How many products do you need to sell on Amazon?

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You may have got started with a single branded FBA product. Many sellers do. Considering that samples and inventory for a single product are likely to cost you $3,000 to $5,000, launching with more than one product can be capital-intensive.

Even if you already retail through your own sales channels, remember that you’ll have to set aside a certain amount of inventory in Amazon’s warehouses. That can eat up your cash so you might want to start with a skeleton portfolio, or only highlighting your new products, for instance.

But how many products makes a portfolio? There’s some interesting research out there on what successful sellers’ businesses look like. Sellers who have made more than a million on Amazon generally have well over 40 products, and a substantial number of them have over 250 products in their portfolio.

Building up your portfolio helps to de-risk your business. You are no longer reliant on just one product for your income. Suppose you sell dietary supplements and it’s discovered that a particular ingredient of some supplements is mildly toxic – let’s call it “excessterone”. If you only have one product and it’s got excessterone in it, you’re ruined.

On the other hand if you have ten products, with roughly equal sales, and the other nine don’t have excessterone in, you only have ten percent of your sales at risk. In fact you can now change your copy on your other product pages and include a bullet point “No excessterone in this product!” – hoping to lure buyers from competing products.

Different types of product present different levels of risk. For instance, carrying a $20 product has less risk than carrying a $150 product, as it’s likely to be a steadier seller with less capital tied up in stock. Building a portfolio will allow you to offer predominantly those lower priced, steady sellers, while maintaining a few high-priced, high margin products that can add extra profitability.

Having a broader portfolio lets you keep refining your business. You can drop the less successful or less profitable products, for instance, and add new ones that make higher margins. Comparing profitability across your product portfolio is something you’ll want to do regularly – every quarter, at least.

You also have less operational risk. For instance, if you have an out of stock single product, your business is dead. If you have a 50 product portfolio and one of them isn’t in inventory, you have 49 others that will continue to sell.

Although there are millionaire sellers who sell “a bit of everything” and are highly opportunistic, most sellers try to build up their brand so that it’s easy to see what it stands for. That might come with a brand story, such as “I started Capable because as an RSI sufferer I needed a computer keyboard I could use without pain, and now I have all types of products for people with hand pain or arthritis”, or “Peachy is a brand of high fashion for larger women, like me”. Or it could be more general, like “good clean basic design for home and kitchen.”

The great thing with this kind of brand portfolio is that if customers love one of your products, they’ll probably be well disposed to another. Capture someone with a really well designed olive stoner, and when they need a jelly bag or a pie slice they’ll probably come back to see what you have for them.

However, you’ll still want to carry out all the steps that we talked about last week for finding the right kind of product. Because if you already have products selling well and making you plenty of profit, you don’t want to add a slowly selling and not very profitable product to your portfolio, do you?

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