So you’ve decided to start an online business – congratulations. If you play your cards right, put in real effort, and understand how the digital marketplace works, you could experience the entrepreneurial journey of a lifetime.
However, there’s one thing that you need before you get into the business of online selling, and that’s a solid product. It’s natural to feel confused at this step – choosing the right product for your business involves uncovering information in several areas, from the category of your product, to niche popularity, and even to how heavy your product is!
With over 75 million products listed on Amazon alone, picking a good product can seem impossible.
We’re here to tell you that the product research process isn’t as scary as it looks. While there’s no get-rich-quick solution out there, we’ve outlined some key factors and points that go into product research, what criteria you should be looking for, and how to lock down your final choices. But first…
What Exactly Is Product Research?
The first thing to understand is that not all products are the same. While this may seem obvious when comparing, say, bicycles to bookshelves, it also reflects in more subtle ways – such as how popular the product is, how well the supply chains run, how much its shipping charges will cost, and so on.
Product research simply refers to the process of choosing products with good market potential and discovering how best to sell them.
If you don’t have the right product, for the right audience, and at the right price – your listings will simply be irrelevant on any digital marketplace.
Why Is Product Research Important?
It might be tempting to go with your gut as a newcomer to the world of e-commerce. After all, you’re most likely a customer too – don’t your insights matter?
This is, unfortunately, a terrible idea – and has led to the downfall of thousands of hopeful new sellers. While it may be useful to use a hunch for shortlisting a few products, marketplace success is dictated by the ebb and flow of product trends and overall profitability – both of which require a basic understanding of how to read data for the benefit of your business.
Even if you feel that a product might be a big hit, remember that over 2.14 billion people are expected to make online purchases this year. How much do you really have in common with them?
Product research, in a nutshell, bridges the gap between an eager seller, and a marketplace hungry for in-demand goods.
Product Criteria – What To Look Out For
At the core of every product research study is the collection and analysis of a few key metrics. While there’s more to look at, you will need to put these four factors under the magnifying glass, so to speak.
Here’s what you need to observe when vetting a potential new product:
If there’s one thing you shouldn’t take your eye off in the e-commerce game, it’s your product’s actual ability to generate a profit.
By buying low and selling high, you generate a better return on investment. This means that the first thing you need to calculate when looking at a new product is the cumulative total overhead cost associated with sourcing it.
Perhaps your product cost is cheap. However, if you end up paying a significant amount in duty, shipping, payment processing fees and more, you will end up compromising your overall profitability – making your business growth weak and your sustainability lower.
Try to keep your product cost price about one-third of your sales price. This brings us to…
You might have heard of how several major companies spend ever-increasing percentages of their budgets on marketing efforts. There’s a good reason why they do this.
Generating sales is extremely hard early on. Convincing customers to let go of their hard-earned cash takes time and effort, even if your product is low in price. If you generate a 70% profit by sourcing a product for $1.50 and selling it for $5, you’re only making a $3.5 profit per sale.
This means that you’ll have to sell nearly 300 items before you see the cash register hit $1,000, which is the most common revenue goal for early e-sellers.
It goes the other way too. You could try selling a product that cost you $250 for $1250 and hit that goal in one sale. However, this is next to impossible for new sellers. At higher price points, people are extremely picky and are highly unlikely to buy from someone they don’t know very well, such as you.
The correct strategy should be to look at a product that makes a decent amount of money per sale but also doesn’t scare off customers. Generally speaking, something at a listing price in the range of $100 – $15 should work best.
3. Size and Weight
This one is pretty straightforward – bigger and bulkier things are more expensive to ship, and will consequently be harder to sell.
On the flip side, lighter products are easier to bundle with free-shipping deals and allow for more flexibility with your logistics. If you’re looking to ship overseas someday, it’s exponentially easier with a lightweight product.
Rather unsurprisingly, it’s quite hard to sell a product that no one asked for. Make sure that you stay clear of too-extreme niches, and choose a product that has regular, consistent demand in the market.
While this may result in having to compete with other sellers, you certainly can’t make any money without a good number of buyers on your side too.
4 Top Tips To Help Find Great New Products
Now that you understand the basics, let’s take a look at four simple ways to discover great products to kick off your online business:
1. Internet Research
Most good products gain traction organically through various channels – you’ll find them reposted on Twitter and Instagram, highlighted on major social media marketing publications, and even reviewed on YouTube.
You can note down how popular posts on these products are and how audiences react to their photos, videos, and features. You can also divide these by niche, allowing you to pick and choose products based on your level of familiarity – more on that later.
Pro tip: If you have the budget for it, you may want to try to train and hire a local college student or someone through a freelance site to gather some initial product ideas to sell. If you have them find 10-20 options with specific criteria in mind, you can further filter to find the best options and save a ton of time.
2. Online Marketplace Research
Sometimes, you need to go right to the source for the best information.
Websites such as Amazon, AliExpress and eBay understand this and offer detailed bestseller lists where products are ranked in order of sales figures.
In Amazon’s case, their page is updated every single hour, giving you a super-relevant snapshot of current buying trends. For eBay, here’s an excellent, recently updated selection of top-selling products.
3. Google Trends
While this may seem like painting with broad strokes, Google Trends allows you to chart and determine how interested people are in buying certain products – or at least how interested they are in searching for them.
Let’s say that you’re aiming to run a store for children’s clothing, and are considering branching out into footwear. You can use keywords such as “baby shoes” or “kids trainers”, filtered as per your industry and location. This will help you understand how market interest in different products changes over time.
4. Start With What You Know
While we did say not to blindly trust your gut, this one’s a bit different.
Most of us are passionate about certain products already, whether it’s part of a hobby, an everyday skill we enjoy, or some other interest, we all have products that we’re excited about and invested in.
By taking a serious look at products in your personal favorite niches, you benefit from:
- Understanding the difference between a good manufacturer and a bad one.
- Complete sympathy and understanding between you and your target audience.
- Excitement! E-commerce is challenging, and being passionate about your product is a good way to stay invested in the game.
While product research might seem intimidating at first, it can quickly become second nature. Once you know what to look for, you’ll be spotting patterns and ideas all over the internet, matching customer interests to your own data analysis.
One thing’s for sure though – a good product can mean the difference between fizzling out and overnight success.
We hope that this article has helped demystify the world of product research and gotten you closer to your perfect product lineup.