How to Find a Niche Market Product

I’m going to briefly take you through what you should consider when identifying a niche market product to sell on Amazon in the USA.

Now I’m not going to harp on about this part too much as there is plenty of information out there already. I recommend listening to podcasts such as Smart Passive Income, Freedom Fastlane or The Amazing Seller. These podcasts are great for giving your product hunt some real direction. Finding the correct or almost correct product is a long and tedious process and it is super important to take your time with this. I decided to do this the budget way without using any available research tools. It took me about 2 months of research to find a product I was happy with. The key for me was that the product had to meet the following conditions:

  • It was a product I wanted or would want
  • At least 3 of the top 5 products must have less than 500 reviews, preferable less than 200 (Indicates there is room in the market for new entrants)
  • Product must have a gross margin of over $20. Gross margin = Sell price – Cost of goods sold (Indicates the product is profitable)
  • At least 2 of the top 5 products must have a Best Seller Ranking (BSR) number higher than 8,000 (Indicates that the market is not dominated by big sellers)
  • At least 3 or 4 of the top 5 products have a 4 or 4.5 star rating (Indicates that there is room to improve on existing products)
  • There is a gap in the market (the niche market I picked had the super-premium and the low cost offering with no value for money option in between)

There are a couple of other points that some recommend. I know a few people say to stick to a small product. I didn’t listen to this and went through a lot of pain with the logistics side of things. That said, picking a larger product does mean it is less likely other private label sellers will go to the trouble of entering that niche market. I consider this a barrier to entry.

NicheI stumbled on my product after a couple of months of research because I was in the market for one myself and couldn’t find a product that met all my requirements. I strongly recommend picking a product that is differentiated from current offerings in some way so that you can charge a premium for it.

All that said, do your research, take your time and make your own decisions as to what dictates your product choice. Like I mentioned earlier, there is a wealth of information out there and there is no full proof right and wrong way. A little bit of luck is always required however adequate research will increase your chances of success.

Research Tools

You can do the research for a niche product the manual way, scouring through Amazon and running numbers through excel… kind like I did.  Alternatively you can use one of the few good tools out there such as AmaSuite 4.0 which is a paid product that can compress your research time from months to a week. This tool is great at quickly crunching important statistics from Amazon to identify good niche products. There is also a bunch of helpful tutorials and tips for included in the product for selling through FBA. You can check this software out here. Again, weigh up your time’s value and make your own decision on which way to go (clearly I didn’t value my time much). I can’t speak from direct experience, however the guys I learned from rave on about this software!

Crunch the Numbers

Another quick tip (this is the engineer in me); run a few simple Excel models using some quick pricing from a manufacturer, freight to a FBA warehouse, marketing and expected sell price to ensure you will make a good enough profit to justify the investment. Don’t forget to account for any applicable taxes, additional Amazon charges for premium features such as premium placement (where you get to pick your FBA warehouse), a healthy product return rate and so forth. Trust me, you will be sick of Excel spread sheets when you are done with this!