Amazon FBA Product Selection: A Comprehensive Guide

Last updated: July 27 , 2023

With over 2 billion monthly users, Amazon is the undisputed king of e-commerce. Keen sellers are jumping on the bandwagon every week, opting for online arbitrage instead of selling their own products. This process involves purchasing products at a low price, then selling them for a higher price on Amazon. Plus, you can use Amazon fulfillment centers to save on storage costs, ensuring high levels of customer service and rapid shipments.

It's no secret that product research and selection is the backbone of any arbitrage ecommerce business. You need to find profitable, high-demand products with a significant profit margin.

Enter OACheddar, your trusted ally in the realm of Amazon arbitrage. Our mission is to equip you with the most profitable opportunities and hidden gems. This guide dives into the secrets behind product selection. Whether you're an online arbitrage pro or an Amazon seller just branching into this field, we've got you covered.

Keep reading to learn everything you need to know about the best Amazon FBA products and snagging solid deals.

What Makes Good Amazon FBA Products?

Selecting the right products for your Amazon FBA business can feel like hitting the jackpot. It can lead to substantial success and boost profitability. However, not all products are created equal, so adding the right items to your product portfolio is essential. Demand, competition, and profitability are all factors you should consider.

1. Demand

Regarding product selection, demand is the bedrock on which your success is built. Amazon FBA sellers should look for products that have steady consumer demand. Evergreen products, for example, have consistent sales that don't fluctuate too much based on seasonality. Seasonal products can still be profitable, but they should have consistent demand year on year.

2. Competition

There are some highly competitive categories and some less challenging niches. Analyze the competitive landscape before you select products to sell. If there are thousands of other sellers peddling the same thing, there's no point wasting your time. Seek products with a healthy balance of demand and competition.

3. Profitability

While chasing your passion is admirable, profitability is the lifeline of any business. Calculate your potential profit margins by determining the product's cost, Amazon FBA fees, and other associated expenses. Aim for products that offer healthy profit margins to sustain and grow your business.

What is the Most Efficient Item to Sell on Amazon?

Product research is the key to finding success on Amazon. After you have some product ideas, you need to consider how you will procure and market these items. Consider the above factors when deciding on the best product to sell.

Imagine you want to get into the electronics market, and you want to sell smartphone accessories. You use free tools to analyze some hot sellers and find that phone grips are witnessing a surge in popularity but still have only moderate competition. This indicates a potentially profitable opportunity.

Conversely, you find that earbuds have fierce competition. Although they sell for a higher price point, the marketplace is too crowded to stand out.

The more you do this, the more you develop a keen eye for spotting products. A product research tool is always useful to help you identify a niche market where you can sell effectively.

Identifying Profitable Products for Online Arbitrage

If you have an Amazon seller account, you're ready to start selling online. However, if you want your business to succeed, then identifying the best products is essential. There are several methods for finding products to sell in online arbitrage. These three methods are tried and tested, so try to use them when searching for product ideas.

1. Understand the Most Profitable Product Categories

Certain product categories offer higher profit margins than others. For instance, electronics and beauty products often have greater markups compared to books. According to research, the less popular categories sometimes have higher markups simply because it's easier to stand out when selling a niche product. For instance, 10% of sellers in the Arts, Crafts, and Sewing category have 51-100% net profit.

Familiarize yourself with the product categories on Amazon (they appear beside the Amazon search bar) and investigate which ones are more lucrative. Don't overlook smaller niches within less competitive categories because they can yield unexpected profitability.

Source: amazon.com

Insider Tip: Keep a close eye on seasonality and trends within the various categories to capitalize on peak buying periods. Utilize organic search results and Google Trends to check out product offerings.

2. Check Out Amazon's Best Seller Rank (BSR)

The BSR is a goldmine of information for online arbitrage sellers. BSR ranks products based on their sales performance within a specific category. Lower BSR indicates higher sales velocity, so the #1 product is the most in-demand. Look for products with a consistently low BSR.

Insider Tip: Utilize Amazon BSR tracking tools of extensions to quickly gauge the history of a product and identify trends over time. You may also set up alerts for new products.

3. Look for Trending Products and New Releases

Stay ahead of the game by identifying trending products and new releases that are gaining traction. If you're on the ball, there will be lower competition for these high-demand products. This gives you an excellent opportunity to grow your arbitrage business into a successful one.

You can identify new top-selling products by following industry news, social media, and niche-specific platforms.

Insider Tip: Keep an eye on crowdfunding platforms like Kickstarter, where innovative products may be launched before they hit other ecommerce sites.

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4. Leverage Tools

In the fast-paced world of online arbitrage, the right brand-building tools are your secret weapon. There are various software applications to streamline your product research process and help you gain a competitive edge.

  • Price Tracking Tools: Utilize price tracking tools that monitor product prices and historical data. These tools can help you identify price trends and fluctuations, ensuring you make informed buying decisions.
  • Repricing Software: Automated repricing software can adjust your product prices based on competitor changes, keeping you competitive while maximizing profits.
  • Product Research Extensions: Browser extensions like Keepa provide essential data, such as price history, sales rank, and product trends, directly on Amazon product listings.
  • Online Arbitrage Software: Dedicated Online Arbitrage software can help you find profitable deals across various online platforms. These tools often allow you to set filters based on criteria like ROI, sales rank, and category to pinpoint lucrative opportunities quickly.
  • Analytics Software: There are plenty of tools that monitor your brand health, including sales volume and history. Checking this software will help you sell on Amazon effectively and grow your business.
  • Inventory Management Software: As your business grows, efficient management becomes crucial. These tools can tell you how much inventory you have and the sales history of certain items. Use them to track stock levels, sales, and reorder points seamlessly.

Some of these tools are available through Amazon seller central in your brand dashboard. However, there are also paid offerings that give you critical insights into your brand and even forecasts for the future.

Source: keepa.com

Insider Tip: When utilizing tools, always cross-reference the data from different sources to ensure accuracy and avoid making decisions based on incomplete information.

5. Avoid Common Pitfalls

All business ventures have their potential pitfalls. Here are some common ones to avoid.

  • Avoid restricted products: Amazon has strict restrictions on certain products. Conduct thorough product research to ensure you're eligible to sell the item. Also, double-check the brand restrictions. Otherwise, Amazon might restrict your seller account.
  • Beware of seasonal products: While seasonal items can be lucrative during peak periods, they may become dead stock afterward. Plan your inventory carefully to avoid tying up capital in unsold items.
  • Factor in fees and shipping costs: Calculate your overall costs, including Amazon FBA fees, shipping, and handling. Overlooked expenses can quickly eat into your profits.
  • Prioritize customer service: Without excellent customer service, you can't grow your brand. Encourage buyers to leave reviews to boost your ratings.

Insider Tip: Managing costs is essential for running your business. You can use a spreadsheet to keep track of fulfillment fees, shipping costs, marketing efforts, and stock. This simple method works, but software tools have extra functions to run your business smoothly.

The Best Products to Sell on Amazon FBA

You can grow an online arbitrage Amazon business selling all manner of products. However, some categories are more popular and profitable than others. Here are nine of the top categories for you to browse.

Most Profitable vs. Most Popular Categories

Popular categories on Amazon are astoundingly successful. For example, Amazon is the number-one seller of pet supplies, taking in $23 billion in 2022. Still, pet supplies are not the number one category on the site.

While the most popular categories attract a vast customer base, they are also highly competitive. On the other hand, the most profitable categories may have higher margins but lower overall demand. You need to evaluate which business model works best for you and try to strike a balance between these two factors.

If you're looking to do online arbitrage and sell on Amazon, here are the most popular categories.

1. Home and Kitchen

Home and kitchen products include everything from kitchen gadgets to home decor. This is consistently one of the most popular categories on Amazon. However, it also has high competition. Many arbitrage retailers looking to sell on Amazon choose this category due to its low entry barriers. As a result, you're going up against hundreds of other sellers.

2. Beauty and Personal Care

Beauty products enjoy consistent demand, making this category a reliable choice for FBA sellers. From skincare to cosmetics, products in this category can yield attractive profit margins. Personal care products have multiple categories, including fragrances, anti-aging products, Q-tips, makeup, and more.

3. Toys and Games

Toys and games are a hit year-round but have peak seasons during holidays and special occasions. Competition can be fierce, but offering unique or trending products can make this category highly rewarding.

4. Clothing, Shoes, and Jewelry

Fashion is a lucrative industry, and with an 11-12% market share of all apparel sold online in the US, Amazon is a great place to sell it. This category is competitive, so it demands careful product selection to stand out. Specializing in niche clothing, trends, or unique jewelry can help you grow a successful business.

5. Health and Household

The health and household category includes replenishable items like vitamins, supplements, and cleaning supplies. There's a growing focus on wellness, but sellers should be aware of potential restrictions. When done correctly, this category can offer steady demand and profit.

6. Sports and Outdoors

Sports and outdoor enthusiasts drive demand for equipment, gear, and accessories. If you have an interest in sports yourself, check out the top-selling items in this category to find niche products to sell.

7. Arts, Crafts, and Sewing

Creativity knows no bounds, which is why the arts, crafts, and sewing category thrives on Amazon. There is a vast range of products to sell in this niche, with hobbyists and DIY enthusiasts keen to snag great deals.

8. Books

Jeff Bezos started out by selling books on Amazon, which explains the vast library available on the site. Books are a staple of Amazon, attracting avid readers and collectors alike. In this category, you can sell pre-owned products, first editions, collectibles, and the latest novels. While profit margins may vary, finding niche genres can lead to lucrative sales.

9. Baby Products

As a growing segment of the market, baby products cater to parents and caregivers seeking convenience and high-quality products. Consider niche items or unique baby accessories to excel in this category.

How to Score Deals for Online Arbitrage

When it comes to online arbitrage, scoring lucrative deals is the name of the game. Amazon resellers must develop a system that considers not only profitability but also product quality, availability, and more. There are a few business models you can adopt to find the best deals.

Firstly, you need to find low-cost, high-quality items that you can resell. Consider the following when selecting products:

  • Data-driven research: Leverage data tools to analyze product performance, demand trends, and competitor insights. Data-driven decisions enable you to identify products with a strong track record of success and market potential. You can also use tools like CheddarSoft to keep track of your OA leads.
  • ROI analysis: Calculate the ROI for each product, factoring in purchase cost, FBA fees, shipping, and other expenses. Focus on products with higher ROI to maximize profits.
  • Diversification: Avoid putting all your eggs in one basket. Diversify your product ideas to reduce risk and explore multiple income streams.
  • Staying agile: Keep a finger on the market's pulse and be open to adapting your strategy based on changing trends and demands.

With these factors in mind, here's how to find items to sell.

Capitalizing on Clearance Sales, Liquidation Stores, and Seasonal Deals

To find profitable products for online arbitrage, explore the following sources:

  1. Clearance Sales: Many online retailers offer clearance sales to clear out excess inventory or older models. Take advantage of these opportunities to grab discounted products.
  2. Liquidation Stores: Liquidation stores and websites offer products from overstock, closeouts, and customer returns. Buying from these sources can lead to massive savings and high-profit potential.
  3. Seasonal Deals: Keep an eye on seasonal promotions and holiday sales, where prices on certain products drop significantly. Anticipate seasonal demand and source products accordingly to capitalize on peak buying periods.  The Today’s Deals tab can give you an idea of current offerings.

Source: amazon.com

The Value of Thorough Research and Building Strong Retailer Relationships

Extensive research is the cornerstone of successful online arbitrage. Analyze historical data, sales ranks, and customer reviews to make informed decisions.

You should also spend time forging solid relationships with online retailers and suppliers. Being on good terms can lead to exclusive deals, early access to sales, and better negotiation opportunities.

Tapping into Wholesale Opportunities

Selling wholesale products has a variety of benefits for online arbitrage resellers. Firstly, it ensures a steady supply of the same product. Secondly, wholesale prices are often better, benefiting your margins. Finally, it helps to manage your inventory effectively.

The same factors apply when shopping around for wholesale opportunities. Try to aim for a niche product selection with high demand but low competition. Also, opt for the same high-quality standards you would use if it were your own brand. Selling trusted brands helps you exceed customer expectations and garner trust.

You can find trustworthy wholesale suppliers at:

  • Networking and trade shows
  • Online wholesale directories
  • Negotiations with online sellers

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How to Make Your Products Stand Out and Sell More

Making your ecommerce business stand out can be difficult in the sea of Amazon brands. That said, standing out is essential for success. Here are six powerful strategies to help your products shine.

1. Offer a Variation

Amazon sellers try to beat their competitors by offering variations, selling a wider variety of items than others. You can also sell items in a variety of different colors, sizes, or features.

2. Create Better Listings

Craft compelling and optimized listings that highlight the USPs of each product. If you want to sell on Amazon, exciting and informative product descriptions are crucial, but so is SEO. You can use SEO tools to target a particular keyword or phrase, ensuring you rank highly. Also, make sure you use high-quality images to attract potential buyers.

3. Do a Design Upgrade

Purchase products wholesale and invest in design upgrades to improve the aesthetics or functionality. This conveys a sense of quality and entices customers.

4. Market to a Specific Audience

Identify and target a specific niche or audience for your products. For example, if you sell makeup, market to older women with anti-aging concealers and lotions. Tailoring your products to a niche audience helps you create a personalized shopping experience and garner more positive customer feedback.

5. Use Bundles

Offer product bundles that combine complementary items, providing added value to customers. Bundling can increase the perceived value and encourage larger purchases.

6. Sell Products Related to Your Niche

Expand your product line by regularly introducing new items related to your existing niche. Leveraging your expertise and credibility can build customer trust and encourage repeat business.

Unleash Amazon FBA Success

Product selection is the cornerstone of success in online arbitrage. By focusing on profitable, low-competition products, you set yourself on the path to thrive in this dynamic marketplace.

If you're keen to get started with high-quality leads, OACheddar is your most valuable resource. Leveraging the knowledge of our experts can give you the competitive advantage you need to unearth hidden treasures and make informed decisions.

Confidently seize the opportunities that lie ahead with expert webinars that will help you excel in online arbitrage.

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