A search for optimal products for selling is one of the most important stages in creating a profitable campaign. That’s why selecting products for an online store should be careful and rely on possibilities and opportunities in the niche.
On 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 criteria 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 first ones, you’ll have limited demand, and with the latter, there will be a 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, are an example of a too narrow niche. It would help if you found 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 the audience and a stable level of sales.
Estimating the potential volume of a market in a country or a region is possible using a specialized service – Google Keyword planner. We’ll go through this more precisely in the future, but if you need the estimation right now, you can ask for recommendations from our experts.
Level of Competition
On the one hand, many competitors in a certain niche say about high demand and stability in this market. But, 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 market segment.
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 doesn’t have enough demand, and it’s not beneficial to develop an online store.
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. Therefore, it means you can focus efforts on the part of the 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 the dynamics of changes of what you’re curious about. In this way, you can understand which category the product is interesting for you belongs to a short trend or a long-term tendency to get serious and create a new market in the future.
It’s very important to foresee this aspect to avoid facing some unpleasant surprises in the 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 decrease income significantly, and in some cases selling certain products may appear unprofitable. For example, 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 than 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 vital for a business since the quality of processing orders, the possibility of selling more, and general stability in an online store depend on suppliers’ availability and terms. Of course, any entrepreneur would be happy to get a good deal from a wholesaler who would let him 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 you can buy from different wholesalers for similar terms the product you’ve chosen.
One more important aspect is the availability of suppliers in the region. Purchasing from abroad, you can easily find some troubles if 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. For example, if the 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 the online store, since without it, the only possible visitors in the store will be you and employees.
Although, there are quite a few ways to trade relatively expensive products without investing a fortune initially. For example, you can find a supplier with fair terms and conditions or, if the trade goes well, you can buy the next part of products for bank credit.
Dimensions of Products
Selling billiard tables will be quite difficult if you live in a 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 scares away potential customers.
That’s why you should consider ensuring 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 the place.
Conditions of Storage
Have you gotten acquainted with the terms and conditions of product storage? Maybe 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. Therefore, you need to consider when building long-term plans since products with a seasonal demand will bring variable profits. In contrast, expenses for supporting and developing the online store will usually be regular.
You can quickly identify seasonal fluctuations in traffic with the help of 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, suppose you don’t manage to sell a particular smartphone model before the new, improved model is released. In that case, you might face not only a decrease in demand but also incur certain losses since 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 using active online store promotions, which generate enough traffic. Moreover, it will let you increase the turnover speed due to selling more, which is proved by correspondent cases.
Average Check and Repeat Sales
They both play an important part in the stage of establishing and further developing a business. It’s much harder to make visitors buy more and come back to buy again than to attract them to the online store. However, it is usually possible to boost repeat sales according to products of permanent demand, for example, cosmetics, items of hygiene, or children’s goods. And the average check can be increased using 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 business, you should think about it on the stage of selecting a product. To make the right decision, you need to consider the following questions:
- Is it possible to increase the volumes of products fast in case there is an increase in orders?
- Is it possible to competently increase the staff for processing orders?
- How difficult is the production of the target product, and how many competitors are there on the market?
- Is it possible to sell more through extending the assortment in the current or similar product categories?
- Is it possible to step on the foreign market or the one outside 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 business by means sell more.
Ease of Comparison
The easier it is for a customer to compare offers with competitors’ offers, the bigger is the risk that there will appear a price chase in the niche, leading to a decrease in income. An example of such a niche is home appliances and electronics. There are services where a customer can easily choose an offer from an online store with 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 in an online store and its employees. Think about 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 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 the numerous online stores selling home appliances? Maybe they’ll have a look at the catalog but in the end, buy from a popular online store.
The first thing that comes to mind is the price. But discounts 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. Of course, there is no ideal and universal recipe for success, but understanding possible mistakes allows avoiding them and developing business.