Choosing a Product to Sell
Episode #1 of the course How to start an online store by Patrick Rauland
Welcome to this course on how to start an online store.
I’m Patrick, an e-commerce entrepreneur. I write books, develop courses, speak at events, and even manage e-commerce software (WooCommerce).
I love e-commerce because of how life changing it can be: You’re no longer a passenger riding in a bus; you’re the driver, and you can go anywhere and do anything.
However, while e-commerce is incredibly powerful, it’s not easy. You don’t just press a button, and thousands of customers show up to buy your product. This course is going to tell you everything you need to know before launching your own store. You’ll learn what types of products you can sell, how payment and shipping work, how to pick an e-commerce platform, and finally, how to create a message that resonates with your customers.
Today, we’re going to focus on selecting and sourcing products.
Choosing a product to sell can be daunting. It seems like everything has been done—there’s an almost infinite amount of products out there. Some people are so overwhelmed, they never get past this step. But here are a few tips to help you find the perfect product.
1. Focus on products, not categories.
Start by focusing on individual products, not categories. If you want to sell kitchenware, start by just selling knives, or even better, just a single knife.
It takes an inordinate amount of time to find a supplier, get samples, create packaging, write marketing materials, promote the product, etc. It’s so much easier to start with a single product than with a category.
2. Gauge demand.
You can make whatever you want in this world, but it doesn’t mean someone wants to buy it. Research the market to make sure there are potential buyers out there. Join Facebook groups, look at search engine trends, talk to retailers, and use your intuition.
An acquaintance of mine bought thousands of iPhone 4 cases when the iPhone 6 came out. He got an amazing deal at $1 each, and typically, iPhone cases sell for $20. Theoretically, they were profitable. Unfortunately, there wasn’t any demand. Several years later, this individual is still sitting on thousands of cases.
3. Remember about money.
Just because someone wants to buy a product, that doesn’t mean you’ll make a profit. You need to look at your margins. Only pursue products that can be sold for twice the cost of acquisition.
If you buy a product from a manufacturer for $25, you need to sell it for $50. If you don’t have that much margin, you won’t have any money left to cover shipping costs, online marketing, refunds, support staff, software, etc.
This rules out many electronics, like computers and TVs. Retailers who sell those make money on the accessories. You could do something similar, but it’s a much more complicated business model, so I don’t recommend it.
4. Consider products that are easily shippable.
If you want to make your life easy, make sure your product is small and lightweight. You’ll save a ton of money on shipping and storage costs.
Once you’ve found a potential product to sell, you need to get your hands on it. You can, of course, create products yourself, and this is a great way to start. After you start making your first sales, you can look into outsourcing that work in order to spend more time on the business.
You can use Alibaba to find a manufacturer that’s already making similar products. The great benefit is that you can get samples and customize the product to your heart’s content.
Beside that, you may consider buying an existing product through a wholesale retailer and then reselling it. Just make sure you can sell such a product with high margins.
In addition, some companies will let you place orders, and they’ll ship them for you. This is called drop shipping. It’s popular because you only have to do the marketing, and they’ll handle the rest. While it sounds attractive, your business is defenseless. At any point, someone else can start drop shipping the exact same product and turn your profitable business into a liability.
There are still opportunities in drop shipping, but I wouldn’t put all your eggs in this basket.
Key takeaway: Start with one product, and make sure it’s in demand and that you can make money selling it.
Andrew Youdarian wrote a massive post about using keyword research to find a product.
Launch: An Internet Millionaire’s Secret Formula To Sell Almost Anything Online, Build A Business You Love, And Live The Life Of Your Dreams by Jeff Walker
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