Finding a product with high demand and low competition is the cornerstone of launching a successful private label business on Amazon. While the Private Label business model allows you to create your own brand and sell a customized product, choosing the right product is crucial for building a sustainable business. The key is identifying a product that consumers are actively searching for, but that isn’t oversaturated with competitors. This combination sets you up for profitability and long-term success.
In this blog post, we’ll walk through the step-by-step process of conducting product research using various tools to help future Amazon sellers find private label opportunities with high demand and low competition. By the end, you’ll have a clear understanding of how to identify winning products that have the potential to thrive in the Amazon marketplace.
1. Understanding High Demand and Low Competition
Before diving into the process, it’s essential to define what “high demand” and “low competition” mean in the context of Amazon private label products.
High Demand:
A product with high demand is one that consumers are frequently searching for and purchasing. Demand is typically measured by:
- Sales volume: The number of units sold per month for a product.
- Search volume: The number of searches for a product or related keywords.
- Consistent sales: Products that sell steadily throughout the year, rather than just during seasonal periods.
Low Competition:
Low competition means fewer sellers are offering similar products, giving you a better chance of standing out and capturing market share. Low competition is usually determined by:
- Number of sellers: Fewer sellers offering the same product.
- Low review count: Competitors with fewer reviews are easier to compete with because they haven’t built up as much social proof.
- Lack of brand dominance: Categories where established brands are less prevalent or don’t dominate.
Now that we understand the importance of high demand and low competition, let’s explore how to conduct this research.
2. Brainstorm Product Ideas and Categories
The first step in finding a private label product is to brainstorm potential product ideas and identify categories that interest you or align with your strengths. While it’s tempting to focus on broad categories, it’s essential to niche down to avoid overcrowded markets.
Tools for Product Idea Generation:
- Amazon Best Sellers: Start by browsing Amazon’s Best Sellers section. This list shows the top-selling products in each category and subcategory, providing you with insight into what’s popular on Amazon.
- Pinterest and Instagram: These platforms are great for spotting product trends, especially in niches like fashion, home décor, and fitness. Pay attention to what influencers and creators are promoting.
- Google Trends: Use Google Trends to search for product-related keywords and see if their popularity is increasing. Look for products with an upward or steady trend rather than sharp spikes that indicate temporary fads.
Once you have a list of potential product categories, the next step is to dig deeper into each category using Amazon research tools to find products that meet your demand and competition criteria.
3. Use Jungle Scout, Helium 10, or AMZScout for Product Research
Advanced product research tools like Jungle Scout, Helium 10, and AMZScout are essential for analyzing market data and finding products with high demand and low competition. These tools pull real-time data from Amazon, giving you insights into sales volume, revenue, competition, and more.
Let’s walk through the steps of using these tools for product research.
Step 1: Set Filters in the Product Database
Each of these tools has a Product Database feature, which allows you to search for products based on various filters, such as price, sales volume, and review count.
- Price: Set a price filter between $20-$50. This range is ideal for private label products because it’s affordable for consumers while leaving room for healthy profit margins.
- Sales Volume: Set a filter for at least 300 sales per month. This indicates high demand for the product.
- Reviews: Set a review filter for under 100 reviews. Products with low reviews indicate less competition and give you a chance to capture market share.
Example:
- Jungle Scout: In the Product Database, input filters like the ones above to generate a list of potential products. Review the results for products that fit within your niche.
- Helium 10: Use the Black Box tool, which allows you to apply these filters and narrow down product options in a specific category (click here for discover the Helium 10 tools with 20% off!).
- AMZScout: Similar to the other tools, AMZScout offers a product database where you can filter products by price, reviews, and sales volume.
Step 2: Analyze Demand and Competition
Once you’ve generated a list of potential products using the filters, the next step is to analyze each product’s demand and competition more thoroughly.
- Sales Volume: Use the sales data provided by these tools to see if the product has a consistent sales volume of at least 300 units per month.
- Revenue: Look for products generating $5,000 or more in monthly revenue. This indicates strong market demand.
- Review Count: Focus on products with fewer than 100 reviews. These are easier to compete with, as it’s challenging to outrank listings with thousands of reviews.
- Review Quality: Check the quality of competitor reviews. Products with poor reviews (e.g., under 3.5 stars) present an opportunity to create a better version of the product and satisfy unmet customer needs.
Example:
- Xray by Helium 10: Use the Xray Chrome Extension to get instant access to sales volume, reviews, and revenue for products directly on Amazon. This real-time data allows you to quickly gauge the demand and competition of each product as you browse.
4. Evaluate Market Trends and Seasonal Demand
While it’s important to find products with consistent demand, it’s also crucial to identify whether that demand is seasonal or trend-driven. Some products experience high demand during specific seasons, such as outdoor gear or holiday decorations, while others may be driven by short-lived trends.
How to Check for Trends:
- Google Trends: Use Google Trends to check the search interest for your product over time. A sharp spike followed by a decline could indicate a temporary trend, while steady growth suggests ongoing demand.
- Helium 10 Trendster: This feature allows you to analyze historical sales data for products on Amazon. If a product’s sales spike during the holiday season and drop the rest of the year, you’ll know it’s seasonal.
- Amazon Best Sellers: Check if the product remains on the Amazon Best Sellers list year-round or only during specific months.
What to Look For:
- Non-Seasonal Products: Ideally, look for products with demand throughout the year. This ensures steady sales and less dependency on a specific season.
- Emerging Trends: Emerging trends present excellent private label opportunities, as they often have growing demand but relatively low competition. However, be cautious about trends that might fade quickly.
5. Evaluate the Competition in Depth
Once you’ve identified a product with potential, it’s important to dive deeper into the competition to understand who you’re up against and how you can differentiate your product.
Steps to Evaluate Competition:
- Review Competitor Listings: Study the top sellers in your product category. Analyze their titles, images, bullet points, and descriptions. Look for opportunities to create a more compelling listing.
- Customer Reviews: Read the reviews of your competitors, especially the negative ones. Pay attention to common complaints, as this can reveal opportunities for product improvement. If customers are complaining about quality, durability, or missing features, you can address these issues with your product.
- Brand Dominance: Check if any major brands dominate the category. If well-known brands are present, it may be difficult to compete. Instead, focus on categories where the market is more fragmented with smaller sellers.
6. Validate Profit Margins
Even if a product has high demand and low competition, it won’t be a profitable private label product if the margins aren’t favorable. Before proceeding, it’s important to validate that the product can provide healthy margins.
Calculate Profit Margins:
- Cost of Goods Sold (COGS): Contact manufacturers (often via Alibaba) to get quotes for producing the product. Be sure to include packaging and shipping costs.
- Amazon Fees: Use the Amazon FBA Fee Calculator to estimate fulfillment fees and referral fees. These costs typically account for 15% of the selling price.
- Target Profit Margin: Aim for a minimum profit margin of 30% after accounting for the cost of goods and Amazon fees. For example, if the product sells for $30, you want to make at least $9 in profit.
By validating the profitability of your product, you can ensure that it’s financially viable in the long term.
7. Test Your Product with a Small Batch
After narrowing down your list of potential products, the final step is to test your product with a small batch. Order a small quantity from your manufacturer, launch the product on Amazon, and run a few PPC campaigns to drive traffic to your listing.
Benefits of Testing:
- Gauge Customer Interest: A test launch allows you to see if there’s genuine interest in your product before committing to a large inventory order.
- Collect Feedback: Use early customer reviews to make improvements to your product or listing.
- Validate Pricing: Testing helps you determine if your price point is competitive while still providing healthy margins.
Conclusion
Finding a private label product with high demand and low competition is the key to building a successful Amazon business. By leveraging tools like Jungle Scout, Helium 10, and AMZScout, you can uncover profitable opportunities, validate demand, and ensure that your chosen product is primed for success. Through strategic research, competitor analysis, and margin validation, you’ll be able to confidently launch a product that meets market demand and stands out from the competition.
