Amazon Case Study #2: Find a Great First Product that Sells like Hotcakes

I spent ages researching how to choose a good product so I wouldn’t make any mistakes. I have compiled and condensed everything I’ve learned here so you can dive right in and not waste any precious time!

There are three main criteria we want to know when choosing a product to sell on Amazon:

  1. Is there enough demand to justify moving forward (you can decide what “enough” means based on how much you’d like to earn per month)?
  2. How fierce is the competition? Can I compete?
  3. Is there a profit margin once I’ve factored in all the expenses (shipping, Amazon fees, etc.)?

 

When you’ve decided you want to sell products on Amazon, your mind may have started filling with ideas of what you could sell. I know I started seeing potential products everywhere around me in the beginning! Not so fast! It is very easy to choose a product that will not be worth your time, or worse, will cause you to lose money and never regain it. I will first discuss how to brainstorm ideas, and then we will go into how to test your ideas against the three criteria above so you will end up with a real winner before you’ve spent a dime!

What Makes a Good (or Bad) Product?

When choosing a product, you want to avoid choosing:

  • Products that you can find in major retailers or that you frequently buy (ex.: towels or toilet paper) as these will have crazy competition, even from Amazon itself
  • Products that have a big name behind the main sellers (ex.: toothbrushes), unless you can improve upon that product. A high demand for that niche will probably not translate to high sales for your unknown brand.
  • Products that have a high risk of return (like electronics or other fragile items). Save yourself the headache!
  • Bulky products that will be a nightmare to ship.

A good product:

  • Sells for between $15-$50; you want something that a person would buy on impulse rather than a major investment but that is still profitable enough to have a decent margin.
  • Ideally, is consumable or something that someone would buy more than once.

Now that we’ve set down some basic guidelines, we will talk about where you can find some ideas.

Brainstorming Ideas

There are a few schools of thought on how to come up with some ideas:

  • Look at Amazon Movers and Shakers and click through the categories on the left to see what’s currently doing well.
  • Look at the Amazon Bestsellers for the most popular products on Amazon (you will probably have to dive deeply into the lists to find undersaturated markets).
  • Study your previous purchases, and try to find a product that you almost forgot you ever ordered from Amazon. Obscure, forgettable purchases can make great potential products! We are not looking for sexy- just the opposite.
  • Ask friends and family to tell you the same as above: things they’ve ordered for work and forgotten about, that travel eye mask they bought and left in Europe, etc.
  • If you want to save time and don’t mind paying, you can try out a service that will list products as you vary category and criteria (including the criteria I will list in the next section). I have used Jungle Scout’s Web App and Niche Hunter and was very happy with them. You can be fairly strict with the criteria that you set so that you will not be overwhelmed with options- it just takes away the iterative trial-and-error.

Any of these ideas should get you started on a good amount of ideas, but keep reading to find out how to vet each one as you go.

Testing Your Ideas

What’s the Demand: How Much are the Page One Sellers Selling per Month?

Go to Product Information on any product’s page and find the Best Seller’s Rank. Copy this number into Jungle Scout’s free estimator (be sure to select the correct category) and you will get the number of sales per month. The Jungle Scout and Unicorn Smasher web extensions (discussed in Software section at the bottom) can also give you the estimated revenue for the sellers in a particular niche. Once you’ve calculated the profit margins (also discussed in the next few sections) you can decide if this is worth your effort. If there are only 20 sales per month for the top seller, it’s probably a bit too niche of a product!

How Strong is the Competition?

I’ll discuss optimizing your post in more detail in one of my next posts, but you should look through the first page of sellers for the product you’re looking for to assess the competition. You can use this tool to view other search terms people may be using to look for your potential product. Here are the main things to look for:

  • Number of reviews: this is the main criterion you should look at. You want to choose a product that has at least a few top sellers (sellers on the first page of results) with less than 200 reviews, or ideally less than 100. A good rule of thumb is that sellers usually have one review per 100 sales, so you can multiply the number of reviews by 100 to get an idea of how established the other sellers are. If you have one or two sellers with a massive amount of reviews but the others have just a handful, that’s great! Jump in there and get a piece of the pie.

  • Average rating: do you see a lot of products with low ratings? The negative reviews are a goldmine. You can use what other sellers are doing wrong to add value and organically climb the seller ranks.
  • Photos: do the top sellers have photos that are professionally done, tell a story, and make an emotional connection? Do they show the product from many angles and use the maximum number of photos? If not, you have a clear way to add value.
  • Other profile features: do the bullet points showcase the products’ main benefits well? Is there a good product description that explains the features? You may see product descriptions with additional photos, tables, etc.; those are reserved for brands with a trademark. If you don’t see any, you could register a trademark and add value that way once you’re confident your product will sell. It’s also worth looking at whether the sellers answer their questions to see how invested they are in their brand; customer service counts!

What Kind of Profit Margin Can I Expect?

Look on Alibaba (or your preferred source of manufacturers). Search for the product on Amazon and try to find an exact match between one of the top sellers on Amazon and a supplier on Alibaba. You want as high of a price difference as possible. You can view how much your Amazon fees will be here by selecting a competitor’s product, entering the price, and pushing “calculate”. Assume that you will have to pay a few dollars per item for shipping as well and you can get a good estimate of whether this item is profitable. If there isn’t at least a few dollars profit margin, don’t bother!

Software that Helps You Find a Product

I’ve mentioned above that I love Junglescout Web App for doing product research, but if you want to rapidly check on products you can use their Chrome Extension for a flat fee rather than a subscription. For a free alternative you can try Unicorn Smasher which gives very different results from those of Junglescout but is a great quick tool to compare products. Once you’ve installed an extension, sort descending by sales (these are monthly) and if your product has a good average price point, at least a few of the top sellers with less than 1000 reviews and product rank in the top 1000, then you know you’re probably onto something!

Conclusion

Verifying the viability of your product is the most important step and will safe you a lot of future headache. It may take some time when you just want to get started selling right away, but it is worth the time doing your research! You will start to get the feel for what a good product looks like as you go along and the next time you need to find a product, you will probably already have several ideas in mind!

 

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