When it comes to deciding what the whole business will be built around, it could be challenging. So we show you how and where to find inspiration.
One of the fundamental tasks of a third-party merchant on Amazon is to conduct product research. Amazon product research is a crucial task every seller must perform to help them understand the current market condition, analyze their competitors, and improve customer satisfaction.
If you are an FBA seller struggling with FBA product research or Amazon product hunting, here are some helpful insights to help you prepare your Amazon business for the upcoming Q3 and Q4 of 2022.
As you read further, you will learn more vital Amazon product research tips you can use to improve your Amazon business.
Table of content:
- What Is Product Research on Amazon?
- Why Is Amazon Product Research Important for Your Business?
- How to Do Product Research on Amazon?
- Amazon FBA Product Research Essentials
- What Sellers Should Not Do?
- Categories Sellers Should Avoid
- Popular Selling Methods Under Amazon FBA Program
- Fundamental Tasks for Success
What Is Amazon Product Research?
Before discussing practical ways to do product research, it is best to refresh our knowledge of what Amazon product research is.
In its simplest form, it is when you search for products to sell on Amazon. However, product research goes beyond simple Amazon product hunting, for the latter requires no intricate planning and execution. Thus, easily performed even by an ordinary Amazon shopper.
Product research generally refers to the process of determining a seller’s idea for a new product. The research process does not only involve product hunting, for it also delves deeper into the following:
- Whether the product might be successful;
- Whether there are similar products on the market;
- Whether to develop, manufacture, and sell your product.
The critical phrases mentioned above can help sellers with product development and identifying potential vital issues to avoid costly mistakes.
Why Is Amazon Product Research Important?
One of the main reasons sellers should conduct the research is to find a product with huge profit potential. Apart from that, it is crucial for sellers because it will help them identify the following:
- The sourcing expenses to be incurred;
- The potential profit to be earned when selling the product;
- The size of the market and the likely demand for a product;
- The competitiveness of an item and its potential competitors in the marketplace;
- The possible trends and the changing interests of consumers for a particular product.
Simply put, product research lets you see if there is a need for a product and whether potential customers are searching for it. In addition, product research helps analyze and validate the profitability of a product and its demand in the future. When done correctly, product research increases the success rate of your Amazon business.
How to Do Amazon Product Research – Basic Guide for Beginners
Since Amazon product hunting is essential and highly relevant for the success of your Amazon business, here are some simple yet effective tips you can follow.
Check Performance Data
Amazon is kind enough to share data about product performance in the marketplace. With the help of data showcased under Amazon Best Sellers or Frequently Bought Together, you can somehow get an idea of what consumers are looking for.
Research Competitor’s Listing
Another effective yet straightforward way of conducting Amazon product research is to analyze competitors’ listings. When examining your competitors, try to review their best-selling items and those highly favored by previous Amazon shoppers via the review section.
Additionally, check items they include in their Amazon Ad campaigns, such as Sponsored Products or Sponsored Brands. Typically, the best-selling products are afforded more advertising budget by Amazon sellers.
Utilize Product Research Tools
If you want to analyze your competition easily or quickly scan multiple marketplaces for potential products for your inventory, you can utilize product research tools. This type of Amazon seller tool is intended to help Amazon sellers save time and money while performing Amazon product research.
Amazon FBA Product Research Essentials | Things to Check
To establish an effective Amazon FBA product research strategy, sellers should first identify the critical elements of an FBA product research. Here are some factors to check when performing product research on Amazon.
When you research products to sell on Amazon, you should consider their sales performance. The sales performance of a product is a good indicator of market demand. Therefore, products with high sales are worth pursuing and will likely perform well.
The price of the item likewise dictates the potential revenue of the seller, which is why it is a crucial element to consider when doing product research. You can use the Amazon FBA calculator to overview the potential profit of a product within a specific price range. Accordingly, 57% of successful Amazon sellers price their products below $30.
Concerning product price, Amazon sellers should likewise consider profit margin. Again, your goal is not to generate sales but to generate sales that can lead to a higher profit margin.
To calculate the profit margin, you can use the following formula:
Profit Margin = (Net Income / Revenue) X 100
For sellers to obtain a higher profit margin, Amazon Business suggests the following:
- offer competitive product prices;
- lower purchasing costs of the item;
- create a solid inventory management system.
To help sellers obtain competitive pricing, they can utilize repricers for a better Amazon pricing strategy like Seller Snap . For Amazon inventory management needs, sellers can also use inventory management software.
Product seasonality is another critical factor to consider when conducting Amazon product research. Like brick and mortar stores, demand for Amazon products varies depending on the season.
It will help if you determine whether a potential inventory item will be in demand the whole year long or perhaps only be appealing to Amazon shoppers on specific dates or holiday seasons. However, although seasonal items can be profitable during the right season, you should refrain from building your Amazon business around these inventory items.
Product Size and Weight
For your Amazon FBA product research, you should consider the size and weight of the Amazon product. Small and lightweight items are easy to ship and will cost less when exported from their origin. Moreover, small and light items will consume less space in your or Amazon warehouses. Thus, reducing your storage fee costs.
Another Amazon product research element to consider is the durability of the product. For example, avoid breakable items or those that contain multiple moving parts. Such items can be a liability when shipped from suppliers or manufacturers’ warehouses.
A thorough Amazon product research will not only require sellers to check the product itself. You should also check how many sellers are selling the product you intend to add to your Amazon inventory. Avoid highly competitive items if you are still starting your Amazon business.
Since most online shoppers follow trends or make purchases based on the current trends, it is best to check the latest product trends in the marketplace when doing Amazon product research.
You can use Google Trends as an Amazon seller tool for product research. With Google Trends, you can identify consumer demand, the product features they are looking for, and even consumer queries about competing brands.
Aside from checking the competition for a particular product, your Amazon product research should also include researching product restrictions. For example, there are items that Amazon does not allow on their eCommerce site. Try to familiarize the restriction guidelines set by Amazon to avoid complications with your business.
Concerning restrictions, Amazon also restricts sellers from selling counterfeit or “off-label items.” Therefore, as part of your Amazon product research, you should first check whether the item is brand gated, especially if you plan to sell branded items on the marketplace.
The product research will also require sellers to check their liability for a particular product. Note that items such as food, drinks, supplements, and topicals have higher liability than gadgets or home kitchen items. Therefore, it is highly suggested that first-time Amazon sellers or online sellers, in general, should avoid selling such items.
Similar to liability, you should also consider the item’s complexity when doing Amazon product research. Products that will require complex assembling need careful testing before adding them to your list of inventory items.
One of the aspects to check when you research products to sell on Amazon is to check the reviews. Try to check the reviews of customers who have already bought the product.
Similarly, on the suppliers’ website, try to check the feedback of other sellers who have purchased the items for their Amazon stores. But, again, you should avoid products with negative feedback.
Amazon Product Research Tips – Here’s What Sellers Should Not Do
Knowing what you should avoid during the research is equally important to understand what to do for effective product research. Below are some tips to consider to give you insight on what to avoid when you research products to sell on Amazon.
Some Amazon sellers tend to focus on a very narrow niche for fear of a highly competitive one. However, if you are doing Amazon product research, you should avoid a tiny niche, for it tends to exclude all other exciting things in the market. In addition, a narrow niche for your products can stifle room for the growth or innovation of your business.
Neglecting Amazon Seller Fees
Some sellers forget the Amazon seller fees when checking products to add to their inventory. Therefore, not including Amazon seller fees in your calculation can be detrimental to your overall profit margin.
Overlooking Product Improvements
When you research products to sell on Amazon, do not forget to examine the growth of the item. Try to look for a product with room for improvement to be easily distinguished from other undifferentiated products on the marketplace.
Neglecting Legal Requirements
One should not forget to examine the legal requirements concerning a product sold during product research. Along with Amazon restrictions and product guidelines, you should also check your country’s legal requirements for importing and selling your chosen item. The same goes for any pending legal issue concerning the product’s patent, licensing, or trademark.
Amazon Product Hunting – Categories Sellers Should Avoid
If you are new to Amazon or online selling in general, there are specific categories that you may find challenging. Here are some product categories you should avoid when selling on Amazon.
Clothing, Shoes, Jewelry, Handbags Category: Items under such categories are dominated by huge brands, so it is not easy to penetrate consumers. Furthermore, Amazon returns frequently occur under the said categories because of the products’ multiple sizes, types, and color variations.
Categories Requiring Approval: Avoid complicated categories and products if you wish to start your Amazon business smoothly. These categories and products that are deemed too difficult to manage typically require Amazon approval, which includes the following:
- Fine Art
- Made in Italy
- Music & DVD
- Postage stamps
- Collectible Coins
- Sports Collectibles
- Video, DVD, & Blu-ray
- Streaming Media Players
- Join Amazon Subscription Boxes
- Holiday Selling Requirements in Toys & Games
- Sony PlayStation Requirements in Video Games
Popular Selling Methods Under Amazon FBA Program
The Amazon FBA program is considered the most popular business model on Amazon. In addition, 68% of third-party merchants on Amazon are FBA sellers. Therefore, you can choose from these two popular selling methods under the Amazon FBA program if you are an online seller.
Reselling on Amazon means buying products from major retailers at a considerable discount and reselling them on the marketplace for a slightly higher price. Some of the methods involved in reselling include Amazon arbitrage – online and retail.
Amazon resellers can source their products from brick and mortar stores, like department stores, outlet stores, and thrift shops. Alternatively, Amazon resellers can also find items online through online retail platforms and international business-to-business (B2B) sites like Alibaba.
The private label on Amazon means purchasing generic items from suppliers or manufacturers and reselling them under your brand. It suggests that you introduce modifications or improvements to a generic product, especially your company’s branding elements such as packaging, tagline, and logo.
Why Sellers Prefer One Over the Other
Amazon sellers prefer reselling over private labels because it is a simple and less expensive method when selling on Amazon. In addition, following such an approach will not require sellers to undergo the tedious improvement, modification, or rebranding of an inventory item.
On the other hand, Amazon’s private label allows sellers to build their brand right from the very start. Therefore, it suggests that you will be less likely to encounter restrictions from a specific brand owner.
Fundamental Tasks for Success
Amazon product research is one of the vital tasks sellers must perform to prepare their Amazon business. Product research can give your business the best chance of success.
However, product research alone is not enough to improve the performance of your Amazon business. Together with Amazon product research, it would be best if you also accomplish other crucial aspects of the Amazon business, including listing optimization, inventory management, Amazon repricing for competitive prices, and advertising management.
About the Author
Junel Ayala is Seller Snap’s in-house content writer. Junel comes with experience in eCommerce and enjoys researching and reporting on all Amazon-related things, including selling on Amazon and repricing.