Last updated on April 5th, 2021 at 11:33 am
Fundamental to any Amazon seller’s success is picking the right product to sell.
So where do we go to look for potential goldmine products?
The majority of us sellers will turn to Amazon product research software like Helium 10 or Viral Launch and scour through different product niches to see what’s best.
The problem? Everyone is using these methods, so everyone is seeing the same data.
You may see that “floating shelves” validates the 10-step checklist your Amazon guru gave you, but chances are hundreds of other people are looking at the exact same data, and coming to the same conclusion.
While not everyone is going to take action on this particular product, with the massive influx of new Amazon sellers coming into the game, a good chunk of them will. This isn’t 2017 anymore, when almost no one had heard of Amazon FBA.
By the time you launch, the market will be flooded with sellers who’ve already beaten you to the punch.
Now, we can’t promise you a step-by-step criteria to find products that no one else is seeing. No one can. Anyone who does promise this to you is lying.
But what we can offer is a more mature, holistic approach to doing Amazon product research that will help you weed out the products that everyone thinks are fantastic (but will likely fail miserably), as well as help you pick out some diamonds in the rough you may have overlooked.
All in all, this article may help you avoid taking a huge loss on a product you shouldn’t have gotten into. Or, it might guide you toward a bombshell product you wouldn’t have otherwise found.
Ready? Let’s get started.
Understand This Before You Do Amazon Product Research
(Before we go any further, I’d like to acknowledge Justin Bell for giving me the inspiration to write this article. I did an interview with him a while back and he provided us with so much bombshell information I felt I just had to turn it into its own blog post. So this article basically summarizes what he laid out in the interview, along with my own thoughts mixed in. For people wanting to listen to the interview, it’s in our Facebook group here.)
Unsuccessful people tend to think that the only reason they’re unsuccessful is because they aren’t in on all the information.
“Successful people have access to secret data I don’t have… if only I could get my hands on this secret data I could be successful too!” they say.
I’m gonna let you in on a big secret.
Successful people, by and large, look at the same data as those who do not achieve success.
Think about someone like Warren Buffett, one of the most successful value investors of all time. What separates him from you and I?
It’s not the data.
When Warren Buffett wants to decide whether he should invest in a company, he carefully studies that company’s balance sheet and does a thorough analysis of all the data. He only invests in established publicly traded companies, which are all required to publish this information. So you can go look up the exact same information he does whenever he invests in a company.
But while you may just try to “buy the dip” on a particular stock, Buffett takes a more careful approach. He looks at key metrics like return on equity, debt-to-equity-ratio, profit margins, the difference between its estimated intrinsic value versus the current market value, etc.
In other words, the difference lies in the analysis of the data. Buffett is able to analyze the data better than most, which is why his results are better than most.
To tie this back to Amazon, it’s not about getting “secret” information that nobody else has. It’s about learning how to analyze the data better than others so you can make better decisions.
Being OK With Subjectivity
The problem I see with a lot of Amazon gurus is that they portray Amazon product research as a straight line to success.
This inevitably sets sellers up for failure.
They usually do this by giving you a multi-step product validation checklist, with each item on the list as either pass or fail.
If a product passes X out of Y items on the checklist you are good to go, they say.
Usually it goes something like this:
- Average product in top 10 getting at least $X per month in revenue.
- Average reviews no higher than Y.
- Average review score lower than 4 stars.
This is certainly getting you in the right direction. But it’s not good enough.
It’s implying that there’s a black-and-white path to success. An “algorithm” if you will.
Think about it—if all it took was a simple computer scan to see if product niches pass or failed a list of permutations, we’d all be millionaires.
The truth is, the right product depends on a lot of subjective factors. Often a lot of those subjective factors are related to your own personal situation. A product may be a good fit for you but not someone else—an algorithm can’t tell you this.
So let’s delve into how we can interpret the data in a more holistic way.
Secret #1: Revenue
Low Experience & Budget = Low Revenue Targets
If this is your first product, you should not be looking for a niche that averages $10k+/month. You should set your expectations much lower and aim for around $4-5K/month.
Niches that have high revenues usually have one of three things (or more):
- Huge volume turnovers (thousands of products sold per month).
- High product prices (expensive to manufacture).
- Huge demand, so competition is extremely high.
And so, if you want to get involved in these niches, you will have deal with the following issues respectively:
- Ordering a lot of inventory.
- Affording the cost of manufacturing
- Huge marketing costs to get your product visible.
Now you might think that even if so many people are getting such high revenues, you can just come along and grab a small chunk of the pie.
The sad fact is that the more successful a listing is, the harder it will be to convince the algorithm to favour your listing over a competitor. You’ll need a good marketing strategy to rank your product to the top, because it’s not going to pick up steam on its own. And that comes down to even more money needed.
What all this means is you shouldn’t get distracted by the high revenue numbers and let greed influence your decision. You will probably lose money, and if it’s an expensive product to source and/or you have to order a huge quantity upfront, you will lose a lot of money.
Keep the revenue targets low and only when you have more experience and a bigger budget should you aim for higher revenue targets when doing product research.
Look for Multiple Listings with Similar Revenues
When conducting Amazon product research, we want to ensure that most listings in a given niche are consistently making similar revenues.
What this means is that if multiple listings can thrive, chances are you can too.
Let’s say you’re looking for a niche that averages around $5900/month in revenue. You find one where three listings in the top 10 are doing $15,000/month while the other seven are doing only $2000/month. You find another one where all 10 listings are doing $5900/month.
In this example, even though both niches average $5900/month, all else being equal you’d definitely want to go for the latter one. Your chances of being one of those $5900/month listings is far higher. This is why it’s important to take the context of the niche into consideration, rather than just simply looking at the raw data.
In the example we just gave of three listings in the top 10 doing $15,000/month, it’s likely in this scenario that these are big brands. We want to avoid competing with big brands, especially as new sellers. These brands have huge marketing teams, a big budget and have brand loyalty—things that will be hard to compete with.
Amazon product research software can’t tell what is a “big brand” or not. You’ll just have to use some snooping around or use your intuition. But usually, they’ll include brands you’re already familiar with.
Secret #2: Reviews
Quantity vs. Quality
When doing Amazon product research, generally you want to find a niche with good revenue and low reviews. But there’s a bit more to it than that.
One time, I was researching a new product to launch when I came across a niche that had very high reviews. I almost clicked off, when I noticed that a bunch of listings seemed to contain reviews for completely unrelated products. One listing in fact had over 1000 reviews and most of them were for completely random products.
I checked back two weeks later and most of this listing’s reviews had been deleted.
The bottom line is always make sure you check the quality of the reviews in niches you’re researching. Don’t instantly dismiss a niche if it has high reviews.
In this day and age it is still common for sellers to manipulate the review system, but in my experience Amazon always catches up to it eventually. It’s hard for the algorithm to detect this, but usually quite easy for you to spot with your own eye. You could miss out on a good niche if you mistakenly think it’s too competitive.
Don’t Use Reviews to Guide Product Design Until You Understand This
Amazon gurus will teach newbie sellers to look through reviews to find out what customers are saying about the type of product you want to sell.
Doing this will help you understand what customers really love—and what they really don’t love—about the product.
This is generally great advice. But, it can be easy to get carried away with this.
Don’t try to add or change something about the product just because two people in the reviews said so. Instead, what you want to look for is broader themes.
If 75% of the negative reviews wished that the product included a hook, then that is a green light for you to add a hook to your product. This means you are satisfying a large chunk of the market, plus you are likely to satisfy people who didn’t know that they needed a hook with it in the first place. But if only 1% of the negative reviews wished the product came with a hook, you’re only really appealing to 10-20 people out of potentially tens of thousands of customers.
Secret #3: The Trend is Your Friend
Finding an emerging Amazon product niche, getting in early and watching that niche expand is every Amazon seller’s dream.
Most Amazon product research softwares include metrics that display trends. But I would completely disregard this information because it is quite limited.
A better gauge of trends would be Google Trends. This is because Google has access to so much extra data outside of just Amazon that the product research software doesn’t take into account.
When researching trends, try to avoid fads—these are huge spikes in interest that are much easier to detect using Google Trends. Just like stocks (looking at you, $GME), any sudden surge in interest is bound to come crashing back down. This is why it’s important to check for sudden spikes in interest when looking at the data. The revenue could be very over-inflated and due for a correction.
Try to look at products that have been slowly gaining interest over time. It’s not guaranteed that it’ll continue to rise in the future, but typically a trend that’s slowly going up will continue to go up, and will take much longer to come down, giving you plenty of time to milk that market.
Looking at Google Trends, does your product have any regular spikes in interest in certain months? If so, your product/niche could be seasonal.
Small differences in interest are natural—there aren’t that many truly evergreen products out there that sell well all the time that aren’t already super competitive. But if, say, the average interest of your product is much lower than the interest in high months, it might be best to look for another product.
A lot of the time, Amazon product research softwares will show you niches that are doing very well currently, but that’s just due to the numbers being over-inflated because they are at their peak. It’s important to identify this and gauge just how much they are inflated by to get a picture of how the niche would look like during non-peak times of the year.
Secret #4: Margins & Pricing History
While doing Amazon product research, checking margins is an important step most gurus teach new sellers. After all, you need to make money at the end of the day.
But what’s just as important is looking at historical margins and gauging the overall trend. If the margins are on average trending down, this is perhaps one of the best indicators that the niche is getting over-competitive. Software like Helium 10 allows you to look at historical price data of listings in a particular niche. Stay away from niches like these.
On the other hand, you may find niches with widening margins. If all else lines up, this may be the extra confirmation you need to dive into that niche.
Hopefully now you understand that there is no “white and black” formula to success. You can’t just simply follow someone’s checklist and expect to walk away a millionaire.
It’s up to you to analyze your own experience level and budget to figure out what would be an acceptable product niche to get into. Often, a product that would be good for someone else won’t necessarily mean it’s good for you.
If you’re just beginning your Amazon FBA journey, start simple, start small, and fail fast. The more products you launch, the easier it will become to find profitable products to sell on Amazon.
For more information about where to look for winning products, check out our article here.
Good luck Sellers!