Where to Sell on Amazon
You might think that selling products in a top Amazon category is the best way to build your business. It could be, but products in a top Amazon category popular with shoppers tend to have a lot of competitors. A better option, particularly if you are a relatively new Amazon seller, might be to look somewhere other than a top Amazon category where the market isn’t oversaturated.
We aren’t saying you shouldn’t consider selling in a top Amazon category. There are other considerations for determining profitability other than potential competition. But there are also good reasons to avoid a top Amazon category.
Let’s take a look at what to consider as your top Amazon category where you are likely to have the most success and ROI. This post discusses what amazon categories are:
- Eligible to third-party sellers
- A top Amazon category
- The most profitable and highest selling
In addition, we cover which Amazon categories require a high level of experience and which require the least experience, as well as the various business and selling models you can use. Lastly, and most importantly, we work through various questions to determine whether or not to sell in a top Amazon category or in a less competitive category.
Eligible Amazon Categories
It’s shorter to list the categories you can’t sell on. Third-party sellers can’t or don’t sell Amazon devices, gift cards, software, and vehicles, as well as anything from Whole Foods Market.
Top Amazon Category
While always subject to change, any of these 10 are a top Amazon category among shoppers.
- Home & Kitchen
- Beauty & Personal Care
- Toy & Games
- Clothing, Shoes & Jewelry
- Health, Household & Baby Care
- Sports & Outdoors
- Arts, Crafts & Sewing
Most Profitable and Highest Selling
While some categories have higher profitability potential than others, it’s not that because you sell in a category you can expect it. Profitability depends more on how you source, the cost of raw materials, and how much you are willing to sell lower than your competitors in the category. But among the most profitable, a top Amazon category includes:
- CD & Vinyl
- Apps & Games
- Luggage and Travel Gear
- Video Games
- Pet Supplies
Keep in mind a top Amazon category that is profitable is not necessarily a top Amazon category in terms of sales. The Handmade category, for example, tends to have noticeably lower sales, while computers, which are overall less profitable than Handmade, have higher monthly sales.
Also important to keep in mind that a top Amazon category—whether in terms of popularity, potential profitability, and/or sales volume—has subcategories that also vary in terms of popularity, profitability, and sales potential. So, for example, Home & Kitchen is a top Amazon category for sellers, but nonetheless, there are subcategories that are not profitable for any variety of reasons (e.g., high competition and fees). Similarly, less popular categories are sometimes also more profitable.
Are You Experienced?
What is a top Amazon category where you really need experience in that category:
- Musical Instruments
- Industrial & Scientific
- Tools & Home Improvement
- Apps & Games
- Automotive Parts & Accessories
If you’re a new seller and don’t have a background in the above areas, consider these as a top Amazon category where seller experience isn’t necessarily a prerequisite:
- Video Games
- Toys & Games
What to Do and How to Sell
So what might a top Amazon category be for you? First off, you can sell in multiple categories. But choosing any category requires careful consideration of the following:
- Am I competing with Amazon? This is not to say you can’t successfully compete with Amazon. The question is can you reasonably compete on price and brand recognition against Amazon? And compete on a sales platform where its own products always receive preferential treatment in terms of search results. We’re not trying to discourage you from competing with Amazon. But it’s something you do need to think very carefully about how you are going to succeed at doing this.
- How can I best compete against other sellers? Is it price (a popular strategy, but comes with razor-thin margins), brand recognition, quality, some other unique differentiator, or some combination of these?
- What is the cost of advertising? Don’t think you can sell without advertising. You can’t. A more popular top Amazon category has higher advertising costs. You need to figure this expense to determine your potential profit margin and closely monitor ad spending so it doesn’t eat into profitability.
- What are shoppers looking for? Do a Google Trends search to identify promising product opportunities.
One of the best strategies is to identify a low-competition niche. Less active categories present more opportunities, especially for beginning sellers.
A popular business model is to private label, to sell a generic product under your own brand. This is more suitable for some categories than others. In Handmade, for example, a brand can make you stand out. People who buy books on Amazon, however, don’t much care about the bookseller as they do the price of the book.
FBA or FMA?
Fulfillment by Amazon (FBA) is popular in just about every eligible Amazon category. However, Fulfillment by Merchant (FBM) opts for the most in the following categories:
- Cell Phone & Accessories
- Apps & Games
- CDs & Vinyl
Generally speaking, FBM is the better choice if you have better control over the shipping process and you are comfortable with managing the fulfillment process. If you sell on other platforms where you have to manage inventory, there is little reason for you to do otherwise with Amazon. But if you are stocking primarily low-margin items, FBA is the better option in terms of both cost and convenience.
If you do choose FBA for selling on Amazon, be aware that Amazon does make mistakes managing your inventory or fulfilling your orders. When that happens, you are owed FBA reimbursement. Unfortunately, you aren’t always reimbursed automatically. In fact, it’s most often the case you have to identify errors and submit claims for reimbursement.
Is this such a big deal? Big enough that it can affect your profitability. FBA reimbursement can add up to between 1% to 3% of your annual revenues. The more you make, the more potential loss.
Given the time and effort into just selling on Amazon, do you have the time to track what is (trust us) a highly labor-intensive and frustrating bureaucratic process? Probably not.
This is why we started GETIDA. It makes the whole process of obtaining your FBA reimbursement simple, easy and cost-effective. GETIDA software reviews the previous 18 months of transactions to flag instances that qualify for FBA reimbursement. And we do this for no charge.
If there are sufficient grounds to file claims, and only with your approval, we put a team of former Amazon employees to work. There is still no charge.
The only charge is a percentage of approved claims. And the first $400 in FBA reimbursement is free.
It’s easy to sign up with GETIDA and let us do all the work of getting back your FBA reimbursements while you concentrate on selling in a top Amazon category (or categories) of your choosing.