Greg Mercer Explains The Science To Amazon Success

Greg Mercer Explains The Science To Amazon Success

Product research is possibly the most difficult hurdle to becoming an Amazon seller. Potential merchants must sift through pages and pages of best selling items on Amazon, eBay trends, and other ecommerce platforms, searching for the perfect product to sell. All the while, they must keep in mind how competitive a niche might be, product profitability, and various other factors that will ultimately impact their bottom line.

If a seller decides to invest in an item that doesn’t sell as well as they had hoped, cannot compete with larger entities, or any other number of shortcomings, they are stuck with a garage full of useless merchandise that they must somehow move in order to break even; and that is the best case scenario.

On the latest episode of Fanatics Ecommerce TV, Justin Simon got the chance to pick the brain of ecommerce guru Greg Mercer, and discover how Amazon sellers can leverage data to become a dynamic and dominant merchant in the marketplace.

Check out the full video and drink in all the delicious wisdom that Greg threw down:

Greg Mercer is the Founder and CEO to the most effective and preeminent Amazon product research tools on the market today, Jungle Scout. He is also the Founder to Jungle Scout’s sister website, Review Kick, where merchants can help acquire product reviews to gain the social proof needed to move more units.

Check out some of the most pragmatic advice Greg shared in this recent interview.

Question #1: What is Jungle Scout and Why is It So Beneficial to People Who Want to Sell Big on Amazon? (1:39)

Jungle Scout is a product research tool that was created out of necessity. Greg is an Amazon seller in his own right and needed something to help identify profitable products based off of data instead of just a hunch.

Jungle Scout now offers several different tools;  the most popular is the company’s Chrome extension which runs inside of the Amazon store to display key metrics on various products. The data provided to sellers includes things like units sold per month, how competitive a niche is, profitability, and other insights to help a seller make educated product research decisions and determine if a market is worth entering or not.

Question #2: Why is that Data So Important and What Does It Reveal in the Decision Making Process? (2:48)

“The beauty of this is that it takes a lot of risk out of the Amazon model and product research.”

Greg’s favorite piece of information that the tool provides is the estimated units sold per month. Amazon does not reveal this information to anyone so an algorithm had to be created to uncover the data.

Jungle Scout tracks a few million items on Amazon along with their Best Seller Rank. Through that information, a regression analysis is run to estimate how many units a product sells each month.

While this information is still an estimate and not 100% accurate, the data still is still valid enough to formulate educated verdicts on an item. This tool allows people to look at actual information instead of just trying to guess what items might sell well.

Question #3: What Products Should Sellers Avoid, Even if it Might Look Like They Have Potential? (4:30)

“If you see a whole bunch of products that have hundreds and thousands of reviews that means it’s a pretty competitive and mature niche and it would be something that you want to stay away from.”

Greg has developed his own set of criteria and standards for product selection that help him to sift through potential merchandise. One of the first things he looks for is that a product, and niche overall, has existing demand and is selling a satisfactory number of units each month. Additionally, he seeks out products that are not too competitive; this can be determined by how many reviews are posted on an item. Greg will also look for good sales margins, strange and unique items, and products that are small and lightweight, making them easy to ship.

If a product doesn’t meet this criteria, it is probably best to shy away. Going on gut feeling is a risky stance to take and could land you in a revenue deficit.

Question #4: Are there Certain Products or Categories that Sellers Should Absolutely Avoid? (7:20)

“If you’re just starting out and really don’t know how the whole system works yet, I would probably stay away from supplements. That’s a pretty cutthroat niche. The margins there are pretty good and because of that, there’s a lot of competition.”

Some categories are much more beginner friendly than others; supplements is not one of them. Sellers want to stay away from products that require a high level of quality control such as electronic devices or other complex items.

Seasonal merchandise is also extremely difficult to build consistent sales throughout the year with and are better left alone. It is also wise to stay away from products that people have a vehement brand allegiance to; things like clothing items that will have to compete with Nike or Under Armour, women’s handbags, and other similar items.

Question #5: When a Seller is Just Starting Out, How Much Inventory Do They Want to Have in Amazon Warehouses at Any Given Point? (8:37)

“If you have the money to spend I would recommend ordering about two and a half months’ worth of inventory.”

Greg likes to consider how many units a month an item will sell. For instance, if he thinks an product will sell 500 units per month, then he will order 1,250 units of that item.

One of the drawbacks with this tactic, however, is that it is fairly cash intensive. For sellers who are just starting out, it’s fine to order smaller quantities, but do understand that Amazon is a powerful platform and you are likely to run out of inventory before a new order can be received. Sellers will ultimately learn how to work more efficiently through this process.

This only scratches the surface of the actionable insights that Greg shares in the full replay. Be sure to check out the video in its entirety to find out Greg’s advice on how to bring down costs when sourcing from overseas, which software services sellers should be using, the future of Amazon itself, and his 3 best tips for potential Amazon sellers when getting started.

Still thirsting for knowledge that will help your seller’s business reach new horizons? Let us know and we can show you how to amplify your status as an Amazon seller and pad your profits. And don’t forget to check out the Amazon Product Page Grader to see how you can optimize your listing for measurably more sales.

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