Whether you’re a brand new Amazon seller beginning your research or an experienced Amazon vet, it can be difficult to figure out which product category to focus on.
With 27* categories to choose from, how do you narrow down your research and find the best niche to focus on? Which product categories have the most or least competition? The highest profit margins? The most opportunity to grow your product offerings? We’ll cover all that and more.
Which categories can you sell on Amazon?
- Apps & Games
- Arts, Crafts, & Sewing
- Automotive Parts & Accessories
- Beauty & Personal Care
- CDs & Vinyl
- Cell Phones & Accessories
- Clothing, Shoes and Jewelry
- Collectibles & Fine Art
- Garden & Outdoor
- Grocery & Gourmet Food
- Health, Household & Baby Care
- Home & Kitchen
- Industrial & Scientific
- Luggage & Travel Gear
- Movies & TV
- Musical Instruments
- Office Products
- Pet Supplies
- Premium Beauty
- Sports & Outdoors
- Tools & Home Improvement
- Toys & Games
- Video Games
*This excludes some categories in which most third-party sellers can’t/don’t sell, including Amazon devices, gift cards, software, vehicles, and Whole Foods Market.
Amazon’s most popular categories
When selling on Amazon, or any other platform, it’s important to know where and what consumers are buying. You wouldn’t want to set up shop at a flea market and realize you’re in the wrong parking lot, right?
The same goes for Amazon and e-commerce. If you create a product in a niche or category that very few people shop in, you’re going to have some trouble. For this info, we can look to the most popular categories third-party sellers sell in.
According to Jungle Scout’s 2020 State of the Amazon Seller Report, these are the top categories**, including percentage of sellers who have products listed in them.
Top 10 categories
|Home & Kitchen||45%|
|Sports & Outdoors||23%|
|Toys & Games||22%|
|Health, Household & Baby Care||21%|
|Beauty & Personal Care||21%|
|Kitchen & Dining||20%|
|Clothing, Shoes & Jewelry||19%|
|Garden & Outdoor||16%|
|Tools & Home Improvement||16%|
Remaining categories in order of popularity
|Grocery & Gourmet Food||12%|
|Arts, Crafts & Sewing||12%|
|Industrial & Scientific||10%|
|Automotive Parts & Accessories||7%|
|Cell Phone & Accessories||7%|
|Luggage & Travel Gear||4%|
|Apps & Games||3%|
|Collectibles & Fine Art||2%|
|CDs & Vinyl||2%|
**Sellers could select multiple categories.
Looking at those categories, it’s important to ask yourself: Are these categories too competitive? The last thing you want to do is jump into an oversaturated market with little to no chance of landing on page one of Amazon’s search results.
But, while these broad categories may be very popular and oversaturated, I’ll explain how you can dig deeper into various subcategories to find better product opportunities later on.
What are the main differences among Amazon product categories?
1. Profitability: Which Amazon product categories are most profitable to sell in?
Profit margins can vary wildly depending on how much products cost you to source and how much you can sell them for (less cost of doing business — see more on fees here).
Fortunately, for most Amazon sellers, average profit margins range between 17-26% depending on the category. Among the higher profit margins? Handmade products (which still may cost a lot in raw materials and time), followed by some high-ticket items, including computers, appliances, and instruments.
|Rank.||Product Category||Average Profit Margin|
|5||Arts, Crafts & Sewing||21%|
|6||Automotive Parts & Accessories||21%|
|7||Health, Household & Baby Care||20%|
|8||Clothing, Shoes & Jewelry||20%|
|12||CDs & Vinyl||20%|
|13||Luggage & Travel Gear||19%|
|15||Kitchen & Dining||19%|
|16||Industrial & Scientific||19%|
|18||Beauty & Personal Care||19%|
|19||Cell Phone & Accessories||19%|
|20||Collectibles & Fine Art||19%|
|21||Sports & Outdoors||19%|
|22||Home & Kitchen||19%|
|23||Grocery & Gourmet Food||18%|
|24||Garden & Outdoor||17%|
|25||Apps & Games||17%|
Profitability is a critical consideration when selling on Amazon, but keep an open mind to find the true best opportunity.
- Some categories may be more profitable than others but every category has profitable sub-categories within it.
- Home & Kitchen and Kitchen & Dining are among the top categories among sellers, but both have plenty of subcategories that are not profitable because of increased competition, price wars, direct competition from Amazon, increased PPC costs, etc.
- Less popular categories can be more profitable than popular categories; for example, Home & Kitchen vs. Arts, Crafts & Sewing. Only 2% of sellers have 51%-100% net profit in Home & Kitchen, whereas 10% of sellers have 51%-100% net profit in Arts, Crafts & Sewing.
The point is, you still need to find the right opportunity that’s in high-demand with low-competition — so don’t get too hung up on categories.
2. Sales: What are average monthly sales for Amazon product categories?
Amazon sellers across nearly every category have average monthly sales in the range of $1,000-25,000.
Some categories stand out as having noticeably lower monthly sales (under $1,000): Books, Handmade, and Apps & Games.
And others see much higher monthly sales ($50,000+): Musical Instruments, Collectibles & Fine Art, Appliances, and Computers.
3. Selling experience:
Which product categories require a high level of experience?
- Musical Instruments (47% of sellers say they have Advanced seller experience)
- Automotive Parts & Accessories
- Industrial & Scientific
Which product categories require the least experience?
- Handmade (28% of sellers say they have Beginner seller experience)
- Apps & Games
- Home & Kitchen
- Clothing, Shoes & Jewelry
4. Fulfillment method:
5. Sales/Business model:
- Private label (creating your own product/label to sell on Amazon) is popular across nearly every product category, but MOST popular in Home & Kitchen and Sports & Outdoors and LEAST popular in Apps & Games and CDs & Vinyl.
- Retail arbitrage is a method of finding low-cost or discount goods in brick-and-mortar retail stores in order to resell online.
- Most popular: Books, CDs & Vinyl
- Least popular: Home & Kitchen, Clothing, Shoes & Jewelry
- Online arbitrage is a method of finding a low-cost or discount product on one website or online marketplace to resell on another marketplace.
- Most popular: Apps & Games, CDs & Vinyl
- Least popular: Home & Kitchen, Sports & Outdoors
- Wholesaling is the practice of purchasing low-cost or discounted goods in bulk in order to sell as individual units in a retail marketplace.
- Most popular: CDs & Vinyl, Grocery & Gourmet Food
- Least popular: Home & Kitchen, Baby
- Dropshipping is a business model where an Amazon seller does not keep their own product inventory, but instead, transfers their customers’ orders directly to the manufacturer or supplier.
- Most popular: Collectibles & Fine Art, Musical Instruments
- Least popular: Baby, Books
- Handmade sellers are people who create their own products to sell on the Amazon marketplace.
- Most popular: Handmade/Handcrafted Products, Collectibles & Fine Art
- Least popular: Cell Phones & Accessories, Beauty & Personal Care
Should you sell in a popular product category?
When conducting your product research in a popular category, there are a few things to consider.
1. Competing with Amazon
More than half of Amazon sellers (53%) say Amazon sells its own products that directly compete with theirs.
For example, Amazon will feature its own private label products ahead of yours (even if they aren’t ranked as well).
This Amazon brand is featured ahead of all the sponsored products and organic results.
An “AmazonBasics” product will typically have a lower price than your product.
Fortunately, not every customer wants the most basic and inexpensive option, and many shop based on brand, product reviews, features, or other differentiators. (See more consumer preference data here.)
2. Competing with other sellers
Typically in a popular category, like Home & Kitchen, many sellers identify a niche with a large volume of sales and think they can take a piece of the pie.
In reality, they may just be making it harder on themselves. You may see a niche like “apple slicers” and think, “Wow, the top sellers do over $100,000 in sales. I should sell this too.”
But when you dive deeper, you see this particular niche is very oversaturated; many sellers have hundreds of reviews, low pricing, and there is nothing that really differentiates each product that is offered.
A new seller might not think about that and end up attempting to sell a product that cannot compete in an established market.
3. Higher cost of advertising
Categories that are more saturated will have higher advertising costs, which of course come from increased competition angling for the same customers and keywords.
This means you may pay a higher cost per click (or CPC), which might mean your business breaks even or even loses money if you don’t monitor your ad spend closely.
According to Keyword Scout, the keyword “diapers” has an estimated exact match brand bid of $35.96, exact match sponsored product bid of $1.40, and broad match of $1.28 per click.
This means you will be paying a lot of money per click when you first launch your product to try and compete with the top sellers.
It is difficult to stand out in this highly competitive product if you do not differentiate your product from the competition. When it comes to diapers, there’s only so much differentiation you can do, but there’s a lot more flexibility in other product spaces. We’ll get to that soon!
How you can find a less competitive category to sell in
1. Use Google trends
A great free way to keep an eye on what consumers are interested in is Google Trends. Make a point to check out Google Trends every week or so and see if you can identify opportunities to create products. For example, is gym equipment trending? You might want to explore this as a sales opportunity.
Simply type in a broad keyword into Google Trends and it will show you the popularity of that topic and if it is trending up or trending down. You can also view related topics, demographics, and related queries which you can use for keyword research. Take some time to explore around this free tool and see what you come up with!
Once you have found a trending niche, you can plug that keyword into Jungle Scout to see if you have a good opportunity to sell on Amazon.
2. Explore with Keyword Scout & Opportunity Finder
Use Jungle Scout’s suite of powerful tools to help you conduct more accurate product research and to find low-competition, high-demand products.
These tools simplify the way you do keyword and product research.
Keyword Scout helps you generate valuable and highly relevant keywords you can use in your product listings and Amazon PPC ad campaigns. It will also calculate how much you should be spending per keyword to reach the first page.
Opportunity Finder allows you to plug in specific criteria to find countless opportunities with high demand and low competition. Turn a keyword into a market segment, and see in-depth data on sales performance, emerging trends, and competitive insights.
How it works:
- Disregard category popularity: A better chance at profitability depends on the niche chosen, the competitiveness of your product, price, cost of goods, etc. Categories that are less active could mean more opportunity for sellers.
- Find a low-competition niche: The idea is to start with a broad topic and conduct deeper research into your initial subject. While the broad subject you searched may be highly competitive, the deeper you dig down the “rabbit hole,” the more likely you’ll discover an untapped market. (Read about how to find a low competition niche here.)
- Conduct product research in these categories: If you don’t have a product in mind and the product category doesn’t really matter to you, then consider searching through the less obvious category options.
3. Monitor consumer trends
Since the start of COVID-19, nearly 50% of consumers are buying more groceries and cleaning products online and on Amazon. While these types of products might not surprise you, other product categories have also seen spikes in interest during this pandemic, and savvy Amazon sellers follow and react to that demand.
For example, cookware, puzzles, kids’ games, home exercise equipment, and home office products have appealed to the families and workers stuck at home and looking to cook more, entertain their kids, etc.
Shopping behaviors are always changing, but while you might not be able to predict drastic shifts in demand caused by events like COVID-19 (and hopefully never have to again with a similar situation), these adjustments serve as a reminder that consumer demand can change in an instant. Sellers need to stay aware.
Some good news? Online and Amazon habits are increasingly entrenched in consumer behavior, and 69% of consumers believe the majority of consumer shopping will happen online in the future.
Read more in the 2020 Consumer Trends Report.
Does it matter what Amazon category you sell in?
As you can see from the data, there are profitable sellers in every category on Amazon, which means finding a category or market with limited competition won’t be easy. But it will be worth it!
Just keep the following in mind:
- Choosing a category to sell in will depend on the results of your product research, the competitiveness of the sub-category, and the demand for the product.
- Don’t let sentimentality dictate which category you sell in. Let the data (and demand) determine your category. In other words, don’t sell a product with high competition and low demand just because you use it all the time.
- Follow through. Your profitability is dependent on how you run your business after you find the right product. Make sure you know how to: conduct proper product research, source quality products, negotiate pricing, present a higher perceived value, run profitable PPC campaigns, create an optimized listing, and more.
Want more info or a deep dive in a certain Amazon product category? Let us know in the comments!