Amazon is a sea of opportunities and possibilities. It has helped many online entrepreneurs like Ryan Grant, Kevin David, Michael Estey, Ryan Moran, and Larry Lubarsky. Around 16.7% of Amazon entrepreneurs make more than a million dollars a year peddling resell products on Amazon. That’s quite amazing, right?
But making millions on Amazon is not as easy as you think. It’s not a cakewalk at all. You must have the right strategy and most of all, you must sell the right product. You can’t make a lot of money through Amazon’s FBA (Fulfilled by Amazon) program if you’re selling something that no one wants to buy. Choosing a cost-effective and high-demand product is the key to making millions on Amazon.
What to Sell Amazon?
Amazon is a shopper’s paradise. There are over 600 million products on Amazon. You can find just about anything – beauty products, clothes, electronic products, silicone baking mats, marshmallow roasting sticks, apple slicers, and barbecue gloves. You can even find weird products like Nicolas Cage pillowcase, glow in the dark false eyelashes, and grass flip flops.
Hence, if you want to join the Amazon millionaire’s club, you have to pick the right product. You must sell something that you can afford to produce or acquire. You must also sell something that online shoppers want. When you choose a profitable, low-cost, and high-demand product, you’re already halfway to becoming one of the many Amazon millionaires.
To maximize your profit and revenue, you have to sell a product that’s low in competition, but high in demand. This product selection principle is grounded on a basic Economics theory called the “Law of Supply and Demand”. According to this theory, the price of a product rises if it has a high demand, but low supply. The price of the product goes down if there’s a high supply, but low demand.
To illustrate this point, let’s do a little time travel to the 90s. People already have cellphones in the early 90s, but they are huge and bulky, bigger than remote controls. In 1997, a Finnish telecommunications company called Nokia introduced 6110, a compact mobile phone. It’s small, cool, and it comes in different colors. You can even change its phone case to fit your personality. At that time, there was no other phone like it. It was ahead of its time. It has an extremely low supply and everybody wants it even if it costs around $900 to $1000-- it’s considerably a large amount of money enough to be able to start a small business.
Soon, Nokia began producing newer ‘antenna-less’ phone models like 3210 and 8210. Soon, the demand for 6110 began to drop. Today, you can find a Nokia 6110 on eBay for only $20 or less.
This story is not unique to 6110. It applies to cell phones in general. Electronics companies produced hundreds of phones, so there’s no supply problem in this industry. But there’s just one problem – almost everybody in the world has a cellphone and only a few people want an upgrade. So, these companies have no choice but to bring their prices down.
The law of supply of supply and demand is also the underlying principle behind the “diamond and water paradox”. You see, water is far more valuable and useful than a diamond. But because of diamond’s scarcity, it’s far more expensive than water.
Step by Step Guide in Finding Products to Sell on Amazon
Some products can cause you headaches, while some can bring you millions. So how can you spot the right ones? Well, here are the general characteristics of a good product:
1. The retail price of the product should be around $25 to $50.
Remember that your goal as an entrepreneur is to make profit. You can’t really earn a lot from products priced below 25 dollars, except if you have around 500 orders a day. This price range can help you cover costs like:
A lot of online shoppers are not willing to spend more than $50 on a product. So if you sell a product priced above 50 dollars, your conversion rate will significantly go down. The $25 t0 $50 price range is called the “impulse buying range”.
2. The product can be used all year long.
Christmas lights are great; but people only buy them during November and December. If you want to earn money all year round, you must sell products that people buy all year long.
To avoid seasonal products, go to Google Trends and type the product you want to sell. Let’s say you’re interested in selling chopsticks. As you can see, people are interested in buying chopsticks all year long. So, it’s a generally a good product to sell.
3. It fits in a shoebox and it weighs no more than two pounds.
Bigger and heavier products have higher the shipping fees. Remember that the higher the fees, the lower your profit margin.
Also, don’t sell a fragile product. This can lead to a number of customer service and shipping issues. You do not want to deal with returns on a regular basis.
4. It is simple to manufacture.
Complicated products like appliances are great, but they often come with quality control and manufacturing problems. Also, you don’t have to manufacture the product. You can find a great manufacturing company (or factory) that can produce the goods. This process is called private labeling and it can save you a lot of time and money. There are a lot of reliable suppliers in China that can take care of the manufacturing process for you.
5. Pick a product that you can improve on.
To earn millions on Amazon, you have to make your product stand out. This is why you should pick a product that you can improve on. Let’s say that you want to sell chopsticks. What can you do to make your product stand out? Maybe, you could produce a chopstick that glows. You can also produce a chopstick that comes with a spoon and fork head. So, you can just put the ‘spoon head’ on if you need to use a spoon.
Now, that you have the main product criteria, it’s time to discuss the step-by-step process of finding products to sell online.
Step 1 – Do Extensive Product Research
This research can help you identify which products are selling like hotcakes on Amazon. It also helps you determine how much these products are selling and when they’re selling (is it seasonal or perennial?).
Product research is an important segment of market research. Conducting this type of research reduces risk and it helps maximize your revenue and profit. It also saves you a lot of time. If you choose the wrong product to sell, you’ll have to switch to another product and will have to switch to another product and start all over again.
There are two ways to do Product Research, namely:
1. Manual Method
If you choose to do the manual research method, your top resource is Amazon itself. You can check the best-seller’s page to see the top-selling products.
You can also search for products based on their categories. This will help you choose the right niche. You can also check the “related items” area to see how you can expand the business later on.
You can also generate product ideas, by checking the following:
Amazon product sub-tiers
eBay’s trending products list
Amazon’s Movers and Shakers
AliExpress Best Seller List
Once you’ve found the right niche for you, it’s time to see what your potential competitors are doing. Check the bestseller list to see who your biggest competitors are. Now check their product listings to learn their best practices.
2. Automatic Method
This research method is way easier. All you need to do is find a market research app or chrome extension. You can try tools like Jungle Scout, Unicorn Smasher, Seller App, and AMZ scout. These tools have a plethora of data that can help you can use in doing your product and market research.
Step 2 – Do a Demand Test
As previously mentioned, you have to sell a high-demand product to earn maximum profits. So, you have to make sure that your product has enough demand.
Here’s what to look for in verifying the demand for the product:
Products that cost $10 to $50 fall under the “impulsive buying” decision range. This means that customers won’t do extensive research before buying a product that costs $20.
Products within this price range also yields maximum returns. You can contact a manufacturer in China and buy the products for $5. You can sell the products for $25. This means that you have $10 -$15 profit for each sale because you have to factor in other costs. You’ll earn a profit of $5000 to $7500 each month if you sell 500 units.
2. Search Volume
Use the keyword planner to check the search volume of the niche keywords. The top three keywords must have a total of 100,000 searches each month.
3. Year-Round Demand
Search Google trends to see if there’s a demand for the product all year round.
4. Do the 999 test.
Check out your potential competitor on Amazon. Go to the page of their best selling product and click on “add to cart”. Click on the quantity and enter “999”. Now, if the seller has less than 999 stocks, you will see the notification “the seller only has X items available”.
Do this process every day for one week. If the “number of items available” don’t move, it means that this product is not selling much.
5. Check Amazon’s “Most Wished For” page.
This page shows that most wishlisted items. This will give you great product ideas.
Step 3 – Do the Competition Test
To optimize your revenue, you must pick a product with high demand and low supply. So, choose a product with less competition.
Here are a few things that you should look at to evaluate the competitiveness in the industry:
1. No big brands in the industry.
If you’re a small-time Amazon entrepreneur, you’ll have a hard time going against a big brand. Online shoppers are most likely to go for “big name” brands, so you’ll have a hard time getting a sale.
Check the number of reviews of your potential competitors. The number of reviews often indicates show steep the competition is in the industry. If you look at the product data and you see that a lot of top-selling products have thousands of reviews, it means that it would be hard for you to get through the industry.
What you’d have to do is check out Amazon’s BSR (Best Seller Ranking). Let’s say that you want to sell essential oils. If you’re using the Jungle Scout tool, you’ll see BSR data that’s somewhat similar to this:
At the end of the day, your goal is to make money. This is why it’s important to sell what sells. But more importantly, you have to make sure that you’re passionate about what you’re selling. This is the only way that you can become a market leader in your chosen niche.