If you’re looking to give yourself an additional income stream by selling products on Amazon, then you should understand how to do Amazon product research. It’s the one decision that you can’t afford to get wrong is on what product you’re going to end up selling. Any product that is successfully sold on the Amazon platform always meets two pieces of key criteria, which is demand and profitability. These are two areas that so many beginners don’t check, despite it being really easy to do.
Every single product that you want to sell on Amazon needs to have existing demand from customers, and verifying this is a step that you can’t miss; otherwise, the risk of you failing is going to be high. A lot of people don’t realize that Amazon is a place where shoppers go with buying intent, i.e., they already know what product they want to buy but they just don’t know who they want to buy it from.
I’m regularly contacted by those that have just discovered Amazon FBA, and they’re full of excitement about how much money they can earn with a product that they think is going to be a smash hit. However, they don’t think to check whether there’s even any demand for the type of product that they want to sell on Amazon, and as a result, they’re exposing themselves to a ton of risk unnecessarily.
Checking the demand and how much money a product makes on Amazon is incredibly easy and can be done in about 30 seconds. All you need to do is download Helium 10’s Chrome Extension, head to Amazon, type in the name of the product that you’re thinking of selling, and once you’ve checked that the search results show the product that you’ve got in mind, run the Helium 10 tool.
What you should then look for, is at least 5 different sellers that are generating sales of more than $3,000 or £3,000 per month. If there’s barely anybody doing these numbers, then the demand for the product is too low and it’s not going to be worth the effort of selling. This is an essential step to take, and it needs doing regardless of how popular you think the product is going to be. Amazon just isn’t a place that many people go to mindlessly browse, so if you do want to sell a product that’s fairly new or that few people know about, consider selling on Etsy or platforms like Kickstarter instead.
Selling products on Amazon comes with various fees that need to be paid, so before you settle on a product to sell, you need to be crystal clear on whether it’s profitable or not. This is a step that I’ve seen many people not take seriously or rush, which increases their chances of failure massively.
The main costs that you need to factor in are Amazon’s fees for packing and posting your product to the customer, also known as the fulfillment fee, which is Amazon’s commission for the sale that you make on their website, also known as the referral fee (usually around 15%), and any costs that you incur from advertising (usually 15%).
The easiest way to calculate profit is by using my free Amazon FBA Profit calculator, which you can download using the link in the description, or by using Helium 10’s profit calculator, which you can also use for free when you install their Chrome Extension.
If you want to give yourselves the best chances of success when it comes to selling products on Amazon, then after all expenses, you should be targeting a profit margin of at least 15%. While this might not sound like a huge amount, remember that selling on Amazon is a volume game. The more units you can sell in a day, the more worthwhile a 15% profit margin is going to be, and that’s why it’s really important that you check the sales demand of any product that you want to sell so that you can see if it’s going to be worth the effort.
My Amazon business’s margins are around the 15% mark, and given that I sell around 7000 units a month, you can see how the profit quickly adds up, and it provides a great return on your investment.
So, avoid the top mistake that I see so many people making when getting started with Amazon FBA. First, verify that the product that you want to sell has enough demand (at least £3,000 in revenue per month) and that and it’s profitable (a profit margin of at least 15%). If you verify both of those points whenever you come across a product that you like the look of, then you’ll substantially reduce the risk of losing your money.
For more tips on Amazon product research, read my 4 tips to Amazon sellers when looking for a product.
If you want to learn how you can create an Amazon FBA business yourself, then check out my free training where I’ll teach you everything you need to launch your first product on Amazon and scale to $5,000+ in monthly profit.
Or if you’re ready to begin your journey and want to start with the best chances of success, apply to become a member of HonestFBA’s training programme where you’ll receive guidance & support from our team of 7-figure Amazon FBA seller experts whenever you need it.
