What to Sell on Amazon: Mistakes to Avoid So You Can Find the Right Product
Many novice sellers wonder what to sell on Amazon to make money. However, before learning what to sell you should learn what not to sell. This is the most important thing for beginners.
Common Amazon Seller Mistakes
There are a number of critical mistakes that can cripple your Amazon business before it even gets started. It’s true that you can get rich by selling the right product and using a good strategy, but if you make one of these costly mistakes you could end up losing money. You don’t need a business certificate in order to sell on Amazon, but you do need to do some research before getting started.
Below is our step-by-step guide on how to avoid the five most common mistakes made by Amazon sellers. Don’t worry about searching the web for articles or watching dozens of YouTube videos. We’ve made sure to include all of the most up to date information. Because what worked in 2019 won’t necessarily work today or in 2020.
If you’re wondering how to know what to sell on Amazon FBA keep reading to learn some important tips and information you can start using right now.
#1 Choosing the Wrong Product
Finding the right product or merch to sell is arguably the most important part of starting an Amazon business. If you want to sell on the platform for profit you need a winning product. But remember, If you’re going to choose a good product you need to start by not choosing a bad product.
So, what makes for a bad product? Here are a few things to watch out for and some tips on how to decide what to sell.
Products That Are Too Big
Bigger products with larger dimensions can cause you a lot of problems. Even if their sales and reviews are good they’ll still likely end up costing you money. There are two reasons for this.
The first is shipping. When you source products from wholesalers or manufacturers in China you’ll need to get them shipped to you. Bigger products take up more space on boats and trucks which means shippers will charge you more. Higher shipping costs cut into your profits which is a big problem.
The second is FBA fees. The Fulfilment by Amazon program provides a lot of benefits to sellers, but you need to remember that the company takes a percent of your profits for this service. The fees increase based on the size of the product, so the bigger your item the more you’ll pay. Like shipping, this cuts into your profits and reduces your margins.
So, while selling an engine may seem like a great idea, you’ll want to avoid these sorts of products at all costs.
Products That Are Too Heavy
Weight is another thing you need to consider. A product may be small, but if it’s overly heavy you’ll also pay more shipping and FBA fees. So, an item like a bowling ball isn’t a great product. Sure, it’s not that big, but the extra weight will limit the amount of profit you’ll be able to make on every sale.
A lighter weight product could end up costing you a quarter or even half the price of something heavier. So, always determine the weight of a product before deciding whether it’s a good idea to sell it.
Products That Are Expensive for You to Buy
We’ve talked about how oversized products will add to your cost. However, your biggest cost will be the product itself. Products that are overly expensive, such as items that are more complicated or are handmade, present a couple of problems.
First, the more you pay for your product, the more you’ll have to sell it for if you want to make a profit. Obviously, you want to sell your product for as much as possible. But if you have to price it too high it could cut down on your sales. This could cause you to have to sell it at cost, or worse a loss, in order to unload all of your inventory.
Second, if you’re buying expensive products it means you’ll likely limit the amount you can order from your supplier. Not only will this limit the amount of inventory you can carry, but it also means you won’t get as good of a deal on your products. Smaller orders mean you’ll have to pay a higher price per product which will make it harder for you to compete with other sellers who have a bigger budget.
This is why you want to find a product that is cheap to buy.
Products in Restricted Categories
Some categories and products, such as clothing, health and beauty, and medicine require Amazon’s approval in order to sell in them. This can complicate things and force you to wait longer in order to start selling. So, it’s best to just avoid these categories and choose products that don’t require Amazon’s approval.
Use the AMZScout WebApp to Pick the Right Product
You can’t just use a randomizer when picking product. You need to be very careful about what you choose to sell. Luckily, there’s an easy way to do that.
The AMZScout WebApp is a great piece of technology that lets you quickly and easily search for products. Best of all, it provides dozens of search filters to allow you to rule out bad products and only focus on ones that you know will be profitable.
The WebApp lets you filter products by category, seller type, ranking price, estimated sales, reviews, size, weight, and more (see below).
Select the filters you want, then click the “Apply Filter” button to see the results.
Not only does this save you an immense amount of time but also makes sure you don’t make any critical mistakes when choosing a product.
#2 Not Doing Any Market Research
By using the AMZScout WebApp you’ll be able to find a number of products that meet your criteria and have a high probability of being profitable. But your work isn’t done yet. A lot of new sellers decide to sell a product before doing any market research, and this is a big mistake.
You need to analyze a product’s niche before deciding whether or not it’s a good idea to sell it on Amazon. Here are a few red flags that might indicate that a niche should be avoided.
Not Enough Sales
The first thing you need to find out about any niche you’re thinking about selling in is how many sales it has. Sales are how you’re going to make money, so you need a product and niche that generates a high number of sales consistently if you want to make a good amount of money.
We recommend looking for products that average about 300 sales per month. That’s approximately 10 sales a day, which should be enough to provide you with a nice flow of revenue.
So, when looking at a niche you want to see a high percentage of products in the niche hitting those numbers. If there are only a few products with those types of sales, or none at all, it’s likely demand for the niche is low.
Low sales mean low profits, so if a niche doesn’t have enough sales then it’s time to move on.
Low Sales Price
High sales are great, but they won’t mean much if people aren’t paying enough for your product. Ideally, you want a niche that includes a number of products that sell for a good amount of money. This ensures you can make a profit on every sale.
There are a number of costs built into each product. There’s the cost to purchase the product from the supplier, the cost of shipping, and FBA fees if you choose to fulfill your orders that way. If you’re only selling your product for $5 it’s going to be really hard to make a profit after all of those fees.
We recommend selling items that retail between $10 - $100. That way you should be able to have some profit left over after all of your costs.
Finally, you want to try and find a niche that isn’t very competitive. Just like Google, the key to getting a lot of visitors to your product pages is to rank highly in the search results. If there are too many sellers with high-quality products it’s going to be really hard for you to overtake them in Amazon’s rankings.
Try to find a niche where there aren’t many sellers, or where the products are poorly reviewed. This will make it easier to become a top seller in the niche and generate the type of sales you’re looking for.
Use the AMZScout Pro Extension to Find a Profitable Niche
You may be wondering how to find out how much demand and competition a particular niche has. You’re probably also curious how long does it take to get this information. But it’s actually quick and easy. All you have to do is install the AMZScout Pro Extension and start searching for products that you’re interested in selling.
Here’s how it works:
If you don’t already have the AMZScout Pro Extension, click here to install the extension and enjoy your free trial period.
Go to Amazon website and search for the product you’re interested in selling.
Once Amazon displays the results, click on the AMZScout Pro Extension icon in your browser to open the extension and analyze the results. You’ll be able to check a wide range of niche indicators, such as average price, average sales, average reviews, and more.
The easiest way to figure out whether a niche is profitable is to check the niche score. This score analyzes a niche based on demand and competition and gives it a score out of 10. Niches with a score of 7 or higher are deemed to have a high amount of potential while niches with scores below that number should be avoided.
The AMZScout Pro Extension also assigns each product within a niche a score out of 10. This can help you decide which products within a niche are the best to sell.
By using the AMZScout Pro Extension you can quickly identify niches with the right amount of demand and competition. This will help you avoid choosing a bad niche and making any mistakes that might hurt your Amazon business.
#3 Selling Seasonal Products
This is another common mistake for sellers who aren’t very experienced. They find a product that meets all of their criteria so they start selling it. Sales are good for a while but then all of a sudden they drop off for no apparent reason.
So, what happened? Unfortunately, they chose a seasonal product.
Seasonal products are items that are only popular at different times of the year. These are things like gardening tools and pool accessories, which are only popular in the summer. Or snow shovels and snow blowers, which are only popular in the winter.
Make sure to review a product’s sales history and look at the entire year. Maybe a product only sells during a certain time of year or during holidays like Black Friday or Christmas. If this is the case then you should probably avoid that product.
Seasonal products are risky because their sales are inconsistent. You might end up with a large amount of stock that goes unsold for a long time. This could lead to higher storage fees which will reduce your profit margins.
Look for products that sell well all year. To do this you can use the AMZScout Pro Extension. By looking at niche history and trends you can view graphs from the last year to see how consistent sales are in a given niche.
This is just another reason why the AMZScout Pro Extension is so useful for Amazon sellers.
#4 Choosing the Wrong Sales Model
Selling products on Amazon isn’t like using their affiliate program where there’s really only one method to make money. There are a number of different strategies you can use to sell products on the platform. Many new sellers jump in and choose a strategy before really giving it much thought and if the strategy doesn’t suit there needs they could end up with a lot of unnecessary costs.
So, before choosing your approach it’s important to review all of your options to find the strategy that’s best suited to you. This can depend on things like your budget or your location. For example, a strategy that works for someone in the UK and Australia might not work for people living in Pakistan, India, and Germany.
Here are all the sales models you have to choose from for your business.
Retail arbitrage works by buying products from retail stores, thrift stores, and other online marketplaces like eBay and then selling them at a higher price on Amazon.
If you check sales and clearance bins often you can usually find products selling for less than they’re listed on Amazon. Books are a popular item to sell with this strategy. To make the process a little easier you can download the Amazon Seller App. This will allow you to scan products that you find in stores with your mobile device to see if they’ll be profitable to sell.
Retail arbitrage is a great way to start selling on Amazon. Just keep in mind that it can be quite time consuming and isn’t very scalable.
Dropshipping is a way for you to sell products without actually buying any inventory. Instead, you partner with a supplier. When an order comes in you simply pass it on to your supplier who then fulfills the order and ships it to the customer.
This is a solid strategy for those who don’t have the budget to buy a lot of inventory upfront. However, dropshipping suppliers charge extra for this service which means you’ll pay more for each product than you would if you purchased the items in bulk and fulfilled the orders yourself.
Also, traditional dropshipping isn’t technically allowed by Amazon. There are ways around it and many sellers simply do it anyways. But if you want to follow the rules and not risk your account being suspended you might want to avoid this strategy.
Wholesalers are businesses that buy products from manufacturers in order to resell them to retailers. They offer lower per product pricing than retail stores allowing you to make a profit on each sale. They also generally have lower minimum order amounts than manufacturers.
If you find an existing product you want to sell you can locate a wholesaler that offers the product and purchase it in bulk to resell on Amazon. This is a solid strategy assuming you have enough money to buy wholesale and can find the right product to sell.
However, keep in mind that you’re selling existing products in their original package. This means other sellers will likely be selling the exact same product, which leads to more competition and can result in price wars as you battle with other sellers for the buy box.
Private Label Products
If you’re looking for the strategy that offers the most potential revenue then this is it. A private label product is one that you designed and branded yourself.
The process is actually easier than you think. Once you’ve found a product and niche you think will be profitable, start thinking about ways you can improve on that product. Then go to the Alibaba or Aliexpress sites, find manufacturers and vendors that make those products, and speak to them about your ideas. Most companies will be happy to work with you and create products with your desired alterations. They’ll also let you choose colors, send you samples so you can test the quality, and put your branding or logo on the product.
This strategy can be very successful, but it does require quite a bit of work initially. However, once you manufactured and developed your product you can easily reorder it just like you would from a wholesaler.
Fulfillment by Merchant vs Fulfillment by Amazon
The last thing you need to consider is how you’re going to fulfill your orders. Amazon gives you two choices so make sure you go with the option that’s going to best suit your business.
Fulfillment by merchant means you must store your products yourself and fulfill your own orders. Every time you make a sale Amazon will notify you and you must pack and ship the product to the customer. The advantage is you don’t pay any fees but it can be a lot of work. This strategy is really only suitable for people who either don’t sell a lot of products or have the resources in place to ship a large number of products themselves.
Fulfillment by Amazon lets you ship all of your products to Amazon. They’ll store your products for you and then when an order is placed they’ll pick, pack, and ship the product to the customer. This is much more convenient than fulfilling orders yourself. Just keep in mind that Amazon will charge you for this service. FBA fees start at $2.41 per sale and go up depending on the size and weight of your product.
#5 Not Complying With Rules and Restrictions
Finally, you need to make sure you comply with all of Amazon’s or your government’s rules.
Don’t make the mistake of breaking Amazon’s terms of service. Otherwise, your account could be suspended. Before you begin selling on the website make sure to review all the rules first so you have a good understanding of what’s expected of you.
You should also review the rules of your local government. Depending on where you’re located you may require certain documentation, licenses, and permits.
Updates on these types of rules are performed regularly, so make sure to check back often.
Here are a few rules you should be aware of:
If your monthly sales exceed a certain threshold for three consecutive months it is required for you to have liability insurance. The thresholds depend on where you’re located internationally:
Ten Thousand Canadian Dollars ($10,000) (if the Elected Country is Canada),
One Million Japanese Yen (¥1,000,000) (if the Elected Country is Japan),
One Hundred Thousand Mexican Pesos ($100,000) (if the Elected Country is Mexico),
Ten Thousand U.S. Dollars ($10,000) (if the Elected Country is the United States).
Tax Information and Legal Structure
An Amazon business is like any other business. You need to structure it properly and make sure you pay your taxes.
For American residents, the easiest kind of company you can form is a Limited Liability Company, or LLC. The benefit of an LLC is that you won’t be held liable for the company’s debts, making it similar to a corporation. If you live outside the US do your research and find the best structure for your needs.
When it comes to your taxes, the best strategy is to use a professional. Keep records of all of your revenue with Amazon and bring it to an accountant. They’ll be able to help you file your return and ensure everything is done correctly.
Getting positive reviews is one of the quickest ways to increase your ranking on Amazon. So, it can be tempting to post fake reviews or pay others to post positive reviews for your products. However, this type of behavior is strictly forbidden. If you’re caught your account will be suspended so it’s not worth it.
The best way to get positive reviews is to sell quality products and offer great customer service. If you do this you’ll get a large number of positive reviews over time.
Selling on Amazon can be a great way to make money. There’s a lot to know, but as long as you avoid the mistakes listed above your chances of success are quite good. If you want to improve your odds of finding great products to sell make sure to try AMZScout’s innovative software. These tools will give you the edge you need and provide you with a much better chance of building a profitable business.