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What makes a good product to sell online?

Whether you already have an online store or are thinking about starting one for the first time, keeping an eye on trends can help you better serve potential customers.

Obviously COVID-19 and the upheavals it's caused will define 2020, but that doesn't mean ecommerce will grind to a halt — it will actually play a more important role than ever.

With people ordered to stay at home as much as possible, they're depending on ecommerce merchants to provide them with the products they need.

That doesn't necessarily mean you need to start selling toilet paper and hand sanitizer. Instead, think about selling products that can make quarantine living a little bit better for people.

You might be surprised by what products saw the biggest spike in demand since COVID-19 restrictions have been put in place, like bread machines, snack food, and crafting supplies.

People are looking for things they can do at home. So if you're just starting a store, you might be able to find an underserved market need, and if you already have a store, there might be an opportunity to offer a new product that your audience can use.

But that doesn't mean you need to completely pivot whatever idea you had, or find a product that can get a COVID-19 spin. People still have the everyday needs they had before social distancing, meaning there's still opportunities to sell all kind of products.

Of course you should still do some research to make sure there's demand for that product you're thinking about selling. If people aren't interested in it, you can invest your entire life savings into marketing and your consumers still won’t bite.

So before you pick Shopify, BigCommerce, WooCommerce, or another platform and start setting up your website — or even deciding what kind of business model you want to run, like B2C or a subscription — you should put some thought into what products you want to sell.

Same goes if you're thinking about selling a new product on a store you already own.

Obviously, you should look at what trending products you should sell (which are likely to turn a profit), but there are other factors that come into the picture.

We'll look at this year's trending products in a moment. First, we'll look into what makes a good product to start selling online. This should help guide you through choosing a product.

But if you want to skip straight to the trending ecommerce product ideas, click here.

 

What makes a good product to sell online?

There are five keys to a great product:

 

#1: Profitability

When picking a product to sell this is the first question you should ask: is it profitable?

Some first-time entrepreneurs think they should just start selling products they use and love, but more should go into the selection process than personal preferences.

You’re running a business, not a hobby. You should only be selling something if it's making you money — and expenses add up quickly.

Say you purchase a thousand sets of bed sheets from your supplier and you pay $10 per set.

After you add in 20% duty fees, shipping fees, and credit card processing fees, the total cost of your product rises to $17.

Because you’ll probably need to run some Google AdWords or Facebook Ad campaigns as well, let’s add an extra $3 for marketing. Now we’re at $20.

In order to make a 33% margin on this product, you’ll have to sell it at a minimum of $30.

And we're not even including the other expenses of running a store, like website fees, packaging, branding, and any other marketing you have to pay for.

You might also want to think about what kind of products you can bundle together, or maybe complimentary products you can offer as upsells so you can increase your average order value.

All that to say: put careful thought into how you can price the products you want to sell.

Selling a core product that has an opportunity to pair nicely with upsell and cross-sell products can help you increase profitability even more.

Pro Tip: if you’re trying to get a sense of how to price your products, check out Shopify’s Profit Margin Calculator. Just plug in the cost of your item and the percentage markup and it’ll spit out your item price and profit margin.

 

#2: Price point

Profitability might be important, but it’s only one part of the puzzle.

Let’s say you import hair accessories from China at $0.10 a pop, and resell them on your website for $1 each.

That’s a 90% profit margin, which sounds incredible!

BUT at the end of the day, you’re only making $0.90 per sale. And it’ll take you a long time to get rich with $0.90 transactions.

Personally, I recommend selling products priced at $50 or more.

Now, you might be wondering…

If I’m aiming for as large a profit as possible, why stop at $100? Why not sell items which are $1,000? Or $10,000?

Well, no one’s stopping you from selling more expensive items. But remember: the larger-ticket your item is, the harder you’ll have to work to earn your customer’s trust.

Let’s flip this on its head, and imagine you’re the one making the purchase.

If you’re buying a $10 t-shirt, you’ll probably complete your purchase pretty quickly without giving it too much thought. You might not even read the return policy. Even if the shirt doesn’t fit, it's just $10 — not the end of the world.

But if you’re buying a $1,000 camera, you’ll probably spend more time researching the camera (and comparing it to other models) before you click that checkout button.

You’ll also read the customer reviews, and I bet you’ll want to know if there’s a warranty included, how long it lasts, and what it covers. You might even ring up the company’s customer service hotline to confirm certain details with them.

Now, imagine a scenario where you’re in the market to purchase a $10,000 state-of-the-art speaker set.

Unless you have a lot of disposable income, you probably wouldn’t dream of making the purchase online. You’ll go down to the company’s showroom and test it out for yourself before you hand over your credit card.

Moral of the story?

The more expensive your item, the more time you’ll spend pre-selling customers and responding to inquiries.

If you’re up for it, then by all means, go for it, but it will generally be easier and more profitable to sell items in the $50 - $200 range. You'll spend less time convincing people to buy and more time actually selling.

What you price things at also plays an important role in how consumers perceive the value of you products, so taking psychological factors into consideration is important as well.

 

#3: Size / weight

Ideally, you should be selling products which are light and don’t take up a lot of space.

This makes shipping your products more cost-effective, which in turn makes it easier for you to offer your customers free shipping (which has been shown to increase conversions).

 

 

If your products aren’t too bulky, this also makes it easier for you to expand your operations and start selling overseas.

Selling overseas might seem completely unnecessary  if you’re just getting started, but don’t write it off completely.

Sure, you might be able to make a decent profit just by selling in the North America for now, but what happens two years down the road, when your business has peaked and you can’t get your sales figures to grow regardless of how much you invest in your pay-per-click campaigns?

That's when you’ll want to venture overseas to try and expand your market.

Pro Tip: If you don’t want to store products in a warehouse yourself, you can always dabble in dropshipping!

 

#4: Popularity

Last but not least, make sure that the products you’re selling are popular and in-demand.

How do you know which products are in-demand? Simple — hop on over to Amazon’s Best Sellers page.

While you’re at it, also check out:

  • eBay’s best sellers
  • Etsy’s best sellers
  • Trendhunter
  • TrendWatching

Now, once you’ve put together a list of options which fulfill all your criteria (profitable, lightweight, small, and in-demand), the next step is to run these through the Google Trends.

If you’re new to Google Trends, bookmark it now! This tool shows you how many people have searched for a particular product over the past few years, and it’s super easy to use.

 

 

You just need to enter your search term and Google Trends will generate a report showing you consumers’ interest over time.

 

 

Now, if you look at this graph I’ve got here, you’ll see that interest in acai berries is waning.

Bearing this in mind, I probably wouldn’t want to sell any sort of acai berry related product on my ecommerce site.

Let’s throw in a second search term: kombucha.

 

 

Now, look at that graph again.

It’s obvious that consumers are a lot more interested in kombucha, so you’ll be better off selling kombucha-related products in your store.

Pro Tip: You can change the settings in Google Trends shoppers to see what people in other countries are searching for. If you’re planning to ship to Canada, for example, click on the drop-down list on the top left hand corner and switch the country accordingly.

Keep in mind however that these scores have "no direct quantitive meaning." According to Google, they're a relative number based on search volume and geographic trends. Even then, it's still a good place to start.

From there, you can get a better idea of demand by doing some simple SEO research, like looking up search volume and keyword difficulty. These will help you gauge demand and competition.

Search volume: How many times people search that term every month. This can give you an idea about demand for the product. If there are only people Googling a product 10 times a month, it's reasonable to assume demand for that product is pretty low. Once you get to 100 plus searches a month, that's probably an indication people are actually interested in buying the product.

Keyword difficulty: How hard it will be to get your page to rank in the top ten results for that search term. This is based on a number of factors, but mostly how backlinks a page would need to get to the top of search results for that term. It helps gives you an idea of the competition you're up against.

If you want more details on how to get traffic through search engine optimization (SEO) and keyword research (which is the best way to get unpaid traffic) check out our SEO guide here.

 

#5: Competitiveness

Now that you know how to assess a product’s demand, let’s look at things on the supply side. Obviously, the more exclusive your product is, the better.

That's not to say that you have to sell a product that’s completely unique and never-before-seen, but putting your own unique spin on something will definitely help.

But at the same time, you don’t want to be selling the same products that consumers can get from a multitude of different retailers, like power banks or generic, mass-produced phone cases.

With so many online retailers selling the exact same product, there’s really no way for a single store to differentiate themselves from competitors.

Because of this, retailers who are selling these items often resort to drastically dropping their prices and “spoiling” the market. It becomes a race to the bottom that no one wins.

Even conglomerates like Best Buy do this:

 

 

When this happens, everyone suffers.

If you can afford to slash your own prices to match your competitors, you might still be able to move some stock, but you won’t make much on these items.

And if you can’t slash your prices, your stock will just take up space in your warehouse (or your basement!). Sooner or later, your items will become obsolete, and you’ll have to write them off.

 

The bottom line?

Don’t sell generic, mass-produced items on your site. Unless you have enough capital to wage a price war and come out on top, it just isn’t worth it.

 

This begs the question:

How do you know whether there’s a ton of online stores selling a certain product?

Simple — just Google the product you have in mind and see what pops up.

At the same time, check to see if there are a lot of sellers offering the same item on Amazon as well.

While you’re doing that, look at their prices (do they have some breathing room, or are they making a tiny margin?) and quickly browse their reviews so you can gauge how long they’ve been in business.

Once you’ve dug up all the dirt on your competition and understand your target audience, you’ll be better prepared to make a decision on what products to sell!

 

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