Product Research for Amazon Europe
HOW TO SELL ON AMAZON EUROPE - THE DEFINITIVE GUIDE
Part 2 - Product Research for Amazon Europe [You Are Here!]
Part 5 - How about banking and getting paid by Amazon? Coming soon!
Want to sell on Amazon Europe?
Yes, I already sell products on Amazon in the US / outside Europe
I recommend performing research and using data to guide your decisions. We’ll look at this in detail in this article.
Yes, I am new to selling on Amazon
Read this article, take some notes and comment below if you have any questions.
Finding profitable products to sell on Amazon Europe
Amazon Europe comprises 5 key marketplaces - the UK, Germany, France, Italy and Spain.
When getting started on Amazon Europe, we advise that you send all of your stock to the UK. It’s more cost effective to ship all stock to 1 country, while the UK is the most simple to do business with for US sellers (no language barrier). This will also make VAT more straightforward.
By sending all stock to the UK, you will need just 1 VAT registration for your business (in the UK). If you opt for Amazon’s Pan EU Programme, your stock will be distributed throughout Amazon’s European warehouses. With warehouses in 7 European countries - the key 5 marketplaces above, Czech Republic and Poland - you would need to do 7 VAT registrations.
At no extra cost, you will still be able to list your products and sell to customers in each of the 4 other marketplaces. Orders made on these marketplaces will be shipped from your inventory at Amazon UK’s warehouses.
While the UK and Germany clearly offer the largest amount of customers, some sellers can find that other markets are more successful, due to lower competition.
As such, we recommend you consider a product's potential in each of these marketplaces.
The following is a framework to assess the potential of a product on Amazon Europe:
1. SALES POTENTIAL
Successful Amazon FBA businesses are driven by sales and so, that’s where we will start.
The question we seek to answer is this - how many units can I expect to sell in Europe, based on the performance of similar products there?
What if your product is unique and will be the first of its type to be sold on Amazon Europe?
In this case, we have a high risk high reward scenario.
Without knowing the sales of similar products, we have no idea how well our product will sell in a new market, which is why it represents a higher risk - although, this risk can be offset by sending a smaller quantity of inventory to Europe as a way to test to the market. With no direct competitors, the potential is also significant.
The following tools provide sales estimates, to help evaluate a product’s potential on Amazon Europe:
Regardless of the tool or method you use, you should use at least 2 sources - due to the uncertain nature of estimates, it’s not advisable to rely on just one data source when estimating sales.
If it’s clear there is a lack of sales of a product type throughout Europe, it’s best to move on and assess the potential of another product.
However, with 5 marketplaces and much lower competition than the US, you will often find the landscape in Europe is an attractive one for your products. Especially, when we consider that ecommerce is growing so fast in Europe right now.
Assuming we deem there is sufficient sales in Europe for a product, we must next determine the level of competition in this niche.
Just as we did with sales potential, we must analyze competition across each of the 5 marketplaces.
I recommend you rate competition in each marketplace e.g. using a scale from 1 to 5 - 1 being lowest competition, 5 being the highest. This will provide an easy way of comparing the opportunities available to you.
If you are selling generic private label products, with little to no differentiating factors, the risk will be higher - there is nothing to prevent new sellers imitating your product and eroding market share in the future.
Here are some of the key factors to consider when evaluating competition in a new market:
How many competitors are there selling products similar to yours? The fewer the better generally, although if there are none, it may suggest lack of demand for your product type.
Do the top selling products in your niche have a large number of reviews, that may make them difficult to outrank? This is generally not the case in Europe, unlike on Amazon.com.
How does the quality of your product compare to those being sold in this marketplace? You can evaluate this by looking at the images of the competition on Amazon, but also by checking out the average review rating for the top sellers. For example, if there are sellers with a less than 4 star average rating and selling a lot of units, this will be encouraging - assuming you have a high quality product right :)
What is the quality of your potential competitors' product listings? If there are sellers with poor quality listings that are still selling well, this is a good indicator that we can do well in this market. On a positive note, the quality of listings in Europe is generally much lower than we see on Amazon.com.
Even if you don't speak the language and can’t assess the quality of the sales copy used, here are some factors that indicate lower quality listings:
Poor quality images
Less than 5 images used in the listing
Very short product title
Very short or no product description
Fewer than the allowed 5 bullet points
Let’s assume you’re considering the potential of 2 products in Europe. Having looked at sales potential and competition, your evaluation / research would look something like this:
In this example, despite its lower estimated daily sales (14 units), Product A appears to be more attractive due to its lower competition.
However, there are other key pieces of the puzzle, before we can make a final decision. The next one is pricing.
It’s also critical to determine the price range at which we are likely to sell in a new marketplace. This will allow us to calculate how profitable our product will be in a new marketplace.
Here are some key factors to consider with respect to pricing:
What is the price range of the top sellers? For example, if we see all of the top sellers are lower priced, this will suggest a more price sensitive niche.
Based on the quality of your product compared to your potential competitors, what is the likely price at which you will sell? If we have a superior offering, this should allow us to price at a premium.
You may need to price a little lower at the start in order to gain market share. Customers on Amazon tend to prefer buying products that have social proof (more reviews), so a lower price can incentivize buyers to check out your offering, as you seek to organically build your reviews.
On Amazon Germany, France, Italy and Spain, sales are made in Euro (€), while in Amazon UK, sales are made in GBP (£).
4. PROFITABILITY ANALYSIS
Once we have established our likely sales price, the next step is to calculate profitability. We must know there is sufficient profit to be earned, before we invest our time and money.
We do this by estimating all costs to sell our product in Europe, including:
Importing / shipping to Europe
Amazon Europe’s referral and fulfillment fees - broken down nicely here
Product listing optimization / translation
Advertising / PPC spend
Software used to run your business e.g. email automation to customers
Staff support e.g. for customer service and PPC
Taxes / VAT
Once we have estimated pricing and costs, we can then calculate the profit margin of our product(s) in Europe. Amazon's Profitability Calculator can help speed this up.
Now, let’s finish off our example, where we have added the profit per unit and estimated daily profit for products A and B.
The question now is which opportunity is more attractive.
Product A has lower competition and similar sales (in units) to Product B. However, Product B is expected to be a much more profitable product, with an estimated €38 extra profit per day (33% more than Product A).
If you could only pick one, which would you choose?
The answer will depend on your risk appetite. Product B offers higher risk, but higher reward. Product A is lower risk, but has lower expected profit.
In general, when expanding to a new marketplace, I would recommend going with the lower competition / risk product. Once you have gained traction and learned the ropes in that marketplace, you can then begin to pursue higher risk opportunities (if you want) from a better position - both in terms of cashflow and experience.
If you have a competitor in your domestic market who has expanded to Europe, you can also review how they have done. If you see, for example, they are selling just 3 of their top 5 products in Europe, this may indicate there is insufficient demand and / or too much competition for the other 2 product types.
Reviewing the performance of a competitor is unlikely to provide all the answers, but it can certainly be a nice compliment to other research you do.
Product Research for Amazon Europe (Examples)
One of the issues with articles that offer advice like this is that they are too theoretical and don't highlight real life examples. To avoid this, let's look at two real life examples.
PRODUCT RESEARCH - EXAMPLE A
Keyword - RFID Wallet
Marketplace - Amazon UK
In this first example, we are selling a RFID Wallet on Amazon.com and want to know the potential for this product on Amazon Europe.
To start, we want to look at the potential offered by Amazon UK.
The data below derived using Jungle Scout displays key data from the top search results on Amazon UK for the term “RFID Wallet” (August 2017).
Does the UK look like an attractive market for this product?
I think so. And I’ll tell you why.
With an average of 391 units sold per month for the top listings displayed, that’s about 13 per product per day. This is excellent, particularly as 10 sales per day is seen as a benchmark for a successful Amazon FBA product.
Sales depth is also good and appears to be nicely spread out amongst the listings. There are 7 products selling more than 9 per day (270 per month).
The average sales price (£14.35) is a little lower than many experts would recommend - however, it doesn’t concern me in this case as customers in this market don’t appear to be price sensitive. 3 of the top 5 sellers are priced above the average market price - this suggest customers are willing to pay for a premium / higher-priced product.
Furthermore, there are no major brands in this market to compete against.
Finally, products with fewer reviews can outsell those with more reviews in this market. This is particularly interesting for a new entrant, as it will take some time to build up our reviews.
Overall, there is strong potential here and it warrants further analysis, including an evaluation of the potential profitability, and a more in-depth look at the competition and their listings.
Now, let’s go through another example.
PRODUCT RESEARCH - EXAMPLE B
Keyword - Garlic Press
Marketplace - Amazon UK
In this next example, we are selling a garlic press on Amazon.com and we are looking to assess the potential for us on Amazon UK.
The analysis below (from Jungle Scout) shows the top results for the search term “garlic press” on Amazon UK ( (August 2017).
Should we sell our garlic press on Amazon UK?
At first glance, we see there is an average of 180 units sold per month for these top listings. That’s 6 units per day per product. Not bad, particularly when you factor in that there are also 4 other marketplaces in Europe to evaluate (Germany, France, Italy and Spain)/
However, there is a noticeable lack of depth in the UK market. The top 6 listings account for over 70% of the units sold. I also see 2 FBA Sellers (ranked 14 and 16) with very poor sales, despite a solid number of product reviews and a 5 star average review rating!
There are other factors that lead me to believe potential here is limited:
The top 2 sellers are big brands (Oxo and Ikea) and will likely be very difficult to compete against.
The top 5 sellers all have over 250 reviews, which is a significant number in the UK market.
We will be competing against high quality products - 15 of the top 16 listings having an average review score of 4.5 or 5 stars.
I hope this article and the examples used will assist you in your research and evaluation for Amazon Europe.
If you have any questions, please post them in the comment section below.
It’s time to move on to the next phase of this guide!
Next section: Part 3 - Do You Need to Set Up a Company?