One of the most important factors in creating a successful online business is knowing what to sell. Finding the perfect product(s)/ niche market to sell is often the most important and difficult step towards creating a profitable and growing online business.
For the past 3 years, I have been trying to define the process of finding the perfect ecommerce product. However, in order to better understand what the perfect online product is, I had to determine common characteristics successful products and niches share. Luckily, after analysing and trying lots of successful and unsuccessful alike, I developed a list of metics and criteria to test new ideas against.
1. Knowing Your Potential Market Size
Choose a product and niche with a small but sufficient market size. Avoid niches that are too narrow with low keyword searches. For example, a product that caters to smokers who have been smoking for at least 5 years is probably good. But a product that caters to smokers who like rock star music will likely be too narrow. It will be harder to find customers, more expensive to acquire them and the small market size will limit your potential growth substantially.
Here’s what I’ve learned throughout those years : what it comes to define your target niche market, try to be the big fish in a small pond.
2. Knowing Your Competitors
What is the competition level for your product? Are there barely no competitors, a few competitors or lots of them?
If there are a lot of competitive players in your defined market, it could mean that the market has already been validated. Therefore, to entering that market, you have to do something different or even extraordinary to attract customer’s attention and gradually build market share.
3. Define the Trend for The Market
Make sure you understand to the best of your ability where your product stands. Does your product or niche fall into fad, trend, stable or growing market?
Google Trends will help give you the big picture whether something is a trend, fad, growing or stable market. If you see unexplainable things spikes, try doing some further searching to see what the possible cause was of it.
4. Can You Buy The Item Locally?
If you are offering a product that is readily available locally, there is one less reason for people to seek your products out online. For example, if you are going to buy a toilet paper roll, do you prefer to go to local supermarket or buy from ebay?
If your product can be bought locally, how are you going to differentiate yourself and convince people to buy from you online? Can you offer a better selection? Higher quality? Better price?
5. Target Customer Matters
Even though you don’t need to go into extreme detail but you should still be aware of the type of customer you would likely be selling to and their online purchasing capabilities.
For example, if you have a product geared for seniors, you should keep in mind that most of them won’t be too much familiar with technology.
6. How Much Can You Sell It For?
A price point between $50-$120 is general recommended as it minimizes the need to find a large number of customers to turn a decent profit and be able to give you some cushion for customer acquisition (marketing) costs.
Prices in excess of $120 tend to come with a lot more customer scrutiny. Potential customers will want and expect a lot more re-assurance. They will have more questions and in general will create a longer, more difficult sales cycle.
8. Can You Offer a Subscription?
As we all know, it takes significantly less amount of efforts to sell to a current customer than to find a new one. A subscription-based business allows you to sell to the same customers many times over, automatically.
7. #1 Cost – Size & Weight
Product size and weight can have a big impact on your sales and bottom line. More and more customers expect free shipping these days. If your product is oversized and/or heavy, costly shipping can deter potential buyers. Did you know that shipping costs are the number 1 reason for shopping cart abandonment?
Apart from above, there will be added costs for shipping the products to you if you are working with an overseas manufacturer and it will increase warehouse costs if you choose to use a fulfillment warehouse.
8: What Will Your Turnover Be?
It’s risky to have products that constantly need to be changed. You run the risk of not being able to sell your product before time of turnover. For example, let’s look at the business of selling smartphone cases. Of course there are lots of successful businesses who cater to these markets, but it’s also important to realise how fast your product turnover have to be.
The product and niche you choose is at the very core of your business and one of the most important decision you will have to make.
Though you might never find the perfect product to sell, there are certainly ways to minimise the risks by selecting a product and niche that have more going for it, than against it.