While you’re brainstorming various niches and products to sell, there are a lot of important things to consider. Here are 6 strategies to help you find a product to sell:
1. Accessory-Heavy Niches: Merchants rarely make much on big-ticket items and will only earn maybe 5 to 10% on products like laptops and TVs. Where they really make their money is on the accessories.
Accessories enjoy markups of 100 to 1,000%, and customers are much less price-sensitive about them. A buyer might shop for weeks to get the best deal on a TV, but wouldn’t think twice about dropping $30 on an HDMI cable from the same place. Yet there’s a good chance the business made nearly as much profit on the cable as it did on the flatscreen.
When you choose a niche with lots of accessories, you’ll enjoy significantly higher profit margins and fewer price-sensitive shoppers.
2. Customers with a Passion or Problem: It’s amazing how much money passionate hobbyists will spend. Mountain bikers will drop hundreds on light-weight accessories to shave a few pounds, and avid fishermen will invest tens of thousands of dollars in boats and related accessories. Also, if you can offer a product-based solution to a painful problem, you’ll find a captive audience eager to buy.
3. The $100 to $200 Range: I’ve found that this price range is an ecommerce “sweet spot.” It’s large enough to create decent per-order profit, but small enough that – with a quality, informative website – most customers won’t need to personally speak with someone before the sale.
As you grow, being able to generate most of your orders online offers massive efficiency savings versus a phone-heavy approach. But if you’re selling products that cost $500 or more, many customers will want personal customer service before pulling out their credit cards.
4. Hard to Find Locally: If you needed garden equipment, you’d likely head down to your local Home Depot or Lowe’s. But where would you go to buy surveillance equipment or magicians’ accessories? Probably online. Pick niche products that are hard to find locally, and you’ll be able to get in front of the vast majority of your customers as they search online.
While you ideally want something difficult to source locally, you also need to ensure there’s ample demand for the product! This can be a fine line to walk, and we’ll return to the issue in the competition section below.
5. Low Product Turnover: If your product line is constantly changing year to year, you’ll end up spending valuable time on resources that will soon be outdated. Selling a product line with limited turnover ensures you can invest in an information-rich website that will be applicable for years.
6. Consumable or Disposable Products: Repeat customers are essential to any business, and it’s MUCH easier to sell to existing customers who trust you than to new prospects. If your product needs to be re-ordered on a regular basis – and you’re able to keep your customers happy – you’ll be on your way to building a profitable business with recurring revenue.
Finding a great product is only part of the equation. Even a niche fitting all the above criteria would be a poor choice in the face of inadequate demand or crushing competition. Understanding a product’s demand, competition and suppliers will be important to making an informed decision.