The launch of Amazon FBA in 2006 was a game changer for ecommerce merchants selling on the popular marketplace. Amazon FBA makes fulfilling orders easy, seeing as Amazon handles the majority of the legwork for you.
If you are an online seller, the biggest challenges you face on a daily basis revolve around doing Amazon product research and providing exceptional customer service. When it comes to sourcing products to sell on Amazon, you need to have an understanding of what makes an item likely to sell on Amazon.
Without going into too much detail, factors like: a product’s demand level, the amount of competition trying to sell it, the number of reviews a product has, the likelihood of you getting the Amazon buy box, seller ratings, and pricing.
Product sourcing is no small task either. It takes a lot of calculated research to uncover profitable products that aren’t oversaturated. Here are a few tips and tricks that will help you find products that are worth looking into while you are doing your Amazon product research.
Find a Product Sourcing Platform
Before you even start scouring Amazon for potential products, find a reliable product sourcing platform that will help you analyze and make sense of everything. There is a lot of data to sort through when looking at products and it isn’t always easy to understand.
But – if you want to be successful, you need to know how demand levels and competition levels relate, how your profit margins are calculated, and how to handle finding new products to keep your shop growing.
If you are looking for an easy-to-use and lightweight product sourcing platform, check out Algopix.
Scour Product Categories and Niches on Amazon
Some people like to jump on a supplier’s website and start hunting for products. I don’t believe this is the best approach.
Here’s how I recommend you do your Amazon product research. Start by heading over to Amazon and pick a product category that you are familiar with and that you have permission to sell on. Remember, Amazon gates certain product categories in the name of quality control. New sellers are unable to sell in categories like Health & Beauty, Toys & Video Games, Automotive, and a few others.
Start searching the product category that you chose, but don’t stay on the main page, dig deeper. You need to find subcategories within your main category to find products that have demand and little supply. Take those products and feed them into your product sourcing platform.
If you are looking in Tools, Patio & Garden, try looking deeper in the Gardening section. The Gardening section alone has several subcategories of its own. I can’t tell you which products will sell because that’s always changing. But I can tell you that you will have to get your hands dirty (no pun intended) and scour the subcategories to find profitable niches.
Understand the Stats
Don’t feel overwhelmed when you filter items through your product sourcing platform. There is a lot of data to go through, but here’s what you really need to know when it comes to doing Amazon product research.
An ideal product for Amazon FBA will have most of the following conditions:
● Medium demand or higher
● Low to medium competition
● Few reviews and competition has a seller rating that you can overcome
● Has low shipping costs
● Has high enough profit margins to cover expenses and unforeseen problems (damaged products, returns, etc.)
● Readily available from your suppliers for current and future demand
● An Amazon buy box that you can take over
It shouldn’t come as a surprise that high demand and low competition are good things for you as a seller. Any product that you want to sell shouldn’t have deeply established sellers. As a new seller, you will not be able to dethrone someone with an item that has hundreds of 5-star reviews. You will waste a lot of time and resources even trying.
Another thing to consider is how likely it is that you can win the Amazon buy box. People pay a lot of money for their Amazon Prime memberships, you can bet they want to put them to use and get their free shipping.
A lot of new sellers make the mistake of trying to pick items that have high selling prices. This isn’t always the easiest way to approach your Amazon product research. There isn’t a direct price range you should target, but if your capital is low and you can’t afford to make mistakes, lower cost items are more forgiving should things go wrong.
If you place an order for 500 units of an item that sells for $50 and costs you $10, your initial costs are $5,000. But what happens if you chase that high selling price item? Maybe you found a great item that sells for 500, but costs you $100. That same order of 500 units will cost you 50,000 instead. Most new sellers can’t afford $50,000 upfront, especially if they are unsure about how the item will perform.
As a rule of thumb, always start small and work your way up from there. There is nothing wrong with being a volume seller if your profit margins are just as good. You can always sell high priced items in the future when you have had a chance to build up your capital.
The final piece of advice I am going to offer is to sell products that are durable. Any product that has delicate pieces, such as glass items or anything that may get damaged during shipping is risky to sell and can cost you more than it’s worth.
When product sourcing, test your products. Don’t take your suppliers word for it. Order a product and be rough on it. Simulate a rough shipping experience, drop it a few times, and see how it holds up to rough play. This may sound comical, but it will help you decide if a specific product is durable enough for regular use.
Your customers will leave negative reviews if their item shows up damaged. Fixing these reviews is a lot harder than it is to just ship durable products in the first place.
It’s never too late to get started in ecommerce. There are always new products and niches to discover during your Amazon product research. If you put a lot of time into properly sourcing your products, you will increase your chances of finding those great products that Amazon sellers dream of.
Keep searching, you will find them.
The Algopix Team
What do you think? Post any comments or ideas you have in the comment section below.
Dani Avitz is an eCommerce expert. He is co-founder and COO at Algopix, a research platform for the eCommerce community