Amazon FBA Product Research in 2019 – A guide for all skill levels

Amazon FBA Product Research in 2019 – A guide for all skill levels

After reading my post on How to Start an Amazon FBA Business 6 Step Guide, the most common question I get asked is: how do you find products to sell? How do you start product research?

There are millions of products in the Amazon catalogue, this makes product research and selection difficult but also easy at the same time.

Initially you may be baffled by the choice of products and niches to pursue. ButI counter, equally with all the data available to us – we can see what’s selling well and simply offer something similar (but better).

Basic Criteria for product research in the UK market


There are lots of things to consider when looking for a new product however, these pointers should get you ‘on the rails’ and thinking along the right path:

  • Price: Look for products selling in the £10 to £30 range.
  • Size: It should be small enough to fit in a shoe box.
  • Weight: It should be light weight, ideally less than 1 kg.
  • Reviews: Competing products should not have thousands of reviews, think hundreds or less.
  • Sales: Competing products should be selling around 300 units monthly or 10 units a day.
  • Complexity: It should be simple, think no moving parts or electricals.

Of course, you will be able to find viable products that do not comply with these specific guidelines. The opportunities are endless however, these considerations will keep the barrier to entry on the lower side.

This is most suitable for the less experienced. Those with higher risk tolerance and expertise may consider larger, more complex items.

Now, let me explain the reasoning behind these criteria.

Price Point


The range £10 to £30 keeps a nice balance between actually making some profit, not spending too much on your first orders all while avoiding devastating returns/refunds of higher priced items.

First, pick a selling price that seems reasonable based on the competition and work back from it.

Due to the Amazon FBA fees among many others involved, you might sell for what you think is a large mark-up, only to be making a loss.

Consider this example:

  • Estimated sale price = £15
  • Item cost = £4
  • Shipping cost = £2
  • Tax and import duties = £1
  • Delivery to FBA warehouse = £0.1
  • FBA fulfilment and referral fees = £7
  • PPC advertising = £1
  • Profit: sale price – all costs = £-0.1

Before you know it, that £4 per item bargain at 3.75x mark-up is losing you 10p per sale! Be careful!

When doing product research, look for profit margins in the 20-30% range, this is realistic and something to aim for.

The best way to work out all the associated costs is to use either AMZ Scout’s Revenue Calculator or Amazon’s Profitability Calculator.

Here we can see the Amazon calculator gives us a margin around 40%. But please remember this doesn’t include things like PPC advertising, tax and import duties etc!

I note down all the costs in a spreadsheet to make sure I haven’t forgotten anything, then just use the calculators for the FBA fees.

Another important gotcha is that the FBA fees exclude VAT (cheeky buggers), so multiply those figures by 1.2 to get the real figure.

Size


Smaller products are cheaper to ship as more can be put into each box. I pay as little as £0.40 per unit for some of my smallest products to ship from China to the FBA warehouse.

A good guideline is to aim for a shoebox size or smaller if you’re just starting out. These can then be sent by air courier (DHL/TNT etc), which is the easiest way to start importing.

With a bit more experience you may wish to take on the complexity of sea shipping and larger products.

Monthly storage fees at the FBA warehouse are also calculated on size/weight – smaller is cheaper.

Weight


Again, weight will affect shipping costs and storage costs. Keep the weight below around 1 kg for simplicity if inexperienced. Some of my lighter products weigh in at as little as 50 grams!

Complexity


Pick products that have few or no working parts. This will reduce the amount of refunds and headaches down the line due to defective units and heavy-handed customers.

Additionally, I personally avoid anything that has the potential to get me in trouble. Think choking hazards for babies, supplements that may make someone ill and electrical products that may cause a fire etc.

This way of thinking shuts off a large part of the market however, I’d rather not have any court cases to be dealing with!

I remember a few stories from 2015 involving ‘Hoverboards’. They came from Alibaba without correct certifications and consequently, non-compliant cables and internals. They caused multiple house fires in UK households – I can’t think of anything worse than being responsible for something like that.

Hence, I stick to simple products which serve me well.

Competition


Competition is healthy. It means the product or niche is in demand. We just have to find those high demand products with as little competition as possible.

In the Amazon world, this means finding products that are selling well, with as few reviews as possible. This gives us the best chance of launching a new product against them, as we will have zero reviews when we start.

Launching a new product against competitors with review counts of 250+ is usually asking for trouble. Unless of course, your product is different/better/cheaper.

Sales


How do you know how well something is selling?

Amazon assigns a Best Seller Rank (BSR) to every product in each category. A BSR of 1 is the best seller in the category.

The BSR for a product can be found on its detail page, see example below:

However, Amazon don’t publish exactly how many units are being sold – for this we need to use a paid tool.

My preference is the Jungle Scout Chrome Extension which I’ve spoken about many times. This software estimates the units sold based on the real BSR, which is normally pretty accurate.

This is the only way to confidently assess the market for demand and feasibility to launch into.

Product research methods to try


There are endless ways to conduct product research using the Amazon database, but here’s two methods to get you started.

Method A

The first method is to comb the Amazon database, typing in keywords that come to mind and running the Jungle Scout Chrome Extension on the search results.

This gives us all the information we need to assess if the product is a good opportunity or just wasted breath.

The results look like this:

If the product is viable, I will start to get quotes on Alibaba.com. I then add all the information to my spreadsheet of potential products. Here, I can compare and contrast different products until I’m happy with one.

Here’s a screenshot if you’d like to do something similar!

Method B

Use a paid tool that will comb the database for you.

The Jungle Scout Web App is my weapon of choice here. I put in all the numbers from my basic criteria and it populates a list of potential products, neat.

If you would like to know more about the Web App, please see my post about it here.

Parting thoughts


Product research is more of an art than a science. I’ve provided some specifics to get you started however, I encourage you to think outside the box. Creativity is rewarded in any marketplace.

To reiterate:

  • Look for small and light products in the £10 to £30 range.
  • Use Amazon’s Profitability Calculator or AMZ Scout Calculator to work out the FBA fees, then multiply by 1.2.
  • Utilise a spreadsheet to work out ALL the costs.
  • Use Jungle Scout’s Chrome Extension to work out sales volume.
  • Consider using Jungle Scout’s Web App for product research inspiration.

I hope this has been helpful, go ahead and get stuck in, I’m here if you need a helping hand or have any questions!

Take care,

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