Today, I will walk you through the eight steps to choose the best Amazon product category for you.
But first, there are two things you need to know:
- My goal is not to persuade you to choose one category over another.
- My goal is to help you think strategically as you make your own product category decision.
I have been selling on Amazon for years and have created dozens of products in several different product categories and subcategories. So believe me when I tell you there is no one magical category.
Step 1. Understand the difference between a gated and ungated product category.
An ungated category means there are no barriers to entry to sell in that particular product category on Amazon. Camera, Photo, & Video is an ungated category.
On the other hand, a gated category means you have to apply to sell in that product category on Amazon. Motorcycles & Powersports is a gated category.
An entire product category can be gated OR a specific subcategory within an ungated product category can be gated.
Check out this blog to learn how to get ungated in a specific product category. We explain exactly how to request approval from Amazon.
Step 2. Understand that categories for sellers do not always match categories for shoppers.
Currently, there are 53 shopper product categories, but only 26 seller product categories.
Why is that?
First off, there are some categories that Amazon does not allow third party sellers like you and me to sell in, such as Gift Cards.
Second of all, Amazon revolves around the shopper experience. Even for categories that Amazon does allow third party sellers to sell in, several seller categories are often broken down into multiple shopper categories, or clumped together into more generalized categories. This is all to facilitate shopper navigation and eliminate category overlaps across the platform.
For example, you will find the category Health, Household, & Baby for shoppers. But on the seller side, the Health & Household category is distinct from the Baby Products category. This is because most sellers must apply for ungating to sell certain Baby products, however this is not the case for most Health & Household products. Therefore, Amazon separates the two for sellers. However, Amazon keeps Baby Products clumped together with Health & Household for shoppers because these products tend to overlap. Putting them all together increases shopper convenience.
Step 3. Use Amazon seller and Amazon buyer data to think strategically about product categories.
Of the 26 seller product categories on Amazon, we at Just One Dime recommend 20 of them to our students.
Across the board, here are the most popular categories for Amazon sellers:
And here are the most popular categories for Amazon shoppers:
Let me make one thing clear: when you add up all the numbers on our Amazon shoppers graph, they will not equal 100%. When this survey was conducted, shoppers were asked to “select which categories you go to Amazon to shop for”. Many shoppers selected several categories, so the graph does not total 100% like it might if shoppers were asked to select one primary category.
Let’s walk through some comparisons:
Home & Kitchen is the third most popular category with Amazon shoppers. Home & Kitchen, however, is the number one most popular category with Amazon sellers. It’s popular with sellers, but less interesting to shoppers.
Here’s another great example:
The most popular category for Amazon shoppers is Electronics. However, for Amazon sellers, Electronics is tied for the 5th most popular category.
And just for fun, let’s look at one more:
Across Amazon sellers, only 3% claim Pet Supplies as their primary product category. However, 20% of shoppers search Amazon for Pet Supplies. This tells us that there is shopper demand within the Pet Supplies category, which equals an opportunity for more sellers to break into that market.
Anytime you find a discrepancy between what shoppers are interested in buying versus what sellers are interested in selling (such as in our Electronics and Pet Supplies examples), there's a seller opportunity.
If you have trouble picking a product category, you might consider a category that has both low shopper demand and low seller interest. These are the categories that are lumped together in the “Other” classifications on each chart. This could be Industrial & Scientific, Musical Instruments, Office Products, or even Toys & Games.
Just because those categories do not have a huge shopper demand doesn’t mean they don’t have any demand. And, the fact that they’re less interesting to sellers means there’s less competition.
Additionally, if you can’t find a good product in one of the main categories, narrow down your search to specific, niche subcategories. Whole categories can sometimes reflect millions of dollars worth of products and thousands of sellers. If you choose that category, it might feel as if the odds are stacked against you.
However, as you niche down into specific subcategories, you might find that you can dominate those smaller, less saturated markets. The amount of overall revenue decreases, yes, but so does the competition. That said, don’t niche down so far the demand drops. You just want to niche down enough so that your competition drops, which will make your market ease of entry much…well, easier.
Let’s say you decide to sell in Cell Phone & Accessories. You might specifically dive into Accessories. Then, you can narrow down even further to cell phone stands, and maybe go as deep as aluminum cell phone stands.
The point is when you pick a product category, you need to understand strategically what you’re getting into. You have to look at everything in perspective.
Step 4. Choose a category you can turn into a story.
When you build out your product, you don’t just develop an item to sell. In order to sell your product, you must develop a brand story that emotionally connects your customers to your brand and your products.
Your product category will inevitably be a part of your brand story. As you think about and pick out your product category, you must consider which you can turn into an engaging brand story. And part of that means knowing your customer base backwards and forwards.
Let’s look at an example:
I love spats shoes. I don’t buy them because of the black and white coloring or even because I need another pair of shoes. I have plenty of shoes.
Why do I buy them?
They tell a story. Spats: 1920s, jazz music, tap dancing, Fred Astair, Gene Kelly, the big band era. I love that time period. I think it was so cool what they did with jazz, trombones, and tap dancing!
This is a story, one I inherited from my grandparents. I have an emotional connection to this product because of its backstory. And I buy these shoes because they tell a story I relate to.
Shoppers buy emotionally. And then, after they’ve hit “buy now”, that’s when they justify their emotional purchase with logic.
As you pick your product category, you must consider how you can turn that niche into a story that your future customers will fall in love with. You need to give them a reason to hit “buy now” without stopping to think about their purchase.
Step 5. Choose a category you can build into an experience.
Similar to step 4, as you choose your product category, you must consider how you will turn your future product into an experience. Or, how your future customers will experience your product.
Customers don’t purchase products. Instead, they purchase the emotional connection to a brand. But they also purchase the experience that your product provides.
Consider this example:
This helmet is sold on Amazon. It’s dripping with oil. It’s heavy. It’s thick. You feel like a medieval knight when wearing it.
But what is the practical purpose of this helmet? Will I get into a sword fight at my local coffee shop or need to protect myself at a restaurant?
No!
Why would I buy it?
I love the medieval period, and I love what this helmet represents.
This helmet is an experience in the same way that a tea mug is an experience. You don’t just buy a tea mug, you buy the experience of a hot, strong cup of lapsang souchong tea on a rainy day.
Let’s say you buy a hand steamer for clothing. You’re not buying the steamer itself. You don’t need another small appliance clogging up your laundry room. You’re buying smooth dress clothes that make you feel confident. You buy the experience the product provides.
When you think about your product category, you should already be thinking about your future customers, what they want out of a product, and how they will experience yours. Ask yourself, “What kind of category will allow me to create products that create an experience that blows my customers’ minds?”
When you think that way, you can be successful on Amazon.
Step 6. Choose a category you have strong knowledge in.
If you’re an expert in a specific area, hobby, or profession, then you have a wealth of knowledge that will help you succeed on Amazon.
Let’s say you’re a mechanic. The vast majority of mechanics never think about creating an Amazon store, which means you have an incredible opportunity to sell on Amazon!
This is also one of the reasons why the Automotive category is so undervalued.
If you have specific knowledge about different cars, car parts, and the tools people use to work on their cars, you have real, experiential knowledge that you can put to use as you build your brand, product, and store. That knowledge will help you to not only choose the right product subcategory to sell in and specific product to build, but you will know how to connect with your customers and how to create a product experience that they will pay you lots of money for.
If you’ve built houses for years, you have an opportunity to dominate in the Tools & Home Improvement and Patio, Lawn, & Garden categories. If you’ve worked in the fashion industry, you could start your own clothing brand.
Whatever it is, look to your past and interests and ask yourself, “What expertise do I have that I can apply to creating and selling a product?”
This will help put you way ahead of the competition.
Step 7. Choose a category you are willing to become an expert in.
This is a counterpoint to step 7, choose a category you have strong knowledge in. The reality is that some skills and passions just don’t translate well to an online store or a product.
In that case, to sell on Amazon, you must choose a category that you are not currently an expert in, but one you are willing to become an expert in.
For instance if you love coding, that doesn’t necessarily lend itself to a product in a store or online as well as a hobby like cars or cooking.
If you want to sell online, there’s no reason you can’t. But you must look to a more unfamiliar product category.
To do this:
- Find a product with demand that shoppers are already buying.
- Find a way to improve that product so shoppers will love yours more than current versions.
- Start selling that product.
Customers will buy it because there’s already demand and you’ve differentiated your version to make it better than your competition.
A lot of product categories have seriously huge selling potential. But if you’re not an expert in them, that doesn’t mean you have to miss out!
You just have to be like Sherlock Holmes: research and learn as much as you can about that product category and its products. Read product reviews. Study listing keywords. Talk to manufacturers. The amount that you learn will blow your mind.
Step 8. Choose a category you are not emotionally attached to.
I’ve found that this is where a lot of sellers get stuck: they get emotionally attached to their product and category.
It does not matter if you love the product you create. Sorry.
What matters is that your customers love it.
As soon as you become emotionally attached to your product, you lose objectivity and put your business at risk because you’re no longer in a position to make tough decisions.
You need to be able to make quick decisions based on customer data. It’s crucial that you can look at your business and your product(s) objectively enough that you act based on facts, not emotion. Don’t be so in love with one particular product that you hurt your business along the way. You must be tough.
Real life example:
An Amazon seller once messaged me on Instagram and asked me to diagnose her failing product. She had invested tens of thousands of dollars into it but was not seeing sales. She was losing money by the minute.
With just a quick look I could tell her product and listing were flawed. Of course, this offended her because she had invested so much time and money into this product, and she was emotionally attached to it. To which I replied, “Do you want the truth or do you just want to hear something that makes you feel better?”
The harsh reality of business is that the market does not care about your feelings. Amazon shoppers don’t care about your feelings.
When you launch your product, you should be able to distinguish if it’s something that will serve your customers or if it’s just something that you like. You cannot assume that just because you like it that others will too.
You must always be thinking about your customers, how you can best serve them, and the value that your product brings to them.
The truth of the matter is there's a lot that goes into choosing product categories, researching your target audience and their needs, and creating products. Fortunately, we can help you through the process with step-by-step Amazon training.
What product category do you want to sell in? Let me know in the comments.
