How to Choose a Product for eCommerce
Often the choice of what product to sell is made for you. For instance if you were following the advice I posted here you’d have to choose a product related to your existing site. Also sometimes you have a hookup with a wholesaler or manufacturer that’s just too good to ignore. However, assuming neither of those things are true, and you have all the options in the world available to you, just what should you try and sell online?
I often recommend people to first try to find out what is made in their area. If you can work with a local manufacturer you’ll have a tremendous advantage. You will be able to save on freight costs, thus making it easier to compete on a price basis. You will also be able to keep less inventory on hand, because the manufacturer will be so accessible to you. Finally you might be able to cull a special relationship with the manufacturer to get further discounts and or first notice of new products.
It is definitely worthwhile to check your local area first.
If you cannot find anything local, or even if you can I guess, there is a series of criteria I have developed for deciding if an item is good to sell online or not.
1. Is it hard to find locally? Does Walmart (or other huge chain retailer type) sell it?
Now when I say hard to find locally, I don’t mean for you, I mean for the average person. If its a common product able to be bought at Walmart or any other similar store, or found at the local Mall, then people will be less apt to look for it online and that means fewer sales for you. The more unique or collectible an item is in general the better it is to sell online. Crafty type things for instance do very well online. For instance this guy sells high end bird houses. You cannot get bird houses that nice locally, I’ve looked, and when I’ve seen them in catalogues they can run up to as much as $300. I happen to know this guy does really good business online because I’ve bought quite a few of his bird houses for myself and for my family (we’re nature lovers) and he’s often had problems keeping things in stock because they’re selling so fast.
2. Is it expensive enough that shipping isn’t outrageous?
If you ship with UPS or Fedex the minimum it will cost you is around $5-$6 to ship something, even across town, and across the country it could be $10-$12. The most common size for USPS priority mail is $5.95, though that’s the same price regardless of distance. Personally when you’re accepting credit cards you really should use a trackable service that gets a signature, so I recommend UPS. The point though is that even small cheap things can be expensive to ship. No one is going to pay $10 to ship something that’s only worth $5. People don’t like paying $10 to ship something only worth $10-$20. However if what you’re selling costs $200 and only costs $10 to ship, well people hardly notice.
So, the smaller in proportion the shipping fee is to the total price the better. In this way jewelry is an excellent thing to sell online, however it’s also available locally, so you’ll need to either compete heavily on price or offer unique jewelry. Another example would be high-end fur or leather coats, which are available in most big cities, but not in the rural areas. One example I often like to use is smaller after-market car parts like taillights, headlights, decals, steering wheels, and the like. These can fit into a decently sized box, aren’t too heavy, and can often cost over $100.
3. Is the item expensive enough so that people shop around for it?
If people shop around before buying an item there is a greater chance they will look online first. This is the only reason why the small cut-rate electronics ecommerce stores stay in business. If someone is buying a Plasma TV they shop around a lot first, and if they find it at some no name ecommerce store that happens to have the lowest price, they might just buy it. However, electronics are actually a poor item to sell online, both because of all the competition, and because…..
4. Is the item durable and easy to use?
You do not want to spend all day dealing with returns and customer support. Consumer electronics are going to result in a lot of both. In contrast a wooden birdhouse isn’t really hard to use, or prone to breakage during shipping. Always consider the potential for breakage, difficulty in packaging, and the potential for needing to provide customer support.
So, instead of opening up that iPod store, open up an iPod accessory store and just sell pouches and cases and other durable accessories.
5. How much of the item will you have to keep in stock? Is the item expensive enough to make a decent profit with each sale?
The more profit you make per sale the better. This means you’ll need to make fewer sales each day, which means less work for you, and it also means you’ll need to keep fewer numbers of items in stock. Now sure, more expensive items are often larger than cheaper items. Also cheaper items might sell more than expensive items, but trust me it’s not that cut and dry.
For instance regardless how expensive an item is you’ll have to spend the same 5-10 minutes shipping it, maybe 3 minutes once you get good or if the item is already prepackaged for shipping. Assume 10 minutes for easy math if you only make $5 in profit per item then you’re only making $30 an hour, without even considering all the other work you do to keep your business going. If in contrast you make $50 per sale you’re making $300 an hour, which even after all the other work would probably still end up being over $100 an hour. That’s not too shabby.
On the storage side of the issue, smaller cheaper items might get lost more easily, or be harder to organize logically. Now when I say large I’m thinking of something the size of a pillow and when I say small I’m thinking of something the size of a soup can. I personally prefer dealing with the pillow, it fits nicely one deep on a shelf and I can easily see at a glance what inventory I have.
Finally, smaller cheaper items have more competition. I’d much rather sell an expensive item even if I make fewer sales in a day.
Of course you also need to worry about your storage capacity, make sure you have enough room to store enough of the product you wish to sell.
So, how about some examples?
- After-market car parts.
- Crafty hand made items
- Imported home decor items (like large wood carvings or artwork)
- Anything high-end that can’t be found in rural areas — nice leather coats, fur coats, etc.
- Anything collectible that is decently expensive.
- Hard to find accessories for common every day products.
The final advice I’d like to give you is check out ebay. If the prices things are going for on ebay are less than what you want to sell for, and especially if there are a lot (like hundreds) of ebay sellers, you might have an uphill battle. Personally, what I sell is often sold on ebay at a lower price. I can compete on a marketing basis though because of my SEO abilities. Within3 months after launch I was at the top of the search engines, over people who had been doing this for years. I also compete on a service basis by shipping items out quickly, usually the same day, and by having more items in stock, because I can afford to buy in larger quantities. However it would be easier for me if ebay wasn’t full of people selling at a few bucks above wholesale.
You can also check ebay to see if it’s worth selling something at all. If no one is buying what you want to sell, there probably isn’t a market for it unfortunately.
As for just selling on ebay, if you’re at all proficient at website marketing I do not recommend it. The fees and the price competition will kill your margins, its much more profitable to build your own site if you are able.