The right product is the lifeblood of any profitable Amazon business. Here’s six tips to finding one…
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When it comes to selling privately labelled products on Amazon, one of the biggest challenges people face is finding the right product to sell.
If you sell a product that has little to no competition, you run the risk of nobody hearing about it. On the other hand, if you sell a product with too much competition, you’ll hardly have any ‘wiggle’ room to grab a fair share of profit from the market.
To avoid wasting money and time on a product that doesn’t sell, it’s important to know what determines a ‘winning’ product, and how to find one.
Rest assured, this article is going to share with you six key tips to help you find a profitable product to sell on Amazon.
Here are the six tips.
Tip #1: Choose Items That Have a Healthy Competition
While having too much competition in a niche can limit your products ability to thrive, a healthy amount of it indicates that the niche is potentially profitable.
Why? Because if the niche is not profitable, other Amazon sellers wouldn’t bother selling their products here in the first place.
It would be a waste of time and money to sell to a marketplace where there are no buyers. So having some competition validates that there are at least some buyers in the marketplace.
With more competition, you have more information to work with. When an item has pre-existing sellers, you can track their sales and see important data trends.
For example, you can see if all of the sales were dominated by a few sellers, or if it is split amongst multiple sellers. This is important information, because if only a few sellers are dominating the sales, then we know it is a brand-driven market and it will be difficult to break into.
Whereas, if the sales are split more evenly amongst multiple sellers, then we know that there is room in the marketplace for multiple competitors.
Likewise, having multiple sellers in the niche means that they will be attracting customers to Amazon already. This gives us the opportunity to come in and steal the sales away from them, given you follow the right strategy.
Tip #2: Choose a Simple Product
As a beginner, it’s always a better option to choose a simple product rather than one that is too difficult to manufacture or sell to your customers.
Choosing a simple product can save you a lot of hassle when working with manufacturers, and also reduces the risk of your products breaking or becoming faulty while in transit to the FBA warehouse.
With that in mind, here are a few tips on what to avoid when choosing your product:
1) Avoid products that have easily breakable parts, such as electronics. These items are a lot more complex to manufacture, and you don’t want to run the risk of receiving a bad review from a customer whose product turned out faulty (especially if there is no warranty).
2) Avoid products that are big and heavy. Focusing on small and lightweight items makes them easier to ship and to handle inventory.
3) Avoid items that are licensed. For example, items containing pictures of mickey mouse, as this will get you into legal problems.
Tip #3: Be Prepared to Sell Items You Aren’t Passionate About
When it comes to selling on Amazon, the products you personally like isn’t exactly going to be what is hot-selling.
Chances are, most products that you end up selling won’t have anything to do with your personal tastes or interests. Most sellers end up selling products in niches they were never even familiar with in the first place.
While this may not sound favourable to some, these sellers are okay with this, since at the end of the day these products will make them the most money.
Not everybody is going to like what you like, and part of being successful in business is knowing how to ‘detach’ from your emotions, and focus on what the marketplace wants.
This is not to say that you can’t sell products in a niche you are passionate about. It just means that not everybody’s passion will be in a niche that is potentially profitable.
Successful Amazon sellers don’t allow their emotions to trump their ultimate decision of what product to sell. They always rely on data to be the forefront of their decision, and often have a better track-record for finding profitable products.
Tip #4: Avoid Seasonal Products
It’s a lot easier to focus on items that have constant, on-going demand so that you can have regular cash flow throughout the year.
For example, Christmas lights are going to have a huge spike at Christmas time, but throughout the rest of the year sales will be very low.
To check if an item you are thinking of selling has only seasonal demand, use Google trends to track how often an item is searched for over the year.
For example, the search volume for ‘Halloween’ always spikes up around October and November.
Ideally, you want to find a product or niche that experiences steady growth each year. This indicates that demand for your product is unlikely to fluctuate, giving a better idea of how many sales you will be likely to make on a monthly basis.
Tip #5: Look for Items With a Higher Price Point
Products with higher price points tend to bring in more profit as well. And this becomes more important when you consider the fees that Amazon deduct from every sale you make.
For each sale, Amazon charges you two types of fees. The first fee is a variable percentage-based Amazon fulfilment fee, and the second is a fixed pick-and-pack fee.
While the variable fee will increase as your price increases, the fixed pick-and-pack fee will not. This means that as the price of your product increases, your profit margins exponentially increase as well (and inversely, as your price decreases, your profit margins exponentially decrease).
That is why we usually recommend you aim for a price of at least $15, so that you’re paying no more than 35% in fees per sale.
Tip #6: Don’t Follow Your Gut
As mentioned above in tip number three, you never want to follow your gut when deciding on a product to sell.
Sometimes in marketing and sales, following your gut is the way to go. But when it comes to investing your money in purchasing products, it’s always safer to make data-driven decisions.
You don’t want to end up manufacturing a product and shipping it over to Amazon’s warehouse, only to find out that your product isn’t making any sales. That’s simply a waste of time and money that could have been better invested if you have researched your product better.
Helpful video: How to Launch Your First Amazon FBA Product
The Bottom Line
Knowing how to spot a potentially profitable product to sell on Amazon is crucial for lasting success with this business model.
And by following these tips outlined above, you will greatly increase your chances of finding that ‘winning’ product, while dramatically reduce your risk of wasting money and time into products that don’t turn out successful.