Your eCommerce Guide to Amazon Product Research

This article introduces and summarizes our ultimate five-step guide for successfully conducting Amazon product research and Amazon market research using DataHawk. By honing in on DataHawk's advanced marketing analytics features, you can have a deeper analysis of a vast array of marketing data that work to reveal patterns, market trends, campaign performance matters, as well as other artificial-driven insights. Already done your research? Take a look at this article to learn how to successfully launch your product on Amazon.

Running Product Research and Market Analysis on Amazon with DataHawk

Do you plan to launch a new product on Amazon or reposition a product you are already selling? Building a competitive strategy on Amazon is not just guesswork. The very first thing you should do is produce advanced marketing analytics data-driven reports of Amazon products and Amazon market analysis within your target niche, and we will show you how to execute this.

In short, succeeding on Amazon comes down to ONE absolute ingredient: product research. It is vital to know how your Amazon PRODUCT stacks against the competition and Amazon market research can help you do just that.

Everything is contingent on your choice of product, such as pricing, potential market share, required investment, scalability, procurement, logistics, costs, competition, profit, and so on. Now, you can spend an exhaustive amount of time exploring an array of underlying parameters that define the Amazon game, which has been facilitated by Amazon's A9 then A10 algorithms. Or, you can dedicate your time to five key factors that define success for Amazon sellers. 

The goal of this guide is to give you a strategic edge over your competitors. It will provide you with detailed examples on how to apply the five fundamental principles by leveraging DataHawk's powerful data insights to help you deliberately crack Amazon's ever-evolving algorithm with DataHawk's potent Amazon seller tools.

1. Amazon Product Research: Know Your Competitive Landscape

Product Research and Market Analysis on Amazon with DataHawk

There is no doubt that your Amazon product will be competing with hundreds of other great products. While some may be your direct competitors, others may very well be indirect competitors. This competitive landscape will define the potential of your product, which is why you must have a clear and well-defined idea of all that comprises your product. Such as:

  1. Pricing distribution
  2. Reviews distribution
  3. Rating distribution
  4. Product and listing quality distribution

How do you know what defines your target market in terms of the items listed above? It is relevant to understand how page one compares to page two and so on. For instance, why would you want to launch a product priced at $100 in a market where page one search results are saturated with top performers priced at $50 and have amassed hundreds of five-star reviews? If you do this, you will struggle and most likely fail at your selling endeavor, not because of the product itself but because Amazon's algorithm favors lower-priced products. Implementing a Competitive and Dynamic pricing strategy is crucial, but how do you determine what is a competitive strategy?

With DataHawk, doing Amazon market research to understand your competitive landscape and analyze your competitors in detail is made easy. You can do this instantaneously when starting to monitor a related keyword that represents your target niche in two ways: 

  1. DataHawk's advanced marketing analytics features provide you with an in-depth Amazon market analysis of the product ranking for that keyword on Amazon through key performance indicators (KPIs) such as their average and median price, number of reviews, and ratings. Maximum, minimum, low quartile (lowest 25 percentile), and high quartile data are also presented. Beyond giving such market research, DataHawk allows you to see how those KPIs vary by page as well, which is tremendously helpful as you crawl your way from low ranking pages to page 1 - and believe me, the differences can be substantial.
  2. DataHawk also allows you to browse through the 200-300 products that usually index in an Amazon search query's first 20 browsable pages. You can do this quickly and effortlessly by using instant filters on desired price ranges, the number of reviews, and ratings, sorting the results in an ascending or descending order, and applying tags or labels. If you are interested in monitoring a competing product in detail, DataHawk allows you to track it, along with its performance. Tracking a product with DataHawk enables you to follow its keyword rankings and changes in its KPIs (price, reviews, rating, best sellers rank), all while getting an estimate of its monthly sales. You can leverage DataHawk's Amazon sales dashboard to have your numbers on your tips.

Mapping out your competitive landscape and knowing it verbatim is the only way to be and stay well-armed to best position your product. Not to brag, but there's a reason 8 out of the top 10 Amazon FBA Aggregators use DataHawk!

2. Amazon Market Analysis: Know Your Pricing

Product Research and Market Analysis on Amazon with DataHawk

Pricing is King, and the typical Amazon customer is highly price-sensitive, seeking the best price/quality balance in the marketplace. Amazon's essential customer resource is time spent browsing product listings. Thus, their ultimate goal is to maximize one golden metric: the Net Revenue Per Minute (nRPM).

While you would naturally think a higher price would drive a higher nRPM, think again: a higher price also means a lower conversion rate. And in the price-driven red ocean and constellation of social proof signals that Amazon is, filled with on-page diverting sponsored product ads to lower-priced and high-converting competing products, you want to be price-competitive. Our data at DataHawk clearly shows it.

There is an astounding correlation between price and ranking on Amazon: a lower-priced product with low reviews will almost always beat a higher-priced product with dozens if not hundreds of more reviews.

If the median price of the products ranking on page one of a keyword search query on Amazon is $100 and the top 25% highest-priced products are priced at $120, you most definitely want your product to be in that ballpark, or even preferably below. Also, this certainly means you'd probably have zero chance at ranking at page one should you price your product at, say, $150, which is way above the median and top quartile market research figures.

When contemplating a new product launch or repositioning an existing product you are selling, make sure you have appropriately and exhaustively done your Amazon market research in terms of how your competing products are priced. DataHawk, for example, can help you drive your pricing strategy and analysis on Amazon using Data Analytics Software tools. Here's how:

  1. Identify a set of mid-tail keywords (three words) that best represent your product and best reflect high-converting search queries for it while taking into consideration its features, price, and quality.
  2. Dig deep into those keywords and analyze them. By tracking those keywords on DataHawk, you can get their monthly search volume estimate and data from the Amazon market analysis tool.
  3. Analyze how the pricing is structured for each keyword while mainly focusing on page one median prices.
  4. Leverage data around estimated Amazon monthly sales, Amazon reviews, and Amazon BSR to see how the top performers are doing.
  5. Set your target price.

Keep in mind that pricing determines many other components of your business, including upfront startup costs, branding, margins, FBA costs, weight, etc. Choose wisely which product Average Selling Price (ASP) you would like to have when considering your competitive landscape and business goals.

3. Amazon Market Analysis: Know Your Total Addressable Market

Product Research and Market Analysis on Amazon with DataHawk

Gauging the estimated size of each Amazon niche you assess can help you decide which target market to focus on. By figuring out the potential market share and sales volume, you may be able to identify how your products are positioned within your competitive landscape, notably in terms of pricing.

Your Total Addressable Market (TAM) assessment is calculated by analyzing the interest level of purchasers within that market, which is reflected by the monthly search volume related to the search queries that purchasers use when scouting for your product.

By knowing the search volumes attached to various product categories, you have a proxy of the market opportunity on Amazon and the kind of sales volume you could expect in each one depending on how you rank for the keywords related to it. You can also benchmark those different opportunities and better know which one to pick depending on your goals and competition for each one.

Assessing your TAM on Amazon with DataHawk is very easy. Just follow those steps:

  1. Identify a set of short-tail keywords (ideally two words) that best represent the product categories you are benchmarking and track them on DataHawk. If you are in the leather goods space, an example would be assessing "leather bag" vs. "leather briefcase" vs. "leather satchel" vs. "leather portfolio" vs. "leather tote bag" vs. "leather backpack," etc.
  2. DataHawk allows you to discover the monthly search volume attached to each keyword in the marketplace you are interested in. This data is a trusted estimate pulled from Google. The big data available on the platform provides you with an estimate of the market opportunity or TAM related to each of those product categories.
  3. To get a dollar-based estimate of your TAM, all you have to do is leverage DataHawk's insights about how each product category is structured in terms of average product pricing. Then, multiply that by the search volume, then further multiply it by a hypothetical "reach" or "click-through-rate" ratio that would try to reflect the effect of ranking at page one versus page two on Amazon.

Armed with information about market opportunities via the lenses of keyword search volume will enable you to make much stronger product launches and business decisions on Amazon.

4. Amazon Product Research: Know Your Required Budget

Product Research and Market Analysis on Amazon with DataHawk

Launch it, and they will come? Well, not really, and not on Amazon, where you need to invest money to push your product higher on Amazon rankings.

This is what is meant by the "Know your Required Budget" mantra: have an idea of what initial investment you need to make to reach that minimal ranking and reviews-based social proof threshold that would allow you to jumpstart a recurring flow of sales on Amazon. In other words, know your required Startup Marketing Budget.

A good metric and indicator that can help you define your required startup marketing budget are reviews, and you can follow the framework below to leverage them:

  1. You need a minimum threshold of "social proof" reviews to make Amazon customers feel comfortable clicking on your product's picture then buying it. Naturally, the higher the number of reviews your product has, the higher your click-through rate (the % of customers who visit your product's page after making a search), and the better your sales conversion rate will be. On average, ten reviews are an ideal minimal target.
  2. Depending on your product and the keywords you are aiming to rank for, you would need a certain number of reviews to be likely to rank on page three, another higher number for page two, and an even larger number of reviews for a chance to be on page one. As such, and depending on your target sales velocity, which is affected by your Amazon keyword ranks performance, you may consider collecting a more significant number of reviews early on. This larger threshold is referred to as your target competitive reviews threshold.
  3. Using both those thresholds, you can budget for your product launch marketing budget on Amazon by using a hypothetical "reviews rate" representing the percentage of your customers who would leave a product review. Assuming a seven percent review rate and a target threshold of ten reviews, you know you would need 10/7% = around 140 orders to get those ten reviews that would jumpstart a minimal recurring flow of sales for your product. You can call those your startup launch orders.
  4. To help those orders come in, you need to generate traffic to your product page, further enticing Amazon's algorithm to make your product more prominent and considerably encouraging Amazon customers to convert more quickly. And this is where you need to budget for sponsored ads and lower your sale price to generate those minimal 140 orders quickly. As a general rule of thumb, aim for an aggressive cost of advertising of at least 70% of your sale price and lowering your sale price by at least 20%. You will be able to raise back your prices incrementally later on.

Now that you know your target startup launch orders figure, you can budget for its related fully-loaded procurement costs, which include the cost of purchasing those units from your supplier and shipping them to Amazon's fulfillment centers. In addition to that, there are extra units to give yourself more leeway, and you are all set with establishing your minimal required launch budget.

DataHawk can help you define your target competitive reviews threshold by giving you data by market research about the competing products and their reviews distribution. You can do this by leveraging the following Amazon keyword-related metrics that DataHawk instantly unveils to you:

  1. The overall average, median, maximum, minimum, top percentile, and lowest percentile number of reviews of the products ranking for the keywords you are analyzing
  2. Those very same metrics on a page-level basis, i.e., how they look on page one versus on page two and so forth
  3. With the information above, you would know how many reviews you would need to have a higher probability of ranking on each page for each keyword relevant to your product

5. Amazon Product Research: Know Your Product, Costs, and Profit Potential

Product Research and Market Analysis on Amazon with DataHawk

By now, you are well-informed on how to drive your pricing strategy to be competitive on Amazon, you know how your competition is structured, you have a more precise idea of your market potential, and you have a clear marketing and procurement budget for your launch.

By leveraging all those helpful insights, you should be able to make a well-thought decision about your product features to be differentiated and competitive on Amazon while allowing you to reach your target sale price. Those product development or product picking decisions around your product features will partially define your final product cost.

Indeed, there are several additional costs you should consider to reach your final fully-loaded product cost, and which should define your final contribution profit:

  1. FBA costs affect your product's weight and dimensions.
  2. Shipping costs to get your products from your supplier to Amazon fulfillment centers are also affected by your product's weight and dimensions.
  3. Duties costs depend on your product, its country of origin, and the marketplace you are selling.
  4. Amazon referral fees depend on your product category.
  5. Costs related to the customer damaged returns because, unfortunately, you will have to bear those yourself.
  6. Marketing costs, which depend on how competitive your market is and how aggressive you want to be in your paid versus organic sales mix.

When factoring in all those additional costs, you should get to your final product contribution profit, allowing you to better gauge the product's potential and benchmark it against other product opportunities on a contribution profit level.

By nailing those five items in your Amazon product research process, you put more odds on your side for a successful product.

6. How to Conduct Product Research

To conduct Amazon market analysis and product research using DataHawk, start by clicking on the projects icon located on the navigation bar and select your desired project. Then, click on the product for which you want to analyze key metrics. This will give you access to a variety of analytics tools related to your desired product. For example, some product metrics will include tracking the number of ratings for your product and average ratings, sales rank, estimated monthly units sold, estimated monthly sales, buy box price, and available quantity.

Watch the DataHawk video below to learn to explore the best Amazon product research tool in detail. 

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