How Do I Know if My Product Category Is Right for Amazon

200 million Prime members can’t be wrong. Thanks in part to the circumstances of the COVID-19 pandemic and in part to inevitable changes in consumer behavior, the Amazon Marketplace is the place to be for retail brands looking to grow.

Amazon now offers such a staggering assortment of goods, it’s easy to forget it was once a bookseller. As consumers become increasingly receptive to buying a wider array of products online, many brands see opportunities in the Marketplace they never would have considered a few years ago.

If you are considering joining nearly 10 million sellers on Amazon, here are some crucial considerations to take back to your team before embarking on your journey.

How competitive is your category on Amazon?

It all begins with category research. Before you do the hard work of setting up an account on Seller Central, get the lay of the land.

The double-edged sword of Amazon is that by providing such a highly accessible platform, it also introduces brutal competition amongst sellers. Understand the value of your product category as a whole, and how much of that has been claimed by rival brands.

If your category is saturated with competition, you may have a more difficult time establishing your brand on Amazon. In this case, it’s a good idea to ask yourself what you are bringing to the table that others aren’t. Amazon reviews are a powerful tool for brands hoping to become category disruptors. Look at what customers have to say about the category leaders, and you may identify opportunities to offer an improved version of their most successful products.

Do your products fit the shipping fulfillment model?

Depending on what you are selling, there are some practical considerations you’ll want to address before entering the Marketplace.

Amazon has stringent regulations surrounding products with any sort of health and safety warnings or disclaimers, including cleaning products, pesticides, cosmetics and ingestibles. Many brands have invested a great deal of effort getting themselves set up on Seller Central only to find that they are unable to bring their products into compliance. It’s important to ensure that you can practically fulfill the platform’s requirements if you plan to sell restricted goods.

Further, the size and weight of some products may make shipping impractical or cost-prohibitive. If your goods don’t arrive on time and in one piece, or you struggle to maintain your inventory, Amazon will likely penalize or suspend your account.

Can you be competitive on price?

If your products are even a few dollars more expensive than your competitor’s, you need to be prepared with an obvious value justification. It is incredibly simple for Marketplace shoppers to compare features and reviews, and brands who are new in town may not have the credibility they need to convince consumers to spend more.

While there is potential to succeed at any price point, products in the $20-$50 range typically have the easiest time gaining traction on the road to profitability. The reason? Consumers are more likely to pour significant research and scrutiny into a purchase that exceeds $50, meaning that you can expect more consideration for the competition. Price your SKUs below $20, and shoppers will be more likely to take a chance on your brand – but you’ll have to sell much more volume in order to be profitable.

Will your product be a repeat purchase?

Is your product a one-time purchase, or will consumers want to come back for more?

Many Amazon sellers find that it’s easier to gain traction when they can leverage the buying power and positive feedback of repeat customers. If you can encourage shoppers to buy in bulk or Subscribe & Save, you’ll do more volume in less time.

Although the platform has the unique benefit of connecting extremely niche products with interested buyers, novelty items are more likely to struggle to gather momentum in the Marketplace.

Are you prepared to invest in advertising?

Amazon's platform is so vast, that it can be hard for consumers to find the perfect product in a sea of options. Enter Amazon's A9 algorithm, which has a proven track record of linking consumer searches with products that are likely to fit the bill.

However, when you’re new to the Marketplace and have no real sales history, reviews or performance history across your account and products, Amazon won’t rank you very high. If you want to combat low rankings and invisibility, it's critical to lean into Amazon advertising.

Experience is paramount to build a foundation strategically. By advertising on Amazon, you begin the process of increasing your rank by paying for clicks. As impressions, clicks and conversions increase, so does your rank. Initially, the rank increase will mostly impact your sponsored rank, but as more sales history compiles, your success will translate to organic your rank. Over time, this can achieve the ultimate goal of having your products appear organically on the first page to search results – an indicator that you've finally reached the flywheel!

Though how much you should spend on Amazon advertising will vary depending on your existing level of brand recognition and goals for growth, all newcomers should plan to pay for visibility. Fortunately, if handled strategically, advertising costs should come down over time.

Can you overcome consumers’ preference for in-person shopping?

In one sense, first-time buyers on an ecommerce platform have access to more information than in-person shoppers ever could. In another sense, consumers who buy a new product online are taking a leap of faith – they don’t have an opportunity to hold the merchandise, examine its packaging, or experience how it looks and feels.

Ten years ago, the idea of buying a grill online seemed absurd. How could anyone make that sort of purchasing decision without lifting the lid and testing the knobs on the showroom floor? Today, nearly a quarter of all grill sales occur online – proof that shoppers are willing to take chances when they feel confident in a product’s value.

Brands that want to succeed on Amazon have to get creative with their content to make up for what online shoppers may be missing. This includes highly descriptive, clear messaging, accurate product images and even video demonstrations.

Don’t forget about your reviews. Positive feedback not only keeps you in good standing with Amazon – it generates trustworthy, first-hand information about what consumers can expect from your product.

Are you in it for the long haul?

A frequently overlooked component of a winning Amazon launch campaign is patience. Nurturing sales and brand recognition requires an investment of time and advertising dollars, as well as a willingness to constantly evaluate your sales strategy.

No product category is immune to outside innovation or shifts in consumer shopping behavior. Long-term success requires brands to conduct frequent category research and respond to changes in the retail landscape. Stay in tune with the market, pursue strategies for visibility and respond to shopper feedback, and you’ll stake a winning claim in the Amazon Marketplace.