As an Amazon seller, you know that product research and selection is by far the most important decision you will make. The product that you decide to sell is the largest determinant of success or failure for your Amazon business as a whole. The wrong product sets you up for failure from the very beginning, while the right product allows for incredible money-making opportunities.
In recent years, selling on Amazon became increasingly competitive and difficult, and because of that, finding the “right” product has also become more difficult. There are more sellers who are using more sophisticated software and marketing dollars, allowing them to extract the best opportunities and bully their way to a great sales volume!
In such a competitive landscape, the question becomes, “Where is the opportunity for me to succeed?” And, “What is the probability for that success?”
Here at Viral Launch, we’ve been honored to help thousands of sellers build successful Amazon businesses over the years. This experience has provided deep insights into the tactics of super successful Amazon sellers, and it helps us stay ahead of the trends.
Despite the increased competition, we’ve put together this in-depth guide to walk you through a new product research strategy. This process will significantly improve your probability of sourcing money-making products every single time.
Unlike a typical guide to product research, this new approach will change the game, helping you to identify profitable product ideas while circumventing your competition.
All the data we’ve collected points to this being THE most comprehensive Amazon product research and selection method available!
Phase 1: Define Your Perfect Amazon Product
In order to find “the perfect product” you have to know what the perfect product actually looks like.
Imagine being asked to find your mom’s friend Howard in New York City’s Central Park during peak summer time, but you have no idea what he looks like and have never been given any details about his appearance (height, age, hair color, etc.). If you don’t know what you’re looking for, “he” is hard to find.
Understanding what makes the perfect product for you is the foundation to product research, so we want make sure we get this step right!
Step #1: Know Your Budget
It’s pretty easy to talk to a manufacturer, or page through Alibaba, and get a feel for how much a shipment of product will cost. That said, understanding your necessary budget for completely sourcing a product is quite a bit more complicated. You will incur regular fees such as your Seller Central subscription, fulfillment and referral fees, and logistical costs (importing and shipping to Amazon), one time fees for things like packaging design, professional photos, and trademarking, and finally, fluctuating costs for things like advertising, promotion, and review generation. If you’re looking to source your first product, there will also be general business related costs as well.
Understanding these fees is crucial to building a successful Amazon business, or any business for that matter. Logging, predicting, and planning for these costs will help you to have a better sense of your potential margins, profit, and growth.
So how do you apply this to sourcing a new product?
You need to know what you can afford. Amazon is an almost limitless sea of products. You need to look at your budget and figure out what you can afford to source, what quantity you can afford to source, and how much capital you will have to reorder before you start seeing any cash flow.
If you can only afford to order 100 units of a product, but it can easily sell over 1,000 units in a month, it’s probably not the right product for you. If it’s going to cost you $15 per unit to source a product that sells for an average of $20, it’s probably not the right product for you. If ordering a first shipment is going to totally absorb your budget, you’re either going to need more capital or a different product.
Understanding your budget is a crucial first step to finding a successful product.
Step #2: Know Your Revenue Goals
It’s all too common for a new seller to look at Amazon as a ‘get rich quick’ venture. Heck, there are thousands of videos, social media posts, and gurus talking about how they made $1 million a month on Amazon and how you can too if you just buy their course, software, or subscribe to their email list!
The truth is, people DO rapidly find unbelievable success on Amazon…but people DO also win the lottery. Starting a business can be a gamble, and you are assuming risk. But unlike the lottery, you have the ability to play smart.
One of the most important ways to do this is to set realistic revenue goals. The three main variables that determine your potential revenue are budget, sales quantity, and selling price.
When looking at the relationship between budget and revenue, it’s somewhat analogous to an investment portfolio. When investing, you typically find that more capital produces higher gains (assuming that the market doesn’t collapse). You can invest aggressively, with increased risk but increased potential reward, or you can invest in safer options, which are lower risk but have smaller rapid growth potential. In either case (unless you hit it big last year with cryptocurrency), if you’re investing $5,000, you’re not going to (quickly) turn it into $1 million.
The same can be said with Amazon. There is absolutely a risk vs. reward correlation, but you’re not going to quickly hit $1 million in revenue from a $5,000 investment. Amazon can be an outlet to quickly build a successful business, but it’s not magic. When establishing your goals for revenue, aligning your expectations with your budget is an important consideration.
With regards to sales quantity, a market research tool (like Market Intelligence) gives you the ability to understand the potential for a product, but you cannot do much to influence it. For example, if your top competitors are selling around 500 units per month, it’s unrealistic to think that you can sell 1,000 units per month. Markets can be influenced by seasonal cycles and social trends, and you can employ marketing tactics to increase awareness. However, when setting a revenue goal, it’s important to know that your potential is dictated by the market demand.
On the other hand, you do have some control over price (though not as much as you might think). When sourcing a private label product, you can technically sell your product for any price that you’d like. That said, your price should be limited (if not dictated) by the competition.
Think about this from the perspective of a shopper. If you’re looking to buy a mousepad on Amazon, are you more likely to buy one for $5 or $20? The $20 pad might be a bit fancier, but all you’re probably looking for is a basic black mousepad for your desk.
So as a seller, you can create any price for your item but a shopper can also choose any alternative. A higher-than-average market price can limit your potential sales quantity, therefore limiting your potential revenue.
Returning to the concept of setting a revenue goal, it’s important to look at the prices and sales quantities in your market. If you’re looking to generate $20k in monthly revenue and you’re selling your product for $20, you need to be able to sell 1,000 units/month. This is definitely doable in some markets, but if the top sellers in your market are moving around 500 units per month and/or if the average selling price in your market is $10, you may need to set a more realistic goal or look for a new product.
But, as Amazon becomes more competitive, it’s becoming more important to not put all of your eggs in one basket. Diversity (much like a stock portfolio) can be the key to success in e-commerce.
Say you can’t realistically hit your revenue goal with one product. Maybe you can do it with two.
As markets get more crowded, review quantities increase, and prices decrease, looking for several smaller, promising opportunities can prove to be more beneficial than looking for that one gold-mine product.
Step #3: Understanding Micro-Niches
Now that we’ve covered your budgeting and goals, it’s time to understand how to find the right product for you.
Amazon has changed a lot over the last few years. Competition, and Amazon’s dominance over e-commerce, has increased. In the past, the strategy was to find a market/niche to sell in, such as bed sheets. Now, because of the depth of competition, focusing on these broad markets can spell doom for a new product. While it’s true that the largest search volume remains in these broad markets, the depth of competition and a product’s ability to convert make it incredibly costly to market and difficult to succeed.
Instead, finding a product should now be about looking for micro-niches. A micro-niche is a market within a market… one with more specificity. For instance, instead of sourcing a set of bed sheets, you should look at sourcing something like flannel sheets. This market may not have the same depth of search volume, but shoppers will still be searching with this keyword, and you’ll be able to filter out a lot of competition. Additionally, because the niche is more specific, your product is more likely to consistently convert.
As Amazon grows, there is a bigger pie to be shared among markets. As competition on Amazon grows, each markets’ piece of the pie gets shared between more products. With that logic in mind, the concept of micro-niches can be employed to find easier to reach pieces of the growing pie while avoiding a lot of markets that are being fought over.
Phase 2: Find Hot Micro-Niches
So how do you find these micro-niches that provide opportunity within more specific markets?
We’ve added a new feature to our product finder, Product Discovery, to make your product research easier than ever. This tool allows you to input what kind of product you’re looking for with filters, which will result in identifying product markets that match your specific criteria.
Within Product Discovery’s Keyword Search function, we’ve included a new filter called ‘Keyword Contains’. This feature allows you to search using a main keyword to help identify profitable micro-niches within a specific market.
To illustrate the use of this feature, let’s walk through how to quickly and efficiently identify micro-niches within the Product Discovery.
Assuming that I don’t have a large budget to work with, I want to look for something that I can source for a low cost. While you can definitely use a product-oriented keyword (like ‘bed sheets’) to find micro-niches, I’m deciding to base my search on a low cost material: paper.
While selecting specific categories is typically my first filter, in this instance (because I don’t necessarily know what I’m looking for) I’m going to leave my categories open. To conduct this search, I’ll add a few filters, and Product Discovery will show me markets that match what I’m looking for. (And remember, this is simply an example. Feel free to personalize your filters. The more you change, the more unique your results will be).
I’m starting by adding the keyword ‘paper’ to the Keyword Contains field, inputting a minimum monthly revenue of $5000 (to meet my revenue goals), and a maximum review quantity of 100 (to avoid markets that are highly competitive).
One important thing to note is that I’m not providing data for all of the filters. The more specific you are with filters, the more restrictions are placed on your results. I like to start my searches with a few important metrics, then if needed, I’ll start adding additional parameters.
That said, when searching for micro-niches, it’s also important to make sure that there is an audience of people searching for your product (or, existing demand). I might be trying to avoid the heavily competitive markets, but if I’m sourcing a product that no one is looking for, I’m not going to be successful. For this reason, I’m also going to click on the Advanced Filters menu and add a minimum exact search volume of 3,000. This means that I only want to see keywords that 3,000 or more people are searching for each month.
Once I click Show Keywords, my results appear. Each result is a product idea, along with market average metrics, and they all match my inputs. I then filter my search based on star rating to see the best ideas first. The star rating is a 1-5 scale, which is Viral Launch’s initial indicator of the product idea’s potential. This rating is generated programmatically and should be used as a first-check, but it’s crucial for you to dig into the data further and decide if the product is right for your business. Note: The Product Idea Score is only available on annual plans.
From there, I quickly pin five different products that looked interesting to me, and I will analyze each one more thoroughly. Moving over to my pinned ideas page, I have isolated ‘white paper bags’, ‘parchment paper sheets’, ‘white wrapping paper’, ‘gold paper plates’, and ‘crinkle cut paper shred’.
Note: Your pins are unique to search type. For this reason, I will click on the ‘Keywords’ tab within the Pinned Ideas menu.
All of these markets have an average of less than 100 reviews, which indicates a relatively low barrier to entry for a new product. Three of the five have a typical sales trend, which implies that sales have remained relatively constant month over month. Average selling prices are relatively low, which can sometimes be of concern, but assuming that manufacturing and shipping costs are low, my product may still have a healthy margin. These markets also look promising from a revenue perspective, ranging from $7k-$22k per month.
Phase 3: Validate Your Product Ideas
Now that I have decided on a broad market that I’m interested in and have found a few micro-niches to hone in on, it’s time to do a deep dive and identify which products I may want to look into sourcing. I am going to use Market Intelligence, our in-depth product research tool, to further investigate my potential products.
Step #1: Logical Processing:
When deciding on a product to source, your first step after compiling a list of ideas should be to think about them critically. There are a few key questions that you can ask (and answer) based solely on your own intuition. This can be especially important when looking for a micro-niche.
The very concept of a micro-niche focuses on a specific product characteristic in order to circumvent the more competitive primary market. That said, it’s critically important to make sure that people are actually searching within your micro-niche.
You can use a tool like Keyword Research to view the search volume for your keyword, but at a more basic level, putting yourself in a customer’s shoes and asking whether or not you would use this phrase to search for your product can be an indicator as well.
When thinking about your product idea, do any brands come to mind? This can be an important question. If a product market has strong brand awareness (or brand loyalty), it’s going to make it harder to penetrate the market. If you can name some brands, it doesn’t automatically invalidate the idea, but it is something to consider.
For instance, if you’re buying a stapler, you’re likely aware of Swingline, but as long as a stapler staples, has decent reviews, and a low price, chances are most buyers aren’t going to be brand loyal (unless they’re fans of Office Space).
Alternatively, other markets have stronger brand association and loyalty. Even if it’s a dollar or two cheaper, Harvey’s Homemade Toothpaste is going to be fighting a really tough uphill battle against Crest and Colgate. It might be an amazing product and a better value but because most consumers have (hopefully) seen and used a few name brands of toothpaste for most of their lives, it’ll be almost impossible for Harvey to muscle his way to the top of the market.
While I won’t go into all of the possible questions that you could ask in this phase, a few others are:
- Do I feel like I can price this product to be competitive and have a wide enough profit margin?
- Do I think I can make enough profit per unit for this product to be worth selling?
- Am I chasing a fad (where demand may decline before I can get my product to market)?
- Am I too passionate or not passionate enough about this product?
- Is my intuition telling me anything about this product or market? If so, what will I need to research to reassure myself?
In the Amazon space, some sellers rely heavily on their own gut instinct or personal passions when sourcing. This can sometimes work and it’s important to believe in your product, but other times, if you source something you’re too passionate about, you’re more likely to spend more to improve or customize your product (cutting into your margins) and/or throw good money after bad (by entering a competitive, expensive, or nonexistent market). Other sellers can alternatively get lost in the data, which can lead to lost time, missed opportunities, and a never ending quest for perfection.
I recommend trying to work somewhere in the middle. Use data to hunt out advantageous markets, use your brain to think critically about them, and return to the data to test the products that made the cut.
Step #2: Sales to Review Ratio:
First, you want to check out what the sales to review ratio looks like for your pinned products. The sales to review ratio is a measure of how quickly you will be able to compete, as a new seller, in any given market. This is calculated by taking the average monthly sales among top sellers divided by the average number of reviews. If a market has a high sales to review ratio, it means that sales are, on average, much higher than reviews. This signifies that a new product has lots of opportunity to gather reviews, plus there is a low review threshold to reach before shoppers consider that product as a viable option among the other options in the market. Because reviews provide consumer confidence through social proof, and because reviews are not easy to acquire, identifying a market where you won’t need to gather as many initial reviews to become competitive can play to your advantage.
Thinking about this concept logically, certain markets are more review dependent than others. If you’re buying a pair of bluetooth headphones on Amazon, reviews are going to be crucial to your purchasing decision. You want to see opinions on audio quality, battery life, durability, etc. On the other hand, if you’re buying something like wrapping paper, unless the reviews are horrible, you’re probably not going to be as concerned with them. At the end of the day, it’s a roll of printed paper. As long as it meets the stated dimensions and it doesn’t spontaneously combust, it should work to wrap a gift.
Looking at my pinned ideas, the average market-wide sales to review ratio ranges from 16 to 32. This means that on average, products in these markets are generating that number of sales per month for each review. All of these rates are relatively high, which is a good sign. Alternatively, if I’m looking at markets that are generating only 2 sales per review, that might be concerning for me as I’m trying to enter the market.
In the interest of due diligence however, I don’t want to stop there. I’m also going to want to view sales to review ratios on a product-by-product basis within Market Intelligence.
It’s important to note that some noticeable factors can contribute to the sales to review ratio when reviewing at the product level. Whether good or bad, this information can help you to better understand your market.
Here’s the data for ‘crinkle cut paper shred’:
Looking at the individual sales to review ratios for this market, I’m seeing some optimistic information.
Starting with the product highlighted in yellow, the sales to review ratio is below average for the market. That said, looking at the date that the product was listed, I can see that it has been selling for a few years. Because of this, I’m seeing that this product has a higher than average review quantity. It’s actually selling relatively well for the market, however because the price point is above average, there’s a good chance that it’s limiting sales potential.
Checking out the product highlighted in red, I’m seeing a super high sales to review ratio. It’s a newer product with 2 reviews but it’s selling really well. A high sales to review ratio does make sense when a product is newer, if it sells well. For me, this is promising because it provides evidence that I can sell well without having to gather a large quantity of reviews.
While the listing dates in this market prove the contrary, higher sales to review ratios can be a sign of a newer market, which is something to also keep in mind. If you’re looking at sky-high ratios in a newer market, by the time you have a product sourced, those products may have accumulated more reviews, making the landscape more competitive.
Finally, looking at the product highlighted in blue, it has a pretty high sales to review ratio. Looking into this more, I can see that the product has been listed for a little over a year, and despite only having 13 reviews, it’s selling really well for the market. It’s price is relatively low, providing a potential explanation as to why it’s selling well. That said, it’s not the cheapest option.
This product is one to review more specifically. Because it’s not the cheapest option, and because it doesn’t have a wealth of reviews, it may be worth reviewing other aspects that may contribute to this product’s success. Is there a color preference? Is it a larger size? These variables may help inform sourcing decisions.
As a brief comparison, here is the data for ‘bluetooth headphones’:
As you can see, the sales to review ratio in this market is incredibly low. The massive review quantities in comparison to sales would make this market exceptionally difficult to compete within.
Step #3: Sales Depth:
It’s important to also observe how sales are divided within the micro-niche. If only 2-3 products are generating 90% of the sales, it’s going to be difficult for you to capture a reasonable share of the market. If sales are relatively divided across the first page (and maybe even the first few pages), it means that you don’t necessarily need to rely on hitting one of the top spots to hit the mark on revenue. It’s much safer to bet that you can rank in the top 10 or top 15. While you obviously want to have the best product in the market, I suggest shooting for the moon, while being okay with hitting the market average.
Using my ‘crinkle cut paper shred’ example, but this time reviewing the sales column, I can see that sales are pretty evenly dispersed throughout the page. This means that even if I’m unable to push to one of the top rankings, I would still have the ability to generate a decent volume of sales.
By comparison, here is another market with a poor depth of sales:
As seen here, there are a few products generating thousands of sales while others are selling in the single digits. In this instance, I know that it’s going to be difficult to compete with the few top sellers.
There are a few different reasons for a poor depth of sales in a market.
It could be that a single brand (or a few brands) dominate the market. This is most common when searching a branded keyword, such as ‘Nike sweatshirt’, but you can also encounter it with non branded keywords with strong brand awareness/loyalty, such as ‘cotton swabs’, where Q-Tip and Johnson & Johnson vastly outsell much of the competition.
This can also happen within private label dominated markets if a handful of sellers have a disproportionately high review count, a much lower price, or a more established product.
Additionally (as is the case in example above), you may not be viewing the primary keyword for a market. This is typically evident if you see large volume sellers in lower positions. If a keyword has a lower search volume, a product with far fewer sales may rank better. This is because it’s able to drive more sales through this specific keyword. However, when looking at a related keyword with higher traffic, the products with high sales volume likely rank better. An example of this would be looking at a keyword like ‘lavender bath bombs’, when the primary keyword is ‘bath bombs’. The keyword ‘lavender bath bombs’ only gets a few hundred searches per month, yet some of the results are selling thousands of units. By comparison, the keyword ‘bath bombs’ receives around 230,000 searches per month.
Step #4: Price & Margin Check:
This can be a bit more tricky, but the next step is to try to get a feel for what margins you can expect. You want to look at average prices in the market and compare that to any sort of sourcing estimates you may have found. Market Intelligence can be used to get a rough idea of the profit margin for a product, but it’s definitely important to compare this to any real numbers that you’re able to obtain (quotes for manufacturing, logistics, etc.).
It’s also important to understand Amazon’s FBA and referral fees. FBA fees are based on shipping and storage costs. A referral fee is the cut that Amazon takes for each sale made and is a fixed percentage based on category. Amazon provides a breakdown of their FBA pricing tiers and referral fees by category on Amazon Seller Central.
If you’re looking for more information on calculating FBA fees, we have a blog post that walks through the process in more detail: How to Calculate Your Amazon FBA Fees and Projected Revenue. Additionally, within Market Intelligence, you’re able to view our estimated unit margin for a specific product by clicking on the the orange Unit Margin metric.
As you begin to fill in some of your own costs, Market Intelligence also includes a Cost Calculator to help you determine you own potential margin.
Typically, I like to review the lower prices on page one. If I’m able to turn a profit while pricing on the low end of my competition, I know that I have some flexibility to adapt to market changes. If I can’t afford to source for a competitive price, I may want to avoid this particular market.
Step #4: Check Tips, Warnings, and Alerts:
On the VL Analysis tab of Market Intelligence, you’re able to view some quick tips, warnings, and alerts that you may have otherwise missed. This can help to clue you into seasonality, sales depth, review concerns, etc. and can help provide a quick overview of any market conditions that may be of concern.
Step #5: Seasonality
Some sellers choose to steer clear of seasonal markets, while others welcome the influx of cash during peak seasons. Either way, seasonality is something that you want to be aware of when sourcing a product and purchasing inventory. By clicking on the Market Trends tab on Market Intelligence, you’re able to see how a product has sold over the course of a year.
If you’re looking for a seasonal product and you find one that is selling well in winter, you may want to look to source this product in summer/early fall in order to capitalize on the peak selling season. If you’ve missed the seasonal window for the year, it might be worth sourcing a small quantity to start generating a few sales and reviews, or you may want to keep it in your back pocket until next year while keeping a longer term eye on the market.
When looking at a market like ‘Christmas decorations’, you can see that the market is highly seasonal:
Alternatively, while there are always going to be fluctuations in a market, when looking at a market like ‘toothpaste’, the sales spikes are much less dramatic:
As mentioned previously, just because a product is seasonal does not mean that it’s not viable. Sellers can make a killing on seasonal products and only need to be focused on them for a few months out of the year.
The important thing is to understand that sales and demand will not be consistent throughout the year. One of the most common mistakes we’ve seen is a seller deciding to source a product based on statistics obtained during a peak season. Without appreciating the ebb and flow of demand, sellers commonly over order inventory, or financially plan for a high sales volume, only to get stuck holding a large quantity of product.
Step #7: Identify Main Keywords:
It’s unlikely that a single search term is driving all of the sales for products in a micro-niche (or any niche for that matter). Typically there are at least 4 or 5 decent keywords that may be viable selling opportunities for a given product.
To start, check out keywords that other products are using in their title. If you’re looking at ‘white paper bags’ for instance, you might also want to check out keywords like ‘paper bags’, ‘white craft bags’, ‘large white paper bags’, and ‘white gift bags’. A sure-fire way to make sure you’re not missing any of your main keywords is to use a tool like Keyword Research, which programmatically identifies all main, related keywords for you.
When using Keyword Research, particularly for micro-niches, I like to first sort by priority score, which will show me the most closely related keywords while factoring in search volume:
Next, I’ll sort by exact search volume, to view the most heavily trafficked keywords in my market:
One of the most helpful, and perhaps underutilized features of Keyword Research is the ability to add keywords to a bank to create your listing’s copy. This will help you to insure that you’re indexing for as many search terms as possible and casting the widest net to capture your customers. Listing Builder, a feature within Keyword Research, can help you construct your listing and maximize the potential audience for your market.
Proper keyword research can sometimes clue you into an even more advantageous market, but more importantly, you should analyze other main keywords in your market to better understand your micro-niche as a whole. While tedious, it’s valuable to repeat the previous validation steps on several main keywords to fully comprehend your product market and competition.
Without reviewing your broader market, it’s possible to miss crucial data that may help you avoid mistakes. One of the more frequent mistakes we encounter is assuming that a specific keyword is the main sales driver for your product market. If you don’t fully understand your market, you could see a keyword that looks non-competitive with a high return, only to realize that sales are being driven through a much more competitive term.
Let’s apply this to my product ideas:
Thinking critically about my pinned ‘paper’ ideas, I’m going to whittle down a few options.
While I was really intrigued by the low reviews and high sales for ‘crinkle cut paper shred’, with an average selling price of $11 per unit, I think I might avoid this market. I know that in order to be competitive, I’m going to want to be able to price on the lower end, meaning that I’d probably be looking at a selling price of around $8-10. Even if I can source affordably, shipping, fees, and storage are likely going to eat up a lot of my potential profit margin.
Next, I’m going to weed out the ‘parchment paper sheets’. The overall numbers aren’t bad but looking at Market Intelligence, I’m noticing some larger names like Reynolds. While Reynolds is providing some steep competition, I’m honestly surprised by how evenly the sales are spread.
That said, I’m also starting to think about manufacturing. Parchment paper typically involves more robust (and likely more expensive) packaging. Typically, it would be packaged as a roll, in a box, with a metal cutting edge. This will also add weight which will increase the cost of logistics. Since average selling price isn’t too high here either, every penny counts.
Finally, and while it may still be a decent idea, I’m going to filter out ‘white paper bags’ as well. This is mainly because I’m not overly confident in how many sales this specific keyword generates. There is a lot of variety on size, intended use, and even features (handles, gloss coating, etc.). This means that it will be hard to determine whether the keyword ‘white paper bags’ is a primary keyword for my market and it will be hard to determine which product features will make me more competitive. In comparison to many products, this is a relatively minor point, and while you should definitely perform quality control inspections when sourcing a product, I’m also a little concerned about glue quality and weight capacity. Compared to wrapping paper or paper plates, I’m seeing slightly more potential for returns and negative reviews which could limit my potential for success.
For the sake of keeping this brief (as brief as possible), I’m going to focus on the white wrapping paper.
Looking at Market Intelligence, price points are relatively high, sales are pretty well dispersed, and the product is relatively simple.
While there is a bit of seasonality to the market, there’s still an overall average of around 500+ sales per month and sales don’t totally drop off outside of peak season. The best selling month isn’t until November, but this will give me a bit of time to source and list my product and work on accumulating reviews.
There are also no warnings or alerts for the market, which is another positive sign.
In comparison, with the ‘gold paper plates,’ one of my major concerns is the diversity of product offerings. On page one, I saw everything from gold plastic utensils to gold and pink plates, different shapes, sizes, and patterns. This will make it harder to isolate the features that buyers prefer and would likely result in lower conversion rates.
Fortunately for my bottom line, it appears that plain white paper rolls sell best. Provided I can offer a comparable size and length as the top competition, while pricing my product at around $15 per unit, this should be a pretty viable option.
White wrapping paper receives around 7,000 searches per month, meaning that it has an audience searching for this product. For products on page one, there is an average sales quantity of 810.46 units/month with an average revenue of $17,665.04 meaning that it definitely has the potential to hit my revenue goals.
The average review count for page one listings is 55.15, however there are several products with fewer reviews that still sell well (implying that, while I will ideally want to generate as many reviews as possible, it’s not necessarily crucial to have as many reviews as my lead competition to be successful). As long as I’m able to generate 10-20 reviews with a rating of around 4.5 stars, it should give me a healthy foundation for driving sales.
It’s important to note that I am running this analysis shortly after Christmas so numbers are likely to be inflated. That said, based on the annual sales trends, I can still expect a decent potential year-round. This means that I should be looking to ramp up my inventory and marketing in time for Q4, but I should still have decent selling opportunity when my inventory hits Amazon. This ebb and flow of the market may actually be ideal for me, as I can source the product now and begin generating sales and reviews with the goal of positioning my listing to capitalize on Q4.
At this stage, white wrapping paper appears to be a solid product idea, and I was able to find this micro-niche within about 10 minutes of research on Product Discovery.
Phase 4: Source Your Product
Once you’ve identified a product (or products) that you’re interested in selling, it’s time to find a manufacturer.
You can go to trade shows, take a trip to China, or contact a sourcing agent, but the quickest and most cost-effective way (and where most sellers end up finding a supplier) is typically using Alibaba. Alibaba is essentially the e-commerce platform for e-commerce businesses; the Amazon for Amazon sellers. This database of manufacturers helps align you with suppliers that will able to actually produce your products.
Looking at my micro-niche for white wrapping paper, I was quickly able to find several suppliers with a simple search:
You may have to experiment with keywords and search around a bit, but you can find virtually anything on Alibaba. And, suppliers are typically willing to negotiate and manufacture to your specifications.
From here, I would select a around 5 suppliers who look to be reputable and reach out to them inquiring about samples. I won’t delve too deep into the sourcing process here, but I’ll want to compare pricing, product quality, and adaptability of the supplier as well as timeliness, communication, and the overall pleasantness of the conversation. Keep in mind that if all goes well, I’m looking to build a long-term business relationship with this supplier.
When looking for a product within a micro-niche, it’s important to consider the competition when making a sourcing decision. With my white wrapping paper, I’ll want to see if there are any discernible features that sell better than others. What sizes, thickness, potential patterns, etc. are ideal for capturing my market and gathering high quality reviews? Returning to Market Intelligence, I can review products that sell well in the market and take note of any shared traits.
This will help me to understand whether I need to order a few different sizes, or whether I should source rolls or sheets. I can also see if offering a patterned paper improves my sales potential, or if there is a certain thickness that buyers seem to prefer. Obviously, this has to be reviewed with attention paid to other variables such as price and review count, but understanding what your customers want will help you to source a product that fits your demand.
Using another example, let’s say I settled on white paper bags as my micro-niche. Through this lens, I would want to check to see if bags with handles and/or gloss coats sell better. I’d also want to check what quantities (how many bags in a package), and what dimensions sell best. Using this information, I can source a product that conforms to, and capitalizes on, the majority of the micro-niche demand.
As the Amazon landscape continues to grow and change, it’s important that your strategy does as well. The days of sourcing a gold-mine product that generate hundreds of thousands (if not millions) of dollars is all but gone; but the opportunity to be successful on Amazon remains strong.
Rather than looking for one big, broad product market, fueled by a small handful of high-volume search terms, it’s now more advantageous to look small and think big.
As competition grows, Amazon’s dominance over e-commerce grows as well. While established sellers have the benefit of experience, sales history, massive review quantities, and large investments, the continued growth in sales creates more depth to the market and creates opportunities in more specific micro-niches.
These days, it’s no easy task to quickly drive a product to a monthly revenue of $50,000. Instead, it’s more advantageous to use micro-niches to drive 3-4 more specific products to a monthly revenue of $5,000-$15,000 each, allowing you to strategically grow your business.
The secret to success on Amazon in its current stage is to think smarter, dig deeper into research, source with specificity, and diversify your offering.
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