6 quick and dirty tips to find your first golden product opportunity
Product selection is, without a doubt, one of the hardest steps of all.
Sometimes people get so stuck with analysis paralysis that they never even launch a product!
Weeks get spent researching followed by some failed supplier negotiations and then it's game over. They decide private labelling is just too much and they miss out on what can easily be a life-changing business opportunity.
Don't be the guy or lady, 3 years later, sitting in an office cubicle made of tears wishing you had taken your shot when the market was still wide open.
Commit yourself to mastering this business model and you will change your life. But before we jump into research strategies I want to mention two things:
1) Some categories in Amazon are gated, meaning you need permission to sell their before you can list product. Most people avoid the gated categories, although if you choose one, you will probably have less competition, so don't fear the gate!
However, if you want to keep the entry barrier as low as possible, don't start getting into supplier negotiations before you check if your chosen product belongs to a gated category.
You can find a list of gated categories here.
2) If you are in the US, get Jungle Scout (or the free Unicorn Smasher), it will make research much faster and easier - you can read about it in the 'tools' section). If you're looking at the UK, here's a chrome plugin that will make things a bit quicker and Jungle Scout works there too. It's a must-have.
3) The most powerful way to get started is by using the Jungle Scout web app and just filerting down everything / tracking products you like. You can find it here, take a free trial and use this guide to filter products
Now with that out of the way, go source and follow these steps:
Step one: Create a spread sheet to filter/store your potential products
1) Create a spread sheet and list columns showing: product name (and link), best seller rank (BSR), number of reviews, number of similar items. Basically all the info you'll want at a glaa
2) Start searching the top 100-500 best sellers in every category (just google amazon top 100).
3) Add products to your spread sheet that meet the following criteria: Small, light, not complex and, preferably, cost over 20 dollars. You can use Jungle Scout to quickly spot good ideas and export the info into spreadsheets.
As a rule, do not choose supplements of consumables for a first product
Try not choose an 'overdone' product like a yoga mat, garlic press, chopping board or silicone baking mat etc
(With thousands of new students from the ASM course, certain products are becoming viciously over populated).
4) Repeat the process for all the categories on amazon and go as deep as you want, I would go as far as looking into the top 1000 to avoid competition.
Again, I like to dive into the top selling lists using Amasuite 4, but you can either use the JS web app or start research in a field you know. You should be using Jungle Scout or at least Unicorn Smasher.
Step two: Refine your short list
Now we need to look deep into each product, for each listed product, do the following (Jungle Scout give yous all this at a glance):
1) Search the main keyword in amazon (if you found that garlic press was a top 100 seller, go to amazon and type in 'garlic press') and look at the top 10 sellers on page one.
2) If most of the top ten have more than 500 reviews, cross them off the list (the more reviews you have to compete with, the longer, harder and more expensive things will be).
3) If the BSR is over 5000 for most of the top 10, cross it off (your goal is to make sure that all the top ten are getting reasonable sales, if only number one has a good BSR, you'll be looking at a slow seller).
It's no good for us if only the top dog is making money, if you can be number 7 and still pull down 10 sales a day, that's great.
4) Note in your spread sheet the amount of similar products (again, search something like yoga mat, and note how many pages of results there are). Or export the data from JS.
The goal here is to find a product that is selling at least 10 a day (which, as a general rule, means a BSR of less than 5000), has less than 300 reviews and beatable competition.
Step three (optional)
Take the potential product (we'll use yoga mat as an example) and look at the actual amazon product listings for the top 10 sellers. How well optimised are they? Good images, bullets and product description?
Keep a note on what you could improve upon (if you're unsure what the anatomy of a good listing looks like, have a look over this article on writing a killer listing),
Look at the negative reviews and see what they say.
Step four - Looking at suppliers
Now you have a refined list of very good potential first products, you need to start crunching those sweet numbers and understand if you can make money on the product.
For this part, I'll use alibaba in the example, although you can also use aliexpress to order very small quantities of unbranded items and test the market with them.
1) Work out your budget - how much can you sink into your first product? Here's a post where I broke down the cost of my first product, it will give you a rough idea of what the breakdowns will look like. Also check out this article.
2) Go to alibaba.com and search your item (example: yoga mat). You'll see hundreds of results.
3) Only look at the suppliers with a gold rating, that have been on alibaba for at least a few years and that have flexible payments (escrow, paypal, T/T ).
4) Look for OEM and FOB for delivery (OEM means you can private label it and FOB means freight on board - basically the delivery quote will be from the factory to your doorstep, as opposed to having to pay the cost of transporting goods to port/airport, which can be potentially expensive).
5) Make sure their MOQ (minimum order quantity is decent). This is usually up for negotiation, but for starting out, you might not have the budget for , say , 5000 units, plus it's more of a risk. If you can't find a small enough moq, aliexpress may be the way to go.
Step five - Get price quotes!
Your goal is a cheap per unit price. If an item is selling for around $20 on amazon, you don't want to paying more than $5.00 per unit as costs will add up. (roughly $5.00 in fba fees, plus roughly another couple of bucks per unit when you factor in delivery and other costs like import tax, prep and shippers).
The cheaper you can get the unit, the better your margin will be, but remember, if you want your logo on a unit, the price will go up. Ask for the cost per unit with a custom logo on.
Also, let's not forget about shipping as this will add to your cost.
If you are sending something by airfreight (which you probably will be for your first untested order) the airline/freight forwarder will use the following formula to determine if dimensional weight is used or actual weight is used in their calculations. The formulas are as follows: Metric (cm) L x W x H / 6000 = Kgs Imperial (in) L x W x H / 165 = Lbs
Sometimes lightweight items can take up a lot of space if they are large items and its usually the weight and the volume that is used to cost air and sea cargo.
Your supplier will most likely be able to get you the best quote, so your task now is to contact enough suppliers and get quotes so you get the best deal possible.
I usually find the cost of small light units for 150-200 to be about $500ish delivery to the UK. If you can get $4 per kg, that's great, $5-6 is more typical though.
Step six - Place a sample order and test!
By now, you should have built a list of reasonably golden product opportunities and selected one to focus on (keep the others in your list).
You should have found a potential supplier with a good cost per unit and placed a sample to check the quality.
If the sample is good, it's time to pull the trigger and place your first serious order. It can be a nervous time, but remember, if you want the business and freedom, you have to pull the trigger!