Finally pulling the trigger and ordering a bunch of inventory to ship off to Amazon can be scary, at the best of times. How do you know for sure that what you’ve ordered is actually going to perform, and sell out on FBA?
Do you know for certain that you have looked over every possible aspect of the niche, making sure that you haven’t missed some subtle clue about whether or not you’ll actually be able to sell everything?
In the beginning, a lot of newbies jump gung ho into ordering their inventory, and sometimes miss those few subtle clues that could have alerted them to bigger potential problems down the line.
In this guide, I’m going to walk you through the entire process of finding and sourcing a product that you know will not only sell once it’s listed on Amazon, but that it is going to sell well and actually turn a profit for you.
This step-by-step outline will help you pick up on the subtle clues that are usually hard to spot for beginners, and get you on the path to earning a consistent income each month.
When it comes to choosing a profitable product, there are two different paths that you can take to see success, depending on how big of a starting budget you have to work with.
While path #1 can lead you to serious money down the road, it’s always advised that beginners start small, and work their way up into building out an inventory that covers an overall “niche”. Let me explain the difference.
When you’re choosing a niche, you may think of selling everything related to the bathroom. Items such as towels, towel holders, sink and shower caddies, drawer organizers, fog resistant mirrors, and on, and on -- everything that you would typically find in someone’s bathroom.
As a beginner, this is going to cause you to lose a lot of money while you’re testing various products, to see which one is going to sell the best. While all of the products may fall into our checklist for what makes a good product to sell on FBA, having so many different options is going to limit the amount of time and resources you can spend on each one to get them to start selling well.
That means, choosing a single product is going to be the best route to take, whether you are just looking to build up a small side income, or you are looking to become the next FBA millionaire. Focusing on a single product line allows you to devote your entire effort to seeing it into profitability, before venturing out into the next line.
Here’s a basic list to help get you started.
To help you understand exactly what we’re talking about, let’s break down that list one, by one.
To determine the viability of a product, you have to know how much profit you’re going to make before you place an order through your supplier. In our experience, products with a price tag in the range of $10 to $50 have the best chances for selling at a high volume, due to impulse buying.
At this price range, the customer isn’t going to spend hours, upon hours doing research to find the best product. As long as they think yours is a good fit, they’re going to purchase it without really thinking twice about the decision.
Think about it for a second. When you buy a large item, like a TV, you’re going to spend quite a bit of time comparing different models, making sure that the TV you’re about to purchase is actually the model that’s going to do what you’re looking for, and last for a long time, right? When was the last time you did that amount of research on a product that cost you $25?
Another big reason that products in this price range sell so well is because they are usually fairly basic in nature. There aren’t a lot of moving parts that are easily broken, and that’s good for the long term viability of your business.
Finally, products that cost less to produce give you a lower barrier to entry than more expensive products, meaning that you can quickly scale up the amount of inventory you’re buying once you find a winner, and decide to pour more funding into the campaign.
Let’s take a look at two different examples, to show you what we mean.
This example shows you why picking a product within the $10 to $50 range is the best choice to make, because it’s going to be a lot cheaper to get started, and a lot cheaper to scale once you’re making sales. For beginners who don’t have large budgets to spend on their initial inventory, this makes it easy to get going.
Choosing a product in the pricing range that’s affordable to get started is critical to seeing success once you’re ready to ship it off to Amazon.
In the best situation, your product would be as light as paper, and cost nearly nothing to ship. However, that’s not always the case when it comes to selling products on FBA.
As a general rule, as the size of your product goes up, the weight of your product goes up, too. When the size and weight both increase, the amount you’re going to pay for shipping will dramatically increase -- lowering your overall profit margins.
When it comes to figuring out the shipping weight, you need to know the total weight of the box that Amazon is going to be shipping, and includes the weight of the item, the packaging and slips, and the weight of the box itself.
Until you’ve chosen the products that you’re going to sell, it’s almost impossible to get an exact weight for each of the packages. That means, you’re going to have to do a bit of digging on Amazon to find out what other sellers are listing their product shipping weights at.
To help give you an idea, let’s take a look at a product that sells well already -- men’s wallets. Take a look at the picture below, paying attention to the “Shipping Weight:”. You can see that shipping a wallet is only 4 ounces -- or incredibly affordable.
Knowing how heavy a product is going to be is vital because it lets you know how expensive the shipping costs are going to be to get products from your supplier in China to Amazon’s warehouses. When you keep your shipping costs down, it’s easy to increase your profit margins.
Amazon also charges you fees based on how heavy the product is. For starters, you’ll be charged around $2 for packages up to 2 pounds. For every pound after that, your shipping rate is going to increase an extra 39 cents.
That means, if your product weighs 10 pounds, your handling fees are going to cost $5.12. Along with handling fees, you can also reduce a wide range of other fees by keeping your overall package size and weight down. To see more, check out Amazon's FBA fee schedule by clicking here.
At the end of the day, the lighter you can keep your products, the better your profit margins are going to be, because you’re not going to be wasting money on excessive shipping and handling charges.
Pinpointing a surefire method for figuring out how often certain products sell on Amazon is fairly hard to do. One of the best metrics you can follow is the “Best Seller Ranking” or BSR.
Amazon’s BSR tells you how well a product is performing inside of it’s specific category. For instance, if a product as a Best Seller Ranking of 10,000, it is going to sell a lot less often than a product that has a Best Seller Ranking of 500. A lower BSR is always better, especially when it is inside of a large category.
Figuring out the BSR will help you determine if a product is going to sell well, and often. The last thing you want to do is choose a product that’s only going to sell a few units a day when you make it to the top spots in your category.
There are a couple other ways to determine the marketing demand for the products you’re wanting to sell, but the Best Seller Ranking is, by far, the quickest and easiest way to get your data straight from the horse’s mouth.
When it comes to choosing the product you’re going to start sourcing, you want to make sure that the first 3-5 products inside of the category have a Best Seller Ranking of at least 5,000 or better. The more products that have a BSR of 5,000 or lower, the better your chances of making a large amount of sales will be.
Having a low ranking shows you that you’re going to be able to move a ton of product if you’re able to get into the same position that the existing products already hold.
Let’s go over the example that we used earlier for figuring out the shipping weights. This time, you’re going to want to look at “Amazon Best Sellers Rank”.
You can see that the wallet is actually the #270 best selling product in the “Clothing” category. Since “Clothing” is such a large category, you can be guaranteed that this wallet sells well -- extremely well.
By making sure that the product you’re intending to source has comparable items with a BSR of 5,000 or lower, you’re going to know that there is money to be made in the market, and that your products are going to sell without too many hiccups.
Competing with large brands is one of the biggest mistakes you can make, especially as a new FBA seller. Instead of trying to take on the big dogs in your chosen product category, you want to find a category that has much weaker competition.
Brand recognition is huge in driving sales, and something you’re not going to have when you’re just getting started. This comes down to buyer psychology, and there are a couple different factors in play that will drive a customer to purchase from the big brand, even if the price is more expensive than the smaller competitors.
To get started figuring out if you’re going to be competing against large brands, do a search for the products that you’re going to be sourcing on Amazon. Take a quick glance over the first page’s search results, and keep an eye out for any big brands that may be taking up the spaces. If you spot big brands selling your exact products, you may want to reconsider trying to sell it to begin with.
As you’re going through the search results, if you spot a brand or two in the first page, but they aren’t necessarily selling the exact same product as you, you may not be directly competing against them.
Let’s go back to our wallet example. On the search results, you may notice a big brand, Swiss Army in this case, selling a passport holder, but not necessarily selling a wallet. In that instance, you’re not directly competing with them, and may still be able to perform well if you’re selling wallets and are up against listings for passport holders from the larger company.
In a perfect world, you wouldn’t have any large brands inside of the search results when you start looking for your product, but nobody lives in a perfect world. To increase your chances, make sure that you are competing against mostly no-name companies.
Spending time finding a product that doesn’t leave you directly competing with large brands gives you a high chance at coming in and making sales right out of the gate, without requiring a large amount of marketing and optimization on your part.
Another piece of the puzzle that you need to put together is the type of items that you’re actually going to be sourcing. You want to sell a product that is simple, while also being one that you don’t have to worry about getting damaged during shipping from China, or from Amazon to your customer’s front door.
Great examples of products like this would be the wallet mentioned above, a yoga mat, or a flexible cutting board. All three items have a single use, and they are generic enough that you can get them sourced through any number of factories overseas.
On top of being able to manage your inventory because you’ll be dealing with less defective goods, these types of items are also cheaper to have manufactured when you compare them to more intricate products, such as alarm clocks or TVs.
To verify that you’re going to be purchasing inventory of simple products, check off as many areas of the checklist below as you can:
The more items you can check off of that list, the better. Ideally, you want to make sure that the items you’re considering sourcing will check off every item on the list, and still have a Best Seller Ranking of 5,000 or lower when looking at comparable products.
Another area that is often overlooked by beginner FBA sellers is the fact that a high number of existing customer reviews on the first page of Amazon’s search results means that you’re going to have a harder time securing sales.
While not always a hard-fast rule, especially in categories where thousands of products are being sold every day, the number of reviews for products on the first page is a good determination on the amount of work it’s going to take for you to compete in the category.
In your research, you want to find products that have less than 50 customer reviews on the first page of Amazon’s search results.
The more products with less than 50 reviews, the better, but you want to make sure there are at least 3-4 different products that you’ll be able to compete against. Building up a smaller amount of reviews is going to be easier for a beginner than trying to compete with a big brand product that has 200, 300, 400, or even more live reviews.
If you notice that there are multiple products with a small number of reviews, say 10 or 20, you know that it’s going to be easy to secure those spots with your own product. Customer reviews is one of the main ranking aspects on Amazon’s search results, so the more reviews you can get, the better.
When it comes to selling on FBA, you’re going to have to micromanage your profit margins. The best way to do that is by making sure that you’re going to be buying low, and selling high. To help you quickly judge the amount of profits you’ll bring in from each sale, make sure that you’re finding products that you can source for at least 25% or less of the actual sale price on Amazon.
To get started, find your products on a foreign marketplace, such as AliBaba. Check to see what suppliers and manufacturers are selling your products for, and then verify the MOQ, or minimum order quantity required to make a purchase.
On AliBaba’s results pages, you’ll be able to tell how much each unit is going to cost to have manufactured. If the product is available at $5 per piece, and sells for $20 on Amazon, you know that you have room in the price to make a profit after shipping and handling charges, and other fees associated with selling on FBA.
As a general rule, 75% profit margins in the beginning are more than enough to cover all of the costs and still leave you with a healthy profit margin once everything has been calculated.
When you’re looking at the product listings on the first page on Amazon’s search results, you want to compare how many listings are well optimized versus how many could use work.
To determine if a listing is properly optimized, look at the following areas:
As you’re looking over the results in Amazon’s search listings, pay attention to how many are not properly optimized, and make a note of what is wrong with each listing. These are areas that you’re going to improve upon with your own product listings, and will make it easier for you to compete and climb up the ranks to secure a spot on the first page.
If your product has made it through the various checks up to this point, you may be onto something. Now, though, you’re going to want to make sure there is actual search volume for your products on Amazon. To do this, we’re going to use a keyword tool called “MerchantWords”.
Click the link above, and venture over to the tool. Then, type in your keywords that customers are going to be using to find your products on Amazon. For our example, we’re going to use the keywords “leather wallet”.
By entering the keywords and hitting enter, you’ll be brought to a screen that looks like this:
If you look at the results, you’ll see that the keywords “leather wallet” receive more than 291,500 searches per month. Even if you only get 1% of those searches to your listing, you’ll still be able to make a healthy amount of sales.
You want to make sure that your product gets at least 100,000 searches per month. Either on the main product keywords, or through a combination of 2-3 different keyword sets.
While you’re doing research on AliBaba, did you stop and pay attention to how hard it was to actually find the product you wanted to sell? Was it available through multiple manufacturers on their website?
If it wasn’t, it may be a red flag that the product is going to be hard to have manufactured overseas, which could dramatically increase your cost of goods.
If you didn’t pay attention, go back to AliBaba, and search for your product again. When the results load up, how many manufacturers can you find either with your specific products, or products that are closely similar to the ones you’ve chosen to sell?
Having multiple suppliers available means that you can get them to compete on price, while also making sure that you are able to source your products through another supplier should the supplier you initially chose stop serving you products, for whatever reason.
While making sales all throughout the year is a huge plus to have on your side, it’s not always necessary, as some seasonal products sell extremely well for a few months out of the year, making them a great choice for a quick turnaround.
It’s generally recommended to pick a product that will sell well the entire year, but that’s not always possible. If you’re ok with making your profits a few months out of the year, though, by all means go with a product that is seasonal in nature (no pun intended).
Another quick way to figure out how big the market is for your products is by visiting other marketplaces similar to Amazon’s. eBay is a great example of one of these marketplaces.
To verify the viability of your product, venture over to Amazon and type in your products keywords. Are there multiple vendors selling products similar to your own? If there are, you have another sign of assurance that there is a large enough market for you to compete in, even as a beginner.
Since you’re just getting started selling products, you’re not necessarily going to have a large brand lineup with various different products that your customers will also purchase. However, that doesn’t mean that you can’t expand into more product lines later on down the road.
To give yourself the most potential for future profits, you may want to look into products that have other related items your customers may likely buy either with your initial product, or by coming back later on and making a second purchase.
If you only want to sell one product, you don’t necessarily have to worry about this step. However, if you’re planning on building a brand, you do need to take this into consideration, and run your other products through the same scrutiny that you’ve run your first choice through.
To give you an example, let’s look at our wallet product.
What are some other related products that a customer may also purchase when they buy a wallet from you? Things like picture holders, credit card protectors, business card holders, and even other leather products such as a passport holder could all be viable options to include under your brand.
While it’s recommended that you only start with one line of products, it’s also recommended that you give yourself space to grow into the future.
The best way to do that is by figuring out other products that may also be purchased when someone buys your initial product. This will help you build a big brand over the course of time, and dramatically increase your potential for profits into the future.
This part of the checklist comes down to figuring out how much work you’re going to be willing to do in order to compete in the marketplace.
Are you willing to put forth the effort required to not only compete with the other big sellers in your category, but also out-do them in terms of quality, and customer service?
When it comes to having a higher quality product built, you’re going to need to spend time going over what you’re actually competing against, and figure out the weakness and strengths of your competitors. You want to attack their weaknesses while making their strengths your strengths.
If you’re able to do this properly, you will have a competitive advantage that will leave them wanting to figure out what you’re doing to make so many sales.
It’s not completely essential to competing, as noted by the sheer number of low quality products that are being sold by the boatload on Amazon every day, but if you want to compete for the long term, you’re going to have to put in the time identifying the easy wins in your product category, and then capitalize on them.
Another great way to increase the amount of money you make from your FBA venture is to source products that encourage multiple purchases, or recurring purchases. If a customer buys multiple products at a time, you’re going to spend less on shipping, and make more profit per sale.
Likewise, if a customer continues coming back to your product listing after making their initial purchase, you will set yourself up to receive high rated reviews, which will help you rank higher in Amazon’s search results.
This is a bit harder to pull off, but if you’re able to source a product that encourages recurring purchases, you will have a lot less work on your hands over the long haul, and still make the same amount of profits as a product that only sells one time.
Finally, to help increase your chances of being able to compete in Amazon’s search results pages, you want to make sure that there are multiple keywords available for you to rank for.
When you look at our MerchantWords.com example, you’ll see that there are various different keywords people use to find products like the one in our “leather wallet” example.
By having various keywords, you can check into the competition on each one, and pick the easiest to compete in as the first keywords you target.
Then, once you’ve built up more sales and reviews, you can pivot into trying to rank for other keywords that may have been more competitive from the beginning.
Go through the different parts of the checklist we’ve laid out for you, and you’ll have an easier time figuring out whether or not the products and categories you’ve chosen are going to be easy enough for you to compete in, while still making sure that your product will turn a profit for you.
To sum it up, check off as many of the points from the checklist below:
The more areas of the checklist you can verify your product against, especially #1 through #10, the better. While not hard-fast rules, they are recommendations that give you a path to navigate as a newbie seller on FBA.