The first major step in running an Amazon FBA business is picking the product to sell.
What is it that you want to sell?
Is there a demand for your product?
How much competition will you be facing?
It’s crucial that you pick the most ideal item to sell. Needless to say, there are a lot of factors that you must consider when you’re choosing your product. This article should serve as a guide that you can use when starting your Amazon FBA business.
This article cannot cover everything in detail. It would take a book to discuss all the topics but it should be enough to get you started.
How to Choose a Product to Sell
So, how can you go about in choosing a product to sell on Amazon FBA?
Before you can choose products or product to sell, you need to choose on a general path that you want to follow. There are two:
- Pick a very specific product
- Choose a very broad niche
Both of these options have their advantages and disadvantages. By choosing a single product that has the potential of selling really well, you can focus your efforts on selling that item. The problem is that if the product does not live up to your expectations, your efforts would go to waste.
Choosing a broad niche, on the other hand, will allow you to earn more money since you can sell more products. It is also the best way if you want to scale your business. The problem is that handling many products will take a lot of work and can be complicated.
For beginners, it is highly recommended that you pick a specific product that you think has the potential of selling well. That will allow you to learn the practices of selling on Amazon FBA.
It will be less costly for you to commit mistakes when you are just dealing with a single product. Once you have learned how you have gained more experience as a seller then you can start expanding your business by adding more products.
What Makes a Good Product to Sell on Amazon?
As you may realize, that is not an easy thing to answer.
If it was then everyone would be making a great deal of money by selling on Amazon now.
It’s not rocket science but it takes hard work and a lot of research to learn which product has the potential of doing really well. If you spend time in researching and you know the qualities to look for, you have a good chance of identifying an item that can generate profits.
So what are those qualities?
Average Sale Price
You do know how much profit you are going to make by selling a product. In order to know that you must be aware of its average selling price.
Products with average selling prices that range from $10 to $50 have better chances of high volume sales, mostly because of impulse buying. That’s because people do not really stop and think about buying stuff that is within that price range.
Consumers will not spend too much time researching your product. Once they feel that it is good enough, they’re going to buy it.
Here’s a good example. When you plan on buying a smartphone or a laptop, you don’t just purchase the first option that you come across. You spend a lot of time researching and finding the specs of the different options that are available.
Do you spend that amount of time researching a t-shirt or a belt? You don’t and so does most consumers.
Another major reason why products within this range do well when it comes to sales is because they are simple and basic. They tend not to have too many moving parts that can get broken.
That is a huge advantage when it comes to shipping. Simple products with few moving parts have a lesser chance of getting damaged during shipping.
Also, products with low prices would make it easier for you to get started. You can scale up your business more quickly with cheaper products.
Ideally, the product that you should choose must be as light as possible. The main reason why weight is an important factor in picking a product is because of the cost of shipping.
This is generally easy to understand. As the size and weight of your product goes up, the more you will have to pay for the shipping. If you spend too much on the cost of shipping relative to the selling price of your product, the less your profit will be.
When figuring out the shipping weight, you also need to include the weight of the box and the packaging that Amazon will be using. The shipping cost is going to be very crucial especially if your products are being sourced from China.
On top of the shipping cost, you also need to keep in mind that Amazon has fees that are based on the weight of the product. That fee is around $2 for the first 2 lbs and each 1 lb increase will cost $0.39.
So, the point is, you need to keep your products as light as possible. The lighter it is, the better it will be for your business.
It is not easy to determine how certain products sell on Amazon. Unless sellers will actually you how much they are selling, the best way to determine that would be the BSR rating.
BSR stands for Best Seller Ranking. You want to get a product that has a BSR of 5,000 or lower. A product with a BSR or 9,000 sells less often than one with 1,000.
Now, you don’t just look at one product’s BSR and base your decision from that. You need to look at the top three to top five products on a category and check out their BSR. If only one product there has a good BSR rating, then it might not be a good product category to get into.
In this example, you can see that product is ranked number 4 when it comes to Electronics and number 3 when it comes Streaming Media Players. Now, those rankings are very good and you can bet that this product is selling very well.
Again, what you want is something that has a BSR of 5,000 or better. Just make sure that your product will be very similar to that item which has that rank.
Avoid Categories with Big Brand Names
When picking your product, you have to make sure that there is no brand name that you will be competing against within its category.
This is especially true when you are just starting out. You do not want to take on strong competition and an established brand is going to be the strongest competition out there. Remember that brand recognition plays a very huge role in driving sales.
One good example of just how important brand recognition is the fact that 50% of people are following up to 4 brands through their social media accounts. They care enough about those brands that they would connect with them online.
When consumers have to choose between your product and that from a recognized brand, they are likelier to choose a recognizable name over what you have to offer. That is true even when the price you are offering is lower or even if your product is obviously better.
Here are the steps to follow to check if there’s a brand name in your product’s category:
- Create a search for your product on Amazon.
- Now, go through the first page result and take a look for big brand names.
- If there are big brand names that are on the page result, try to evaluate if they are selling the same product as the one that you are planning on selling.
- If the big brands are selling are the same product as yours, then you should consider dropping your idea and looking for something else to sell.
Products That Are Not Damaged Easily
There is a good chance that you will be sourcing your product from China. That means it has to be durable and will not be broken easily.
You want something that can handle being handled while it is being shipped. There are so many products like that. A simple wallet, a mat, or a cutting board. Anything that does not contain a moving parts should be okay.
By getting products that are not damaged easily, you will have an easier time managing your inventory. That’s because you will not be dealing with damaged items.
Here is a list of questions that you need to ask when picking a product:
- Is it durable?
- Is it easy to get made in China or another country?
- Does it contain electronic parts?
- Does it contain moving parts?
- Can it be used without an instruction manual?
- Is it made for doing a single purpose?
- Is it small?
- Is it lightweight?
By asking those questions, you can pick a product that will not cause problems because of damages later on.
Check the Customer Reviews
When looking for the right product to sell, you want a product where the competition would have 50 or fewer reviews. Now, this is not a definite rule, but there is a good reason for this.
Products with 200 or more reviews would mean tough competition. Buyers will pick a product that has been reviewed over yours that has none. Online buyers are checking the reviews to make sure that they are buying the right product.
Whether consumers are correct to base their decision on the online reviews is not the point, what’s important for you to note is that they do and you have to factor that.
Ideally, most of the products within the category that you are targeting will have few reviews.
The Cost of Sourcing the Product
The cost of sourcing the product which you will be picking should be 25% of the actual sales price. Anything over that could mean that it will not be profitable enough for you.
You really have to watch your profit margins when you are an Amazon FBA seller. There are a lot of costs involved in this business. One way to be sure that you can make a profit is by finding a product that you can source for 25% or less of its actual selling price.
Does that seem like too low? That is the reason why most sellers source their products from abroad, mainly China.
Find the product that you want to sell on a platform like AliBaba. Find out the price of the manufacturer and the minimum order quantity.
If the product sells for $10 per piece on Alibaba and something similar sells for $40 or more on Amazon, then you have a potential product there. You can earn some money after the cost of shipping and other fees are taken out.
Room for Optimization Improvements
Now, it’s time to get a bit more technical.
Let’s go back to the results pages that you got when you did a search on Amazon. Now, take a look at some of the listings there. How many of them are optimized? How may are not optimized?
Now, maybe you need to backtrack a bit and learn what an optimized listing is or better yet, you want to know when a listing is not properly optimized. Here are some of the things that you should look for:
- Few or no images.
- Images are of low quality.
- Title tags that are non-informative
- Bullet points have low info
- Product description has low number of words
- The listing has missing important information
What does it mean when you find multiple listings that are not optimized? It means that there is an opportunity for you when you start selling your product. All you have to do is make sure that your own listing would be optimized.
To do that, just avoid the things on the list. Make sure that you provide as many images as you can and with as much information that you can provide.
Keywords Have Enough Searches
Once your product passes through all the other qualifications before this, you have a promising item. It’s still not a guarantee though. This step is all about making sure that there are people who are actually searching for the item.
To do this, you will need a tool. One of the best is known as Merchant Words and is specifically designed for this purpose.
When you go to the site of the tool, you will see a page where you can type in keywords that people will be using in search of a product. So, when you take your product, you have to think of the top keywords that people will be using in search for it.
Let’s say that you want to sell a wallet, then the most likely keyword for that would be wallet. Once you type in the keyword, it would take you to a different page with the results you need.
You will see the number of searches for that keyword each month.
Now, you want the top three keywords to have at least 100,000 searches each month to make sure that the product is actually sought after by consumers.
Easy to Source from Abroad
Now, you want to make sure that the product is easy to source from abroad, mainly from China.
Because you want to make sure that the cost of the product is low. If you source the product in the United States, chances are that it will be more expensive.
Go back to your search on Alibaba. Check out the results that came up when you made the search. How quickly did you get the results that you wanted?
If you had to do some extensive digging in order to find a source of the product then that’s a bad sign. Not only does it mean that your options will be limited, but it also means that you would have to settle for a high price.
Make sure that your product will have multiple suppliers so you will have options later on.
Not Just a Seasonal Seller
You want your product to be selling all-year round. You don’t want something that is only popular during the Holiday season or during summer. While seasonal products can make you a lot of money during certain periods, they are not sustainable.
Christmas decor may sell very well when they are in season but you will not have any sales for most of the year.
You want a product that you can build your business around.
Okay, if you want a quick turnaround and you’re okay with making money for just a few months of the year then go for seasonal products.
Check Similar Sites
You can never be too certain that there is an actual demand for your product or rather that there is enough demand for it. Will there be enough buyers of it for a new seller like to enter the field?
An additional means that you can use in order to be sure is to check the sites that are similar to Amazon. Of course, the biggest site to check would be eBay.
If you find similar products to what you are planning to sell on eBay and some other online platform, that just means there really is a market for it.
Is It Expandable|?
Since you’re just starting out, you will just have to worry about a single product to sell. You can try to launch your business with multiple products but the chances are that you will have a hard time. First of all, handling one product as a beginner can be problematic, imagine handling multiple products while you’re still trying to get a feel for the process.
But even as you are just starting out, you should also consider the possibility of expanding your business. So, the product that you need to choose should be related to other products that you can sell.
If you’re selling a type of weather wallet as your first product, then you can expand your business to include other types of wallets later on or maybe other products made from leather, like belts.
If you’re only planning on selling a single product then there is no need to worry about this step. But if you’re planning on building a brand, like what most want, then this is a necessary step for you.
A Better Product
you’re going to have competitors on Amazon. That’s actually one of the qualities of the product that you need to pick. Someone is selling it already. Now, in order for the consumers to choose your item over the competition, it has to be better, not just in terms of the pricing but the overall quality as well.
You need to spend time checking out what your competitors are selling. You can buy their products to check and make sure that what you will be offering is superior.
Returns will be handled by Amazon, but you will still be the one to answer the questions regarding your listing. You can make sure that your customers will get the best possible support from you.
Finding the right product to sell on Amazon FBA is not easy. It takes a great deal of research on your part to identify the right product that you will be selling.
Also, even after you follow all of these guidelines, there is no guarantee that your product will sell enough for you to make a profit. Just keep in mind that starting a business, no matter what kind will always be a risk that you have to take.
With these steps however, you can minimize the risk that you are taking by selling on Amazon FBA. That would be the best guarantee that you can get when starting your Amazon FBA business.