People often find themselves jaded just a few short months in starting their business online. Truth be told, product research and selection is both time consuming and complicated. Plus, the work can get so tedious at times– some people find themselves procrastinating and end up wasting more of their time. The worst-case scenario is these entrepreneurs end up quitting even before mastering it.
First, let us tackle the two important questions you must answer even before beginning.
- What product are you selling?
- Are you having one product manufactured that you’ll sell many times or are you going to resell old items for a profit?
- Where are you selling?
- Are you selling on a third-party platform like Amazon, building your own Shopify store, or selling on social media?
If you are looking to make some extra income on top of your current source, you can select low-margin e-commerce models like Merch by Amazon, dropshipping, and arbitrage. However, if you are looking for something that could replace your full-time job and provide you with your most awaited financial freedom, it is important to look at the wholesale and private label.
Buying and Selling Products Online — Concepts to Learn
Keep it small, tight and simple – The heavier the product, the more expensive the shipping fee would be. Bear in mind that the shipping fee is typically the next expense in this kind of business. Hence, picking a product that smaller will typically keep your business expense manageable. Moreover, it is also crucial that you avoid fragile products with moving parts. If you wish to sell on Amazon, you can check their FBA classifications to get a good idea of the best-sized items to sell.
$20 to $75 is the rule of thumb – Once you’ve started your online business, you are not guaranteed a decent sum of money. However, with hard work, you will eventually get there. Just remember to keep the price of your products within $20 to $75. Why? Because selling products under $15 will leave you little to no profit margin left after paying for your advertising costs, sales fees, shipping & handling fees, storage fees and so much more. Selling more than $75 will cause you to shell more money to just start. If you are wondering how much you should invest, just add 2 zeros on your retail price. If your product costs $30, your investment is most likely a minimum of $3,000.
Keep the 3x rule – if you do not want to use the rule above, stick to the “3x Rule” — whatever price you buy a product for, you must aim to sell it for at least 3 times more your cost. It is important to apply the necessary business models in starting your business and use profit margin and ROI to compare products against each other. The 3x Rule is a handy conceptual tool to have. Sometimes you may want to just break even on a competitive product, so you can launch that new revenue stream for your company. After launching the product, you can then work on increasing profit margins.
Simple Products Profit More — Other Concepts You Need to Know
If you are still unsure of the product you want to sell, finding something simple and useful is a sure way to go. However, there you must also consider that your competitors are most likely selling the same products you want to sell. So before you look for the most profitable products to sell online, here are other concepts you must absolutely know.
Watch out for the Product Life Cycle – The product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall.
The main stages of the product life cycle are:
- Research & Development – researching and developing a product before it is made available for sale in the market
- Introduction – launching the product into the market
- Growth – when sales are increasing at their fastest rate
- Maturity – sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in market or saturation
- Decline – final stage of the cycle, when sales begin to fall
For successful products, a business will want to do all it can to extend the growth and maturity phases of the life cycle, and to delay the decline phase.
Embrace the fact that there will always be competition – Nobody wins in business by avoiding their competition. Instead of fearing your competitors, get your brain in a positive mindset and learn from them. Check how they sell their products and try to reverse engineer as much as you can. Breaking down their success will help you follow the same pattern.
Do not immediately add value – Start out simple. Try to deviate from excessive customization of your products to cut down expenses. Adding a simple logo and packaging will do for now. The trick to getting started is again – finding a product with growing demand, and growing with that demand. That allows you to start with a relatively simple, unmodified product. And then with each order, you want to keep trying to add more value based on customer feedback and ranking data.
How to Find a Product to Sell on Amazon
Amazon has become synonymous with eCommerce. Apart from being a great online store, it is known for its user personalization feature. Keep in mind that Amazon sells more than 300 million individual products, and only by selling the right products you can become a successful seller.
Start by Discovering Profitable Products
You need to understand what makes an item profitable. Criteria like, shipping weight, popularity, category, and competition all play a major role here. You need to identify products that meet most of the criteria.
Research the Shippable and Sellable Factors
While looking for products you need to first consider 3 things:
- Shipping Cost
- Wholesale Pricing
- Amazon Seller Fees
Check for Competition
To bring in profits, you need a product that is priced profitably, found and shipped easily, and in demand. Below are the key factors that determine whether your product(s) meets these criteria:
- Products that are not currently being sold by major brands and Amazon sellers
- Similar items that have Amazon’s Best-Seller Rank (BSR) of 5000 or lower
- Items that can be searched under multiple product categories and keywords
- Leading product keywords having not more than 10,000 searches/month
- Similar product listings having less than 50 reviews
Select Your Source for Products
Once you are done researching which products to sell, you should start thinking about sourcing them. Here are two places where you can start your search:
- Alibaba – If you are planning to sell on Amazon, Alibaba is a good place to source your products. It is a place where you can source inexpensive imports. A good thing about Alibaba is that it helps you learn about product sourcing. This is extremely helpful if you are new to the business.
- Wholesale Marketplaces – Wholesale buyer’s markets are another way of sourcing your products. Wholesale markets are situated in every major city in the US. And the best part is, they focus on every imaginable industry. To locate your nearest wholesale market just google it. Also, don’t forget to add the product name or category you are interested in.
Amazon accounts for nearly half of all online sales made in the US. Hence, there are a lot of profitable opportunities for sellers. The only thing that you should concern yourself with is market research and focusing on finding the best products to sell.
After this, you can begin creating a remarkable buying experience for your customers. Make sure to familiarize yourself with the concepts on how you can begin looking for that perfect product for your eCommerce business. Good luck!