The online business is determined by by-products. It’s no different on Amazon either. Around 229 million products can now be bought on the platform in individual categories.
In order to be able to assert yourself here and make money with Amazon FBA, you have to sell really good products.
However, that is easier said than done. What is a good product anyway? And how do you find it? Answering these questions is essential for success on Amazon.
At this point, you shouldn’t ponder too long and make the biggest beginner’s mistake and not sell at all. But it is still important that you deal with the topic sufficiently in order to even have a chance of becoming a successful Amazon seller.
This post is aimed at prospective Amazon sellers who are currently looking for a product. We have developed a strategy for you that will help you find a successful product in no time. Here we go!
SellerActions helps Amazon Custom sellers to import their text-based customization details to Shipstation automatically
What is good or bad always depends on the context and is usually very subjective. However, Amazon FBA also has some objective criteria that can be used to evaluate a product to determine if it is suitable for sale on Amazon:
High search volume – First, the product should have a high search volume. A high search volume occurs when the product is frequently searched for by prospective buyers in the Amazon search bar.
Little competition – In addition, a good product is characterized by relatively little competition. Because there are niches that are already so flooded and occupied by “top dogs” that it makes little sense to enter here as a newcomer. But the competition is also reduced by having a truly unique product that does not yet exist on the market in this form. This is an opportunity to stand out from the competition.
Regardless of the season – In order to be able to achieve consistently high sales throughout the year, it is advisable, at least at the beginning, to try to find a product that is bought regardless of the season, i.e. that is a “permanent favorite”. Products such as Christmas tree decorations are therefore not recommended for the beginning.
Low weight – It is also important that the weight is suitable for shipping from the country of production. Small and light products have the advantage here, as they take up less space and can even be shipped by air freight if necessary.
Combinability – It is also good if a product can be combined, i.e. it can become part of an entire product portfolio that appeals to the same buyers over and over again. This gives you the opportunity to draw buyers’ attention to other of your own products or to sell a set of complementary products.
Free from infringements – Of course, the product should not violate the rights of others, such as design or patent rights, and it should comply with all necessary certificates and other legal provisions. Otherwise, you risk fines and penalties that can threaten your very existence.
High margin – Finally, it is also important that the product has a sufficiently high margin.
The margin is the ratio of the Amazon FBA costs to the profit made with the product. It is an indicator of whether your business is profitable or not. You can also use it as a guide to finding out whether additional expenses (e.g. advertising costs) are worthwhile, or whether you should rather make other adjustments (change the supplier, the shipping method, etc.).
The calculation goes as follows:
Margin = Net Sales – Cost of Goods – Freight Cost – Selling Fees – FBA Shipping Fees
Gross margin percentage = margin / net sales x 100.
The larger the margin, the lower the risk of going into the red due to unforeseen costs. It is not possible to give a general answer as to what percentage margin you should aim for, as this is always a question of the individual case and several factors always play a role.
However, the margin of an individual product is not that important once you have built up a product portfolio. Because here you can still sell successfully on Amazon with a mixed calculation, even if individual products have a “too low” margin, they still have their right to exist because they sell well. For example, if some products only have a 10% margin, while others have a 50% margin, selling on Amazon will probably still be worthwhile.
Now that you know what makes a good product on Amazon, how do you find such a product? It goes without saying that this task is not that easy – because if it were easy, everyone would successfully offer numerous products on Amazon.
When looking for your own product, you should focus on sustainability. Find your own passion and ignore the mainstream! This is the only way you will be able to build a successful Amazon business that you can and want to stand behind.
Jot down interests – Use pen and paper to jot down your top 5 areas of interest. What are you particularly interested in privately? What are you most passionate about? Your YouTube search history, books you have recently read or topics that keep coming up in conversations with friends and acquaintances can help you along the way.
Research product ideas – In the next step, you can then research product ideas for the 5 areas of interest. Above all, focus on small and light products! For example, when researching, you can browse online shops for inspiration. Topic-specific online shops are particularly suitable here, as they usually have more selection and are categorically easier to search through than Amazon.
Validate product idea – In the last step, you can then validate your product idea with tools.
Product validation means that after you have found a product idea that meets the above criteria, you specifically check whether there is sufficient search volume so that enough sales can be achieved with the sale.
But how do you go about validating a product – what is the right tool and how does it work?
We recommend the Chrome Browser Extension Helium 10 Xray for validating the product idea. Here you can easily and conveniently display the sales and turnover figures of the competitors for a product or search term.
In order to be able to use Helium 10 Xray, you must first create an account (1). This is free for up to 50 searches on Helium 10 Xray. If these are not sufficient, the account can also be upgraded accordingly. Then download the Chrome Browser Extension Helium 10 Xray (2).
After installation, you can find the tool in your Google Chrome bar.
If you now enter a search term in the search bar on Amazon, click on the Google Chrome Browser Extension for an evaluation and then on “Xray – Amazon Product Research”.
The results of your search query then appear, which you can then analyze to validate your product idea.
You should definitely keep this in mind when using tools and analyzing search queries as part of Amazon FBA product research!
When using validation tools, consider the following to analyze the results:
Avoid brand dominance traps – Don’t use tools for niches dominated by one manufacturer. Because: In these cases, the results can be falsified because the prospective buyer may not be looking for the product, but directly for the brand.
Flat sales distribution – A niche makes sense for you above all if the sales are evenly distributed, i.e. everyone achieves roughly the same sales over the first three pages of the search results. Here you have a good chance of “playing along” and will never be left without a turnover.
Sufficient sales potential – In addition, there should be enough sales potential, which means that your competitors should make at least 2000 to 3000 euros in sales per month with the product on average.
Attention: Tools like Helium 10 only serve as a rough estimate and should therefore only provide a first indication of whether a product idea is good. Keep in mind that the results are sometimes biased as the tools only measure sales rank, inventory, and other factors and can therefore only give a rough estimate of the numbers. They should be used with caution and only serve to validate products that you have already considered without offering absolute certainty for a successful sale on Amazon.
If you already have a vision, don’t let bad numbers discourage you. Because even if the numbers look bad at first, you can create your own market if you stick with it. You also have the opportunity to build your own market through content marketing or other strategies.
A good product is a be-all and end-all of selling on Amazon. There are various criteria that make a good product.
If you follow the steps mentioned, you will soon have found a suitable product for starting out as an Amazon FBA seller, which you can validate with the appropriate tools.