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Choosing the Best Amazon Product Categories

Threecolts
Emma Ritson
Published
March 16, 2023
Modified
March 26, 2024
Online shopping and using the Amazon product categories

As an Amazon seller, deciding which product category to focus on can be challenging, especially with over 40 options available. Regardless of whether you're new to selling or an experienced seller, it's critical to do your research and identify the ideal niche to channel your efforts into. After all, you’re in this for the ease and convenience of earning your own money in your own time. And guess what? That dream is achievable. Doing the work and research beforehand, however, is crucial.

This blog post will highlight the most popular product categories among buyers and sellers on Amazon—woot! We’ll also show you the least popular categories among sellers—and whether certain categories are more profitable than others.

An Amazon screen on a laptop

Since we’re so excited about the opportunities of selling on Amazon, we'll give you some hard-won advice on how to discover untapped opportunities within sub-categories with less competition. We’ll also show you how you can leverage our tools to streamline the selling process on Amazon.

Let's dive into the best practices for selecting a profitable category so that your business thrives. With our tools and tips, can easily choose the right product category without overthinking it. We'll show you the best practices for selecting a profitable category, such as analyzing demand, competition, and those all-important profit margins. And since we’re so happy to share all we know, we'll give you some pretty awesome tips for choosing sub-niches that haven't been fully explored and optimized by other sellers. By focusing on a niche category, you can definitely increase your chances of standing out and succeeding in the highly competitive world of Amazon.

So go ahead and keep reading—this information can help you achieve your e-commerce dreams. With the help of our tools and tips, you'll be well-equipped to choose the right product category and set your business up for the most glittering, long-term success.  

The most popular categories mean the most competition

If you're planning to sell products on Amazon or any other online platform, it's crucial to understand what consumers are buying and where they are buying it. Otherwise, you might end up with a lot of stock that nobody wants. Likewise, creating a product in a niche or category with few buyers could spell trouble.

The most popular product categories on Amazon attract a large number of shoppers which means there is a lot of competition from other sellers.

Data from an e-commerce store on a laptop

So, not only do you need to determine if there's a market for your product, but you also need to assess the level of competition. In a crowded marketplace filled with the same sorts of products (apple peelers or whisks, anyone?), it can be a huge challenge to distinguish yourself from others sellers and capture customers' attention.

So read on ahead for ways to get around these issues and thrive as an Amazon seller.

Most popular categories among Amazon sellers

Selling on Amazon has grown in popularity in recent years, resulting in increased competition for existing sellers. Certain product categories have seen a surge in popularity compared to others, and we want you to be aware of the general trends and movements within this space.

According to current data, the leading 10 categories with products available for sale on Amazon are Home & Kitchen, accounting for 35 percent of the market share (not surprising, since we all need to cook food to survive). Beauty and Personal Care follows closely behind at 26 percent, while Clothing, Shoes and Jewelry makes up 20 percent of the rest of the market sure, also unsurprising. Toys and Games and Health, Household and Baby Care each hold an 18 percent and 17 percent market share respectively. (Keep reading! You're nearly done with all the numbers.) Baby, Electronics, Sports and Outdoors, Pet Supplies, and Office Supplies are the remaining categories on the list, each with a market share ranging from 13 to 16 percent .... and yes, now it's time to take a deep breath.

Which category will you choose?

As a seller, you have the option to choose from multiple categories to list your products. However, the crucial question to ask yourself is whether these categories are too competitive.

It would be unwise to enter a market that is oversaturated with competitors, as it would be difficult to rank on page one and gain visibility (the first page of results on Amazon is what you’re always aiming for).

A credit card and a laptop

That's why conducting thorough product research is crucial when selecting a product to sell on Amazon. Although the popular categories may seem oversaturated, in the following section, we'll explain how you can explore various subcategories to uncover better product opportunities.

Issues with selling in a popular product category

Why do so many people sell in Home and Kitchen?

Home and Kitchen is a highly sought-after category among sellers, and for good reason. Almost everyone needs home or kitchen products in their daily lives, making it a necessity in terms of spending and acquiring. Another bonus, the category has a lower barrier to entry than others, which means it's not restricted to new sellers. And since most people have some type of kitchen or home product in their house, it's pretty damn easy to come up with product ideas.

Moreover, products in the Home and Kitchen category don't usually (but not always) have complicated requirements such as the requirements for supplements, food expiration dates, toy certifications, or auto parts. This makes it way less of a hassle to sell in this category and ease is definitely something we need to be aware of.

online products for sale

Another advantage of selling in Home and Kitchen is that it's easy to manufacture these sorts of products. A quick search through a few kitchen supplies on Alibaba will show you how easy it is to find almost any kitchen product you can think of.

How to find a popular category to sell in

Google Trends

Google Trends is a valuable, no-cost tool that reveals current trends and hot topics in today's world. It's an excellent resource for generating ideas for new products or identifying growing categories.

Although inflation is causing many consumers to cut back on spending, certain categories like exercise equipment, toys and games, and books have experienced a surge in sales during Q4 2022.

Given that 93 percent of consumers have noticed higher prices on products they purchase regularly, it's important to focus on categories where spending is essential rather than discretionary because then you won’t be the first in line to be discarded. Offering discounts or deals may help alleviate some of the financial burdens consumers are facing and offer them a pathway to joy.

Look at up-to-date consumer trend reports

Some companies publish trend reports that can help you get ahead. Be careful not to get sacked into buying their tools and software, however, as they may not be as reliable as you think.

Find a low-competition niche

To find a niche with less competition, start with a broad topic and conduct thorough research like you’re earning a Ph.D in the area. You won’t regret it! Even if the broad category is highly competitive, the deeper you dig, the more likely you'll find an untapped market that people are into.  

For tips on identifying a low-competition niche:

  • Firstly, conducting keyword research is an effective way to identify potential market niches and find awesome product ideas you may not have thought of. Remember, don’t only focus on popular keywords, but also select relevant and specific keywords that highlight sponsored items with stable demand.
  • Secondly, it's best to offer items that have a year-round product to ensure a stable cash flow, instead of relying on seasonal products that have fluctuating sales and that can leave you panicking in the low-demand months. By using keyword planners, you can determine the search volume of your niche and rate its potential seasonality.
  • Thirdly, it's crucial to balance the niche and the product's profit margin. By using an FBA calculator, you can factor in shipping, advertising, and other Amazon charges to accurately predict a product's potential profitability. It's important to aim for a profit margin of at least 15 percent to ensure a lucrative e-commerce business and not a watered-down side hustle that powers your irritation and not your bank account.
  • Fourth, please, please, please, consider the ease of shipping and logistics of the product. Heavy and bulky items can be expensive to deliver and manage, so it's best to stick to lightweight products that are easy and cheap to ship. Otherwise, you will lose your mind and possibly your stellar seller rating.
  • Lastly, it's important to actively engage with niche communities to widen your knowledge about nifty product ideas and how the trends are moving in general. By connecting with communities on Reddit, Facebook and Pinterest, you will discover incredible new trends and cater to the needs of these niche potential markets.  
A wrapped gift item from an online store

Here are the categories with the least number of products listed by Amazon sellers:

  1. Appliances - 12 percent
  2. Garden and Outdoor - 11 percent
  3. Cell Phone and Accessories - 10 percent
  4. Apps and Games - 8 percent
  5. Automotive - 8 percent
  6. Handmade - 6 percent
  7. Computers - 5 percent
  8. Industrial and Scientific - 5 percent
  9. Collectibles and Fine Art - 5 percent
  10. CDs and Vinyl - 4 percent
  11. Luggage and Travel Gear - 4 percent
  12. Video Games - 4 percent
  13. Musical Instruments

Though fewer sellers list products in these categories, they can still be profitable.

Remember: the profitability of selling on Amazon is not solely dependent on the popularity of the main category. Factors such as the niche selected, competitiveness of the product, price, cost of goods, and more also come into play. Remember this when making your decisions!

Having fewer sellers in a category could create more opportunities for sellers. For instance, even though a pretty impressive 44 percent of Amazon shoppers bought from the electronics category in 2022, only 16 percent of sellers listed their products in electronics.

As we have already emphasized, it is important to conduct thorough product research to identify profitable sub categories in any category.

Are some categories more profitable than others?

While Home and Kitchen is the most popular category, some of its subcategories may not be profitable due to increased competition, price wars, direct competition from Amazon, and high PPC costs. It is possible to find more profitable niches in less obvious category options.

Profitable sellers exist in every category, but some categories are more profitable than others. Surprisingly, less popular categories can be more profitable than popular categories and you’ll often see this in the Kindle store. In Home and Kitchen, only 2 percent of sellers had a net profit of 51 percent-100 percent, compared to 10 percent of sellers in Arts, Crafts, and Sewing.

Based on current data, the ten categories with the most profitable sellers (21 percent net margin and up) are:

Sellers often sell in multiple categories

  1. Beauty and Personal Care: 30 percent of sellers
  2. Home and Kitchen: 30 percent of sellers
  3. Clothing, Shoes and Jewelry: 27 percent of sellers
  4. Arts, Crafts and Sewing: 23 percent of sellers
  5. Electronics: 22 percent of sellers
  6. Sports and Outdoors: 21 percent of sellers
  7. Health, Household & Baby Care: 21 percent of sellers
  8. Toys and Games: 20 percent of sellers
  9. Grocery and Gourmet Food: 19 percent of sellers
  10. Cell Phone and Accessories: 17 percent of sellers
  11. Appliances: 17 percent of sellers
  12. Office Products: 17 percent of sellers
  13. Baby: 16 percent of sellers
  14. Pet Supplies: 16 percent of sellers
  15. Books: 15 percent of sellers
  16. Tools and Home Improvement: 15 percent of sellers
  17. Automotive Parts and Accessories: 13 percent of sellers
  18. Garden and Outdoor: 13 percent of sellers
  19. Handmade: 11 percent of sellers
  20. Collectibles & Fine Art: 10 percent of sellers

What categories potentially have more opportunities?

Choosing a category doesn't guarantee profitability, but there is potential in less popular categories. For instance, the Automotive Parts & Accessories category only accounts for 8 percent of sellers, but 42 percent of auto sellers see profit margins of 21 percent to 100 percent, which is some kind of wonderful. While this category is restricted to new sellers, the upfront hurdles may definitely be worth the ability to sell in categories that others cannot. Additionally, less popular categories typically have less competition, giving sellers a greater opportunity to succeed. And that is something we all want!

To be successful in a less popular market, proper product research, sourcing quality products, negotiating pricing, presenting a higher perceived value, running profitable PPC campaigns, creating optimized listings, and more are all critical factors.

How to find lower competition products in a popular category

To find products with high demand and low competition on Amazon, it's important to dig deeper into subcategories within your main category. This will increase your chances of finding a market with limited competition. Even in large and popular categories like Home and Kitchen, you can still find lower competition sub-niches, such as Vertical Plate Holders under Countertop and Wall Organization. Bet you didn’t ever buy one of them (other people buy them, though).

It's important not to rush the product research phase and to continue digging deeper into every subcategory until you find a pleasingly low competition and high demand product with a beautifully consistent sales history. It's not just about the category you sell in (after all,  there are profitable sellers in every category on Amazon). It's more about the actual demand and how you can differentiate your business offerings from others.

Amazon is a highly competitive marketplace, so it's important to get creative and use tools like SellerRunning and Tactical Arbitrage to find untapped opportunities, making your life as an Amazon seller a little easier. Remember, you can also refine your Amazon business with tools that look at pricing, sales data, customer communication and more.

Conclusion

The purpose of this post is not to dictate which Amazon category you should sell in, but rather to encourage you to think creatively and utilize data-driven decision making in order to increase your chances of success. Remember, research and persistence pay off. Happy selling.