How To Find The Best Products To Sell On Amazonamz
POSTED ON APRIL 25, 2016 BY SAM PRIESTLEY
After reading my in-depth guide on how to start an Amazon FBA business, the most common question I get is: how do you go about choosing what to sell? What are the best products to sell on Amazon?
Well, it takes quite a lot of research but here are the basic criteria of what you should look for:
Items that can be sold for between £20 and £100 in the UK. Or $20 and $100 in the USA.
Items that aren’t too big. ≤ 45 x 34 x 26 cm in UK. ≤ 18″ x 14″ x 8″ in USA.
Items that aren’t too heavy. ≤ 5kg in the UK. ≤ 10 pounds in the USA.
Items without too much competition. Where there aren’t a lot of items with hundreds of good reviews competing for the top spot.
Items that are selling well. Enough that it is worth the time to go to the trouble of competing with them.
Items that are simple with few moving parts.
If you’re interested in why then read on. If not you can jump straight to ‘How to Research What Products to Sell on Amazon’:
Let’s start with the money because understanding pricing is hugely important for any Amazon FBA sellers. When working out how much money you’re going to make it isn’t as simple as taking the amount you paid from the amount you sell the item for. There are a bunch of costs involved.
If you don’t pay attention, you might end up selling an item for a huge markup and still make a loss. This is a pretty typical example:
You expect to be able to sell the item for £10.
It costs £2.5 per item to buy.
Shipping is £1.5 per item.
Tax and import duties are £0.5 per item.
Delivery to the FBA warehouse is £0.4 per item.
FBA fulfilment fees are £3 per item.
Amazon closing fee is 15% of sale price, so £1.5.
There is VAT which averages at 10% for £1. (note, you don’t need to pay VAT till you reach £83k of turnover in one 12 month period).
Despite the 4x markup, you are making a loss of £0.4 per item!
I recommend aiming for at least a 25% profit margin after all costs. That should be enough to cover the cost of returns, unforeseen expenses and still make some money.
The Amazon FBA fees can be quite complicated, but they have handy calculators which will tell you all the fees involved:
Amazon FBA USA Fees Calculator
Amazon FBA UK Fees Calculator
You will want to check every potential item against the calculator to make sure that you are making enough money. To speed things up we can set a lower and upper limit of what items are worth our time.
Lower Limit on Price
In the UK, there is free delivery on orders over £20. Below that standard delivery costs between £3.99 and £4.75. That means it is cheaper for the customer to buy your item at £20 than it is at £17. The fixed fees and VAT make it very difficult to make a 25% margin on sales below £17. So I set my minimum price at £20.
In the USA, free delivery doesn’t start till the customer is buying $45 of items. The higher fixed fees mean it is very difficult to make a 25% margin on sales below $20. So I set my minimum price at $20.
Upper Limit on Price
We never know how well our items we are going to sell so when starting out I try to limit my exposure to new products by placing a small order to begin with. My personal limit is to spend no more than $3,000 on a first order. I believe a $/£100 max limit is sensible.
If I spend that money on a few high-priced items then I am at much more risk of losing money if there are a few returns. It will also be much more difficult to make a dent on the best-seller list and to get plenty of reviews. I believe a $/£100 max limit on RRP is sensible.
Size & Weight
Very large items cost a lot more to ship, store and fulfil at Amazon FBA. Ideally, I suggest looking for items that you can easily hold and carry in one hand.
You can go heavier but make sure to get accurate quotes for the inbound shipping to Amazon FBA as it can get very expensive very quickly.
There is a dark side to Amazon FBA businesses. Badly designed and dangerous products.
Last year hoverboards were very popular and there were hundreds of sellers on Amazon. People who had found a factory on Alibaba selling cheap hoverboards, put their brand on it and then started selling them for a large markup on Amazon FBA.
The problem was that a lot of these hoverboards were made with non-Uk compliant plugs. They had faulty cables, chargers or plugs that could catch fire or explode. At least three house fires were caused by such devices over 10 days in October.
My advice is: if you don’t understand exactly what you’re buying and how it works. Stay well away.
Competition and Best-Seller Ranking
The best products to sell on Amazon will be those that are selling a lot but with little or poor quality competition.
We don’t know exactly how many items our competitors are selling, but we can make a pretty good guess. Amazon tells us every product’s best-seller rating, known as the BSR.
Each category has its own best-seller list, and every product is listed from 1 onwards, with 1 being the best-seller.
The following is a graphic from the paid-for product research tool Jungle Scout and shows the approximate number of items sold a day in different categories on the USA marketplace and with different BSRs.
The graphic is just their estimates, but it gives you a rough idea (personally I’ve found them to be too low).
When we open a product’s page on Amazon you will be faced with:
This product is number 4,777 in Toys & Games. Looking at Jungle Scout‘s estimates we can be pretty confident this item is selling more than 10 units a day.
It also has 103 good customer ratings. That is quite a lot, so perhaps it is not the best item to try and compete with.
This product, on the other hand, is selling only slight less well, perhaps 9 units a day. But it has a very low number of reviews. A much easier product to compete with.
Ok. So now we have a rough criteria for the best products to sell on Amazon, but how do we find them among the hundreds of thousands of items for sale on Amazon? There are really only two choices:
How to Research the Best Products to Sell on Amazon
This is the way I used to do all my research. It is time intensive and hard work. But it is free and used to be the only way to find underexploited niches and the overall best products to sell on Amazon.
Create a spreadsheet that lists: price, number of reviews, average review, size (small, medium, large, extra large), weight, amazon seller ranking, category.
Then open up the bestseller lists on the Amazon website and manually go through sub-category, adding every to the spreadsheet.
Filter the spreadsheet by all products that fit your criteria.
Honestly, I wouldn’t recommend it. It’s really boring and takes forever.
With a Paid-For Tool
Normally I like to give you a few different options for online tools, but when it comes to researching the best products to sell on Amazon, there is one company that is miles above all the other competition. Let me introduce you to Jungle Scout.
I must admit I hadn’t tried out Jungle Scout until very recently. I kept getting emails from readers telling me how awesome it was so eventually I gave in and signed up. Now I am kicking myself that I didn’t find it earlier. It would have saved me so many hours of work.
They have two different options: a chrome plugin and a web app. I have found the web app to be the most useful.
The starting place in the web app is the product database. It is basically a live and filled out version of the spreadsheet we spoke about creating in the ‘manual’ section.
You can easily search and filter through every product on Amazon based on the criteria I spoke about above. In the below screenshot I have filtered by:
Price: $20 to $100
Estimated Sales: 100 to 1,000 a month. Below 100 it’s not really worth the hassle. Above 1,000 is fine, but chances are there will be a lot more competition.
Number of Reviews: 10-20. These are listings with hardly any reviews, which means it will be easy to beat them on number of reviews.
Weight: Max 10lb.
Seller: Fulfilled by Amazon. We don’t want to try and compete with the products Amazon is selling themselves.
Even with those limitations it immediately filters to over 3,250 search results. There is plenty of good product options in there.
Imagine how long that would have taken to do manually!
A cool little feature is that it tells you how much you get after all the fees. This makes it much much quicker to work through your potential products.
You can get the product database on the web app for just $39 a month. If you do your research quickly you might only need it for a month or two. Considering the amount of time it takes to do all this research manually, that is a bargain.
There is still quite a lot of manual work to be done, delving into that list, checking the other competition in the same category and searching Alibaba. Jungle Scout does have a more advanced feature as well called the niche hunter that aims to make it even easier for you.
The main thing I like about the niche hunter is that you’re filtering by search keywords and grouping the top 10 items in that search. With the product database, you need to go and manually compare the other similar products that are up for sale in the same category.
Here is a video from Jungle Scout to show you how the niche hunter can be used.
It is pretty awesome, but it does cost $99 a month. Personally, I think it’s worth it but you need to way up the pros and cons.
It’s easy to cancel once signed up, so if you move quickly you can do all your research in one or two months and then cancel your membership once you have found your favourite/best products to sell on Amazon and they are being manufactured.
One thing to be aware of is that the web app only works on the USA marketplace. Personally, I don’t think that matters as eventually you want to be selling your products on every marketplace.
As the USA market is the most mature and competitive I think it makes sense to start your research there. If you find something that is selling well in the USA but isn’t yet for sale in the UK, it’s a fairly good bet that it will do well in the UK market. Chances are that the best products to sell on Amazon USA will also be the best products to sell on Amazon UK.
The main thing to be careful about when comparing the two markets is using it to predict sales volume. I don’t know if this is true across the board, but I’ve found with my products items with similar sales rankings in the UK and the USA get about 4x less volume in the UK.
The chrome plugin works on both UK and USA markets.
Once you have your short-list of the best products to sell on Amazon that fit your criteria, you can start discussing with factories on Alibaba and doing all the other steps to starting an Amazon FBA business.