Determining If There Is Too Much Competition For Your Amazon Private Label Product
There are often 2 main things that we tell our course members to be looking for in a new private label product: 1) Customer Demand, and 2) Limited Competition. In this episode of The Amazon Seller Podcast, we discuss some key indicators to look for when trying to determine if there is too much competition for your new Amazon private label product.
Determining Your Main Keyword
First off, when you are doing product research, you want to try to determine the main keyword for your Amazon private label product. If you miss this part of the process, it may lead to bad decisions down the road. Many people have trouble with this step because it isn’t always immediately apparent what the main keyword is that a product is ranking for on Amazon. At first glance, you may feel that it is a word that sticks out to you the most in the title as being the most descriptive. However, that isn’t always the case. There are several tools available that estimate the number of searches per month of keywords on Amazon that can help with this.
Key Indicators To Look For When Researching New Amazon Private Label Products
- Number of similar listings: One of the first checks you should look for is the number of similar listings that are already on Amazon. This all comes down to supply and demand. If there is a lot of customer demand, then the Amazon marketplace can likely support more listings/supply. If there isn’t much customer demand, then the marketplace likely won’t support many listings. So how many similar listings is too many? There is no one-size-fits-all answer for this, unfortunately. That being said, if there are less than a page of similar products, that is probably a good sign. Similarly, if there are pages and pages of product listings that are all very similar except for a few minor differences, then the market is likely saturated.
- Price trends: Liran recommended in the podcast that you look at price trends when doing your Amazon private label research. You can use a tool called Keepa to look at historical price trends and rank trends right on Amazon. (Check out this article for help on reading Keepa and determining if a product is worth buying). When looking at price trends, you want to try to determine if most of the listings on Amazon with some history are trending up or down (or the same) with their prices. Prices trending down may be a sign up increased competition.
- Number of reviews: How many reviews do the top listings you are planning to compete with have already? If there are relatively few reviews on listings, that is usually a good sign that you can come in and compete pretty quickly. If there are hundreds or thousands of reviews on the top listings, you may want to be more careful. This isn’t a perfect indicator, and you can compete with listings with high reviews (especially if the reviews aren’t very good), but it is something to watch out for. Your brand new listing with zero, or very few, reviews isn’t going to have the social proof that many Amazon shoppers look for when making purchasing decisions
- Amazon Sponsored Ads competition: How competitive is the Amazon sponsored ads space? When you look at similar listings to your new product, are there several pages of similar items that are competing for Sponsored Ad spots? If so, that is a sign that there is a decent amount of competition. If not, then you can likely get into the market and use Amazon Sponsored Ads at a lower cost per click when advertising.