I got an email earlier today from someone who was interested in selling on Amazon but they were worried that they had waited too long and the competition was too fierce. Here's the full text of the email:
I was reading this post from you and I was wondering if you still think starting out FBA in 2018 is a good idea. I've been reading about FBA for at least 8 months but I'm afraid to start as it seems like every category is saturated and already full of FBA sellers.
I started to write out a reply but it got longer and longer and I realized I should just post it here since there are probably a lot of people with the same question.
My short answer is that I think Amazon is still a great opportunity to get started selling physical products even though the competition today is higher than it's ever been before.
Amazon FBA really only got popular a few years ago so it's still relatively new. This is kind of like the year 2010 for Google. Even if you started an ugly, poorly written website back then, you'd probably be making decent money today just because you got started so early.
In the early days of Amazon's FBA program, you could throw up a product that was identical to other ones already on the market and start selling $50k per month. Some people who got started selling supplements and did some shady tactics to get fake reviews skyrocketed to hundreds of thousands of dollars per month in sales. And these were people with no experience and no prior knowledge. They just paid some guru $3,000 to learn how to sell on Amazon and got incredibly lucky with their first product.
Times Have Changed
Those good old days are gone now. As more people have swarmed to Amazon's platform to start selling their products, there has been a huge increase in sellers chasing existing categories and diluting the share of the pie for older sellers.
My first product was a garlic press. If you search for a garlic press on Amazon right now you'll see a ton of listing that look almost the same.
Using a tool called JungleScout, you can get data on how many units per month each product is selling. Add them all up and you know the size of the market.
The size of the garlic press market on Amazon is $388,000 per month in total revenue.
If you were the first person to start selling garlic presses on Amazon you'd get all of that money. 5 years ago that was probably much smaller because Amazon wasn't as big. Maybe it was only 1/3 the size, or about $130,000.
Today, even though the total pie has grown to almost $400k per month, the number of sellers has exploded. If you want to sell a garlic press now you'll be one among hundreds of sellers.
Even if sales were distributed randomly, you're still looking at $4k per month or less once you split that $400,000 up between 100 sellers.
Even worse, that's not how Amazon works. The top search results get's the bulk of the sales with smaller and smaller amounts trickling down. By the time you get to the bottom of the first page of search results you'll be looking at just a fraction of the sales compared to the sellers who rank higher.
All that to say that yes, competition is much worse today and it's going to be harder to get started. But it's still possible if you know what you're looking for.
I'm planning to get back into physical products and launch at least 1 new product this year. It's fun, challenging, and has an enormous profit potential.
Unlike my affiliate websites, which I'm building as a separate side hustle, physical products can take off very quickly. If you find a good product and tap into strong, existing demand, it's entirely possible to go from $0 per month to $10k+ per month in sales within 30-60 days. This is hard to do but entirely possible, unlike creating websites which take months to years to make significant amounts of money.
So how do you get started on Amazon today?
Most of the advice I gave out on selecting a product to sell on Amazon almost 2 years ago is still accurate. This is called private labeling and it's the best way to make money on Amazon. Here's a free guide showing you step by step how to start a private label business on Amazon.
I'd also recommend setting up your own website off of Amazon so you can build your own customer list and market directly to them. Shopify has a great guide about selling on Amazon that you can check out for more tips.
Everything I wrote in that post can be summed down to just one sentence which is my golden rule for finding a product to sell. The golden rule is:
What will make people buy your product over everyone else who is already offering one for sale?
Golden Rule to Amazon FBA Product Selection
When I started selling on Amazon, my first product was a garlic press.
I spent $1,700 on inventory and lost almost all of that money because there was so much competition that I had to sell my product at a loss just to get it to show up in front of people.
My product was a commodity and was identical to everything else that was already out there on the market.
If you can't figure out why someone searching for your product would click on yours over your competitors, then you need to find a new product to sell or figure out a way to change the one you've decided on.
It's OK to sell a backpack. But it needs to be unique. It has to offer something different that isn't already out there.
If you come out with a "me-too" product that just copies an existing design, you're toast. That seller already has more reviews and more 'proof' in the Amazon algorithm. For you to beat them in the ranks and start showing up higher than they do in the search results, you need to do something different and unique. Something that convinces shoppers that you have a better product than the competitors and that yours is worth buying.
How to find these products
My favorite way to find products to sell is to use JungleScout's web app which is a database of all products that exist on Amazon.
You can set filters in the search results and I target products that are doing $5k-$15k per month in sales but have less than 50-100 reviews.
These filters are just guidelines and there's no reason why you can't adjust up or down on either of the values. Basically what you're looking for are products that are generating decent sales volume with minimal reviews.
You can try to find products doing higher numbers like $50k per month but it's very rare to see something doing that well with few reviews.
The reason you focus on items with a low review count is that they're probably newer and less established. If you see someone doing $10k per month in sales but he has 1,500 reviews, you need to run for the hills.
It will take you forever to catch up to his review count and even if you do, the slice of the pie isn't that big at just $10k. In some niches like supplements, if you get 1,500 reviews you would be pulling in 10x that amount per month in sales just due to the higher demand of that market.
Another easy way to find products to sell is to browse Aliexpress.
Aliexpress is like the consumer friendly version of Alibaba.
Alibaba is where I've found many of my suppliers, but they are usually real factories/wholesalers who will require larger orders and complicated logistics involving customs and freight forwarders.
Aliexpress, on the other hand, is meant with the consumer in mind. You can order just 1 of an item and it is shipped by air to your house so you don't have to mess with any of the importing/customs/duties.
This approach lets you invest a very small amount of money. You can just buy a couple different products, take some good pictures, and throw them up for sale on Amazon.
When you find a product that works, order more and talk to the supplier about customizing the product.
Maybe it's a backpack and you find out that you can upgrade the zippers and fabric to higher quality materials. Or you can change the design and add an extra pouch on the outside for another water bottle. Whatever it is, just look for ways to make the product better.
Usually these changes are very cheap. It might only cost $.50 to add a pocket for a water bottle to a backpack and $.25 to print a custom design.
Your product cost goes from $5 to $5.75 but customers who originally would have only paid $10 for your bland backpack are now willing to cough up $30 because it looks so good and has extra functionality.
If you start trying to customize a product up front you might not know what your customers want. Imagine if you decided to add a feature that nobody wanted and ended up with 1,000 units you ordered on Alibaba but now you couldn't sell?
It's much cheaper, easier, and safer to order a smaller number of units then only increase your order size when you have proof that the demand is there.
Need help? email me
If you have any questions or want advice on selecting a product, just shoot me an email.
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