Product research is key!
As mentioned in the Introduction to Amazon FBA, the hardest part of making money with Amazon FBA is finding the right product to sell in the first place!
Think of a product, any product, Amazon sells it. Finding your niche is tough and without the right tools it is a needle in a haystack.
So what does a successful and profitable product look like?
Profit Margin - We are here to make money so it is important that once the item is sold and fees are taken away that we are left with some profit. Now remember here, as Amazon are fulfilling the orders whilst you're likely busy at work, try not be too greedy! Any profit is a profit and when you scale your business the small margins add up! If you waste too much time trying to find 50% return on investment (ROI) then you will never get started. Get the sales ticking over and then scale.
Low/Medium Competition - You don't want to be competing with the likes of Apple/Amazon Echo/Sharpie Pens or any brand that is going to absolutely blow you out of the water. You need to find a niche that you can perform and stand out in. Products with high competition make it very hard to get onto the first page on Amazon and no-one buys from page 2!
Affordable - As mentioned during the introduction, you will be purchasing your product wholesale and will have to meet minimum order requirements. This must be considered when you choose how expensive your product will be.
Size of product - The size of your product is certainly something to consider. As you are storing your products in Amazon's warehouse, they will charge you per block of storage you have. This can eat into your profits as storage can be expensive if you're not careful!
Durability - Ideally you want to avoid picking products that are liable to break in transit as you will be constantly seeing returns for faulty items which cannot then be sold on, not to mention the 1 star reviews!
Availability - When you pick a product you need to make sure it will be available to order time and time again should your sales increase. Amazon punishes out of stock inventory and will knock your product way down the rankings leaving you back where you started. You need to make sure when things are going well your supplier can keep up with your demand. We will look more into suppliers later!
Sales Volume - Are the products in competition with mine actually selling? If so, how much?
Is there anything out there that can make product research for Amazon FBA easier?
This was a question I asked myself when I first started looking because I was finding products I liked but was unsure of exact margins and also unsure on if these products were actually selling!
It didn't take much Googling to come across a platform called JungleScout. They essentially saw this problem and decided it was worth their time to build a platform to help all of us find products in a much easier way!
JungleScout works via either a Web Application or Chrome Extension. (I personally love the Chrome Extension). All I had to do was to search for a product on Amazon and click the Chrome Extension and straight away I had a list of all items:
- Monthly Sales Data
- Daily Sales Data
- Historical Sales Data
...and also an opportunity score out of 10 where JungleScout would add all of these metrics together to give you a score to use as a guide.
Take a look at this quick tutorial on using the Chrome Extension and decide for yourself!
There were occasions I thought I found a good product only to get 4/10 on the opportunity score. But why? On closer inspection the sales just weren't there! Yes the competition was low and the ROI was good, but if the product won't sell it all means nothing.
I have yet to find a 10/10, you will have to post below if you come across one!
Now all of these golden nuggets don't come free, but that's because they are well aware of how much money this can make with their help. They just want a small piece of your pie which I think all things considered, is fairly reasonable.
JungleScout do not offer a free trial as such, however they do work on a 14-day money back guarantee so if you want to try their services you can do and if you don't see the benefit then let them know you want to cancel and they will give you your money back.
When you feel you are ready to start product research and have a rough idea which area you want to look in, activate your JungleScout and set a reminder for 13 days.
Use the tools as much as you can and if you don't find anything just ask for your money back. You are essentially getting your free trial so don't worry too much about the initial cost.
Once you see what help JungleScout can provide it will be clear that the monthly/annual fee is purely an investment in your business and will help bring you greater rewards!
Once you have a product in mind, the next thing you need to do is find somewhere to buy it.
Click here to continue my Amazon FBA guide and learn more about sourcing your products!