Why Product Research Is Important for Amazon

Product research is a crucial first step for anyone looking to sell successfully on Amazon. With millions of products and competitors on the platform, taking the time to thoroughly research potential products is key to launching and sustaining a profitable Amazon business. Here are some of the main reasons why product research is so important for Amazon selling.

Validate Demand

The most basic reason to conduct product research is to validate that there is sufficient market demand for a product you’re considering selling. If people aren’t actively searching for and purchasing a particular item, there’s little chance you’ll be able to sell it profitably on Amazon. Product research tools can show you monthly search volumes for keywords so you can confirm consumer interest. They also provide sales history data so you can see the total amounts of a product being purchased. Ensuring genuine demand exists makes it much more likely your listings will gain traction.

Assess Competition

Understanding the competitive landscape is another key reason to do product research before selling on Amazon. If a product already has multiple strong sellers, it can be difficult to breaking into that market and take share. Product research shows you how many other sellers exist for a particular keyword or product, their pricing, their review counts, and more. If competition is too high, it's best to stay away. However, finding niches with genuine demand but lower competition can present excellent opportunities worth pursuing. Put simply, product research equips you with the knowledge of what you're up against before ever launching a product.

Identify Profit Potential

Product research also enables sellers to gauge the profit potential of a prospective product. After determining consumer demand and competition levels, you can then compare potential selling prices to wholesale product costs and shipping fees. This allows you to realistically estimate the profits you could make per sale. Product research tools connect to supplier databases so you can get quotes for manufacturing costs without commitment. If the profit margins for a product are too slim, it likely won't be sustainable long-term. But identifying products with healthy margins for your business can steer you towards more lucrative opportunities.

Inform Keyword Selection

Selecting the right keywords to optimize your Amazon listings for is imperative for product discoverability. If you don't rank well for keywords that shoppers are actually searching for, they'll never find your listings to purchase from you. Comprehensive product research reveals the terms that consumers use when searching for a particular product. It also shows you which keywords your potential competitors are already targeting and bidding on for their listings. Having this intelligence should guide your keyword selection and optimization strategy.

Guide Pricing Decisions

One of the most advantageous uses of product research is to benchmark competitive pricing. Analyzing the going rates that top sellers have set for a particular item prevents you from pricing products too high or too low. Pricing too high means losing out on conversions and rank potential relative to competitors. But pricing too low leaves profits on the table and isn't sustainable long-term. Product research enables you to price within the sweet spot that maximizes sales and earnings. As market prices fluctuate over time, it also arms you with the insight to know when and how much to adjust your pricing.

Assist With Launch Planning

Product launches on Amazon have become increasingly challenging with so much competition on the platform now. This makes pre-launch product research more important than ever. Investing upfront in researching demand trends, buyer behavior, pricing fluctuations, keyword gaps, seasonality effects and more allows you to craft data-backed launch plans. Rather than taking shots in the dark, product research makes your launches more precise and bolsters their chances of success. Planning launches armed with rich analytics insights sets you on the best path possible out the gates.

Inform Sales Estimates

Projecting future sales is an integral part of any Amazon seller’s business planning. Not only for inventory and operational planning but to calculate potential ROI on new product investments as well. Here again, comprehensive product research lends tremendous value. By revealing total category and subcategory demand along with market share distribution amongst top sellers, product research tools enable you to model out various sales scenarios if you entered a market. More accurate sales projections allow you to make smarter decisions about which products to pursue and how much inventory to stock.

Mitigate Risk

Ultimately, conducting diligent product research minimizes financial risk when selling on Amazon. That could mean wasted ad spend because a niche is already over-saturated. Excess inventory if demand falls short of estimates. Excessive price competition that leaves no profits. Negative reviews due to quality issues. These types of risk events can seriously hurt Amazon businesses. But they can also be largely avoided by deeply understanding the markets you enter beforehand through accurate product research and analysis. Selling on Amazon will always carry some inherent risk. Doing product research simply gives you greater control in mitigating that risk wherever possible.

Monitor Market Changes

Markets change, especially on Amazon. So product research can never be a one-time activity if you want to sell profitably over the long-term. Competitor landscape shifts, consumer preferences evolve, new products launch etc. The savviest Amazon sellers continually monitor markets via product research so they can stay ahead of changes and ahead of the competition. Whether demand spikes or craters, prices inch up or new sellers appear, product research keeps your finger on the pulse so your business can adapt in real-time.

Refine Business Strategy

Business strategy shouldn't be static. The best Amazon sellers periodically step back, re-analyze market landscapes and refine their approach accordingly. Relying on lagging sales reports alone provides limited perspective to inform future decisions. More insightful product research reveals gaps in the market, emerging opportunities competitors have yet to capitalize on and other strategic openings better aligned for future growth. Continually researching products and niche markets can spur ideas and new strategic directions for your business over time.

In summary, meticulous upfront and ongoing product research is one of the most invaluable investments an Amazon seller can make. At its essence, product research minimizes risk and breeds sustainable success by arming you with intelligence. Accurate consumer demand, competitor activity, pricing trends, search behavior and more allows you to find and evaluate products with true potential. It also equips you to realistically plan and execute launches as well as monitor listings for maximum profit over time. Simply put, skimping on product research sets sellers up for failure in the ultra-competitive Amazon marketplace. Taking the time upfront is well worth improving your chances of hitting product launches out of the park.

My name is Mark Desimone. I am a writer specializing in health and fitness, parenting as well as gardening and outdoor fishing and hunting,