How to Analyze Demand and Competition on Amazon

How to Analyze Demand and Competition on Amazon

Before you design packaging, run ads, or place your first order, there’s one critical step:

Validate the market you’re entering.

Not every product with demand is worth launching. And not every niche with sales is open to new sellers.

At Flapen, we’ve helped 100+ brands launch and scale on Amazon by following one key rule:

Only launch in markets with $3M+ in annual sales and a clear path to owning at least 5% market share within 6–12 months.

In this guide, we’ll show you how to use Amazon’s Product Opportunity Explorer to analyze demand, spot competitive gaps, and confidently decide if and how to enter a niche.

Table of Contents

1. Why Market Validation Matters

2. The $3M Rule: What We Look For

3. How to Analyze Demand with Product Opportunity Explorer

4. How to Evaluate Competition Inside a Niche

5. Key Metrics to Track

6. Flapen’s 5% Market Capture Strategy

7. Final Thoughts

1. Why Market Validation Matters

Many new sellers skip product research—or chase trends based on gut instinct or TikTok.

That leads to:

• Low-margin products

• Seasonal dead-ends

• Price wars

• Inventory that doesn’t move

A validated niche, on the other hand, gives you:

✅ Real demand
✅ Clear customer behavior
✅ Predictable sales targets
✅ Fewer surprises post-launch

2. The $3M Rule: What We Look For

At Flapen, our product validation framework starts with one question:

Does this niche generate at least $3 million in annual sales?

If the answer is yes—and competition is winnable—we ask:

Can we realistically capture 5% of that market within 6–12 months?

That means:

• Targeting $150,000+ in yearly revenue per SKU

• Selling 300–500+ units/month

• Achieving 10+ daily sales by Month 2–3

If the math doesn’t work, we don’t launch.

3. How to Analyze Demand with Product Opportunity Explorer

Amazon’s Product Opportunity Explorer gives you real-time data from the platform—including units sold, sales volume, conversion rates, and more.

To access it:

Go to Seller Central → Growth → Product Opportunity Explorer

Then search by keyword or category to find a relevant niche.

Step 1: Check Niche Sales Volume (Past 360 Days)

Inside the Niche Overview, look at:

• Total Units Sold (12M)

• Total Net Sales (12M)

This confirms the market is large enough to support your growth goal.

Step 2: Identify Your Market Share Opportunity

Let’s say the niche generated $4.2M in the last 12 months.

Your goal is to capture 5% of that = $210,000/year, or roughly $17,500/month.

Assuming a $30 price point and 25% net margin, that translates to:

• ~600 units/month

• ~$4,375 in monthly profit

📌 If no one below 500 reviews is selling that volume, the niche may be too saturated. If 2–3 newer listings are succeeding—you may have a viable path.

Step 3: Validate Buying Behavior

Still inside the Niche tab, look at:

• Search Conversion: How many buyers convert after searching?

• Click Conversion: % of clicks that turn into purchases

High conversion means customers are ready to buy, not just browsing.

4. How to Evaluate Competition Inside a Niche

Now that we’ve confirmed demand, the next step is answering:

Can a new product break into this market?

Inside Product Opportunity Explorer, navigate to the Insights and Products tabs.

Step 1: Review Top Seller Performance

• How many ASINs dominate the top 90% of sales?

• Do any new products (<12 months old) perform well?

• What’s the click share for top 5 products?

A niche dominated by 2 products with 70%+ click share is hard to break.
A niche where 10+ products share traffic evenly = ideal.

Step 2: Analyze Listing Quality

Click on the Products tab and scan the top 10 listings:

Ask:

• Are images professional or generic?

• Is A+ Content missing or poorly designed?

• Are titles and bullets keyword-stuffed or readable?

• What are the most common negative reviews?

Weak content = huge opportunity for you to differentiate.

5. Key Metrics to Track

Here’s a summary of what matters most when analyzing demand and competition:

6. Flapen’s 5% Market Capture Strategy

Once a niche passes our checks, we build a launch plan designed to capture 5% of the niche revenue in 6–12 months.

Here’s what that usually looks like:

💡 We track PPC performance, organic rank, and listing quality weekly—and optimize aggressively to stay on pace.

7. Final Thoughts

Success on Amazon doesn’t come from picking the trendiest product—it comes from choosing the right market and executing with clarity.

Using Product Opportunity Explorer and Flapen’s demand framework, you’ll know exactly:

• Whether customers want the product

• Whether you can win in the market

• Whether the numbers make sense to invest