Amazon product and niche selection are can make or break your FBA business. It’s important to do the due diligence, research and product sourcing to find the perfect (or more likely good enough) product and brand to go forward with. Today we’ll look at some criteria for evaluating product ideas and ensuring private label profitability – don’t waste time and money on a loser. We all make mistakes, minimize them and max out results by planning ahead.
Product Selection Time
- What to do if you don’t have a product to sell
- Ways to track Amazon sales and why it matters
- How to decide what product price point to target
- Why Amazon ads need money to work
- What to do when competing with big brands
- How to take advantage bundling and Amazon automatic upsells
- Why supplements and beauty products are so competitive
- What Walmart knows about Amazon sales
- What China is doing to change the world of manufacturing
Product Selection Criteria
- Sales Volume – Best Seller Ranks <1000
- Price Range: $15-60
- Margins >33%
- Dimensions: Weight < 1 lb, Length <18″
- Can it be private labeled?
- Does product lead itself to related products or multi-product orders.
- Can you build a brand around it??? At least 4 products in the line.
- Are there enthusiasts? Is it fun?
- Low competition -Not too many reviews
Go do this now!
Tools and Resources Mentioned During the Show
Matt: So today, we’re talking product selection. How do you choose an incredible product and brand to build on Amazon?
Matt: And let’s see what happens.
Rus: This is basically the first step – one of the first steps of setting…
Rus: Yeah, setting anything on Amazon. What are you going to sell on Amazon?
Some people are really lucky. They’ve got their own products already. But for the most of us that don’t have the E-Commerce experience etcetera, it’s like – “I’ve got no products. What am I going to sell? I don’t own anything. I don’t make anything. What am I going to sell?”
Matt: Have you ever feel… I mean, it’s hard.
Rus: Yeah. The way I solve that is browsing Amazon and seeing what’s selling – seeing where I can find a hole I could jump into. I’ve got a few criteria for looking. Matt, how do you do it?
Matt: Yeah. Typically, I think a lot of the same lines. Basically, what you want to look for if you’re choosing a product is you want to make sure that it is something that’s moving.
And what you can do with this is BSR (Best Seller Rank). We’ve all kind of heard of it. But if you go into any Amazon products page, you can check out the rank of how something is selling.
Matt: One – It’s selling like God. And the higher it goes, the worse it is.
Typically, it’s going to depend on the category. But you can look for some charts. Jungle Scout has some great information on this. I think you use that – don’t you, Russ?
Rus: I’ve written my own version because I’m that kind of guy.
Matt: Oh, yeah.
Matt: How did you write your version?
Rus: It’s just a Chrome plugin. I’ve never heard of Jungle Scout. And when I was doing a product selection last year, I thought – “Man. I could automate this and make it way easier.” And so, I did.
Matt: You know what we should do, Rus? Let’s give that away. If people opt into the Amazooka Opt-In Form, we’re going to have to make one of those.
Matt: They can get the free BSR checker.
Rus: Yeah. That’s a solid plan. High five!
Matt: High five over the internet and across TimeZones.
Rus: Oh, yeah.
Matt: That’s what Skype is for.
Rus: Yeah. So the bestseller’s is the most important thing. You don’t want to sell a product in Amazon or try to sell new products in Amazon if it’s not already selling – because if it’s not already selling, then you’ve got a lot of work to do.
You’ve got to tell people what it is, why it’s useful to them. You’ve got to create a massive amount of product awareness over what you’re selling which isn’t what we want to do with Amazon. On Amazon, we want to create brand awareness about products that people are already looking for – which is a slightly different spin.
So if you go to Google and just type in three different words – “Amazon best sellers.” So just type in “Amazon best sellers” into Google. The first link back should be something like amazon.com/bestsellers/zgbs.
So if you go to that – on the left hand side, it’s got all of your Amazon categories. And then down the middle of the page, it’s just got all the bestsellers from the categories.
So I’ve got a few criteria that I use when I’m picking out new products.
Matt: What kind of stuff do you look for?
Rus: Well, I want to be selling products in the $10 to $60 price range and I think less than $10. And you’re not really going to be getting a good margin.
If you use the rule of thumb that maybe 1/3rd of the price goes to buying and packaging the product in the first place. So 1/3rd of the price will go to your supplier.
And if you assume that a third of the price goes to Amazon for their warehousing and shipping and handling and then if you assume that you get the last 3rd yourself, is profit.
So that’s not going to be the same for every item. I’ve got some where the margins are way better than 1/3rd. Now that’s my ballpark estimation.
So if you’re selling products for under $10, then you’re looking at $3 profit for every single sale – say you’re going to have to sell a lot…
Matt: And the fee structure goes way up too because Amazon hates that.
Rus: Yeah, exactly. You’re going to have to sell thousands of these things in [Inaudible][0:04:28.6]. It’s only 30 a day, but then you’re making 3 grand.
But if you’re going to find a product that’s $20 instead of $10 and there’s a $6 margin on it for you, then you’ll make twice as much money potentially doing the same thing.
And higher than $60 – obviously, you’ve got to pay more money to get the product out there yourself. You might have to be buying a thousand units for $20 each. You’re up to a 20 thousand pound investment or $20 thousand investment.
And also, Amazon buyers outside of that range can become a bit…
Matt: It’s kind of scary.
Rus: Yeah. They want to know more. If they buy something for $15 on a win and they don’t like it, (I’ve done this myself) there’s a strong chance they just might not send it back. They might not care.
$15 to them is not worth the hassle of asking if they can send it back for a refund, going down the post-office, packaging it all up and posting it again. It’s just not worth their time.
So it’s thinking between the $10 to $60 mark. You’ve got to target a lot more people.
Matt: And part of the way you make money on Amazon is its mass appeal. I’m going to add my own little caveat.
Matt: I probably wouldn’t go below $15 or $20 just because the cost structure is so hard.
Matt: I like to shoot for closer to 50% margins on products or a minimum of like 45%.
Matt: Because I’m a big PPC guy – spend, spend, spend. You want to be running sponsored ads through Amazon because it’s just so powerful.
Matt: And if your margin suck, it’s really, really hard to run effective Amazon access.
Rus: Oh, yeah. Yup. I would say ideally, something that’s light in weight. You don’t want to be… even if you’re shipping 20, 30, 40 a day, it should be great. You’re selling something massive.
Just trying to think what’s in my flat at the moment. It’s actually huge. I’d say a fridge.
Matt: Your TV.
Rus: Yeah, yeah – a fridge or a TV. That’s going to cost a lot with the shipping overheads and storage as well. Amazon…
Matt: Oversize inventory.
Rus: Yeah. So Amazon will blow you through the nose. If it’s something really small like maybe some knives and forks or a small key fob or something or a glass or whatever, then all of a sudden, your cost diminish and Amazon take away this money off you which means you can make more.
Matt: Yeah, and there’s less fees. Less than 18 inches, guys and less than a pound.
Matt: Shoot for that at the very least for your remaining products. You can rollout some bigger stuff later once you’re working.
Rus: Yeah. Also the next one of course, is actually be private labeled. Most things can be, but you have to do your research.
Matt: What kind of products can’t be private labeled?
Rus: That’s a really good question. If someone is looking for a pair of Nike Trainers, then you can’t really private label that because they’re after the brand. Lots of people will buy products because of the brand.
Matt: Yeah. Private labeling isn’t knocking it off.
Matt: You’re just making a similar product that people want.
Matt: But if you’re trying to knockoff Mac’s, I’m pretty sure Steve Jobs will come back and cut your head off or something.
Matt: It just doesn’t work. And those people are so brand loyal. Watch out for that one. You’re necessarily choosing your products.
If only top brands are dominating, it can be a little bit of a turnoff versus saying, “Oh! There’s clearly some people that are rocking the FBA sales.”
Matt: Then you know there’s little money to be made there and the buyers aren’t so brand sensitive.
Rus: Yeah. Generic products are a lot easier to private label. It’s even possible to compete against the Amazon basics range or major brands on the smaller things.
I’ve seen Amazon basic selling lots of little camera cases and USB hard drive cases which is cool – because you can still go up against them.
Their product is so generic that no one is really looking for a branded version even though there are big brand players in the market.
People are just looking for the one that maybe looks the best to them and will fit their hard drive the nicest.
Matt: Fun fact. Top sellers on Amazon: Health and beauty, toilet paper and diapers, guys. It’s just things you need to have. You want to be running your business like a Walmart.
Rus: Yeah. There are other criteria’s that I find interesting as well to look out.
Does the product lead itself to related products? Can you keep the same brand and can you add more products to it that are related?
And then if so, does it lend itself to multi-item orders? Are people going to order just one of those things or are they likely to order maybe two, three or four at a time?
No supplements I guess. People will bulk order six months of supplements at a time or the same with face…
Rus: Yeah. The same with face creams and stuff. But if it’s something like a can opener, people generally… I actually had a can opener that lasted me for nine years.
Matt: Those things are built strong.
Rus: Yeah. It was a premium 5 pound one, but that lasted me nine years. And I was buying the 99P1’s. They last me about nine days.
Matt: That bags another question. Why were you tracking how long you had a can opener? And did you really brought that thing around? That’s kind of rough.
Rus: I moved it between one, two, three, four different jobs. It was my work can opener. And I took it with me between four different jobs. It was awesome. And then it did break about two years ago. But I was impressed.
Matt: That is very impressing.
Rus: Yeah. So if you can make people buy multiple versions, multiple items at the same time, then that’s a bonus point.
Matt: I think we should’ve brought this up first.
Rus: I suppose if…
Matt: I think honestly, the brand ability behind to this.
Matt: One of the caveats or the problems that a lot of people have when they go into an FBA business, they want to start selling on Amazon.
Matt: Okay. This looks like an incredible product. I can move 30 of these a day. I can move 20 of these a day. This is going to absolutely crush it.
Matt: And you’re selling something that has no real sister product.
Matt: The beauty on Amazon, we talked it a little bit before – is that bump that you get second products, third products – because then, you don’t have to acquire new customers. They already like you.
Matt: And pairing your products together. I know you talked about it a little bit before, but what kind of bumps were you seeing when you launched products two, three, four?
I’m excited because I’ve got some products hitting Amazon in the next couple of days, guys. And I’ll give you some updates on that. But what do you see, Rus?
Rus: I probably saw a 200% growth rate in the first month and it did shoot up astronomically after we’ve got our second product in.
So if you can bundle products like that, you can really amplify sales.
Matt: How does one go about bundling products?
Rus: Well, what we were doing was – Amazon have the… and people also bought box. I think that’s the right term.
So halfway down the Amazon page… And I’m looking to take the longer example for this.
Matt: I know what you mean. They show my competitors and they’re like – “You could totally buy this in addition to your other one.” And it’s like…
Rus: That’s luck.
Matt: Yeah. But if I can sell it too, I’m going to make more money and get some ground on the competitors.
Rus: Yeah. They’ve got the customers who bought the sides and also bought box which has a few examples in it.
And then sometimes, they have the frequently bought together box as well where maybe one, two or three different items can be added to the cart all in one go.
And so if you can have items like that that feel right when they’re bundled together, maybe you’re selling makeup and you’ve got a lipstick set and an eyeliner set and a blusher set – it sounds like in a way too much about makeup.
But then something like that is maybe something that if it’s a good price, people might buy it for themselves or as a present for someone in a bundle. And that will raise your sales across all of your products.
Matt: Shopify as well. If you want to create an E-Commerce store, it helps to have a brand where people can get more than one product.
Rus: Yup. Yeah, definitely. Another good idea when picking up products is – Is there an enthusiast or are you selling a hobby products basically? If your case rings like a hobby community, maybe model trainings or…
Matt: What are some of your hobbies, Rus? Let’s just improvise right now on the podcast. What do you do for fun when you’re not working?
Rus: I like skateboarding. I’ve been very big into martial arts recently. I should’ve been having a kite surfing lesson today, but the wind isn’t windy enough apparently.
Matt: Kite surfing would be tough because you need a massive kite.
Matt: But you could go with easily a swimsuit, maybe a cute little bikini if you are going with that makeup you are wearing earlier, Rus.
Rus: That’s it. Well, exactly. This is also like surf wax and stuff. And with skateboards, you’ve got the trucks. Skateboard itself is quite big, but the trucks, the wheels, the stuff to look after your board, etcetera, it’s quite small…
Matt: And hobbyist love to spend because…
Matt: This is what they love to do. They make money so they can have fun doing this.
Matt: And they share it with their friends and family and people that are interested.
Rus: That’s it. You got to think about your target audience. If you’re targeting (let’s just say people in maybe their 40’s or say), there’s a strong chance that they’re looking after kids with less disposable income.
But if you are targeting someone like late 20’s to early 30’s, the chances are – they’ve got a lot of disposable income, they don’t have a family that they’re raising and maybe they’ve got a hobby that they’re sinking all of that money into.
So that’s a great market for… If it was model trains, there are so many different things you can sell someone. You could sell them the tracks, the trains, the little trees that they put around the sceneries to make it look pretty model houses and stuff – paints, the flock in order to make a fake grass.
It’s almost unlimited – the amount of things you can resell to the same guy. And you can create amazing marketing material as well. Again, using trains is an example, a video of the train going around or a step by step process on how to do the modeling.
Matt: The more hobby you like, the more fun it is – even for you.
Rus: Yeah, yeah. It’s like – Do you really want to watch a video as I test out eating with a knife and a fork? Kitchenware does sell, but it’s not quite as exciting as if it’s in someone’s hobby.
Matt: So start with your hobbies because you’re going to love doing that.
Matt: But it’s not necessarily something that’s going to work out. Go through all of the Amazon… I know that’s what I did. I looked at the Amazon categories. You can go through those. We talked about the bestsellers a little bit.
Matt: Look through the top hundred, top 500 bestsellers and see what speaks to you guys personally.
Matt: Even if it doesn’t, then there are still plenty of other options. But you want to… At least for me, (I’m not sure about you, Rus.) I typically try to look to make sure that the number one product for whatever I’m going for in an Amazon search is at least a thousand BSR or better.
And then once I’ve gone thought those lists – how I did it is make a massive excel spreadsheet. I brainstormed out tons of different ideas. I remember I bugged you about this. I bugged Kyle. I bugged tons of people on getting feedback.
But make a list of different options that you have – a good 50 or so. And then once you start seeing a couple of products that you’ve got listed, do some Amazon searches, see what the competition is like.
Matt: Because competition is the next thing I think we need to talk about for what it looks like to have an incredible product.
Matt: If we’re saying with those model trains, that could be great. But I’m pretty sure with some of those model trains, certain brands absolutely dominate. So if one person…
Rus: I would say…
Matt: Go ahead.
Rus: I’d be honest. I was looking into model trains and they actually suck.
Matt: They suck? Why do they suck?
Rus: No one buys them. Their BSR is through the floor.
Matt: I guess they’re too niched.
Matt: Do you want to sell Walmart stuff?
Rus: That’s it.
Matt: Not super collector stuff?
Rus: Yeah. I think the top sellers for the things like the model trees – they’re selling one unit a day or something which is…
Matt: Oh, big money, big money!
Rus: Yup. Not too great.
Matt: So with competition, I don’t know about you, Rus. Let’s go into that a little bit – because competition is basically measured on the number of people that are really up there in the reviews.
Matt: Anything above 500 is pretty darn competitive.
Matt: And if you see a bunch of those on the first page, it’s going to be tough.
Matt: But what you can do – it’s going to take some research, it’s going to take a bit of looking.
We’ll start to become a bit of a judge on this. I know that’s how it seems to work once you go through this a million times. Jungle Scout is a great tool for this.
But say you’re looking at a product. And the first couple of them, they’re all really high BSR’s. That means they’re selling well.
That’s awesome news because that means a lot of people are eating the market versus one fish who’s dominating.
You want to be a decent size fish in an epic pond – not necessarily trying to take on a shark like in open waters.
Rus: Yup. Yeah, it can be scary when you come across a product range and there’s 6 to 10 people on the front page or with a thousand plus reviews. Don’t go into that category.
Matt: Start supplements if it’s your first thing – unless that really it’s the supplements.
Rus: Yeah, exactly.
Matt: Supplements are dirty. There’s a lot of dirty. Health and beauty can be dirty as well. That makeup that you are wearing earlier, Rus?
Matt: I do not want to be making makeup.
Matt: Anything that’s really cheap to produce and who spend a ton of money to buy means that it’s going to be madmen competition.
Rus: Well yeah. You’ve got to take a few things into consideration – especially with supplements.
If you’re getting your supplements from China, there have been reports of people contaminating their food in the flat and stuff. The quality control just isn’t that great.
Do you really want to be…? One thing I would never do is sell edibles made in China. Regardless of the legal ramifications of poisoning someone, I don’t think I’d be able to live myself if I accidentally killed a bunch of people because something I was selling was contaminated. So I definitely advice don’t going by not going…
Matt: Health and beauty as well.
Rus: Even if it’s cheap. Yup.
Matt: Imagine if you take some beautiful little supermodel or some willed kid and dyed their hair permanently purple or you ruin their skin of give them cancer or something.
Matt: I think what I’ve heard and what I think is probably pretty smart is – Health and beauty in supplements, keep that somewhere when you can really make sure it’s controlled.
And then China is very good on product quality for most products that are outside of that. China has been making the world stuff for forever.
Matt: I actually spent six weeks there. We can go into that in the later episode.
And that’s how it was beautiful for getting samples. Imagine getting free samples on everything that you want.
Rus: Yup. Oh, that’s working. Yeah. China at the moment – automating as many of their facilities as possible in order to still be competitive. And one of the things that it’s doing is driving up the quality of their products.
There were some recent numbers that I was reading. I think that one factory reduced its workforce from like 300 down to 6 and reduced its failure rate from 25% down to maybe 5% or something. The ROI on just automating it was insane.
So there are a long of products where China is the best place to go to, to be made. But they often can take a lot of shorts if they don’t think you’re going to notice.
Matt: Yeah. You got to be checking quality. Alibaba is a good place to start if you guys are looking to source products.
Matt: We’ll go deeper into that later. Any other thoughts on your end, Rus? What do you think about when you’re looking at products?
Rus: Well, it depends how far you want to go with the marketing and how passionate you are about a product.
Do pages related to the market and the products – do they exist on Facebook or Instagram? Are there people out there talking about them?
I don’t know. If you’re selling cross fit gear or something, are there pages on Instagram or Facebook with people using [Inaudible][0:21:39.9] boxes? The answer to that is yes.
But if it’s kitchenware, people are less excited about that. So there aren’t going to be loads of people taking posts on Instagram with a knife and fork or #spoon.
Matt: #spoon. Write there #spoon.
Rus: Yeah. So if you want to create a product that you can take and build for the next couple of years and really work on, then if people do have social media pages about it, then that’s obviously awesome because you can tap into that and it will help your marketing a massive amount.
Another thing is – is it possible to sell accessories for that product? I know that if you’re doing cameras and stuff, there’s no end of accessories that you can… new lenses, batteries, battery clips. You can bundle way more items and you can even add in free samples in order to be competitive.
So let’s just say you’re selling a little… they have those camera cases for the iPhone. So as well as selling a camera case, maybe you can sell a small fish eye lens or something that goes on the camera case just to differentiate yourself between a guy who sat next to you – setting exactly the same camera case.
So anything that helps with marketing should be one of the decision makers that you can use when picking a product.
Matt: One last one I have, guys. When you are launching your product, it’s all about reviews.
Matt: And that means that you’re probably going to want to leverage your friends and families. So if you have friends or family that do certain things, focusing on that could be beneficial, potentially.
But I like to have the – Could you tell your parents about it? Could you tell your grandparents about it? Because there are stuff on Amazon that you can sell. There’s all sorts of dirty thing.
But if you need your friends and family to help you with reviews and really, if you don’t want to feel like crack while you’re doing it, you might as well make something that is at the very least… I don’t know. You know what I’m saying. Keep it clean, San Diego. Keep it clean.
Rus: Yeah. One of my friends, he has a concept called “The Grandmother Test.” If he can explain what his business is to his grandmother and she approves, then he’s happy with what he’s doing.
Matt: He’s also probably not pushing the envelope enough. Grandma knows about Amazon and all of this marketing stuff. You got to make sure… My parents can barely understand. I’m sure most people’s family.
Matt: But at the same time, guys. Just go out there and start doing it. I think we’ve nailed this one in the coffin. We’ve killed it to death.
Matt: Those are the basic breakdowns. Start looking at products.
Rus: There is no secret or trick to this. You just got to browse the Amazon. You got to have your criteria in mind.
So you go back to the beginning, re-listen to the part where we’re talking about opportunity criteria. So $10 to $60, light in weight, can be private labeled, not too many reviews. And just browse Amazon. Browse all the little categories until you find something.
There isn’t a trick where you don’t have to do any work and this stuff just pops out at you. You’ve got to go find it. You have to go and find it.
Matt: And make sure that it’s selling. That’s the last and most important thing and you can build a brand around to this – because that’s really what you want to do. You want to build a brand. Not necessarily a cash flow.
Matt: Let’s wrap it up, guys. Go make something happen.
Rus: Go do this now.
Matt: Absolutely. And then think about it. Take a night to think it over before you make a decision. It’s a big decision.