The first step to enter the Amazon industry is to understand the direction of the store you want to operate, and then investigate the market situation of this category. After the classification is done, the store can be operated. So what do we need to do if we want to do Amazon target market analysis?
1. Market Ceiling Research
After sellers operating on Amazon decide on a product, they need to have some understanding of the product's market ceiling. This ceiling will determine how much sales and profits the seller can generate after the seller’s product becomes stable. You can search for keywords of related products on Amazon. In the search results in the upper left corner, sellers can see the number of related products on sale on Amazon. This can help sellers operating on Amazon to determine whether there is a market for the product.
II. Market Competition
Amazon operators can use keyword query software to capture the monthly search volume of a certain keyword on Amazon, compare it with the current number of products on sale on Amazon, and analyze the market competition.
If a keyword has a lot of searches, but there aren’t a lot of products for sale on Amazon, that means there isn’t a lot of competition for that product. You can make a rough estimate based on the ratio of the two, and if the product competition is very fierce, you can directly exclude it.
3. Brand Concentration
If most of the products in a category come from the same brand, you need to pay attention to whether this category is monopolized by a single brand. In the case of a monopoly, buyers will be more willing to buy products of this brand.
In addition, you need to pay attention to whether there are a large number of Amazon self-operated links in the category. Amazon will also acquire some brands and sell them itself. If a large number of links in a category are operated by Amazon itself, then you don’t need to try this category.
4. Competitive Product Analysis
Many novice sellers have just settled in Amazon’s US site. To sell on Amazon, they need to know themselves and their competitors and analyze similar products to their own.
The main thing is to observe the price, number of reviews, product features, etc. of competitors’ products.
In addition to the above main aspects, sellers need to analyze the sales performance of products in different category rankings, and analyze whether competitors rely on unique factors to achieve such rankings and sales.
Only by paying close attention to your competitors' information can you better optimize your own products and gradually catch up with or even surpass them.
5. Cost structure analysis
Everyone’s goal is definitely the same - to make a profit through sales. Among them, it is very important for sellers operating on Amazon to understand the cost structure of the products.
First, sellers can count the various selling prices of products on the market and use these as their own selling prices to estimate costs. The Amazon platform will charge a 15% commission on the sales price, as well as the FBA delivery fee for the product. After deducting the cost and headquarter cost of the product, the gross profit of the product can be roughly calculated. Amazon may also charge some storage fees and other miscellaneous fees.
If the product gross profit is above 30%, this product can be tried.
6. Seasonality Analysis
Some products will have obvious seasonal effects. So how do we determine whether a product is seasonal?
Sellers can use software such as Googletrend to query and determine whether the product is seasonal based on the popularity of the search. The sales volume of seasonal products generally fluctuates greatly, so it is not particularly recommended to operate it. It is possible that the products will not be sold after the peak season, so you still need to be fully prepared.
Market analysis is a huge topic in Amazon product selection, and some products may even involve patents. By analyzing along the lines proposed above, we can basically draw conclusions about the market situation of the product, which can provide a reference for everyone.
This is the end of the knowledge on Amazon target market analysis for this issue. If you want to get more information about Amazon target market analysis, please pay attention and we will continue to answer your questions~
