Welcome to our complete step-by-step tutorial on Amazon FBA product research. If you're a beginner looking to sell on Amazon, this guide is for you. In this article, we will cover everything you need to know about product research for Amazon FBA. Proper research is crucial in this highly competitive marketplace. By finding the right product, you can maximize your chances of success. You'll also avoid wasting time and money. Let's dive in!
What is Amazon FBA Product Research?
Before we go into the details, let's understand what Amazon FBA product research is all about. When selling on Amazon, FBA stands for "Fulfillment by Amazon." This means that Amazon takes care of the storing, shipping, and customer service for you. In other words, all the daily tasks are done for you!
Product research involves identifying and analyzing potential products to sell on Amazon. The goal is to find products that have a high demand but are not overly competitive. Your product choice is one of the most important parts of this business.
So, doing proper research will help increase your chances of success as an FBA seller. We'll show you how to increase the chance of picking a product that meets your customer's needs.
Amazon can be really competitive, that’s why it's so important to invest enough time in your product research. Rushing into selling a product without proper research can lead to loss and wasted time. Take the time to analyze market trends, competition, and customer preferences. That's how you can make informed decisions and increase your chances of success.
Why do you need Amazon FBA Product Research?
You might be thinking, “Why do I need product research? Can’t I just sell something everything needs, like toilet paper?”
This is actually one of the most common mistakes new sellers make when choosing a product to sell on Amazon. They look at their own buying behavior and try to sell something they would buy.
The problem is, if a product is so obvious that you can think of it on top of your head, so can others. Meaning, obvious products are crazy competitive. Additionally, if you don’t do any research, you could pick a product that is trademarked or seasonal.
Selling a product that is trademarked can have legal consequences. And selling a product that’s seasonal means your earning potential is limited. To avoid all these problems, take enough time to properly research your product.
Amazon Product Research Exercise:
Get a piece of paper and write down 10 products you can think of right now. Done? Ok. Promise yourself to NEVER sell these products. All of them are way too obvious and competitive.
Amazon FBA Product Research Tools
To streamline your product research process, various tools are available to assist you. One popular tool is Helium10, which we use at BJK University. Helium10 has a feature called X-Ray that will be especially useful for your research.
You'll gain insights into data like competition, average selling price, FBA fees, niche, and reviews. You can use these insights to make an informed decision about your product choice.
Besides Helium10, you could also use Jungle Scout, AMZScout, and Viral Launch. They offer valuable features and data to support your product research efforts. Take time to explore these tools and understand their features. It can provide you with a competitive edge in the Amazon marketplace.
How to Do Amazon FBA Product Research
Effective Amazon FBA product research takes time and dedication. It is a crucial step that you don't want to rush. Some of your students spend weeks or even months at the FBA product research stage - it's always worth it.
It’s better to take your time at this stage. Otherwise, you might lose your product budget and you have to start over from the beginning.
Now, how do you actually do the product research for your Amazon FBA product? At BJK University, we use the "elimination method" to conduct our product research.
We start with a pool of potential products. Then, we remove those that do not meet our criteria. Keep doing that until you're left with one or two strong contenders.
The elimination method is an effective approach to narrowing down your product options. Begin by compiling a list of potential products that align with market trends.
Then, check each product for market demand, competition, differentiation potential, and profitability. You can also use keyword research tools to find popular search terms related to your product. This will provide insights into the market demand.
Next, take a look at the products of your competition. What kind of reviews are they getting? What do customers like and dislike about their offer? Use negative reviews to brainstorm a better product or offer. Using this research method will give you an edge because almost no one uses it.
Amazon FBA Product Research Metrics
When you do your product research for Amazon FBA, metrics can help you choose the right product. At BJK University, we teach our students to aim for the following metrics:
Price
The ideal price range for your product on Amazon is between $20 and $70. Yet, this can also depend on your budget. Keep in mind that higher-priced items need a larger product budget.
Selecting an appropriate price range is crucial for your Amazon FBA business. We recommend a price range between $20 and $70 because it's a good balance. You'll be able to attract customers and generate a decent profit. But consider your budget and financial goals when setting the price for your product.
Keep in mind that your product budget is only a part of the budget you'll need for the whole business. Also think of things like things like Amazon's fees, marketing expenses, and branding. Doing proper research will help you pick a price that aligns with your goals and chosen market.
Since we are using the private label model, you'll be buying inventory from a manufacturer. As a rule of thumb, the cost of a unit should be about 25% of your sell price.
Meaning, if you sell your product on Amazon for $20, then you should buy it from your manufacturer for $5. You don't want to go higher than that because of profit margins. You also don't want to go much lower than 25% to keep good quality.
Competition
Assessing the competition is a crucial aspect of product research. Look at the top 10 sellers in your niche to get a grasp on the competition. Gauge the level of competition and make informed decisions about entering the market.
Use Helium10 or do a manual search to analyze the number of reviews the top sellers in your niche have. As a general guideline, aim for an average of fewer than 300 reviews among the top competitors.
If a product has more than 300 reviews, it indicates high competition in that niche. Breaking into such a competitive market as a new seller can be challenging. So, we recommend focusing on products with a lower level of competition.
Keyword Search Volume
Your customers need to be able to find your product search. Choosing a product with a large monthly keyword search volume is crucial. It will help you with generating organic traffic and potential sales.
Use keyword research tools to identify relevant search terms. Look up the monthly search volume. Ideally, target keywords with a monthly search volume ranging from 5,000 to 20,000. This means that there is a good level of customer demand for your product. It also increases the likelihood of attracting potential buyers.
Differentiation
Differentiating your product from competitors is a key strategy for Amazon success. Avoid buying a product from Alibaba and selling it as is. Instead, consider bundling your product or adding a unique twist to make it stand out.
Differentiation plays a crucial role in attracting customers and creating a competitive advantage. Offer more value or unique features, to differentiate your product from similar offerings. This makes it more appealing to customers and they'll more likely buy.
Think creatively about how you can enhance your product's value proposition. This could include bundling items, improving product quality, or better design. By offering a differentiated product, you can stand out in a crowded marketplace.
How to Set a Product Budget for Your Product Research
Determining your product budget is an important part of Amazon FBA product research. Your specific budget will depend on your resources and goals. But it's important to have a budget for your products and other expenses.
The biggest part of your budget will go toward buying inventory. We usually recommend starting with 200-300 units. Also budget for shipping, product photography, branding, marketing, and Amazon fees. These costs are essential to launching and promoting your product successfully on Amazon.
Make sure you understand the costs before you set your budget. Also, consider that products with a higher sell price need a bigger budget. Either way, the Amazon FBA business model is flexible enough to fit many budget sizes. And many of the expenses are only due after you made a sale.
How Much Money Can You Make with One Amazon FBA Product
One of the enticing aspects of selling on Amazon FBA is the profit potential. Individual results will vary depending on your background, resources, and other factors. But we want to give you our general profit breakdown.
On average, the breakdown for your product price is as follows:
- 25% goes to your supplier for inventory.
- 25% covers FBA fees, shipping costs, PPC marketing, and other expenses.
- Another 25% goes to other expenses such as product photography and branding.
- The final 25% represents your profit.
These are just general estimates but they serve as a guideline on what to expect. All in all. selling on Amazon FBA provides higher profit potential compared to many other businesses.
Once you generate a profit, you can reinvest parts of it to buy more inventory or launch your next product. That's how you scale your business and increase your profitability over time.
Conclusion
Congratulations! You've now learned the ins and outs of Amazon FBA product research. Following these steps will help you increase your chances of finding a product that is in demand. While also making sure you don't enter a highly competitive market. Take the time to explore different ideas, use research tools, and analyze your metrics.
If you want help with your Amazon product research, launch, and more, you'll like BJK University. We'll guide you and help you analyze your product choice before you launch. You'll get access to our product research criteria that show you the exact metrics to look for. It's like getting an MBA in Amazon FBA (but without hefty college fees). Click here to learn more about BJK University and how we can help you.
