2019 FBA Case Study: Part 1 – Product Research

Whatsup guys! My last product launch case study was very well received. So I have decided to do another one. Only this time I will cover the full process! So I will show you exactly how I:

  • Find a new product.
  • Manufacture & ship it.
  • Launch & promote it.

Just like the last case study, I will not reveal my product. But I will show you everything else. Hopefully this will be a great learning experience for new & established sellers.

So let’s get started right away. What I have done so far:

Product Research

I have found a great product with the Jungle Scout Web App! I spend about a week doing product research and I am very happy with this product I found. Here are the stats:

fba case study 2019 jungle scout

If you have never used Jungle Scout before this might be a bit overwhelming. So let me break it down for you. When I do my product research I want a potential product to fulfil these requirements:

  1. Minimum price: minimum $15.
  2. High demand: minimum $3,000 per month.
  3. Low competition
  4. Healthy profit margin
  5. Easy to manufacture
  6. Not seasonal.

So right away I can see in the Jungle Scout screen that this product fulfils the first 3 requirements:

1). Price

The average price is around $29,99.

2). Demand:

Very high. Most competitors have more than $10k revenue per month. Average is around $20k per month.

3). Competition

About half of the competitors have less than 50 reviews! The #1 only has 25 reviews, and #2 only 14!So yeah, everything looks very good so far. Now lets check out the other requirements:

4). Profit margin

I did a quick price check on Alibaba and the product can be purchased for around $5. I roughly estimate that the shipping will be around a $1. So my landed cost will be around $6. I will then use the FBA fee calculator to see how much profit I can make on this product:

Amazon FBA fee calculator

If I would price this product around my competitors ( $29,99 ) I would make a net profit of $12,79!!! So around a 200% ROI on my $6 investment. So far everything is looking good!

5). Easy to manufacture

Not really. This might be the only problem with this product. It consists of 2 parts. And 1 part is made from a material that is kinda hard to manufacture. I have never manufactured a product from this material and I know nothing about it. I can imagine I can easily get scammed, where I would pay for the premium quality material and end up receiving low-end material. This happened to me before.

So I already did a bunch of research on this. I spend some time reading about the different type of materials I can use for this. What materials my competitors are using. Checking the reviews and finding out what customers have to say about the different types of material. I feel a little bit better prepared right now, but this is still an issue that I should focus on when I’m in the manufacturing phase.

6). Seasonality

This product is not seasonal. Of course I still like to look at the statistics and find out if there is actually a trend in the market. So I pulled up the Historical Sales with Jungle Scout:

Sales History Jungle Scout Chrome Extension

So this is the history of sales for the #1 seller in this niche. The guy that does $87k a month. As you can see there is a clear upwards trend here. Very good to see this!

7). Bonus!

All the competitors are selling the product in the same color: Black. So a very easy method I can use to differentiate myself can be to start selling the product in a different color. This way my product will definitely stand out in the search results. I will have to discuss with suppliers if this is possible and how much the extra cost will be. But this is definitely a nice little bonus!

So let’s sum it up:

 RequirementMy productFits requirement
Price+ $15$29,99Yes!
Demand+ $3,000$20,000Yes!
CompetitionLowLowYes!
Profit Margin+ $5$12Yes!
Easy to manufactureYesNoNo!
SeasonalNoNoYes!

I am very happy I found this product. Like I said, the major issue might be a quality control issue. Since it is not very easy to manufacture the product. And I don’t want to receive a low-quality product, as this will result in a low review rating. But yeah, I am willing to take the gamble on this product.

Next up I will contact different supplier, request samples, negotiate with them.

Keep me updated!
Leave your email below and I will let you know when I post part 2 of this case study!

 

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5 Comments

  1. Stumbled upon your blog yesterday and have been through most of the content already.

    Loving it so far and I can’t wait to see how this new product pans out!

    Good luck!

  2. Hi, few questions:
    1)Aren’t the first 2 listings sponsored? It may not reflect their real success. Maybe they spend a lot on PPC
    2)How can you estimate shipping costs today, with all the trade war and Trump tarriffs which increases the cost of tax to pay? It affects the vast majority of products already.

    1. 1). First 2 are organic.
      2). I have a couple of products that are similar size so I can roughly estimate the shipping cost based on that. I estimated it quite rough, most likely will the real shipping cost be lower ( somewhere near $0,8 – $0,9 ). You can lookup your HS code and check out if your product has been hit with a tariff increase. My last forwarder (Flexport) was kind enough to check all the products I had imported in the last 12 months and only 1 will be affected with the new 25% increase. Not sure if Im really lucky, were you hit by the last 25% increase?

  3. Hi,
    Is Junglescout still the best research practice?
    If we don’t live in America,where do we pay the Trump taxes, when do we pay taxes?

    1. I still use Jungle Scout as my main product research tool. Can’t give any advice on taxes as I am no expert on this and don’t want to get sued for giving wrong advice.

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