amazon and see if any brands catch your eye. If you recognize any brands on the first page then it is not a good sign.
The Product Spy Pro’s product analyzer can help you home in on products by specifying the criteria such as what is the average demand for a category, average price. The challenge score (lower the score, easier it is to compete), selling potential (higher the score, better it is to sell here), listing quality grade (lower the score, better your chance to improve upon the competition when you list) and word count gives indication as to how much the competition is engaged in creating an appealing listing.
5. A Simple Item That Does Not Have Many Moving Parts or Electronics Such That It Is Not Easily Broken
We want to sell a product that is simple and one that we would not have to worry about arriving to the customer home in a broken state. The best way to ensure that a product is simple is to stay away from products that have more than one part or that are electronic.
Search for a generic product that that has one function such as an ice cream scoop. These are the type of items we want to pursue. It has one use and generic such that anyone can manufacture them.
Another advantage of selecting a simple product is that you will have a much better chance of finding a supplier that makes the product. Simple products are also going to be cheaper to get made compared to intricate products.
Here is a list of Simple Product Characteristics Checklist:
• Easy to get made
• No electronic parts
• No moving parts
• Can be used without the need for an instruction manual
• Made for doing one job
6. Around 2 to 4 Products with Less Than 40 Reviews on First Page
The number of review is a good indicator of the competition.
Items with less than 40 reviews are generally considered to be easy to beat. That is why we want to see at least 2-3 products with less than 40 reviews on the first page. This means that there is a good chance that we would be able to reach the first page for our product.
Analytics tool such as Product Spy Pro can be used here to help you search for products. In Product Spy Pro, you can set variety of criteria including number of reviews, keyword etc. as follows:
It can return analytics for number of different criteria as shown blow:
We can see above that ice cream scoop product is selling for $9.99 and has only received 13 reviews so far which makes is a good candidate to compete against. We also see that the Sell Rank is 1252 which is much below the 5000 Sell Rank we discussed above. In addition, we see that there is only one seller of this product and Listing Quality Grade (LQG) suggests it is a reasonable listing but not the best.
In general, It is even better if there are listings with 30, 20, or even 5 reviews. If you find a product with high demand and a listing with only 5 reviews on the first page then you have found yourself a compelling product to sell.
The amount of reviews is one of the best way to gauge the level of competition for a product. We know that reviews for a product is one of the main ways Amazon ranks products. That is why we look at the number of reviews so closely before entering the market for a product.
7. The Purchase Cost of a Product Must Be Less Than or Equal to 25% of Sale Price
In order to check if a product can be made for less than 25% of the sale price, you can use B2B websites such as Alibaba to check what price suppliers are offering a product of interest.
Many suppliers on Alibaba will give you an estimated price per unit cost on the product page. You can use this price to check if it is below 25% of the sale price or not.
The 25% purchase cost for a product is a good general rule to follow since it gives you a buffer of 75% profit margin from which to pay for other costs.
We need to take into account other cost involved such as shipping costs, Amazon FBA fees and an Amazon selling fee that will cut into the profit margin. The 75% profit margin should be adequate buffer to cover the shipping costs, Amazon FBA fees, Amazon selling fees and still leave a healthy profit margin.
From product spy pro, by clicking the fourth icon, users can directly go to Alibaba to check out the suppliers.
8. Is There a Possibility of Improving the Product Listing?
There may be listing of products from other vendors on the first page that are not composed well and shows a strong possibility of improvement on them. Examples of sorts of markers that make a listing a good candidate from improvements are as follows:
• None or one product image
• Substandard image quality
• Non-descript or overly complicated title
• Weak/confusing and number of bullet points
• Minimum number of words in a product description
• Vital information missing
A weaker listing on the first page presents a good opportunity for us to make significant improvement on listing of our product. An online analytics tools such a Product Spy Pro can help here. It provides a Listing Quality Grade (LQG) score for each product of interest and help you quickly decide whether you have a decent opportunity to compete.
We covered the first eight requirements/intuition needed for product research in order to sell successfully on Amazon. Using these intuitions in conjunction with online analytics tools such as makes product research easy. In the follow up blog, we will cover the final remaining intuitions/requirements for a successful product research and selling on Amazon.