We all want to be the next big company. We look out at the market and immediately recognize at least dozens of companies that entered into the online retail with minimum experience. In a short time frame, they managed to achieve incredible results that everyone is talking about.
And you say “If they can, why wouldn’t I?”
And then you get tripped up on the very first step: “What Am I going to sell?”
If that’s you, don’t worry. While picking an ecommerce product is the key to success, it’s also one of the hardest. Hard, however, doesn’t mean impossible. If you learn the right tactics and put in the work, you can do it.
Luckily for you, that’s precisely what our Holy Grail is for… a product brainstorm and viability evaluation checklist to help you unlock your entrepreneurial drive in picking the most profitable products.
Product brainstorm checklist
1. Identify or create products that solve a problem.
The reason behind the success of many companies is that they manage to pinpoint a problem and conveniently solve it for their customers.
Your product doesn’t necessarily need to be a huge, complicated endeavor — it can be quite simple, yet exceptionally effective.
The key is to flip your thinking: The question isn’t, “What can I sell to make money?” The question is, “What do other people need that they will pay money for?” Switch from me, me, me to your customer needs. That’s how you’ll win.
Here is an example of business that offers a simple solution to a problem:
The problem: most of the headphones on the market easily slip off your ears, and you can’t listen to music while training or exercising.
The solution: Kyle Kirkpatricki, an Olympic gymnastics coach, successfully recognized the problem and transformed it into a brilliant business idea — the invention of Decibullz.
Product opportunities can also exist in a few other areas:
- Improved product features,
- A new market unrealized by your competitors, or
- Unique product positioning and marketing.
Another great example is Storytel. Instead of selling books, they come with the idea of selling a subscription for audiobooks for listening the books on your iPhone or Android.
2. Define a niche
You only need ONE specific niche that people are passionate about and will love to buy.
One. Uno. Aon. That’s it. Just one. We often try to sell too many products to too many audiences, and we end up selling nothing.
In truth, niche segments usually mean success for ecommerce businesses because you create a product that solves an issue for a very passionate audience segment. An audience that is highly-engaged, and highly-converting.
To nail your niche, you need to start asking yourself questions: “Which people do you want to deliver to and what?”
Shoes? What shoes – men’s, women’s, or children’s? For men? What kind of men’s – formal, sporty-elegant, tennis shoes, work shoes, men’s sandals, men’s sneakers, or others? Work shoes, that’s it.
You got the idea. Just narrow down your choices, and you will find a niche.
3. Hop on trends early.
Take advantage of an emerging market and carve out a spot for your brand.
Spot a trend and jump on it. You have to be quick to capitalize on it before it starts increasing in popularity, and other companies enter the market.
As a small business owner, hopping on trends early can give your business a huge advantage. You’ll have the opportunity to build your brand quickly without having to compete with big names and establish yourself as a leader within the market you serve early on.
Here are a few places to look for current trends:
Type in a product/topic or a keyword that you have an interest in. If you want to sell sunglasses, for example, you type in sunglasses in the Buzzsumo search bar, and the service will return the most trending articles in the sunglasses niche.
Evaluate your product idea
Now you know what you want to sell, and you’ll need to ask yourself some serious strategic questions about your product’s viability.
- Is the product idea has potential?
- What obstacles or challenges lie ahead?
There are several pieces of criteria I recommend to use as a rule of thumb when assessing the viability of your products.
- Retail price higher than $20 – you can’t sell too cheap products (like makeup brush cleaner mat for $2, for example). Let me explain why. Setting the minimum retail price of a product at around $20 ensures that you’ll be able to cover all of your margins – from manufacturing costs to shipping fees to advertising costs – and still be able to make a profit. If you go too low, you might not break even!
In the next installment, I will explain the basic business formula and give you our FREE calculator to do the math for your business venture.
- Decent sales volume – Is there potential, and what is the potential? How many people buy your products each month?
How much forecast revenue will you reach if you get 10% of the market? And 20% of the market? And 50% of the market? And if you become number one?
Suppose your market segment (the people you are targeting are men who work in enterprise companies at C-levels and fall in the age bracket of 25-35 years) is so small that you could make only 15 sales per month. In that case, your business will never make decent revenue, or worse, it will never even reach the break-even point. (More for it in the next installment of this series).
Low seasonality – Avoiding products that only sell during specific seasons and holidays. Or you should have a strategy in place that will cover the seasons with low demand. It’s safer to go after products that will sell all year round.
- Less competition – It’s a no-brainer that the lesser competition, the bigger the opportunity to jump into that market. But we all know that all niches are quite saturated. At that stage, you will have to make a quick research of the companies that sell the same products. If your competitors have less than 200 reviews, than you can start considering this product! Alternatively, if they have thousands of reviews, it’s best to avoid that product category that is already dominated by a competitor.
Another option is to consider selling the same product on a different market or to a different market segment.
- Cost-efficient with high value – Every retailer’s dream is to find a product that costs nothing to make yet sold for millions of dollars each. Sounds perfect, but it’s not realistic. So the goal is to get as close to that ideal as possible. At best, look for products that have low production costs but a high perceived value (so people look at your products and say, “Oh wow, that’s impressive. I can’t live without it. I want it now!”).
- Ability to improve the product – Anyone can recreate a successful product, but you will only stand out in the crowd if you create a superior product. When you ask, “What do people need/want?” you’re just looking to see what gaps exist in the current market. Where can you fill it by doing something special, something that other companies aren’t doing, or something they aren’t doing well?
That’s the UVP. The unique benefit your product could provide to a potential buyer.
For example, you can go with the same product but with a different package bundled with a gift.
Small and Lightweight – You want a product that isn’t big and heavy. Why? Both your shipping and storage fees are determined by your product’s size, which is why going for small and light products will keep your shipping costs and storage fees as low as possible. Fewer fees = more profit! Shipping for heavy items can be astronomical.
Potential legal implications – Say, for example, that you had an idea for some sort of nutritional supplement ecommerce. The idea would involve making medical claims that could highly complicate your business venture, and eventually, you could find yourself in legal hot waters. Unless you have a legal background in the area, it’s better to avoid such ideas for now and save yourself the trouble down the road.
- Licenses and permits. Depending on which product you decide to offer, you may need a license to sell it. Contact your local licensing department to see if you need some licenses and permits to start your ecommerce.
- Simple to manufacture. – The ONE major trait that makes some products easy to manufacture over others is simplicity. Ask yourself, “How many components and materials are involved in manufacturing my product?” Typically the more components and materials needed for a product, the more suppliers will be required. And coordinating productions becomes more complicated with each supplier involved.
Stay away from complex materials or any potential manufacturing challenges! Try to keep manufacturing as smooth and straightforward as possible.
And one final piece of advice. Choose a product that is close to your interests, expertise, or passions. Running a business takes a lot of time and dedication. Make your life a lot easier by choosing a product you love and enjoy.
After you determine your products’ viability, you should be able to answer these two questions:
- Can my business produce a profit with this product?
- Can I ultimately scale my business with this product?
Well, in our next installment, you will find the answer to those questions. We have a simple business profit calculator that will help you keep a pulse on the numbers to ensure your investment in ecommerce is a profitable one.
Update: The article is now live: The Ultimate Guide To Ecommerce Business Budget Planning
Here is a link to the Business Budget Planning Tool . You will need that tool at hand all the time: from your initial budgeting, product profitability, break-even point, ect. to crafting different strategies to grow revenue and scale your business.
If you find ecommerce planning difficult, Valentin and I are always ready to land a helping hand. The only way toward predictable success is to get it all right from the beginning. Just get in touch at email@example.com or join our Facebook group