How to find a profitable, high-demand, low-competition product to sell on Amazon

For all products you’re considering, analyze them for:

1.Profitability

For every product you’re evaluating, think: can I source and ship this to Amazon for substantially less than it’s selling for?

Generally, you can consider the “rule of 3’s” to estimate this. Each product’s sale is broken up into ⅓ for fees, ⅓ in landed costs, and ⅓ for you. (So, if the product sells for $15, you should expect to profit $5.)

Here’s a breakdown of how you can calculate potential profitability by assessing costs and revenue for each product opportunity.

Costs

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Landed costs

The collective costs to produce and transport your product to Amazon’s warehouses:

Cost of inventory Any preparation or inspection fees Shipping Duties

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Amazon’s fees

Referral fee: Essentially Amazon’s “commission” for each item you sell on the platform, this is typically a flat 15% which you pay when a product sells

Selling plan fee: For professional Amazon sellers, a monthly fee of $39.99; for individual Amazon sellers (those who typically sell fewer than 40 units per month), a $0.99 per sales transaction (but no monthly fee)

Fulfillment fee: For FBA sellers, this per-product fee covers Amazon’s cost for packaging and shipping products, and it varies based on weight and dimensions of your product and which marketplace you’re selling in Storage fees: FBA sellers pay either a monthly storage fee or long-term storage fees

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Other

Business costs may include advertising and packaging

Revenue

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Of course, your take of any sale will depend on how much you can buy the product for, and what fees come out along the way. As a general rule, you want the product to sell for $20-$70 to allow for healthy profit margins. Below $20, profit margins are minimal and possibly not worth your effort. Above $70, some customers are often unwilling to spend higher amounts on a brand they don’t recognize. Simply calculate your profits by subtracting fees and costs from your potential revenue.

Jungle Scout Tip

We recommend using Extension to find out exactly what your profits and Amazon fees are for a certain product. Simply use the Extension on a product listing that is similar in weight and dimensions and click on “Net Price.” From there, you can enter your selling price and your product cost, and Extension will break down all selling fees and show you your profit.

2.Demand

The key component of a good product to sell on Amazon is demand. Do people want this product? Are they looking for it or is there a need or pain point this product could solve? We use data to answer these questions.

The key metric that helps us determine demand on Amazon is sales.

3.Competition

Next, we want to evaluate the competition, determining how many similar products exist and whether there is opportunity in the market for a newcomer.

The key metrics that help determine competition are the number of products and the number of quality reviews and ratings they have. In other words, are the products already listed on Amazon any good?

We’ll use Jungle Scout’s product research tools to explore these metrics and show you how to find profitable products to sell on Amazon.