Do you want to establish an online business but not sure how to pick the right product to sell? You’ve come to the right place.
Think about how many times you’ve brainstormed product ideas and gave up midway because “too many people are selling it.” While there’s room to come up with an even better innovative version of the product, it does not hurt to launch entirely new products.
The average failure rate after a product launch is 85-95%. This statistic should in no way discourage you. Most people dwell so much on finding the perfect product which does not exist.
Why is it important to choose your product wisely?
Products and services available to customers online are in their thousands. With that in mind, the ability to choose the right product or service to potential customers determines how successful a business will become. The marketplace is highly competitive.
Therefore, to deliver efficiently, aspiring entrepreneurs must take advantage of the unlimited opportunities on the table – and select the right products and services for their target community. Every aspect of your business is influenced by the product you sell.
This article should inspire you to make better decisions in choosing the profitable products you are about to launch and sell – and locating suppliers with the best deals and terms.
What makes for a good product to a new seller?
Here are some key product selection concepts
→ Small, light and simple to ship
Bulky products are expensive to ship. Avoid products that drive up shipping costs, e.g. fragile and complex products.
→ The price range of $15-100
Anything less than 15 dollars will have no profit margins left after paying for sales fees, storage, advertising, shipping and handling. Anything more than 100 dollars will require more investment, yet you’re just starting out.
→ Profitable product with good ROI
You should aim to sell your product at 3x the cost. The products should display an efficient use of capital. You can use the ROI and profit margins (which increases over time) to compare these products.
→ Early product life cycle
The product should be early in the phase of its life cycle but with a lot of growth ahead. This allows you to position yourself and product way before others get the chance to. Products outside the life-cycle can bring a significant loss to a new business.
→ Value-adding product
Find a product with growing demand and grow with that demand. You can customize it later on, but you must keep adding value to it, based on the feedback you get from customers and analysis.
Steps to choosing the right product
1. Assessment Phase
Brainstorm with your team about the SWOT analysis of a product or service you may want to introduce to the market. Analyze the internal and external factors in play and capitalize on the strengths and opportunities while you solve the weaknesses and threats. Be truthful about this.
a) Internal assessment:
- What are my competencies and passions?
- What have I have been doing excellently in your life that I know no one else can do better?
- What kinds of products do I like, consume, enjoy and benefit from?
- Do I like the product I want to sell and would I buy it?
- Do I see myself selling the product or service for 5 or 10 years?
- What makes me unique among competitors? Can the product be duplicated along the way?
- What does the product do for the customer?
- What makes me vulnerable?
- What skills don’t I have that I wish to acquire?
- What do I want to improve on, and will it be beneficial to the process?
- What do I dislike that could be turned into a potential service or product online?
b) External Assessment:
You should be aware of your surroundings or outside forces that can affect your business. This way, you can maximize on possible opportunities and handle challenges better.
Some of the questions should be answered from a customer’s point of view;
- What is my ideal customer looking for online?
- What are my potential consumers passionate about or interested in?
- What customers will I sell the product to?
- How will it improve my customer’s life or work?
- What does the product avoid, preserve or achieve for the customer?
- What trend can I convert to a feasible and creative offering in the long run?
- What are the things not in the market right now?
- What existing products could do with more features?
- What solutions could fill potential market gaps?
- What are the potential threats that could risk the business?
- Is there an actual demand for the product at my pricing and is it enough to make a profit?
- Is there a scarcity of supply for the product?
- Is there a potential threat to the longevity of the product? If so, how will I strengthen the product idea to maintain the value?
- How can I leverage the slice of market share for small and medium businesses?
2. Strategy Phase
Use highlights from the assessment phase to find the most profitable products that meet your set criteria.
You can use either of these strategies, tools or platforms to find good profitable product ideas:
a) Analyze the sales data of global eCommerce sites to get a realistic understanding of the demands in online markets.
You can gather ideas based on best-selling products, or even moving items.
These sites include Amazon (Movers and Shakers, Hot new products) eBay (Popular destinations, Trending on eBay) Etsy (Most wanted, Best Selling) and Alibaba.
b) Explore up-and-coming product trends.
This method is called trend hunting or trend spotting, which is the process of monitoring consumer behaviour and interests. It entails going to websites and platforms they visit and tracking the number of times keywords have been searched, posted and shared.
The sites include Trend Hunter, Springwise, Trend Spotting Market Research, Subreddits, Kickstarter’s Trending Products, Pinterest (search for high-level terms)
c) Read product review sites to find inspiration.
These online customer reviews are valuable product opinions to use.
Some of the sites include Yelp for business establishments reviews, TripAdvisor for restaurants and hotel reviews and Amazon customer reviews.
d) Monitor social media platforms to collect honest opinions, insights, reviews, interests and relevant customer behaviour.
Social media sites include Instagram and Pinterest.
3. Selection Phase
It is time to curate the product ideas you have come up with and evaluate critical areas most viable for business.
a) Trim down your ideas to just three potential and viable digital products.
You can use Google Trends to evaluate and compare the shortlisted products. Customize your selection according to country, time range, category and source of data.
b) Select the top products and further scrutinize them.
Test market demand by asking yourself;
- Is there a demand in my community or close by?
- How large is my potential market size is? (Use Google Search and Google Trends for this)
c) Repeat the Google Trends process
To test your isolated product idea further, explore it on Google Trends again. Find out which countries searched the product the most and what were the related queries.
Alternatively, you can carry out a feasibility study of your community to establish product viability.
d) Evaluate competition
Input your chosen product on Google Search to check if other companies offer a similar product and what is your advantage over them.
How many are online businesses?
Do they have other products in their catalogue?
How long have they been running that business?
e) Evaluate your expenses and selling price
Your projected costs will determine how much you may sell the product. As well as profitability and ROI. You can ask your customers how much they can pay for the product. Also, compare the pricing with your potential competitors.
f) Assess the product’s benefits and apply the SWOT analysis from the assessment phase;
- Is it consumable, perishable or durable?
- What is the shape, weight or size?
- What is my kind of packaging?
- Is there an actual need for the product, and how will it benefit the consumer? How is the product or service better or superior to anything from the competition?
4. Implementation Phase
It’s time to turn your informed decisions to action to obtain the product, with varying costs.
These questions will help in planning the manufacturing, supply, pricing, and delivery process;
- Will I produce the product, or will a third-party manufactured it?
- If I’m making the product, where will I source the materials? (domestic vs overseas sourcing)
- How do I find manufacturers, distributors or third-party makers?
- How will it product to be sold? Is it directly by me or through dropshipping?
- How will the product going to be paid for and by whom?
- How will the product or service be delivered to the customer?
- How will the product be serviced, repaired or replaced?
Once you have decided on whether you will create self-made products, or buy outright from manufacturers or use drop shipping, you may search for the suppliers. You can do this either be online through search or offline in directories in newspapers and phone directories. You can also get recommendations from referrals or social media.
To establish the price, calculate the overall product cost, decide on the profit you need to make on to accomplish your overall revenue goals, then compare the amount to your competition for the best value. You can then adjust accordingly. Do not underprice nor overprice.
Also, consider the value you are adding to the customer’s experience and motivation.
Before launching your product, you can do a few test runs to secure customer interest and some investment. You may create a landing page to promote the product as you build your email list. You may also run an ad to drive traffic to your page.
As you may have learned from this article, choosing the right product is a lengthy process that requires your time and in-depth research on product ideas. It doesn’t stop there.
For a product or service to be successful, it should be the right product purchased by the right customer at the right time in the right market. It should also be manufactured and sold by the right business company and the right entrepreneurs.
Hopefully, this guide will direct you to a high-quality product that potential customers want to buy, that tells a story, solves a problem, delivers on the promise and one that you’re excited to sell.