Demographics of Amazon's 3P Sellers (PART 2/3 : Seller Product Categories)
Amazon is still the largest online retailer. Its position on top of the market means that it can be used as a crystal ball to identify the prevailing seller and consumer trends. For example, health and safety products were among the best-selling categories in 2020, reflecting consumers' concern over the COVID-19 pandemic. 2021 has seen a shift from health-related products to other categories.
Here is an overview of the best-selling product categories on Amazon in 2021.
Top 10 Seller Product Categories
Here is an overview of the ten most popular product categories on Amazon in 2021, including the percentage of sellers stocking them:
|Home & Kitchen||40%|
|Sports & Outdoors||21%|
|Toys & Games||19%|
|Beauty & Personal Care||19%|
|Health, Household & Baby Care||18%|
|Kitchen & Dining||16%|
|Garden & Outdoors||14%|
|Tools & Home Improvement||14%|
These product categories have several things in common, but it all comes down to one thing: they are easy to stock and sell.
However, other factors also affect different product categories' popularity, as evidenced by the shift towards health products in 2020 because of the COVID-19 pandemic.
Collectibles, fine art, and musical instruments are some of the least popular products on Amazon. Surprisingly, electronics are also less popular than expected, as only 20% of sellers on the platform stock and sell them.
Average monthly sales across all product categories range between as little as $1,000 and as much as $25,000. As expected, sellers dealing with these top ten product categories register the highest sales, thanks to their high and sustained demand.
However, some product categories register much higher average monthly sales – for example, sellers in the computer and musical instruments categories register a monthly average of more than $50,000 in sales.
What Determines Product Categories' Popularity?
Most of the sellers on Amazon prefer selling products that fulfill several requirements. Demand is one of the most determining factors, as most sellers prefer products that register steady year-round sales. High demand guarantees higher monthly sales – and higher profits. Competition is also a major determining factor, and sellers naturally prefer low-competition products. However, competition isn't controllable – besides, most sellers will stock high-demand products, creating high competition. Additionally, most sellers prefer selling products in categories with few and manageable restrictions. For example, sensitive products such as medicine and alcohol are highly regulated, and Amazon has imposed strict restrictions and requirements for sellers seeking to sell them via the platform. In contrast, home and kitchen products have almost no restrictions. Durability is also an integral factor for sellers on Amazon. Perishable goods and goods that are generally easy to damage may result in significant losses when mishandled. Additionally, these goods may spoil during delivery, ruining the sellers' reputation with dissatisfied customers. It also helps if the products are easy and affordable to manufacture and ship.
Popular Sales & Business Models
Sellers on Amazon adopt varying business models, including private labels, retail arbitrage, online arbitrage, drop-shipping, wholesaling, and more. Private label is the most popular business model, and it is most popular in the home and kitchen industry – coincidentally the most popular product category in 2021. Most of the sellers who engage in the private label business model source their products from China, which is still the leading importer to the U.S. However, it is worth noting that Vietnam is catching up to China's position as imports from the upcoming Asian country (including generic products for Amazon sellers) are increasing steadily.
These are the most popular product categories on Amazon in 2021. However, it is important to remember that shopping (and selling) trends are always changing, and several months are still left to go.