Market Research

How to Do Market Research on Amazon: Seller Case Study

 We talked to experienced seller Travis Fleming who’s been on Amazon since 2014. Travis lives in Canada and currently makes a living copywriting. Travis always had an entrepreneurial spirit. Ever since college graduation he'd tried different business opportunities. Some worked while others didn’t, but he'd learned something from every venture he started. Travis was working as a Marketing Specialist in the tourism industry, but he was still looking to start his own business.

In 2014, Travis discovered selling on Amazon as a viable option for people to make some extra money and possibly start a business of their own. Over the years, Travis has learned how to sell and grown a great deal as an Amazon seller and eventually became very successful. Some of the most important lessons he has learned have come from the failure of his first product.

Amazon FBA was a very new concept in 2014, and from the start, it was obvious that it was a revolutionary concept. The fact that you could sell your items online without having to store and ship them yourself was very attractive and not a lot of people were aware of it yet. Also, other eCommerce business models, like dropshipping, weren’t nearly as common or as prominent as they are now. Even in the early stages of this revolutionary concept, Travis discovered in time the necessity of Amazon market research.

Product research

In 2014, there were no sophisticated product research tools around, so you had to get by with what you could deduce yourself by browsing Amazon. This primitive form of amazon market research was quite a challenge for beginners back then. Travis checked the bestseller pages, and he got some product ideas based on basic criteria that he had in mind.

However, since there was no way to access accurate data about what was going on in the market, in terms of average monthly sales, fees, and trends, problems were to be expected. While you can never be in a position where you can be absolutely certain that any product will bring you success, the more you know, the less of a risk you are taking.

Finding the “right product”

After extensive amazon market research of browsing, Travis eventually settled on tie clips as his first product to sell on Amazon. This seemed like a good idea for a beginner wanting to get started in eCommerce.Tie clips are small and light, and you can design them so that your product stands out. This was not a bad route to take, and the criteria that Travis used were valid ones. However, his list of criteria to apply to the decision was incomplete.

The main stumbling block for Travis was profit margin. Travis was excited about the tie clips since they were really cheap to manufacture at only about $5 per unit. Since they were so small and light, the shipping costs were decent too. He was previously considering selling an inflatable punching bag but gave up due to high shipping costs. This is why tie clips seemed so attractive in comparison.

Travis was hoping to sell the tie clips for $12 - $15 per unit, which would provide him with a decent profit margin (or a margin that he found acceptable). It turns out that he was wrong with these calculations. 

Finding a supplier

Once Travis had decided on selling tie clips, he went to Alibaba and started contacting suppliers. This is another unskippable step for any eCommerce seller, and as far as this part of the process is concerned, he did everything right. He asked for price quotes and various quantities. Travis ended up narrowing down his list to three possible suppliers.

He proceeded to order samples from all three. After receiving the samples, Travis selected the supplier that he wanted to work with. This is the part of the process that he got right. Sellers often make the mistake of only ordering samples from one supplier. This means that they have already basically made their supplier choice before they even receive the product samples. The fact that Travis had the foresight to get samples from several suppliers ensured that he ended up with a product that met his quality and design criteria.

Travis ended up being very satisfied with both the product and the supplier he was working with. Unfortunately, that wasn’t enough to ensure his success.

Product promotion

To launch his tie clips, Travis decided to give away a number of them for free in exchange for reviews. This worked in the sense that the reviews started coming in, but it didn’t improve his ranking. Keep in mind that this was 2014 and that exchanging products for positive reviews is strictly forbidden now. Amazon removed all unverified reviews from the platform several years ago and now strictly enforces its rules to ensure that every review received is legitimate.

Giveaways are not effective. The seller loses stock to “get the ball rolling”, but there are better ways to make that happen. Travis should have done proper keyword research and committed to using PPC to rise in the rankings.

Even if there were no proper keyword research tools available in 2014, a seller could start with AUTO campaigns, then extract precise keywords and phrases from the report and proceed to target them aggressively. Amazon treats PPC sales just like organic sales, and if you constantly get sales on a keyword, you will start to show up higher and higher organically. If you have a strong product listing and you construct a decent PPC structure, you will be able to make sales even with 0 reviews. This is assuming that you are selling a product that people want to buy.

The difficulties

The tie clips became a failed product for Travis because of the margins. He was not able to sell them in the $12 to $15 range. After trying to sell them at that original price, Travis had to reduce his price and sell them at a break-even level just to cut his losses. He ended up not losing too much money, but he did lose time.

However, through this process, he learned a lot that helped him find success with his future products. Overall, it was a valuable experience. After the experience Travis was wiser and was able to make better decisions in the future, so here are a few tips from a seller that had a failed product so you don’t have to make the same mistake. 

The takeaways

1.   Use market intelligence software

Unfortunately, access to advanced software like the AMZScout Pro Extension wasn’t an option for Travis in 2014. Today, you can leverage every piece of available information. Now, you can view data such as sales volume, sales and BSR history, margins, listing quality, and other invaluable points of data. This information can help you to determine the advantages and shortcomings of selling any product. You will most likely never find any product that is a perfect home run. This is why you should understand the sort of challenges that you face by attempting to sell any product before committing to it as a seller.

When determining the best go-to-market strategy for a new product or product idea, having simplistic advanced software to determine the best messaging that will spark your target market on Amazon is essential. Travis lost money in the long run, due to not conducting adequate market research. Market intelligence software is used by competitors across all industries, not utilizing them will decrease your chances of beating the competition.

2.   Sales Price and margins

The tie clips were not cost-efficient enough at a low selling price, resulting in no profits. It is hard to earn a decent profit on a low-cost item, which is why it’s smarter to find potential products that can sell for at least $25. Margins are another really important factor. A seller needs to calculate the cost of manufacturing, shipping, and the 3 Amazon FBA fees: Referral, Storage, and Fulfillment. There are free calculator tools for this purpose, and most Amazon market research tools will give you this breakdown as well.

3.   Use proper keyword research and PPC

What Travis did in 2014 was not wrong, since, in the early days of FBA, giveaways were a common tactic. There were circumstances where the cost of offering giveaways was justified. These days, this is no longer an option. Now that Amazon has become so strict about the way that any product listing gets reviews, it’s more and more common to see products with a very small number of reviews getting good sales.

Previously, it was almost a given that you would have to spend some money or find a way to get at least those first 5 to 20 reviews. Now, it’s a more even playing field. With a proper PPC setup and understanding of how it works, you can do well. Use keyword research software, identify the most related keywords, and build your PPC structure around them. If you have a good product, it is bound to start growing in sales.

4.   Prioritize Customer Feedback

Every business across all industries understands they need to increase positive reviews and manage poor reviews for the business, but reputation management on Amazon is different. Its very strict platform enables no gray area or spammy reviews added on its site. How can one increase positive reviews naturally without being penalized?

All eligible business prime memberships of Amazon can decrease negative feedback and increase positive reviews free of charge with the Amazon/Qualtrics integration. The following results will unfold from this feature:

  • Access to enhanced channels; email, web, mobile, apps so you can follow up and collect positive feedback from your please customers.
  • Automated reporting and dashboards to pinpoint what the customers love and hate about your products
  • Translate data into results through segmentation, viewing trends, and organized performance metrics.
  • Close feedback loops by connecting to other software and CRM platforms that help sell your Amazon products such as Slack, Zendesk, Stripe, Salesforce, HubSpot, and many more

Imagine how Travis could have changed his negative outcome into a positive. He could not reach his margins because his target audience was not willing to pay at the price value you needed. If he could have received proper customer feedback, he would have known what advances/features needed to be included to sell his clips at the price he wanted. His clips could have been bestsellers because he offered his target audience what they wanted that competitors were unaware of due to his advanced market research.

The Bottom Line to Amazon Market Research

In conclusion, learning how to conduct general Amazon market research is the key to finding the right product. You should not rush the process. Especially as a beginner you should think carefully about what your criteria are and make sure that you get all of the information you can access about any niche that you are considering selling in.

Also, make sure that you set a decent selling price and that people are willing to pay that price for your product. Calculate your margins carefully by deducting all of the associated costs from the selling price. You have every tool available to you in 2021 to avoid making critical errors. With today's tools, you can ensure that your Amazon business succeeds.


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