Finding products to sell is a two-step process — deciding what to sell and finding suppliers that have the product and will sell it to you at the price you need to make profitable sales.
What to sell and not sell on Amazon
We can’t tell you what to sell and not sell on Amazon. That would be like trying to hit a moving target. What we can do is provide the guidance you need to find potentially profitable products on your own. First, you need to know what Amazon will and won’t let you sell in its marketplace. Next, you need to know how to gauge demand for a product and estimate its profit margin.Amazon product limitations
Assuming you shop on Amazon (a foolish assumption we did make), you’re aware that Amazon groups products into categories and subcategories, such as books, clothing, electronics, movies and TV, office products, and pet supplies. As a seller, you need to know that some of these categories are open, some are off-limits, and some are restricted:- Open categories: Amazon features product categories in which you can list items for sale with no prior approval, including clothing, shoes, and jewelry; electronics; home and kitchen; patio, lawn, and garden; sports and outdoors; and toys and games. However, even in some open categories, you may encounter restrictions, such as the following:
- Restricted (gated) subcategories: You need to obtain permission from Amazon before you can list products in certain subcategories.
- Restricted brands: You may be prohibited by the brand owner from listing its products.
- Restricted products: Certain products may be prohibited, usually due to health or safety concerns.
- Categories requiring approval: To ensure product quality, safety, and authenticity for its customers, Amazon allows only reputable sellers to list products in certain categories, such as automotive, collectible coins, fine art, music, movies, and watches.
- Restricted products: Amazon prohibits the listing of certain products deemed unsafe, unhealthy, illegal, or unacceptable for whatever reason, including products available only by prescription.
Don’t list any restricted products or products you think may be considered harmful or illegal. You’re responsible for making responsible choices regarding which products to list, and the penalties for violating Amazon’s policies are stiff; violations may result in account suspension, termination of selling privileges, destruction of inventory (held at Amazon distribution centers), and permanent withholding of payments.
Amazon does provide some guidance on which products you’re permitted to sell. When you try to list a product, for example, you’re prompted to select a category; restricted categories are displayed with a lock icon.Product research
Product research is an important step to ensure the salability and profitability of a product. You generally want products that meet the following criteria:- High demand: To spot the best sellers in each product category on Amazon, visit Amazon.com, and in the toolbar near the top of the page, click Best Sellers. Use the navigation bar on the left to choose the product category you’re interested in.
- Weak competition: Skim through the reviews for a product you’re thinking of selling. If you see a lot of low product ratings and negative reviews, you may be able to beat the competition by creating a more accurate product listing, providing better customer support, or selling a similar but superior product.
- Decent profit margin: Generally, look for products that sell for more than $25 and you can buy for 60 to 70 percent less than the sales price, which will give you a decent profit margin after subtracting your costs.
The Amazon Seller Mobile App is a great tool for conducting product research. For most products listed for sale on Amazon, you can see whether you’re eligible to sell the product and the lowest price it’s listed at, its sale rank, and your estimated profit after subtracting the your costs, including Amazon selling fees, shipping fees, and the product’s net seller proceeds (see the following figure).
- Light and easy to pack and ship: Shipping and handling costs and complexity can leach the profit out of your product sales, so generally avoid products that are more than two pounds, fragile, or bulky. This will also save you money if you need to pay for storage.
- Not seasonal: Look mostly for products that have steady sales throughout the year. Seasonal products, such as those that sell well only in the spring or summer or only near certain holidays are okay, but don’t rely on them for a majority of your sales.
Amazon Mobile Seller App is a great tool for conducting product research.Product sourcing options
Product sourcing is the process of finding items for a low enough price that you can sell for an acceptable profit. Numerous product sourcing options are available, including the following:- Retail arbitrage: You buy deeply discounted products, typically from large brick-and-mortar retailers, mark up the price, and list them for sale on Amazon. Retail arbitrage also applies to buying from online retailers, such as eBay sellers.
Keep in mind that Amazon restricts some product categories and specific items, including many branded products. For example, you may not be permitted to purchase a pallet of brand name shoes from a major retailer at discount and list them for sale as “new” on Amazon.
- Auctions and liquidation sales: Local and online auctions (and estate sales) allow you to bid on items and often buy them for significantly less than they would be sold for in traditional retail stores, although you may be required to list these items as “used.”
- Drop shipping: With drop shipping, you select items from a drop shipper’s catalog and list them on Amazon. When a customer orders the item, you pass the order to the drop shipper who picks, packs, and ships the item to the customer according to your specifications, so it looks as though it came from you.
- Wholesalers: Traditional processing involves purchasing a large quantity of products from a manufacturer, then selling them individually at a significant markup to consumers. You can find plenty of domestic and foreign suppliers that offer products at wholesale prices.
Product sourcing platforms such as Alibaba.com provide easy access to tens of thousands of manufacturers and other wholesalers. You can also connect with suppliers at popular tradeshows.
- Handmade products: You can make your own products to sell on Amazon and list them for sale in the Handmade category. However, you must register with Amazon as an artisan, and your products must be hand-crafted, not mass-produced. (You can use hand tools and light machinery.)