This is arguably the most important step for every retailer, period. Without proper research, you're likely lose out on thousands of dollars that could have been saved if you had taken the time to evaluate not only your product, but also the market. For many sellers this is a grueling process, but the most successful sellers learn to love and cherish this process.
We'll be breaking down the basics of product research to get you started and we'll point out some many pitfalls that many new sellers fall victim to. These are the 5 steps that everyone should perform prior to conducting product research:
- Assessing your situation
- Identify product criteria
- Performing Product Research
- Analyze and Narrow down
- Decision time
Assessing Your Situation
Before you begin, you need to take a step back and take a look in the mirror and your finances. These are some questions that you need to ask yourself and know before moving forward:
How much money do I have to spend on this venture (total)?
The most important thing is to figure out how much money you have to spend. Not just on the product itself, but this entire venture. We like to think of each product as a round. In this round you come up with a number that you're going to spend in this round and make sure you don't go over this number. Let's say your total spend for your first round is $1,000. Then you'd allocate $500 to COGS (Cost of Goods Sold), $300 for shipping and the rest towards advertising - if you only have $200 to spend on advertising, do something else with that money.
Most beginners fail with their first product so if this is your first go at it, we suggest you go light on your first round and go hard on your second round.
Like any business, the more money you have, the better your chances. That said, we imagine it would be very difficult for someone to get going with anything less than $1,000.
How much time do I have to spend on this each day, week, month?
Be completely honest when answering this. If you're doing this part-time and/or have a family, you should take whatever number you come up with and reduce it by 30% and if that number doesn't equal at least 10hrs a week, then it's going to be really difficult for you to start this journey. This will also help you in picking out your products, because some products require more time to assemble/pack/handle and/or require more administrative work. For instance, if you decide to sell fragrance oils on Amazon, you'll need to perform a fair amount of administrative work to pass Amazon's hazmat requirements.
Are there any products that I wouldn't be comfortable selling?
If you're going to start selling on Amazon, you need to be comfortable with promoting with that product. If you're a big burly man from Alaska, you might feel uncomfortable promoting fuzzy wuzzies on social media or you may OK with it, but you may not know how to connect at all with people who do buy fuzzy wuzzies. This is a problem and if you can identify this, it'll help you narrow down and pick a successful product.
This is a step that many new sellers don't pay enough attention to or just skip over altogether, but it's mistake because it can save you time by allowing you to narrow your research scope and you'll be more aware of your finances, which is important going into this business - expenses will pop-up when least expected and it'll chip away at gains.
What am I doing to do with products I purchase?
It's very important that you know what you're going to do with your products once you've purchased them. If they go straight to FBA, then you can ignore this, but if you plan on storing them, then you need to assess your storage conditions, e.g., size, temperature, humidity, cost, etc. To give an example, if your storage area is dark and damp, then you don't want to store books here.
Identify Product Criteria
If you followed the previous step then you've already begun narrowing down criteria for your product, which is important, because there's a LOT of out there and trying to consume all that product data is impossible. So you need to narrow down your criteria to find the right product in a timely manner - remember, time is money and good products don't go unnoticed for long.
Everyone's criteria will be different, but here are some guidelines that will help you narrow down your criteria:
- Huge demand
- Profit margins > 65%
- this will vary per person, but this is a good benchmark to look for
- Small items
- smaller means lower storage/shipping costs
- Low competition
- Products that have room for improvement
- If you're doing private label selling, then this is important that you find something that you can add additional value to that the market will pay for
- Low seasonality
- sales are not highly correlated with seasons
- No legal issues
- Want to sell Soap on Amazon? You need FDA approval.
- Products > $20
- Margins get eaten up quickly on products that cost less than $20
- Non-hazmat items
- Fragrance oils and any combustibles are considered hazmat materials and can be a pain to sell on FBA, but not impossible
- No Fragile Products
Now, unless you have a manufacturing partner in China who comes out with the newest, hottest kids toys, you're not going to find a product that meets all of these checkpoints, but it gives you a good idea on how to weigh products you research.
Performing Product Research
The actual process of performing product research would be too much to cover in this article, so we're going to break it down and give you a good overview. There are essentially two ways you can perform product research:
- Using Research tools
Manual Product Research
Amazon has some tools that you can use that can help you perform your research, which include:
Check The Best-Sellers List
Amazon offers you with substantial help for researching about a product and this is through Amazon’s Best Sellers page. In fact, this is the foremost step you should be doing, as Amazon displays all the top-selling products here.
You can search for products based on their categories & sub-categories. Perform a quick check at the listings in order to determine what items are sold the most. This, in turn, will also assist you in deciding a niche (perhaps, if you are not sure which one to go with).
From a product’s selling info, you can predict what products can appeal your target audience. In addition, you can even check the related items to help you have an idea about the ways you can expand your business into.
Try to choose products that are neither priced too high nor too low. Besides this, a limited competition also gives more prospects to sell the product.
Generating a product idea can also be done through the following ways:
- Amazon’s best-seller list
- Amazon storefronts
- Exploring the retail stores
- Amazon’s Movers & Shakers
- Amazon Basics
- Browsing about a few products on Pinterest
- Exploring the Shopify stores
- Looking at the eBay’s trending list
- Checking the section – “Customers Also Bought”
- Amazon’s product sub-tiers
- Seeing through the AliExpress’s Weekly best-sellers list
Once you have an idea about the niche and the respective product, see if the product is in-demand or not through the following ways:
- Google keyword planner
- Google trends
- Product Monitoring tool - see how it does day-to-day
See what your competitors are doing
The second step is to analyze what your competitors are doing to sell the product that you have picked. The Amazon’s Best Sellers page enables you to see through your primary competitors.
You can check for their product listing pages and their official website if available. The insights give an idea of what items are selling the most, the ones that are getting good ratings and customer reviews.
Apart from this, you can spy on your competitors outside Amazon by typing the appropriate keyword on Google or other search engines, and see if their results are showing up.
Also, you can purchase the product from your competitor (if it is affordable for you) and check the kind of service they offer. You can always learn those best practices from them and find out ways to improve them while selling yours.
Few tips to keep in mind when researching the product’s page:
When you check a product page in detail, you will tend to get multiple new ideas. With thousands and thousands of products listed, it is very easy to be carried away, it is important to be clear to understand what you are exactly looking for.
When in doubt, ensure to follow the tips mentioned below:
- Look for any type of product from the Amazon’s Best Seller page, as that’s adequate to help you come with ideas.
- Focus more on the Sponsored Products, Frequently Bought Together, andCustomers Also Bought sections, as they provide better data intelligence, which you further might want it for increasing or up selling your inventory.
2. Using Automated Tools
There are a lot of product research tools out there, probably the most popular is Junglescount. These tools can save you a lot of time, but you have to be extra vigilant when using these tools. These tools make it really is to find good products to sell, but it also makes it really easy for other sellers. So instead of going into detail on how to use these tools, we're going to tell you the extra steps you should take before select a product from using automated tools.
When you find a product you like:
- check how long it's been on the market
- Check the products BSR (Best Seller Rank)
- see how it's trending
- Check out your competitors reviews
- Ask yourself, is there any value that I can bring to this item that would make it difficult for another seller to add
If you're still unsure, give it a week and see where it is. We've heard from countless sellers who found a great product only to found out that a dozen other sellers found that same product and then flooded the market.
Analyze and Narrow down
You should have 5-20 solid products now, but you should narrow it down to the best one. Follow these steps in order to narrow down your products:
- Get Baseline Average for each product
Say I choose a product with a selling price of $30 that sells about 10 units per day and I get a profit of $10 after the Amazon FBA fees, shipping, promotions, etc
The net gross I make per month is $30* 10 units * 30 days = $9000.
And if it all goes according to the plan, I get a profit of $10 * 10 units/ day * 30 days/ month = $3000 per month in profits.
The better the average sale units per day, the better the profits. However, baseline criteria choose products that sell at least 10 units per day.
2. Check the products BSR
Figuring out how often a product sells is a hard thing to do. The best seller rank is a close fit for understanding how well a product sells within its category.
For example, a product with a BSR of 20,000 is going to sell A LOT less than a product in the same category with a BSR of 2,000. The last thing you would want to do is choose a product that sells only a meager number when you hit the top spot.
Having 3-5 products that have a BSR ranking of 5000 in the main category can ensure that you will sell a huge number of products once you reach the top spot. More the number of products with low BSR rating, better the chances of success.
3. Check product keywords for viability
One of the other important ways to find whether there is enough customer interest in your product is to find out how many users are searching for your product on Amazon or Google. What is more crucial is to find out the demand for your primary keywords in Amazon since data suggests that Amazon typically has a conversion rate of anywhere between 12 – 17%! So if our top three product keywords together get over 100,000 monthly searches in Amazon, then it is a good sign that there is enough demand for us to sell.
4. Year Round Sales
This is important information to know while doing Amazon Product Research. Do you have a product that is only purchased during a particular season? Are people buying this product consistently throughout the year?
The best way to determine this is to head on over to Google Trends and type in the main keyword for your product. Once there you will be able to see if your product is seasonal or not.
5. Check Product Reviews
The number of reviews in the first page can help you understand how difficult it is for you to gather sales, Though it is not a very important rule, especially in categories where there are good sales. The number of reviews can still help you understand how easy it is for you to secure the top spots.
The more points in the checklist you can verify, the better. Though they are not hard rules to be followed they are the basic criteria that are recommended for a successful start.
6. No Big Brands
This is something that deals exactly with buyer mentality. A shopper will obviously choose a famous branded product over a new product or brand. Rather than trying to compete for a product that already has famous brands, and competing with them for the sales, it is better to start on with a product that has relatively lesser competition.
6. Hit the scale
If you've made it here, you've definitely narrowed down your products to a few really, really good possibilities. At this point you should choose the one that is lightest.
Hopefully you've narrowed it down to one or two products. Now you can go ahead and sell both of them, but keep in mind that there's still a lot of work you have to do to sell a product, e.g., taking pictures, marketing material, promotion, sales pitch, PPC campaigns, etc. All of this work is doubled if you decide to sell more than one.