Choosing the Right Products to Sell on Amazon

As a new seller on Amazon, selecting the right product to sell is the most crucial success factor. Choosing the right product can result in high sales and profitability, while choosing the wrong product can result in losses and wastage of resources. In the previous article, we went over the basics of identifying a profitable product to sell on Amazon. In this article, we will expound on five essential product selection steps that you should take: demand analysis, competition analysis, profitability analysis, supplier analysis, and product testing before committing

1. Understanding Market Deman

The first thing you want to do when selecting a product to sell is know the market demand. Understanding market demand will help to gauge the potential of a product’s profitability. While it can be a daunting task, there are three areas you can focus on to understand market demand of a product:

1. Keyword Research

Customers frequently use particular words when searching for a specific product. These words are known as keywords – for instance many customers will type in “scrub” when searching for body scrubs or skin care products. For keyword research, you have to use tools like Jungle Scout, Sellerise, Helium 10, and Amazon’s own search bar to find out what customers are searching for. To get quality results, you will need to look for high search volume keywords related to your product ideas. Products with high search volume translates to a high demand product that you can choose to sell on Amazon.

2. Trend Analysis

Beyond keywords, you will need to also check out a products market trend. Google trends is a vital tool for this job because it shows you if a product’s popularity is increasing or declining. On top of this, you may want to check out Amazon’s Best Sellers, Movers and Shakers, as well as New Releases lists to see which products are trending.

3. Customer Reviews and Feedback

Another area to observe market demand is through customer reviews and feedback. Analyzing what customers have to say about a product will help you understand what they like and dislike in a product or service. This will enable you to see gaps in the market, or discover unmet customer needs which you can fulfil.

2. Analyzing Competition

Once you have identified potential products, the next step is to analyze competition to ensure you can compete effectively. In this stage, you need to look at the top sellers in your chosen product category, then analyze their product listings by checking their titles, descriptions, images, and bullet points. Also, review what customers have to say about their products to identify existing gaps where you can improve on to stand out. Another area to take note of is the price points – compare the pricing strategies used among the top competitors. This ensures that you can competitively price your product while maintaining a healthy profit margin. You can also utilize various tools to enhance your competitor analysis – check out our guide on How to analyze competitors using Chat GPT for more details.

3. Evaluating Profitability

If the demand is right and competition manageable, the next step is to evaluate the profitability to ensure the financial viability of a product. To do this, you must consider several factors:

1. The cost of Goods Sold (COGS)

Do a calculation of the total cost incurred to produce or purchase your product, including materials, labor, and shipping.

2. Amazon fees

Take note of Amazon’s referral fees, FBA fees, among other associated costs. Take advantage of Amazon’s FBA Revenue Calculator to figure out these fees.

3. Profit margins

After accounting for all the costs, make sure that your chosen product leaves you with a healthy profit margin. You can aim for a minimum profit margin of 30% to ensure you achieve profitability.

4. Product Sourcing

If you find that the product checks out on the previous steps, you need to now find a reliable supplier. Reliable in this sense means a supplier who can guarantee product quality and availability. In this stage, there are three main things you need to pay attention to:

1. Domestic vs. overseas suppliers

You have to research and determine if you want to source your products domestically or from overseas because each option carries pros and cons in terms of quality, cost, and lead times.

2. Supplier platforms

Consider using platforms like Alibaba, Global Sources, or ThomasNet to find suppliers across the world.

3. Negotiating terms

Ensure you negotiate favourable terms with your chosen suppliers by engaging with them about pricing, minimum order quantities, as well as payment terms.

5. Testing your Product

Before making any large investments, it is very crucial to test out the product to ensure it achieves market acceptance and that the quality is right. This will involve requesting sample orders from multiple suppliers to gauge who has the best product. Don’t be overly ambitious with large batches; instead, start with small batches to test how the market will respond. This initial batch will help you to gather feedback and make necessary improvements. Additionally, you have to check on quality control – set strict quality standards to ensure that the quality of your product doesn’t deviate from customer expectations.

Conclusion

As you can tell by now, choosing the right products to sell on Amazon involves thorough research and careful planning. You have to understand market demand, analyze competition, evaluate profitability, effectively source products, and test your products in order to set a solid foundation for your Amazon business. So now that you know what to consider when selecting a product to sell on Amazon, the next move for you is to join Amazon sellers. In our next article, we will jump into the details of setting up your Amazon seller account so that you start your journey on the right foot

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• Testing Amazon Products