A search of optimal products for selling is one of the most important stages in the process of creating a profitable campaign. That’s why a selection of products for an online store should be careful and relying on your possibilities and opportunities in the niche.
In the internet, you can sell anything, but it’s not always beneficial. To get a good profit from the very first day of work, you should pay attention to a range of criterias that you need to use when selecting a product. And this is what we’ll tell you about.
Potential Volume of The Market
Avoid too narrow and too wide niches, since in the case with the first ones you’ll have a limited demand, and with the latter there will be high level of competition and scattered budgets. An example of a too wide niche is digital appliances. Clothes for people who suffer from obesity on the contrary is an example of too narrow niche. You need to find the golden mean, for instance, accessories for men. The niche might seem a bit too narrow, but if you effectively use internet marketing tools, you can become one of the leaders in this niche, having reached loyalty from your audience and a stable level of sales.
To estimate the potential volume of a market in a country or a region is possible by means of using a specialized service – Google Keyword planner. We’ll go through this more precisely in future, but if you need the estimation right now, you can ask for recommendations our experts.
Level of Competition
On the one hand, a big number of competitors in a certain niche says about a high demand and stability on this market. On the other hand, a growth of competition makes it more difficult to get into it, requires higher costs to attract customers, and, hence, leads to a decrease of margin of a product unit. So, this is quite a reason to think if you should try yourself in such a segment of the market.
If you have found a product with low competition, don’t grab it right away. The absence of competitors may only say that this niche just doesn’t have enough of demand and it’s not beneficial to develop an online store in it.
Consequently, you need to aim for an optimal option, trying to find a product possessing a stable demand (even if it’s low) and a tendency to grow. Besides, a competition of a single product may vary drastically in different regions. It means you can focus your efforts on a part of market in one region, reach the point when you have no losses anymore, and then spread on other target markets.
Dynamics of Demand
There is such an interesting instrument as Google Trends which helps you analyze dynamics of changes of what you’re curious about. In this way you can understand which category the product interesting for you belongs to: a short trend or a long term tendency getting serious and creating a new market in future.
It’s very important to foresee this aspect in order not to face some unpleasant surprises in future. Having analyzed a purchase price from suppliers and an average retail price, you’ll get a difference which will be an acceptable margin. Still, there will be something that you’ll have to deduct from that number: all operational costs, taxes, etc.
In total, some minor expenses may seem to significantly decrease your income, and in some cases selling certain products may appear totally unprofitable. A product with a starting margin of 300% might bring a profit of only 20-30% of its cost price. Moreover, no freshmen or leaders on the market, who can sell the same product with a minimal margin, are secured from dumping.
It’s always more beneficial to work with the products that bring you a proper profit after one sale then to rely on quantities. The way to huge incomes, if it’s too long, might end up as bankruptcy.
Availability of Suppliers
To sell something you need to buy or make it first. A supply is a vital aspect for a business, since the quality of processing orders, a possibility of sales increase, and stability in general in an online store depends on the availability and terms of suppliers. Of course, any entrepreneur would be happy to get a good deal from a wholesaler which would let him to get ahead of his competitors. But that can also ruin the business, since you’ll depend on one supplier, and whatever serious issues he’ll face will have an impact on you too. Thus, the best option is if the product you’ve chosen you can buy from different wholesalers for similar terms.
One more important aspect is availability of suppliers in your region. Purchasing from abroad, you can easily find some troubles if your products get stuck on the border or don’t pass the control at all. Besides, significant
Value of Purchases
It’s good to be determined, but you also need to have possibilities. If your budget is $2000 and you want to sell air conditioners, it’s better to get rid of that idea. But this money is probably enough for selling some cell phone accessories or sunglasses. Besides, you need to leave some money in advance for promoting your online store, since without it, the only possible visitors in the store will be you and your employees.
Although, there are quite a few ways to trade relatively expensive products, without investing a fortune at the beginning. For example, you can find a supplier with fair terms and conditions or, if the trade goes well, you can by the next part of products for a bank credit.
Dimensions of Products
Selling billiard tables will be quite difficult if you live in one-bedroom apartment and don’t rent a warehouse. Besides, delivery costs for large-sized goods are quite high. There are quite a few examples when a delivery cost is 30-40% of the product price, which obviously scares away potential customers.
That’s why you should consider if you can ensure a storage for purchased products in desired volumes and if delivery costs won’t be too high for customers. But for trading accessories for mobile devices you can easily rent just a few square meters in a warehouse or even store it at your place.
Conditions of Storage
Have you gotten acquainted with the terms and conditions of your product storage? Maybe your goods are too fragile or require certain levels of temperature and humidity. This is an important point if you plan to trade, for example, some dinnerware. It’s more difficult to pack and more expensive to transport, and in case of damage, a customer will blame the online store.
Seasonality of Demand
This feature doesn’t mean anything bad. Besides, almost all niches have seasonal demands. You need to take it into account when building long term plans, since products with a seasonal demand will bring variable profits, whereas your expenses for supporting and developing the online store will usually be regular.
You can quickly identify seasonal fluctuations in traffic with help Google trends.
The option is to trade products that are in demand throughout a year and will always generate profits.
Period of Product Relevance
It might not seem obvious, but it might cause certain financial losses. For example, if you don’t manage to sell a particular model of smartphone before the new, improved model is released, you might face not only a decrease of demand but also incur certain losses, since your competitors will start to drop prices. Jewelry and accessories prices will remain the same or maybe even grow. But photography equipment will diminish in value significantly. If you update the model range too fast, it potentially creates certain risks for the business that begins to develop.
This problem can be sold by means of active online store promotion which generate enough of traffic. It will let you increase the speed of turnover due to active sales, which is proved by correspondent cases.
Average Check and Repeat Sales
They both play an important part on the stage of establishing and further development of a business. It’s much harder to make visitors buy more and come back to buy again than just to attract them to the online store. It is usually possible to boost repeat sales according to products of permanent demand, for example, cosmetic, items of hygiene, or children goods. And the average check can be increased by means of particular marketing methods, such as an offer of kits and accessories. And, of course, mass emails to registered clients should take place.
Possibility of Growth
If you don’t want to reach the maximum income without the possibility of extending your business, you should to think about it on the stage of selecting a product. To make a right decision, you need to consider the following questions:
- Is it possible to increase the volumes of your products fast in case there is an increase of orders?
- Is it possible to competently increase the staff for processing orders?
- How difficult is the production of your target product and how many competitors are there on the market?
- Is it possible to increase sales by means of extending the assortment in the current or similar product categories?
- Is it possible to step on the foreign market or the one outside your region?
Each of the options has its pros and cons, since you can capture a significant part of the market in a niche where possibilities of growth are low. But in the opposite case, you can actively develop your business by means of sales increase.
Ease of Comparison
The easier it is for a customer to compare your offer with competitors’ ones, the bigger is the risk that there will appear a price chase in the niche, which will lead to a decrease of income. An example of such a niche is home appliance and electronics. There are services where a customer can easily choose an offer from the online store that has a lower price.
But at the same time, jewelry and a range of other products of mass demand are much more difficult to compare. And in such niches, you set the margin that is truly beneficial for you.
Understanding the Product
Selling the product that you know all about is not only beneficial but also pleasant. An expert opinion is always highly appreciated by users, which evokes trust to an online store and its employees. Think what niches or products are the most interesting for you, it might help you make the right decision.
The same approach is fair for hiring employees too. It’s better to pay more but for a qualified worker than to use cheap labor ending up working with people who know very little about the product they sell. A good example is “Apple” who send their consultants from offline stores to special courses that help them become experts.
And finally, the way to success in any niche narrows down to creating a unique offer that makes you stand out among competitors. So, why would people need one more of numerous online store selling home appliance? Maybe they’ll have a look at your catalogue but at the end buy from a popular online store.
The first thing that comes to mind is a price. But discount are easy to get used to, and permanent dumping is by no means a winning strategy. That’s why you should consider other options which are quite a lot. It can be a high quality service, a free delivery, something complementary, regular promotions, etc. Every niche has its bright sides, and to become a successful seller you need to make the right offer.
The criteria of selecting a product and a niche for an online store, shown in this article, will let you minimize risks and the optimal choice. There is no ideal and universal recipe for success, but understanding possible mistakes allows to avoid them and develop your business.