Amazon FBA Competition: Does Your Product Have Too Much?

How much competition is too much when it comes to selling on Amazon FBA?
Seth Kniep
Aug 26, 2022
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If you’ve found a product idea for Amazon FBA that passed the tests for profit margin and consumer demand, you might think that you’re set. However, what if there are a bunch of other products like your prospective item already on Amazon?

How much of the market share do they currently hold, and how easily will it be for your product to sell once it launches? 

Today, I’m going to give you three steps to measure a product/market’s competition so you can assess how quickly you might move to profitability should you launch there. 

And you will find that when it comes to evaluating competition, you will rely heavily on product reviews.

1. Find markets with low review acceptance.

Review acceptance refers to how customers shop and how much emphasis they place on a product’s review count (high or low) when they do. 

Reviews indicate social proof—positive or negative. Social proof is when others influence our trust or actions because of their own trust or actions. For example, one pedestrian crosses the street. Their faith in their own safety shows those that it is safe to cross, so some people who were waiting at the sidewalk cross. As more people cross, more people are convinced to cross the street. On Amazon, reviews are social proof that create trust for new shoppers. 

So it follows that high and positive review counts lead to extreme consumer trust. 

Some markets are quite susceptible to high review acceptance: shoppers place high emphasis on the number of reviews a product has. They may only consider products with at least a few hundred—or even thousand—reviews and still have their pick of product options. You’ll often find this is the case in electronics markets.

Amazon Shoppers Favor High Review Numbers in the Electronics Product Category

On the other hand, some markets are much less susceptible to this phenomenon. It may not bother shoppers that a product has dozens and dozens of five star reviews, and they may even consider a product with no reviews, which yours will when it first goes live. You’ll often find this is the case with office supply-type products.

Amazon's Office Products Category Sees Lower Review Acceptance From Shoppers

Markets that lend themselves to low review acceptance are some of the best places to launch a product on Amazon, especially for newer sellers. 

Going back to our street analogy, finding a good market to sell in is like deciding whether or not to cross a narrow street with few, slow-moving cars. You may not need any social proof at all to have faith that it is safe to cross the street—just like shoppers may not need any social proof (reviews) at all to buy your product.

If reviews matter less to customers, they’ll be more likely to purchase from you when your product has one and few reviews. 

Customers may care more about a product’s attributes and features than its reviews in such a market.

To test for review acceptance, look at the top listed organic (non-sponsored) products on page one of search results. If at least three of them have under 300 reviews, that market tolerates lower review count. 

Keep an eye on those top listed products, as well; they are your (future) top competitors. 

2. Find markets with a limited number of top competitors.

Top competitors are those whose products sell the best. The benchmark that we teach in our Amazon FBA Mastery membership is 300: any competitor selling 300+ units per month is a top competitor in Amazon’s US marketplace. That number drops to 200 in other global marketplaces.

You must determine the number of top competitors in a prospective product market. But why?

Because it will be much harder for your product to break into a market where there are dozens upon dozens of top competitors. 

Of course, with enough hard work and determination (and perhaps a dash of stubbornness), you can make anything work…even in a market saturated with 25+ top competitors. It’s definitely feasible. 

But it will require aggressive marketing which all amounts to more money spent on pay per click ads (which cuts into your profits). This is especially true if you have not differentiated your product in any way, shape, or form from current, top-selling models.
We teach our students to search for markets where there are ten or fewer top competitors, as this may suggest much easier entry into that market. 

By the way, if you’re looking for our full breakdown of how to find and test product ideas for Amazon FBA, build those ideas, and launch them for sale, visit Our Amazon FBA Mastery membership will take you through the entire Amazon FBA process, step by step. 

3. Find markets with an ideal price to reviews to sales ratio.

Allow me to nerd out a little here.

You’re going to find the top ten organic (remember, non-sponsored) products in a niche. 

Of those ten, identify the three products most similar to the one in your vision. For example, if you sell square-handled coffee mugs, and of the top ten organic coffee mugs on Amazon only three have square handles (while the rest have round ones, presumably), the three with square handles are your closest competitors. 

Closest Top Competitor Products

That’s a little reductionist, but you get the idea. 

For each of those three closest top competitor products, assess their price, reviews, and sales. This will provide you with an objective, high level snapshot of each product and can thus help you to better see the market’s bigger picture.

Price is that competitor’s current sell price. By assessing price, you ensure that this type of product is not simply selling well because of a low price tag. It also gives you a reference point for where you should price your own version of that product type.  

Reviews is the number of that product’s consumer reviews. This metric indicates whether that product is selling well because of the reviews it has or if it’s simply an exceptional product. 

Sales is the number of units that product sells per month. With this metric we can better understand and consider the former two: we can deduce if a product is selling well more because of its review count, more because of its low price, or more because it’s a strong, unique product that customers appreciate. 

With these three metrics, we take a three-pronged snapshot to determine which variables most cause sales within this particular market. 

Price to Reviews to Sales Ratio

If our snapshot shows us competitors with a high price tag, low review count, and many sales, that market entry is easier; shoppers base their purchase decision most on product attributes. Such a snapshot might look like this: 

$39.99, 68, 410 (price per item, total reviews, items sold per month). 

This is the goal scenario.

In that case, we should examine what customers love about these particular items and mimic those attributes in our own version. 

On the other hand, we might find a snapshot showing low priced products with both high review and high sales numbers. That would be a much tougher market to enter. Such a snapshot might look like this: 

$18.99, 610, 1,320.

By fully vetting a market’s competition, you can more fully understand if your product idea will be viable—and move to profitability quickly—before you’ve even started researching suppliers, let alone committed to a full scale manufacturing run!

How to Assess Amazon FBA Competition

To get our full training to selling on Amazon—in over 100 video lessons—along with one-on-one coaching sessions, access to vetted product ideas, live webinars and Q&As, and our community of dedicated sellers who love to share the tips and tricks they’ve picked up along the way, apply today here

There, you can meet with a member of our team to determine if we are the right fit to help you along your ecommerce journey.

What surprised you most about scouting product competition? Let me know in the comments.


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Seth Kniep

Married a pearl. Fathered 4 miracles. Fired his boss. Turned a single dime into $104,857. Today, a self-made millionaire, Seth and his team of 8 badass coaches teach entrepreneurs how to build passive income on Amazon.

Dead serious about building income on Amazon with eight successful coaches in a community of badass Amazon sellers? Join the Amazon FBA Mastery membership.

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