Today I will show you how to evaluate your ideas for products that you want to sell on Amazon.
I will walk you through the pros & cons, things to look out for, and the actual data you’ll need so you can know whether or not your product has potential. I will also give you a lot of pitfalls to avoid.
Myself and the Just One Dime coaches have a combined 50+ years selling on Amazon. We know a thing or two about how to distinguish the gems from the throwaways.
Become familiar with our Product Evaluation Tool.
Our Product Evaluation Tool (shown below) is a pre-formatted spreadsheet that we use to compare several product ideas at once.
It can help you to be more objective with your product ideas. It allows you to see, side-by-side, different product attributes that could signal success, or alternatively, suggest ideas to walk away from.
This tool comes free with our Amazon FBA membership. But even if you’re not a Just One Dime member, there’s still tons you can learn about how to compare product ideas from this tool.
When you use this tool, you will give each different product idea its own row, and then you will fill in each column with the appropriate information for that idea. In some cells, you will be able to choose “Yes” or “No” from a dropdown. In others, you will enter specific data. It’s quite simple once you’ve done your research and collected data.
In this blog we cover how to find product ideas. And we show you how to use Just One Dime’s product research software, Niche Hunter, to determine how strong they are. You can choose from different product research softwares out there, but of course, we’re partial to this one.
Niche Hunter is still in beta testing and has not yet been released to the public. However, you can sign up to join the waitlist here. That way, you’ll be the first to know when it officially launches.
With Niche Hunter’s chrome extension, anytime you search a keyword on Amazon.com, Niche Hunter automatically shows you valuable data about that product niche.
Once you have your data, you can easily evaluate each idea.
Let’s go through our Product Evaluation tool for the product idea “Cigar whiskey glass set”. We’ll type that into column A.
When we search that keyword (word or phrase shoppers search to find what they want to buy) on Amazon, we get the following results from Niche Hunter:
(By the way, once Niche Hunter launches, this is what it will look like when used on Amazon!)
We will use this data with our Product Evaluation Tool.
Make sure to go through the whole process for the big payoff at the end.
Evaluate sell price.
Make sure the product you will build can sell for at least $30, $25 minimum. This will allow you to move to profitability faster after you deduct the costs of manufacturing and shipping, plus fees and advertising. Sell price has two criteria columns.
1. Is the average sell price greater than or equal to $30?
We already know that the average sell price for our cigar whiskey glass set is over $30.
We would select “Yes”.
2. What is the average sell price?
We know that number from Niche Hunter.
So we would write “$34.38” in column C.
Let’s move onto demand.
Make sure people want to buy the type of product you want to sell. Demand has six criteria columns.
1. Are there at least three sellers who make at least $5,000 per month in revenue?
We can get this answer from Niche Hunter:
We would select “Yes”.
2. Are there at least three sellers who sell at least 500 units per month?
You can easily calculate that number by dividing each seller’s monthly revenue by the price they sell their product for.
We can find the per unit sell price and the monthly revenue for the top ten listings for a given keyword using Niche Hunter.
We can then find out how many of these sellers sell at least 500 units per month by dividing each sellers’ monthly revenue by product sale price. For example, the YouYah product does $8,097 revenue each month. And each item sells for $29.99.
$8,097 divided by $29.99 ≈ 270 units.
We would select “No”.
3. Are less than half of the products from the same brand?
If one brand holds half or more of the top ten listings, that means they hold a large chunk of the market share. This would make it harder to compete against them, especially as a new listing.
We can easily check this with our snapshot of the top ten listings from Niche Hunter.
There are a few duplicate names, but that’s it. Since there is no one name that appears five or more times, we would select “Yes”.
4. There are no big brand names
Just like a brand that is dominating the market by taking up most of the top ten listings, it’s hard for new brand names to compete against household names.
We can follow the exact same steps as we did in column F to check this using Niche Hunter.
In this instance, we do have a big brand name—Bezrat—however, that name is bigger for beverages and less so for cigars. So we would write “Yes”. There are no big brand names.
5. Are there at least five different brands each selling at least 300 units per month?
We want to ensure that the market is evenly distributed across different brands. If one seller is dominating the market niche and claiming the majority of sales, it will be tough for a new seller to sell anything, let alone compete.
We can calculate this the same way we determine if at least three sellers sell over 500 units per month in column E.
And in this case, we would select “No”.
6. Is the BSR stable?
BSR stands for “best sellers rank”. Essentially, BSR calculates how fast a product sells within its market niche. And it’s like a race: the lower the BSR, the faster the product is selling.
We can use Niche Hunter to look at specifics about each of the top ten ranking listings, including BSR.
All products will have their ups and downs, however, you want to find a market with a relatively even BSR. If the BSR looks like a rollercoaster, it’s an unstable product.
Looking at this graph, this product’s BSR appears to be relatively stable.
This amount of fluctuation is normal. We would select “Yes”.
Evaluate ease of entry.
Ease of entry tells us how easily a brand new listing could potentially break into a market niche. It has two main criteria columns.
1. Are the three sellers with less than 100 reviews each selling at least 300 units per month?
This is fairly simple. We already know from Niche Hunter there are at least three sellers with under 100 reviews.
And we know that across the board, sellers in this market sell under 300 units per month.
So we would select “No”.
2. Are there 25 or less top competitors overall?
When you shop on Amazon, the first page of search results for any product is typically between 20 and 25 organic (non-sponsored) listings. If all of those 25 organic listings are doing well, your product will probably land on page two or three of search results when you launch. This means you’ll have to spend more money on PPC advertising costs to get your product to rank on the first page of search results, which is where you want to be.
To test this, scroll through the first page of search results. If all the products on that page are relevant to your idea’s keyword, there are 25 or more top competitors. If products start to deviate from what you’d expect when we search that keyword, however, that’s a good indicator that there are fewer than 25 top competitors.
When we search “cigar whiskey glass set” for instance, we see a lot of listings that look like our potential product. But we also see a lot of just plain old whiskey glasses with no cigar holder. However it seems those are mostly sponsored listings.
We would select “No”. There are more than 25 top competitors.
Evaluate close competitor snapshot.
When you start accumulating dozens of product ideas, sometimes they can get mushed together, like oatmeal in your brain. It can be difficult to consider each idea independently and truly assess which is the best product for you to sell.
To alleviate this issue, you will take an aerial view—or snapshot—of the top three competitors for each product idea. This snapshot gives you an objective overview of each product’s competitors so that you can keep a clear head as you make your decision.
What you’re looking for as you compare products are: high sell price, low reviews, and high sales. Not all competitors’ products will meet all three criteria, which is why it’s helpful to have a visual where you can quickly see which do and which don’t.
But how do you know which listings are the top three competitors?
From the first page of search results, identify the products that most closely resemble the one you might create. For example, if you sell a glass tea steeper, but several of the first page search results are non-glass tea steepers, those are not your top three competitors. You would find the top three glass tea steepers in that case.
For each of the top three competitors, you will input their:
Selling price - Number of reviews - Monthly sales revenue
For our “cigar whiskey glass set”, we might choose the products ranked numbers two, three, and five in Niche Hunter’s top ten listings.
Let’s take a look at the second result: “YouYah Cigar Whiskey Glass with Cigar Holder”. It sells for $29.99. It has 560 reviews. And that seller makes approximately $8,097 in revenue from this specific product each month.
When we add it to “Close competitor 1 snapshot”, column L, we would write “$29.99 - 560 - $8,097”.
We would then repeat this process for the next two top competitors.
Once we have all three top competitors evaluated, we can more objectively look at the product. Keep in mind, no one data point should ever be a deal breaker (with the exception of profitability and differentiation).
Evaluate differentiation potential.
Differentiation is how you stand out. If a product meets every single criteria on the planet, but it can’t be differentiated, that’s a deal breaker.
You don’t want to sell the same product as everyone else. You have to find a way to make your new product stand out from the competition—even without reviews.
Differentiation potential has five criteria columns.
1. Is there demand for a solution or product improvement?
From reading product reviews on our top three competitors’ listings, we can see that there are complaints that existing glasses’ cigar holders don’t fit all cigars.
We would select “Yes”.
2. Is this demand visually expressible?
By this I mean: can you exhibit your solution or improvement in a picture?
It’s not enough to just differentiate a product. You have to make your differentiation visually obvious to the consumer. Otherwise, how do they know your product is unique?
For example, we can see that one of the complaints for this “cigar whiskey glass set” is that the product arrived broken.
We can fix that with better packaging, but that’s not something that we’ll show in the main image that appears in search results.
However, we can show in our main image that we’ve created a glass with a larger cigar holder. Perhaps our photo includes an excessively thick cigar in the glass.
Since we might fix that problem, we would select “Yes”.
3. What is the most common complaint’s solution?
This is pretty straightforward. We’ve already identified a common complaint: cigar holder is too small. We would write that in this column along with our solution, “bigger cigar holder”.
The point is to ensure you have a differentiation plan for each potential product.
As you go through the top competitors’ listings, you will notice more and more problems that you can potentially fix in your product. You will then fill out columns R and S in the Differentiation Potential section with the second and third most common problems and how you would fix them.
Once you’ve done that, it’s time for everyone’s favorite part: profitability.
To do this, we will rely heavily on Niche Hunter to examine our competitors’ profitability.
When we look at the YouYah brand’s snapshot, Niche Hunter shows us this product’s estimated
- Sale price: $29.99
- Amazon fees: $9.67
- Profit per unit: $12
Notice that profit margin maintains at 40%. That is a predetermined value in Niche Hunter’s settings. This is because at Just One Dime we recommend you find products with at least a 40% profit margin after Amazon fees, plus manufacturing and shipping costs. You need to have enough margin leftover to run effective PPC advertising campaigns, which we go extremely in-depth on in our Amazon FBA membership.
That 40% profit margin is also how Niche Hunter determines “Cost per unit”, in this case $8.32. Rather than an estimate of the cost to manufacture a competitor’s product, that cost per unit number is the maximum amount it can cost to manufacture that product in order to achieve a 40% profit margin.
You can get a more accurate estimate of how much it might cost to manufacture a product by searching your main keyword on Alibaba.com. There, you can discover how much it costs to manufacture similar products to the one you might sell.
When we search “Cigar whiskey glass set” on Alibaba, we get an estimate of $4.05 to manufacture each unit.
Learn how to filter suppliers on Alibaba here.
In regards to Amazon fees and profit, Niche Hunter is giving us a data-driven estimate. To find a more exact potential profitability of our competitors’ products,
- Visit Amazon’s “Fulfillment by Amazon Revenue Calculator”.
- Copy your top competitor’s product ASIN (Amazon Standard Identification Number) from the listing’s URL. It’s located directly after “/dp/” and it always starts with “B0”.
- Paste that ASIN into the box titled “Find your product on Amazon.com”.
- Click “Search”.
- Input the product’s sell price of $29.99.
- Input “2” in the “Ship to Amazon” box (as an estimate).
- Input the product’s estimated manufacturing cost of $4.05 from Alibaba.
- Click “Calculate”
Amazon is giving us an overview of estimated profit, margin, revenue, FBA fulfillment fees, referral fees, and more.
And we can use that data to add to our Product Evaluation Spreadsheet.
Profitability has 13 criteria columns.
1. What is the goal sell price?
Your goal sell price should be around the same price as your top competitors. You can also use the average price from Niche Hunter as a guideline.
Let’s write “$30”.
2. Is the product less than 18” x 14” x 8”?
These measurements include the product in its retail packaging, whatever container has your brand logo on it. It does not include whatever box or bubble pack that Amazon will ship your product in.
You want to find products that measure less than 18” x 14” x 8”. If you exceed these dimensions, you move up a tier size and your FBA fees will increase dramatically.
When you search your competitor’s ASIN in Amazon’s Revenue Calculator (which we show you how to use here), it will tell you that product’s retail dimensions.
The YouYah competitor’s cigar whiskey glass set measures 4.6” x 5.1” x 8”.
That’s less than 18” x 14” x 8”. We would select “Yes”.
3. What is the packaged product size?
Input your top competitor’s retail packaging dimensions as we found them for column U.
We would write “4.6” x 5.1” x 8”.
4. Does the product weigh less than 4.75 lb?
We can find this information right below product size in Amazon’s Revenue Calculator.
The YouYah product’s total weight is 2.101 lbs.
This is less than 4.75 lbs. We would select “Yes”.
5. What is the product’s weight?
Here, weight refers to unit weight: the weight of your product including retail packaging.
Input your top competitor’s retail packaging weight as we found for column W.
We would write “2.101 lbs”.
6. What is the dimensional weight?
Dimensional weight is an Amazon-specific calculation based on unit volume. It’s meant to account for larger items that don’t weigh much (like a gigantic box of cotton balls) but still take up considerable space.
We go fully in-depth on how to calculate dimensional weight in our Amazon FBA membership.
7. What is the outbound shipping weight?
Outbound shipping weight is either the product’s unit weight or its dimensional weight, whichever is greater.
We can assume that our unit weight of “2.101 lbs” is fair.
8. What is the FBA fulfillment fee?
We can get this number from Amazon’s Revenue Calculator by looking at the “Fulfillment by Amazon fees” line.
We would write $5.79.
9. What is the Amazon referral fee?
Referral fees vary by product category. However, most are 15% of the total product cost.
15% of $30 (our goal sell price) is $4.50.
We can also get this number from Amazon’s Revenue Calculator’s “Selling on Amazon fees” line. And that line will tell us our exact referral fees based on that product’s actual category, rather than simply using 15% as a guideline.
We would write “$4.50”.
10. What is the product’s landed cost?
A product’s landed cost is the total combined cost of manufacturing, shipping, and Amazon fees.
From Amazon’s revenue calculator, we know that it will cost us
- $4.50 to sell the product on Amazon
- $7.79 for Amazon to fulfill the product
- $4.05 to manufacture the product
When we add all these numbers up we get a total landed cost of: $16.34.
For simplicity, we would write “$16.50”.
11. What is the profit per unit?
Once you’ve entered the previous profitability information, your Product Evaluation Tool will auto-calculate the profit per unit, as well as profit margin.
In our case, the profit per unit is $13.50.
12. What is the estimated profit margin?
In our case, the profit margin estimate is 45%.
13. Is the profit margin at least 40%?
This is a simple Yes or No question based on column AE.
If the profit margin is less than 40%, you should go back to the product, determine if there is anything that you can change about it to get closer to that 40% mark.
For instance, maybe you can differentiate your product even more and increase the goal sell price because you’re creating a more unique product.
If, however, there’s nothing you can adjust to raise the profit margin, it might be time to return to the drawing board.
Use the product evaluation tool to choose your product.
To find the best idea in your Product Evaluation Tool, all you have to do is compare the total number of “Yeses” for each product that has at least 40% profit margin. You can find this number auto-calculated for you in column “AG”. For our Cigar whiskey glass set, we get ten total yeses.
The more “Yeses” a product has, the stronger it will most likely be. And the greater likelihood that you will be successful if and when you start selling that product.
To get this handy-dandy Product Evaluation Tool, visit JOD.com/freedom.
When you enroll in our membership, we will not just give you this tool. You will get one-on-one coaching, product ideas, a community of sellers willing to share all their tips and tricks, plus comprehensive lessons on everything you could ever need to know about how to succeed on Amazon.
One more thing: what factor are you most concerned with as you evaluate potential product ideas? Let me know in the comments.