#104 Finding a Killer Amazon Product Part 4: Check Competition!
The next thing to do IF your product has good demand at a fair price (so probably over $30 at least), the next thing to do is to check the competition.
Here we look first at brand dominance. This comes in two forms:
- A big, well-known brand which takes a lot of the market at the higher price points
If you’re in the Cookware space, for example, if you see a product like “Russell Hobbs” and you can see that the spread of prices is $15-30 but only Russell Hobbs is commanding $25-30 a unit sales price whereas the rest only make $15-23, I’d be wary of entering that space
2. A private label type brand
You may well be able to beat these guys because they don’t have a large brand. But you need to have a really really visually differentiated product. Otherwise – you’ll just end up getting shopped on price. Amazon ads costs go up – selling price comes down – profit disappears.
This is an incredibly common pattern – do not ignore differentiation! If you don’t think you can beat similar competition that is well established with a genuinely different and better product, DO NOT go into that market!
If you are considering selling price, I’d advise aiming for $30-40 upwards. It leaves a decent profit margin after Amazon ads, and means you’re less likely to enter into wars on price because price was not your main selling point in the first place. Both of which protect your overall profit margin.
Just because a product may cost more per unit, doesn’t mean that the upfront costs will require a huge budget. Most MOQs (minimum Order Quantities) from Chinese suppliers are in reality more like minimum amounts per order. So as long as you are spending $2000+, you can often get away with much lower MOQs than advertised.
Next we look into projected P & L in more detail.
But remember: Eliminate before you Investigate! Don’t spend valuable time analysing products you should just eliminate.