Disclaimer: Success in Amazon FBA is not guaranteed.
With that said, you can exponentially increase your chances of finding a successful product by following the steps and tips provided in this Amazon FBA product research tutorial.
The following tutorial is the culmination of our own experiences with Amazon FBA and countless hours of researching the tendencies and opinions of the experts.
We start with a step-by-step guide to first establish a comprehensive understanding of the product research process and end with an example of finding a product opportunity with a high probability of success.
Don’t Start Product Research Without a Plan
Before even starting Amazon FBA product research, you need a plan. Without specifying your goals and understanding any limitations you may have, success in Amazon FBA will be nearly impossible to achieve.
Start by asking yourself the following questions:
- How much profit do I want to make every month?
- How much capital do I have to start?
- Do I have additional capital in reserves, or do I have expendable income each month that can go towards supporting this business?
The reason you need to understand your financial position before attempting Amazon FBA product research primarily has to do with purchasing items in bulk, which is necessary for two reasons:
- Higher quantities improve your profit margin by pushing down per unit cost
- Manufacturers from sites like Alibaba often require a minimum order quantity (MOQ)
Now, before starting your search, you need to choose from one of the many Amazon product research tools available.
Finding opportunities on Amazon is nearly impossible without one of these in today’s competitive Ecommerce landscape.
We use Viral Launch as our Amazon product research tool in this article.
Step 1: Product Discovery
Using a product research tool like Viral Launch efficiently allows you to sort products based on your business needs.
You first need to determine which Amazon categories you want to try selling in. There are many variables to be considered when selecting categories, such as competition, manufacturing difficulty or a product’s likelihood of being returned.
When choosing categories, you should consider:
Amazon's most popular categories (percentage of sellers)
Average profit margin per category
Categories to avoid as they are the most likely E-commerce items to be returned
There are also a few "gated" categories, meaning you need approval from Amazon to sell products that fall under them.
With some product categories selected, let's use an example intended monthly profit of $2,000 and set the remaining primary parameters.
Industry experts suggest a minimum sales price of $15 as any lower and fees will probably erase most of your profit margin.
Keep in mind that there are many new sellers attempting to break into Amazon FBA with small budgets that are targeting this $15 price point, so for the sake of ensuring adequate profit margins while avoiding new seller competition, setting a higher minimum price is advisable.
Let’s set our minimum price at $21 and while the maximum price really depends on your budget, here we can set ours at $50.
Instead of setting the minimum exactly at $21, you can set it to $20.98 to ensure you are capturing all the items that are essentially a “$21 value” even if they have the usual $0.99 ending as is common in sales.
We use the common Amazon rule of thirds to help us estimate either minimum monthly sales units or revenue. You can choose to set either of those parameters.
Rule of thirds:
- ⅓ for manufacturing costs
- ⅓ for Amazon selling fees
- ⅓ for profit
In order to make a $2,000 profit with a product that has a $7 profit margin, you will need to sell at least 286 units per month. If setting the parameter by revenue, it would be $6,000 in this example.
It’s best to choose a conservative maximum sales unit or revenue amount. You don’t want an extremely successful product if you don’t have the funds in your business to meet the demand.
It’s easy to lose a hard earned market share if you run out of product and a competitor fills the void during your absence while you are waiting for more product.
The final primary parameter we set here is review count. We only set the maximum review count because we just need to ensure the product has not already established a strong market reputation.
With Viral Launch, there are also many advanced filters to choose from beyond what we have already gone over if you really want to narrow down your search.
Search the product database with your outlined parameters by choosing “Show Products”.
As you scroll through the list of products generated, pin items that appear unique and show high demand with sales figures in line with your goals. These are the products you want to go after.
Using the example of $2,000 intended monthly profit, here are some products we pinned and why.
- Using the rule of thirds ($2000 * 3 = $6,000), product revenues are likely to meet or exceed desired profit
- Size tier large, so Amazon fees shouldn’t be too expensive
- Not major brands but selling successfully
- Reviews that are good but have room for improvement
- Appear relatively simple to have manufactured
According to Amazon guru Dan Vas, finding a product worth selling can take 1 - 2 weeks, so it’s important to have patience during this stage.
Pro tip: Don’t start your product research on the first 10-20 page results as most searchers are also looking at those products and many of them will show this warning.
If you are not finding any suitable opportunities with the parameters you have set, you may have to readjust them and reload a new set of items from the product database (ex: higher max price).
An efficient method is to bulk pin 10 to 20 items to establish a list and then complete more in depth vetting and analysis in the next stage.
Step 2: Searching for Market Opportunities
Once you have a sufficient list of potential products pinned, begin analyzing each to determine if there is market opportunity by opening the product page on Amazon.
Keyword Research to Find the Best Fit
From the items product page on Amazon, identify the main keyword that describes the product and input that into the Amazon search bar to search the products market.
Use the Viral Launch Market Intelligence browser extension to bring up the first page of data for the product's market.
Before analyzing the market, we need to confirm that this is the correct market for our product by confirming that there isn’t another keyword that more accurately describes the product’s market.
Click on “Est. Search Volume” to open the similar keyword comparison list. Scroll through the list to see if there is a keyword that comparatively or better describes the product, that also has a higher volume of searches over the last month.
Once you have established the best fit keyword, verify that there is sufficient monthly search volume of that keyword (2000 to 4000 minimum).
Substantial keyword search volume is a promising sign, but you need to dig further and look at the market depth to determine if there is an opportunity.
Market Depth - Three Things to Look For
Click on “Review Quantity” to sort the items.
First, view some products to determine if the products shown are in fact similar products to the original you found and discount any outliers listed from your analysis.
From there, you want to look for three things:
- After the top 3 products, the rest of the products have less than 1,000 reviews, with the majority having less than 150 reviews
- Monthly revenue figures that indicate your profit goals are likely to be met for most of the products on the page
- Low review counts with high sales figures
These three traits are the basis for a potential market opportunity. Next, verify if the product market is stable and consistent.
Step 3: Market Stability and Consistency
A stable and consistent market allows for easier inventory planning and monthly profit estimation.
Is There Sufficient Data Showing Sales Stability?
While Amazon does not disclose daily or monthly sales volumes, you can use Viral Launch’s sales estimator on the "Trends" tab to accurately predict the sales trend and verify stability.
Use it to check the individual products that you intend to most closely compete with and also the entire market for your keyword.
The overall trend on the above chart looks consistent, this is what you want to see.
When using the Viral Launch sales estimator, you need to be careful when analyzing products that have numerous sizes and variations like this wine tote.
Instead of viewing sales by the "Trends" tab, you will need to click into the specific variation's "Monthly Sales" from the "Sellers" tab.
This brings up the monthly sales only for only that specific product and not all product variations sold under that Amazon product listing.
Look for any seasonality in the data or signs of declining sales as potentially negative indicators.
If you intend to sell products from the toys and games category around the holidays, you should be aware of Amazon's holiday selling requirements or your products won't be listed until after the holidays.
Does the Best Seller Rank (BSR) Show Consistency of this Product Type?
The BSR outlines how well a product is doing in its specific category. A stable or increasingly lower BSR shows the product is competing well in sales when compared to other products.
You can find the BSR trend and category by searching your keyword phrase in Amazon and again opening the Market Intelligence plugin.
Look at the BSRs of the products that are most similar to your intended product.
Next, click into the BSR trend line to see a product’s historical performance. This product shows both consistency and improvement of its BSR, a good sign to look for.
After determining whether the market is stable enough to sell in, we need to analyze the original product and some competitors to determine if and how we can differentiate our product and make improvements.
Step 4: Opportunities for Improvement
Identify potential areas where a product can be improved in terms of the product itself and/or its listing.
Do the Images Showcase the Product and Its Benefits Well?
The first photo of any product listing is always the item by itself with a white background, but the accompanying images also play an important role in portraying the value of the product.
Infographics showcasing the benefits of the product and/or comparison images should be included. If they are not but could be, that is an opportunity for improved images on your own version of that product.
All images should be high quality and not use Photoshop when portraying the product in real-life settings, as this could misrepresent the sizing of the product to customers.
Browse through the photos and determine if and where improvements could enhance the product’s portrayed value.
Are the Bullet Points Concise and Highlighting the Products Key Features and Benefits?
Amazon sellers have 5 bullet points at their disposal. Bullets should efficiently describe the main points of the product and include keywords without cramming. They should be easily readable and contain professional grammar.
Amazon provides tips here on writing successful bullets.
Below is an example of bullet points that can (and should) be improved as they contain poor grammar, incorrect spelling, and are just plain difficult to follow.
Do the Reviews Show Product Interest with Room for Improvement?
Customer reviews provide the most explicit data for potential improvements as you simply need to improve what the customer is complaining about. Specifically, look for repeating complaints across the product’s market (ex: difficult to assemble, poor directions included).
Here’s a review with a complaint on an abdominal roller:
This product is already above average with a 4 star rating, but it could probably be improved further by incorporating more comfortable handles.
According to Pattern, an industry leader in Ecommerce intelligence, a one star increase in reviews results in a roughly 4-5% increase in conversion rate.
By making minor updates to products already doing well, you can get higher reviews. More satisfied customers lead to higher sales and market share.
Step 5: High Value Traits
You should also do competitor research to see if there is an optimum style, color patterns or size for the product by looking at competitors or related products in the category that are popular.
A few examples:
- Noticing the best-selling tents have a circular shape or contain certain colors
- Identifying that the best-selling dog sweaters have a furry collar
By further enhancing a product with the optimum traits, you can improve your chances of success.
Step 6: Ability to Sell Product
Before moving forward with a product and reaching out to manufacturers, it’s imperative to verify whether there are any restrictions on the product to ensure you don’t waste your money ordering a product that you can’t even sell on Amazon.
You need to verify that the product:
- Is not listed as a restricted or FBA prohibited on Amazon
- Does not require approval
- Is patent and trademark free
You need to have an Amazon Seller Account in order to check product restrictions and can do so by either:
- Taking the ASN of a competitor and sending it to Amazon Seller Support for verification
- Searching the ASN of a competitor in Amazon Seller Central selecting “show limitations” to verify if that product has any
To verify the patent or trademark status of a product, you can either check with the United States Patent and Trademark Office, do a quick search on Google Patents, or hire a professional patent attorney.
Side note: Just because you see others selling a product on Amazon doesn’t mean there isn’t a patent on the product. Many sellers receive special permission from the patent owner in order to sell products.
Step 7: Calculating Amazon Fees and Shipping Costs
As an FBA seller, you need to consider the following in your profitability analysis:
- Transport cost from manufacturer to country of sale
- Amazon referral fee
- FBA fulfillment fee
- Amazons warehouse storage fee
You can employ the free assistance of the Amazon FBA calculator or estimate manually as we show you in the example run-through at the end.
It's important to understand the costs and fees associated with selling your product before looking for manufacturers. This allows you to focus solely on manufacturers that can create a product that meets your needs.
Step 8: Finding and Negotiating with Manufacturers
The final step in product research is ensuring a high-quality product can be sourced that allows your intended profit margins with an order size that you can afford.
Amazon products are most commonly sourced from Chinese manufacturers through sites like Alibaba.
Set the search to suppliers and use your product’s keywords to browse through manufacturer's offerings.
As you see products that meet your requirements, begin reaching out to suppliers to determine at what price points the product can be had for at different quantities and negotiate.
Request product samples from the manufacturers to compare quality and value.
Negotiation hack: If you prefer the product of one manufacturer but have a lower quote from another similar manufacturer, show the manufacturer you want to work with the other’s quote and see if they will lower their price.
When determining how much of the product to order, look at your startup capital and ensure you have at least 30% of the product order amount in reserve to meet the needs of the down payment of a second order if the product does well.
This ensures you have sufficient resources to meet demand if your product is selling well until you can receive the revenue from the first order.
Full Example: Successful Amazon FBA Product Run-Through
Now that you have the steps down, let's run through a full example of finding a successful product.
We start with a budget of $10,000 to launch a new Amazon product, with a profit goal of $3,000 per month.
Narrowing our search down to the selected categories below, let's see what we can find.
This should be a satisfactory revenue range to hit $3,000 per month, considering over half of Amazon sellers make a 16 - 50% profit margin.
Now we pin around 10 products for further review and select "Show Advanced Data" to make sure we see all available data when selecting products.
One item pinned was this pack of black shipping boxes. We chose it because:
- Its revenue shows it is likely to meet our profit goals
- Would be affordable to have manufactured
- Doesn't seem to be a strong brand presence dominating the market if "ZSZMFH" is selling 183 units per month
Let’s check out this product idea further by opening its Amazon product page.
"Black Shipping Boxes" appear to be the main keyword for this product.
We determine if there is another keyword that more accurately describes it by searching in the Amazon search bar and opening the Market Intelligence plugin.
Upon first inspection, it looks like Amazon Basics dominates this market. However, we need to confirm that the products they are selling are actually in the market we are going after.
We see that this market does in fact meet the three criteria we look for with market depth:
- None have a 1,000 reviews and a majority of the first page have less than 150
- Most of the revenue figures would likely allow us to hit or exceed our $3,000 profit goal
- A clear willingness to purchase despite low reviews
This market definitely shows opportunity, but next we need to determine if there is stability and consistency.
We start by looking at the overall market.
Based on the graph, there seems to be a fair bit of volatility, as the market ranges from 450 to 900 sales.
However, according to Viral Launch, this is a typical sales pattern.
Moving along, we check the sales for the original product and the most similar competitor for a more precise view of the market we want to sell in.
First, the original.
The sales of our original product have dropped off since the holiday season, which coincides with the fact that January through March are the slowest months for Ecommerce.
The most similar competitor appears to be the one with the highest reviews, as that is the one selling a black box of the size 9x7x3 in too, however only in a pack of 10.
Like our original, it also shows sales falling off recently.
Now, looking at the BSRs will better provide further clarity about consistency, again starting with the original.
We further analyze consistency of the market by again looking at the highly reviewed similar product that has likely been selling for longer.
It does, in fact, portray greater consistency.
While the sales and BSR trends are not optimal as there appears to be a slight downward trend now, we move forward in analyzing the product anyway to see if all factors considered together signify an opportunity.
Next, we need to determine whether we can improve the product itself and/or the portrayal of the product with a better Amazon product page, starting with the original.
In terms of images, the seller of the original product already does an adequate job of showing the product visually, including the:
- Product in use
- Benefits of product vs. traditional design
- Accurate sizing of the product
- Ease of product assembly with both image and video
However, the bullet points on this product page do have a few grammatical errors and could be improved for better English language readability.
Although the product is overall well reviewed, some reviews and a question provide two potential areas of improvement.
We could make a slightly thicker product and also make them water resistant by having the manufacturer spray them with some kind of lacquer sealer.
Our goal is not to improve upon this one product though, we also need to find other common pain points in the market for black shipping boxes.
We look at similar product reviews by going back to the Market Intelligence page for "Black Shipping Boxes" and opening the product pages to look at the reviews.
We confirm thinness as a common complaint and also identify assembly as another pain point.
Two traits commonly appear for many of the top selling items:
- Pack of 25
- Various sizes offered
Based on the analysis so far, there is an opportunity to be successful in this market if we can create a black shipping box that:
- Is slightly thicker than competitors' products to enable customers to feel more secure about using them for shipping
- Supplied in a pack of at least 25 boxes
- Are easy to fold and maintain their form without the assistance of tape or other adhesives
- Utilizes a spray or sealant for improved resistance to water
- Comes in various sizes with lifestyle images showing products that can fit into each size
Bonus opportunity: Many of the product images in this market show shred paper for packing but none seem to have included it as part of the product offering. It is also a frequently bought product with black shipping boxes, making it an excellent opportunity to bundle this with our own product and potentially offer customers a better value.
Before we go through the trouble of calculating this product's profitability potential, we need to determine if we can sell this product.
This type of product does not appear on the Amazon FBA prohibited list or on the restricted list and we confirm this status with Amazon Seller Support.
However, we need to ensure the product is not manufactured using asbestos as products with this substance are prohibited.
Finally, we need to consider Amazon fees and check with some manufacturers to determine if any are capable and willing to create this product for us for a price that allows us a suitable profit margin.
To determine an adequate per unit price, we average some variables from our original product and five of the top selling products in the category to help us in estimating fees.
The estimates show us that black shipping boxes around the 9x7x3 in size in packs of about 25 are selling for aproximately $34.99, with an average weight of 6.22 pounds and cubic inches of 1,111.
We do intend to improve upon the current market so we add $5.01 per unit (pack of 25 boxes), or a total selling price of $40.00.
Those improvements are also likely to cause extra weight. We estimate 6.5 pounds as our per unit weight.
First, we discount the Amazon referral fee, which for office products is 15% of the selling price.
$40.00 (1-0.15) = $34.00
Next, we consider shipping costs to receive the product from China. Current ocean freight forwarding from China is estimated at $2-$4 per kg; we use the median of $3 in our estimate.
Then, we need to convert pounds to kilograms to do the conversion.
2.95 kg x $3 estimates an ocean freight cost of $8.85 per unit.
$34.00 less $8.85 equals $25.15, but there are still fulfillment fees to consider.
Amazon fulfillment fees for this product are estimated to cost $7.18 based on our estimates, leaving us with $17.97 left before taking into account monthly inventory storage fees.
Standard monthly storage fees for our product are $0.83 per cubic foot (January - September).
A cubic foot is 12inx12inx12in, or 1728 cubic inches.
The estimated average we found was 1,111 cubic inches, so we divide 1,111 by 1,728 to get the percentage of a cubic food our product will need.
Then, we multiply that percent (64% here) by $0.83 to determine our per unit storage cost.
We estimate our monthly storage cost for this potential product to be around $0.53 per month. This would leave $17.44 for the cost to manufacture the product and our profit margin, so let's see what we can find.
When searching Alibaba, it looks like there is potential to find a manufacturer to create for us an improved product for a cost of around $0.30 per box if we purchase a large enough quantity.
If we can get these manufactured for $0.30 in packs of 25, the cost would be $7.50 per unit (box of 25).
This would leave us with a profit of $9.94 per unit, or a 24.9% profit margin.
Finally, we need to determine if our budget will allow us to meet our sales goal with this product.
At a profit margin of $9.94, we will need to sell about 302 units in order to make $3,000 profit per month.
Of our $10,000 budget, we want to keep 30% (or $3,000) available for a product re-order, leaving us with $7,000 in available funds for use now.
Amazon charges a monthly selling plan fee of $39.99, so let's knock off that cost for the first month as well, or $6,960 left.
With $6,960 for the product and an estimated per unit cost of $7.50, we can afford 928 packs of 25 boxes or 23,200 individual boxes in total.
We are likely to get a good deal from a manufacturer with such a high quantity and can definitely afford to stock enough products to meet our sales goal with a diversity of sizes to offer.
Before coordinating with manufacturers and placing an order, we verify one last time that the market for black shipping boxes is likely to support sales of at least 302 to meet our profit goal. We open the Market Intelligence for "Black Shipping Boxes" again to confirm.
Based on the above, we are likely to meet our sales goal, therefore we will proceed with contacting manufacturers to source the product.
Amazon FBA product research is a comprehensive process that goes beyond simply browsing through products if you want to be successful.
You need the knowledge AND the tools to identify opportunities in the extremely competitive ecommerce landscape.
The key is to find unique products with high sales to low reviews you can further improve upon.
While this sounds easy enough, it requires patience and business acumen to find a profitable product.
With the right mindset, it’s entirely possible to be successful in ecommerce and enjoy the benefits of running your own Amazon FBA business. Patience is key.
Every product launch can take up to 6 months or more. Ordering samples, buying inventory, creating logos, getting professional photos, getting reviews. You do not want to waste all that time in the wrong product because you rushed the product research step.