How to Find Profitable Products to Sell on Amazon

2. Look for High Demand and Low Competition

You want to find products that are in high demand but aren’t overly saturated with competition. Here's how you can gauge demand and competition:

• Search Volume: Use keyword research tools (like Helium 10's "Magnet" tool) to identify how many people are searching for a product. Products with a high search volume show strong demand.

• Reviews: Check competitors' reviews. If a product has high demand but its competitors have relatively few reviews, this could be an opportunity. Fewer reviews suggest a lower barrier to entry.

• Sales Velocity: Research how quickly products are selling using tools like Jungle Scout, which estimates monthly sales based on historical data.

Tip: Ideally, aim for products with high monthly search volume (5,000+) and competitors that have fewer than 200-300 reviews

3. Focus on Products with Healthy Profit Margins

Profit margins are critical when calculating potential profitability. To determine if a product is worth pursuing, consider:

• Amazon’s Fees: Calculate referral fees, fulfillment fees (if using FBA), and any additional costs like storage fees.

• Cost of Goods: Determine the cost of manufacturing or purchasing the product.

• Shipping Costs: If you're not using FBA, account for shipping costs to customers.

A common rule of thumb is to look for products with at least 30% profit margin after deducting all costs, including Amazon fees.

Example Calculation:

• Product sells for $30.

• Amazon referral fee = $4.50 (15% of the selling price).

• FBA fee = $4.00.

• Cost of goods and shipping = $10.

• Profit = $11.50 (38% profit margin).

Tip: Use tools like the Amazon FBA Revenue Calculator to estimate your fees and potential profits​.

4. Consider Product Size and Weight

Shipping costs are a significant factor in product profitability, especially if you're using FBA. Smaller and lighter items generally incur lower fulfillment and storage fees, making them more profitable. Here’s why:

• Lower FBA Fees: Amazon charges less to store and ship smaller products, so consider targeting items that fit within the standard size and weight limits.

• Cheaper Shipping: If you handle your own fulfillment, smaller and lighter products reduce shipping costs.

Tip: Try to avoid bulky or heavy items, especially as a beginner, as they can significantly increase your overhead​.

5. Explore Niche Markets

Selling in niche markets often means less competition and higher customer loyalty. Niche products target specific customer needs or interests, making it easier to stand out.

To find a niche:

• Passion or Interest: Start by considering hobbies, professions, or interests you know well. This can help you understand your target audience.

• Trending Niches: Use tools like Google Trends or the "Trending Now" section on Amazon to identify emerging product categories.

• Social Media & Forums: Browse Reddit, Quora, and niche forums to see what people are talking about. Often, niche communities reveal gaps in the market that bigger brands overlook.

Example Niches:

• Eco-friendly products.

• Products for home-office workers.

• Pet care gadgets.

Tip: Once you’ve identified a niche, validate it with product research tools to ensure there’s enough demand to justify entering the market​.

6. Check Product Reviews for Opportunities

Product reviews are an untapped resource for discovering unmet customer needs. By examining negative reviews, you can identify common pain points and potentially develop a better version of an existing product.

• Identify Product Gaps: Read 1- and 2-star reviews to understand what customers dislike about current products. Can you offer something better?

• Product Variations: Often, customers express a desire for variations (size, color, etc.) that the current product doesn’t offer. This can lead to an opportunity to differentiate your product.

Tip: Improving upon existing products is often easier and less risky than creating an entirely new product from scratch​.

7. Seasonality and Trends

Certain products are seasonal, meaning they experience a spike in demand at particular times of the year (e.g., Christmas decorations). While seasonal products can be profitable, it's important to manage inventory carefully to avoid overstocking during off-peak months.

You can also capitalize on trending products. Use tools like Google Trends or browse Amazon’s "Best Sellers" and "Movers & Shakers" categories to spot emerging trends.

Tip: If you choose a seasonal product, supplement it with evergreen products to ensure consistent sales year-round​.

Conclusion

Finding profitable products to sell on Amazon requires careful research and planning. By using product research tools, focusing on high-demand and low-competition niches, ensuring a healthy profit margin, and continuously analyzing market trends, you can increase your chances of success. With the right strategy, you’ll be able to identify products that not only sell well but also provide a solid return on investment.