Perhaps that’s why so many choose to start an Amazon store rather than going the traditional brick and mortar route: the potential gains are higher. As for the risks? Lower.
But what if I told you we could lower those reduced risks even more?
Today, I’m going to show you what makes an Amazon FBA product low risk and how to identify prospective, low profile product markets.
What makes a product “low risk”?
Unlike demand, competition, or seasonality that are more cut and dry, low risk—or low profile—can be defined multiple different ways. In other words, there are multiple attributes that could make for a “low risk” product.
Low competition
Low profile products typically have lower competition than other product niches. Less competition correlates to ease of market entry, meaning that it will be easier to succeed in a less competitive market for the simple fact that there will be fewer sellers to compete against.
Note that a lack of competition is often derived from less shopper demand. It’s a circle of cause and effect: less demand = less seller competition, and vice versa. What’s important is that you find a niche that balances some consumer demand and fewer competing sellers.
Another benefit to finding a low competition product to sell is that that product will be less worthwhile for low-cost Chinese sellers, which means less hassle for you. These sellers often saturate the market they sell in, start price wars, or even use gray and black hat tactics to get ahead.
Regardless, with fewer products and sellers to go up against, low competition markets also lend themselves to lesser ad spend.
Low-cost PPC ads
Since Amazon has a robust platform for in-house ads, ad cost directly relates to competition strength within a product niche.
PPC—pay per click—ads work on a bidding system where sellers fight to outbid each other for keywords related to their products. The highest bidder gets the number one highest sponsored position in search results. The second highest bidder gets the number two spot, etc.
Where there are more sellers to compete against for these keywords, the higher the bids will go. So if you choose a less competitive, lower profile market, you will likely be up against fewer sellers when it comes time to bid on your top keywords. Thus you will not have to bid too high to rank within the top spots, which equates to lower ad spend and more profits returned to your business.
Additionally, with PPC, your product appears as a sponsored ad in search results when a shopper searches a keyword you’ve bid on. When that shopper clicks on your ad, you pay Amazon your bid amount for that keyword…regardless of whether or not you get the sale.
In a less competitive market with fewer sellers, your cost per click (CPC) will be lower because your bid amount won’t be exorbitant. You are also likely to see conversions from those clicks, as shoppers have fewer product options to choose from.
The better your lower cost sponsored ad converts, the more quickly your organic—non-sponsored—listing will rank. Soon, your organic product listing will be solidified on the top of page one of search results for your top keywords, even within a matter of days. This will then allow you to reduce your ad spend and move to profitability that much more quickly.
Market share sustainability
Most Amazon shoppers buy from the first page of search results, and usually the top of the page, at that.
The faster you can get your product to rank on the top half of page one of search results, the faster your product will account for a greater percentage of sales within that niche. In other words, low profile products offer an opportunity to get out ahead of the competition and dominate sales in your market.
Once you’re ahead, stay ahead with our tricks to garner organic reviews (without breaking Amazon’s terms of service!), which we offer as part of our Amazon FBA Mastery membership.
And if you’re looking for the full how-to guide on finding product ideas for Amazon, bringing them to life, launching your store, PPC ads, and more, visit us at JOD.com/freedom. Our training will coach you through everything as you start, run, and grow your Amazon business.
Lower sales with lower risk
“But,” you’re probably saying, “Low profile, less competitive markets have less demand, which is critical in a product!”
Hear me out. When you select one of these products, you may not make hundreds of sales in one day as they typically have more moderate demand. That’s why a lot of sellers do not mess around with lower profile products.
However, lower profile products also carry less risk.
How?
When products are hot on Amazon, markets turn into war zones…almost overnight. I’m talking copycats and knockoffs, price wars, hijackers…the list goes on.
By avoiding hot markets and opting for a few less sales per day, your listing will be safer and you can dominate the market more and more easily maintain your rank.
Now that we know what makes a product low profile, let’s examine different types of products that meet our criteria.
What types of products are considered “low profile”?
Lower profile products may not be as obvious to find—especially if you search for product ideas using the shopper side of Amazon, one of the many methods we teach our students. But there are actually several classifications that can fit the bill.
As you sift through product ideas, pay specific attention to more empty niches. Markets that loads of sellers totally discard are often gold mines of untapped potential.
High sell price products
High sell price refers to $50 or more in Amazon’s US marketplace (amazon.com).
When scouting high sell price product niches, aim to find a market where the top three sellers do at least 100 sales per month and have fewer than 100 reviews.
Most new Amazon sellers ignore higher price point products because they cost so much more to manufacture and ship. In other words, they require a much larger initial investment. Additionally, a lot of other trainings warn against launching products at these levels.
But, as we established above, markets that most sellers shy away from can be a great way to launch a successful, low risk product: there’s less demand and thus competition.
And because there’s less seller demand for these products, suppliers are more likely to offer smaller MOQs (minimum order quantities). This means you won’t have to commit to as many units (especially when you’re just starting out) and thus that your initial investment might not be quite as high as you fear.
Additionally, with higher prices comes the opportunity for greater profits. This is mainly for two reasons:
1. Shoppers are more likely to spend larger amounts of money when shopping for these types of products. They will likely neither shy away from your product because it’s high priced, nor will they be as susceptible to choosing the lowest priced product in the market, which means you might be able to charge even more and still see steady sales.
For example, customers shopping for a refrigerator know that it’s going to cost a decent chunk of change; they’ll be less upset about a $30 difference between the model they want versus the best, lowest cost option.
2. Profit amounts tend to be higher with higher priced products. If your product sells for $75 a unit and you can pull off a 40% profit margin per sale (that’s the general guideline we teach our students to aim for), you will make $30 in profit per sale ($75 x 0.4 = $30). That’s much better than if you did 40% profit margin on a $20 product, in which your profits per sale would be only $8.
Greater profits better offset fixed expenses such as Amazon fees, including fulfillment fees, which are based on a product’s size and weight.
A good rule of thumb to keep your fixed, fulfillment cost (the cost to have Amazon ship your orders to customers, among other things) down is to ensure your product fits beneath the Small Oversize product size tier:
- Product weighs less than 70lbs
- Product measures less than 60” by 30”
- Product’s longest side + girth is less than 130”; girth is the distance around the thickest part of a product on its height and width sides (not length)
At the end of the day, selling fewer units doesn’t matter as much when your profits per unit are larger.
Large or heavy products
Back in the day, Amazon sellers were told to avoid any products larger than a standard shoebox.
Fortunately those days have passed and we now know there’s a lot of money to be made with larger and/or heavier products. However, a lot of sellers still hold fast and hard to the shoebox rule, which means like more expensive products, you have an opportunity to dominate a less competitive market.
Here, large means those items that measure more than 18” by 14” by 8”. Heavy refers to products that weigh more than five pounds.
With this sector especially, note that your FBA fulfillment fees and your international shipping costs tend to be greater for large and/or heavy products. Shipment size and weight is, afterall, the same way that shipping costs are measured.
However, everything comes down to profit margin, and a lot of large and/or heavy products fit into the above classification—high sell price—as well, meaning you can better offset higher transport costs with your own price tag.
Speaking of shipping, with current global shipping timelines, it might be best to air on the side of avoiding seasonal versions of large and/or heavy products.
Seasonal products
Seasonal products are those that sell extremely well around and during their specific season, before falling off until the next year or season.
Halloween costumes, for instance, are highly seasonal products. They sell like crazy from September through the end of October. At the start of the holiday season, however, they’ll go dormant until the coming autumn.
The seasonal nature of seasonal products make them quite volatile, leaving their markets fairly open. Make no mistake, however, you can make a lot of money selling seasonal products through strategic planning.
That said, if that is your strategy, you must carefully plan your cash flow and inventory management so as not to run out of stock or money.
Finding seasonal products when they’re in season is as easy as opening an internet browser. That said, you’ll have to plan them well in advance of their selling season. You can best find off-season seasonal products by tracking their historical BSR (best sellers rank). We show you how to do this with Keepa, and most other product research softwares track historical BSR as well.
Those same softwares can also help you determine product demand both in and out of season.
Low-demand, standard products
Low-demand, standard refers to products that meet all of the typical product hunting guidelines for size, weight, sell price, etc. However, these products have less than average (or often, recommended) consumer demand.
Consider that most sellers are on the hunt for that one special product that will take off and bring them $30,000+ in revenue per month. Even we at Just One Dime teach our students to find products where the top three sellers do at least $5,000 per month (that’s the minimum standard).
To work this product angle, however, aim for products that have the capacity to bring in $3,000 - $9,000 per month. Look for markets wherein the top three sellers do at least $3,000 per month, have fewer than 100 reviews, and still sell 100+ units per month.
Finding products that strategically avoid common Amazon FBA product guidelines is a great way to safely launch high potential products in low competition markets. However, there are dozens of ways to find product ideas to bring to life on Amazon FBA.
Learn all the different ways to find the best product ideas, best practices for vetting suppliers to bring those ideas to life, as well as various strategies to launch those products on Amazon at JOD.com/apply. You can speak with a member of our team who will understand your goals and help you decide if we are the right fit to help your business succeed.
Which low risk, low profile product strategy are you most excited to try? Let me know in the comments.
