Watch our Jungle Scout tutorial to learn how to make money on Amazon FBA with private labeling.
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STEP 1: Research a List of Potential High-Profit Items
Use the Jungle Scout Web App to uncover a list of products that have the potential to make money on Amazon. To do that, use the following criteria with the Product Database tool:
1) They have 50 reviews or less.
2) They are selling 300+ units a month.
3) They have a price point between $20-$50.
4) They weigh 2 pounds or less.
The reason why we want products that meet this criteria, is because we want to find items that are making lots of sales (300+) despite having low numbers of reviews. This is so that we will still be competitive when we launch our own product which will also have low numbers of reviews (as it will be new).
The reason we want to find items priced at $20-$50 is that when we launch our product, we want to price it at least $20 so that we have have at least a 30% profit margin after production costs/shipping costs/Amazon FBA fees. However, if an item is priced at more than $50 it usually indicates that it is quite expensive to manufacture, and as a beginner we don’t want to have to spend too much on our start-up costs, which is why we set a maximum price point.
And of course, the reason why we set the weight to be 2 pounds is so that we can keep shipping costs low (and profits high).
STEP 2: Pick the Best Products to Analyze
Once you’ve used the Jungle Scout Web App to find products that have potential to make money on Amazon, we now need to go through the list and add products that meet a new sit of criteria to our product tracker. Here is the criteria we are looking for:
1) It’s not a big brand product.
2) It won’t be easy to break on transit.
3) It won’t be bulky or hard to ship.
4) It doesn’t require variations.
The reason we want to rule out items that are big brands is because, most likely, the reason why they are making lots of sales despite low numbers of reviews is because they have a lot of authority from their brand. So it’s not a fair comparison to say that we could do the same if we enter the market with our unknown brand.
We want to avoid items that are made out of easy to break materials like glass. Not only would this cause loss inventory costs and refunds, but the bad feedback will hurt our product reviews and our seller statistics – which is not good. And we want to avoid products that are big/bulky when shipping because this will increase our shipping costs.
It’s also important to avoid products that require variations, such as t-shirts which require us to product multiple sizes. Variations can improve conversions of a product, but they are expensive to manufacture. So in the beginning when we have a limited budget, we want to avoid products like this.
When you find items that meet this criteria, add it to the Jungle Scout Product Tracker.
STEP 3: Analyze the Competition
Now it’s time to use the Jungle Scout Chrome Extension to see whether a product has the perfect level of competition for us to make money on Amazon by selling it. Here is the criteria to look for:
1) The price on average is $20 or more.
2) The top 10 competitors should be selling 3000+ units.
3) At least half of the top 10 competitors should be selling 300+ units a month.
4) There should be at least 1 seller in the top 5 with less than 50 reviews.
5) There should be at least 3 sellers in the top 10 with less than 50 reviews.
If an item meets this criteria then that is great: it would be a fantastic product to manufacture and make money on Amazon. If it doesn’t meet this criteria, then we don’t recommend pursuing the product.
BONUS STEP: Analyze the SEO Competition
The way to sell products and make money on Amazon is to rank your product listing in the Amazon search results. And to do that, you want to pick keywords where your competitors have listings that are poorly optimized for conversions. The best way to quickly analyze which keywords are the best to target is with the Jungle Scout Niche Hunter, which is included in the Standard & Business editions of the Jungle Scout Web App.