Almost 50% of U.S. internet users started their product searches on Amazon in 2018 (compared to only 35% who started on Google). So it makes sense to sell your product on one of the most profitable sites on the internet.
There are many products offered on Amazon, which may worry you. Over 12 million products are sold on Amazon. Which of these products are likely to give you a high return on investment?
You do not have to think long about what to sell on Amazon and how to sell it. On the website itself, you can do most of your research for free.
Read on to learn what you should sell on Amazon to choose a low-risk, high-return product.
What You Can and Can’t Sell on Amazon
Prior to choosing products to sell on Amazon, familiarize yourself with the product types you can sell, what you’re prohibited from selling, and what you can sell by under certain conditions. Any products you offer for sale on Amazon must comply with all laws and regulations in the country where you’re selling and with all Amazon policies.
In this section, we bring you up to speed on Amazon’s two main product categories (open categories and those that require approval), call your attention to restricted products, and explain Amazon’s food and safety rules.
Amazon strictly prohibits the sale of any illegal, unsafe, or other restricted products, including those available only by prescription.
1. Products You Can Sell: Amazon’s Product Categories
Amazon organizes all products into dozens of categories and subcategories, some open to all sellers and others restricted to only those sellers who request and are granted permission. In this section, we explore the differences among Amazon’s product categories, so you have a clearer idea of the types of products you’re allowed and prohibited from selling on Amazon.
Amazon offers more than 20 open categories in which you’re allowed to list products with no prior approval from Amazon. These categories include Amazon device accessories, beauty, camera & photo, cellphones, clothing and accessories, electronics, home & garden, and several more.
Even in open categories, you may encounter subcategories, brands, or products you’re prohibited from listing. These restrictions are divided into the following three groups:
- Restricted (gated) subcategories: An open category, such as Beauty, may include subcategories in which permission is required to list products.
- Restricted brands: Some brands are picky about who lists and sells their products. You may need a brand owner’s authorization before you can list the brand’s products.
- Restricted products: Restrictions may be placed on certain products, usually due to their chemical composition or safety concerns.
Before you decide to offer a product on Amazon, do your research and obtain any authorizations required to list the product. To find out about any listing limitations, take the following steps:
- Search for the item you’re thinking of selling.
- In the search results, next to the item, look for a Listing Limitations Apply link. If no such link appears, you’re free to list and sell the product.
- If you see the Listing Limitations Apply link, click the link to view details about the listing limitations. If you still want to list the product for sale, click the Request Approval button.
- Follow the on-screen directives to complete the application process.
If the product you want to sell isn’t already being sold on Amazon, try to create a product listing. If you see the Listing Limitations Apply link, you can assume that the category, brand, or product is restricted. Click the link for details.
Categories that require approval
Over the years, Amazon’s reputation has taken a beating from complaints about counterfeit products and faulty or substandard products sold by third parties. To mitigate these risks, Amazon has identified certain categories that are more problematic than others and placed restrictions on who can sell products in these categories, which include the following:
- Automotive and power sports
- Collectible coins
- Fine art
- Fine jewelry
- Grocery and gourmet food
- Industrial and scientific products
- Music and videos, DVDs, and Blu-ray
- Professional services
- Sports collectibles
- Toys and games (during the holiday selling season)
To list products in restricted categories, you must provide more details about your business and the products you’re planning to sell, so Amazon can ensure that only genuine sellers of authentic products are listing them.
To sell in a restricted category, you typically must meet the following requirements:
- Be an Amazon Professional Seller (Individual sellers aren’t permitted to apply for approval to sell products in restricted categories)
- Submit the required application form
- Maintain good seller performance in certain categories
- Have any required brand lease/distribution agreements in place
- Present business details supporting your authenticity
- Have invoices that support product authenticity
Prior to listing anything for sale on Amazon, read and understand Amazon’s current code of conduct and policies and strive to comply with all restrictions and requirements. Remaining in good standing with Amazon is always a wise policy.
2. Restricted Products on Amazon
Amazon restricts the listing and sale of certain products. Commonly restricted products fall into the following categories:
- Animals and animal-related products
- Art: Fine art
- Art: Home decor
- Automotive and powersports
- Composite wood products
- Cosmetics and skin/hair care
- Currency, coins, cash equivalents, and gift cards
- Dietary supplements
- Drugs and drug paraphernalia
- Explosives, weapons, and related items
- Export controls
- Food and beverage
- Gambling and lottery
- Hazardous and dangerous items
- Human parts and burial artifacts
- Jewelry and precious gems
- Laser products
- Lock picking and theft devices
- Medical devices and accessories
- Offensive and controversial materials
- Pesticides and pesticide devices
- Plant and seed products
- Postage meters and stamps
- Recalled products
- Sex and sensuality
- Subscriptions and periodicals
- Surveillance equipment
- Tobacco and tobacco-related products
- Warranties, service plans, contracts, and guarantees
- Other restricted products
The list of restricted goods isn’t exhaustive. Amazon updates the list regularly through consultations with various stakeholders, including regulators, carriers, and third-party experts. Also, certain products may be restricted only in specific countries or parts of a country; be sure to offer such products with the applicable shipping settings, which you can find in Seller Central by choosing Settings, then Shipping Settings.
Additionally, Amazon requires sellers to get pre-approval to sell products in certain categories such as clothing, grocery, dietary supplements, and certain brands (to protect against counterfeit products). Products that require pre-approval are considered gated.
To gain pre-approval, obtain an invoice from the brand or supplier showing the purchase of at least the minimum quantity Amazon requires for permission to sell that product and use the product’s Listing Limitations Apply option to request approval. Sales of some products are restricted to only Amazon Business Account (BA) holders.
If you’re unsure whether a product is restricted or gated, try listing the product through the Amazon Seller App or Seller Central. If the Listing Limitations Apply option appears next to the product you’re trying to list, select the option and follow the procedure specified to apply for approval. If you’re unsure whether you’re permitted to list a certain product, contact Amazon.
As a seller, you’re responsible for making informed decisions of which products to list and not list on Amazon. Amazon has sophisticated mechanisms in place that flag questionable products based on the product title, ingredients, or evolving database of commonly restricted products.
Listing a restricted or gated product prior to obtaining approval could derail a successful business overnight for violations. If you’re uncertain about Amazon policies, contact Amazon or seek outside legal counsel prior to listing any questionable product.
3. Food Safety Rules
Because people directly consume food products, Amazon regulates their sale closely to ensure that its customers receive safe, fresh, high-quality products.
Every product being offered for sale in the grocery or gourmet food category must meet the following requirements for quality, branding, and consumer safety:
- Is properly prepared, packaged, sealed, and labeled.
- Has all required approvals from relevant government agencies.
- Complies with all applicable federal and state laws.
- Is new (can’t be used or open).
- Has a permanent expiry date printed clearly on the packaging, unless otherwise exempt for any reason. The expiry date can’t be altered or removed.
- Has an expiration date on the multi-pack packaging that matches the earliest expiration date of the individual products contained in the multi-pack.
- Is labeled in English according to the guidelines of FDA Food Labeling and Nutrition, FDA Pet Food, and USDA Label Approval web pages, assuming the product comes under the purview of U.S. federal or state laws.
- Is packaged using the suitable materials to prevent contamination, damages, spoiling, and melting during shipping.
- Ships to Amazon distribution centers with enough shelf life remaining. If you’re using the category specific templates to upload the products, set the value of the is_expiration_dated_product field to “true.”
- Is listed using the manufacturer’s UPC code.
These sections examine organic and chilled or frozen food in greater detail.
To be listed as organic on Amazon, each product must comply with organic regulations set by the USDA or an equivalent international organization recognized by USDA. Every organic product must comply with the following rules:
- Be produced in compliance with USDA organic requirements.
- Comply with USDA organic labeling guidelines.
Chilled and frozen products
Every seller offering refrigerated food, frozen food, or temperature-controlled foods must meet the following requirements:
- Seller must be registered as an Amazon Professional Seller.
- Seller must provide all documentation required by Amazon.
- All refrigerated, frozen, and raw agricultural products must be packaged and sealed with suitable materials for safe shipping.
- All temperature-controlled foods must meet temperature requirements for quality and safety.
- Raw agricultural products that don’t have valid expiration dates must have acceptable shelf life remaining specified on the product.
- Sellers offering temperature-sensitive products are expected to validate the chill chain by demonstrating theoretically how the temperatures are maintained in worst-case scenarios. Similarly, a verification program is recommended to confirm the performance of products in a real business world. Sellers are expected to maintain the validation and verification data with all recorded activities to be produced to Amazon and other relevant regulatory departments upon request.
- Sellers who are planning to sell food products should have proper awareness of all the nuts and bolts of the processes in order to avoid any unexpected disruptions to the Amazon business.
Characteristics of Products with Profit Potential on Amazon
As a retailer, you want to move a lot of products, but you also want every sale to generate a sufficient return to compensate you fairly for the time, effort, and expertise you invest in your venture. By identifying and buying products with respectable sales volume and profit potential, you boost your return on investment (ROI), alleviate some of the pressure to sell large quantities, and reduce the risk of getting stuck with a product you can’t sell for a profit.
In many ways, buying and selling on Amazon is like scoring profits on real estate properties, where experts often advise investors to “make your money when you buy,” meaning if you buy the right property, you’re almost guaranteed to earn a handsome profit when you sell it.
When you’re getting started as an Amazon Seller, look for the low-hanging fruit — products that have certain qualities characteristic of products with high sales and profit potential. While conducting Amazon product research will reveal such products, you can often identify them more quickly by looking for products with these specific qualities.
Selecting unique products that set you apart from the competition gives you greater flexibility to charge what you want without the pressures of competitive pricing. According to the law of supply and demand, the more generic the product, the stiffer the competition, and the lower the price and profit margin.
Here are a few ways to find/create products that stand out from the competition:
- Make your own handcrafted products, such as jewelry, clothing, soaps, toys, games, and so on.
- Invent and patent your own product idea(s), hire a manufacturer to produce them, and then sell them on Amazon.
- Start listing trending products before the competition notices the product is trending.
- Find products that use difficult-to-source raw materials that you can access more easily than the competition. If you can control the supply chain for a specific product, your competitors won’t be able to offer the same product.
Any opportunity to offer a unique product is a good place to start your Amazon journey.
2. Price range and profit margin
The sweet spot for profitable products exists where the product price is above $25 retail with a 40-percent net profit margin or cost to produce of 25 to 30 percent of the retail price to produce it.
Generally, steer clear of products that sell for $20 or less, because Amazon selling fees are likely to gobble up a good portion of your profits. When you sell products for at least $25, you increase your profit margin, which is revenue/cost.
For example, if you buy a product for $3.25 and sell it for $10, Amazon selling fees, FBA fulfillment fees, and the costs related to shipping products to an FBA distribution center are likely to exceed what you paid for the product, leaving you a tiny profit, if any.
3. Sales volume
Although you want to earn a decent profit on each item, selling only a few of an item isn’t going to make you the affluent retailer of your dreams. You want something with a high profit margin and strong sales volume. Unless you’re trying to get ahead of a trend or have invented an amazing product that addresses a serious customer need or fulfills consumers’ longing desires, look for products that meet the following criteria:
- Strong market demand
- Items that people commonly consume, wear out, or replace
Market conditions change over time. For example, computers and cellphones are still strong sellers, but as the quality and functionality of these items have increased over time, consumers are finding that they need to upgrade or replace their electronic devices less frequently, leading to slower sales and increasing competition. The moral of this story is to keep an eye on changing demand and be ready to adjust your product-selection strategy.
You can find plenty of product research and analysis tools (free and not) on the Internet to estimate total sales for main product keywords or product lines. Use those tools to identify products that have steady market demand higher than average sales volume.
One free and easy way to tell whether a particular product sells well is to pull it up in Amazon and add 999 of them to your cart. If the seller has fewer than 999 of those items, the number in stock appears. You can check this number daily to monitor the number of items sold daily and gauge its sales potential. (Of course, the number of items may increase if a shopper returns a product or the seller adds inventory. Also, this tactic doesn’t work if the seller limits the quantity of items a shopper can add to his cart.)
4. Shipping cost/complexity
Shipping costs and complexity are a one-two punch that can knock the stuffing out of your profits. When considering whether to sell a particular product, look for the following traits:
- Easy to pack. Avoid products with complex packaging requirements, such as fragile items or those that require refrigeration or temperature control.
- Two pounds or lighter to ship (and return).
- Easy to ship.
- Sturdy enough to handle shipping, returns, and customer handling.
Shipping costs consume a good chunk of any online retailer’s profits, especially when a customer returns a product, hitting you with a double dose of shipping fees.
Customer ratings and reviews serve as a window through which you can view and understand the competition and how customers are responding to the product and seller. Just find a product you’re thinking of selling and check out the customer ratings and reviews. Look for the following criteria:
- Relatively low number of ratings/reviews posted. When competitors already have hundreds of positive customer ratings/reviews, you’ll have a tough time increasing your listing’s search ranking for that product.
- Relatively high number of low ratings and negative reviews. Low ratings/reviews can be a sign of a problem or opportunity. If reviews indicate dissatisfaction with a product, you may not want to sell it, or you may want to find a similar, higher quality version to sell. If the reviews indicate a dissatisfaction with the seller, you may be looking at a golden opportunity to beat the seller by offering better customer service.
Characteristics of Troublesome Products on Amazon
Some products are more trouble than they’re worth. They can lead you into a legal quagmire, suck your time and energy with complaints and requests for technical support, wipe out your profits with shipping and return fees, or set you up to compete with big-box retailers who are almost guaranteed to undercut whatever low price you can afford to offer.
Some products even have the potential to disrupt your business unexpectedly if Amazon suspends your account while investigating a claim against you.
In this section, we point out some red flags that may cause you to think twice before listing certain products for sale.
1. Trademarked products
When choosing a product, check for a registered trademark for any part of the brand or logo. If a product is trademarked, you’re prohibited from selling it on Amazon unless you have written permission to do so from the trademark owner. If you list a trademarked product without a proper agreement, Amazon considers it to be a counterfeit item.
In the United States, you can research trademarks via the United States Patent and Trademark Office (USPTO) website at www.uspto.gov. In the Find It Fast box choose Trademarks, and then choose the desired trademark search and follow the on-screen instructions to complete the process.
Here, you can find information about the trademark owner along with additional tools for researching, filing for, and managing trademark registrations.
Another, simpler, option is to search online for the trademark to pull up a list of links to patents, trademarks, and branded websites that match your search term.
2. Mechanically complex products
When starting on Amazon, avoid mechanically complex products with moving parts or complex designs, those that require complicated assembly or installation, those likely to require more than minor technical support, and those that can be easily damaged or even made dysfunctional by minor mistakes during assembly or installation.
Products like these are highly susceptible to high return rates, low ratings and reviews, and time-consuming communications and tech support you don’t get paid for. They chip away at your profit margins and can even undermine your account performance, decreasing the ranking of your products in search results.
Several underlying issues contribute to the fact that listing mechanically complex products isn’t a good practice for first-time sellers, including the following:
- Amazon strongly encourages free, no-hassle returns for just about any reason, even if the buyer made a bad purchase decision, changed her mind, or became frustrated after a few minutes of trying to assemble or use a product.
- You typically have to charge more for mechanically complex products to account for the extra time you’ll need to invest in customer service, which can make your product listings less attractive to shoppers.
- Demonstrating product functionality in an environment like Amazon where buyer’s attention span is less than a half minute on average is often challenging, if not impossible. Prospective buyers are likely to lose interest in a listing that requires them to spend more time grasping the intricacies of the product or its assembly or use.
Mechanically complex products can present an opportunity, as well. If you can figure out a way to eliminate or reduce the complexity, you may be able to succeed where others have failed.
3. Products that are difficult and costly to store and ship
Storage and shipping represent significant costs and complexities, so carefully consider listing any products that are large, heavy, or irregular in shape or size. Recognize the factors that contribute to storage and shipping difficulties and costs, including the following:
- Carriers calculate the larger of the actual weight or volume, so you pay extra whether a product is heavier or the package is larger.
- Items shipped in larger containers are more likely to be delivered by ground, thus taking longer to reach the customer. Even though customers can pay more for expedited shipping, the additional cost drives down sales because customers may prefer to buy it at a nearby brick-and-mortar store to get it faster and for less.
- Certain products, including some beauty products, are perishable and more likely to spoil if not refrigerated during transit. Insulating packaging and cold packs can add significantly to the cost of packing and shipping, and customers are more likely to return products if they notice any damage to either the packing or the product.
4. Products sold in large retail stores
You may want to steer clear of products available at large retail stores simply because you probably can’t compete with their price and customer service. Big-box retailers have several advantages over mom-and-pop operations, including the following:
- Lower prices: Large retail stores usually have multiple branches all over the country and even the world and procure any products in bulk quantities at better than wholesale prices through exclusive deals.
- Product displays: Customers can often see and touch products such as laptops, TVs, vacuum cleaners, cookware, and tools before buying them.
- No wait for delivery: Products are more widely available to the customers nearby their house without having to wait days for delivery.
- Fast, easy returns: The customer service counter provides a quick and easy way for customers to get refunds and process exchanges.
Learn more about the best Amazon product research tactics.