Originally Published in Jungle Scout
You want to find a niche that has existing demand, with customers already searching for your specific product idea. This ensures that you are not guessing that you have a great idea…..there are already thousands of potential customers who want to buy your product. All you have to do is get your product in front of them!
When you are first launching your product, you do not want to launch in a competitive category or product. If you enter a niche that is too competitive, it will be hard for your product to get exposure to these new customers.
How do you know if a niche is too competitive? Look at the number of reviews of other sellers selling the product when you type your product into Amazon’s search bar.
Ideally, you want to look for listings under 50 or 100 reviews, which means that there is an opportunity for a new product to enter the market. If you don’t see a lot of reviews, then that’s a good thing!
For example, if I search for “iPhone case”, there will be sellers with thousands of reviews. This is difficult to enter. So I want to find a search term or product that has sellers with 50 or 100 reviews as the top search results!
You want to make sure that you are making money on each sale. My rule of thumb is 100% Return on Investment. That means for example, for every $5 spent in costs (paying for the product, the shipping, Amazon’s fees, etc), I will make $5 in profit. If you can make 100% ROI on each sale, you are in great shape!
Small and Lightweight
You definitely want to start with something that is small and lightweight: this means lower shipping costs, fewer Amazon fees, and you are not limited by how many you can store in Amazon’s warehouses. The Shoebox Test: Generally, find something that can fit in a shoebox, and that weighs less than 2 lbs. This will ensure that you have found a sufficiently small and lightweight product.
It is important that your product is simple to manufacture. This means easier quality control with your manufacturers, and also greater likelihood that your product arrives intact. You can’t sell damaged goods, so make sure that they are simple and you are in the clear.
In order to build a good business on Amazon, you want consistent sales. So I advise you to stay clear of seasonal items. This will allow you to manage your cash flow, inventory, and marketing efforts with greater efficiency.
I saved the best for last…. The Weirdness Test! I like to stay away from popular, trending products. These are the products that will be competitive and harder to enter. So the weirder the product, the greater the likelihood that it is less competitive and still has opportunity.