What to sell online in your home based business: choosing the right products.

How do small home businesses break through the highly competitive online market and become market leaders in a couple of years? What are they doing right?

One of the key things that these businesses do well is that they know what products to sell online. Having the right products to sell is the main foundation of starting a successful ecommerce home-business.

Instead of looking for a profitable product niche, look for a single profitable product to sell. Looking for a profitable product niche will overwhelm you with all the data and options available.

So how do we determine that single profitable product that would be an online hit?

For starters, you can do your preliminary research on these websites:

  • Alibaba and AliExpress – Sites where you can find product listings and prices from overseas suppliers.
  • eBay, Amazon, and Etsy – These sites will give you an idea on which products are fast-selling and how much these are sold for.

Here’s a comprehensive list of criteria that you could use to evaluate potential products:

How big is your market?

Select a product which has a sufficient market size. Steer clear of items which have low keyword searches. A product for mums between 25 to 35 years old is better for instance, than a product for mums between 25 to 35 years old who like knitting – the latter is too limited a niche. It will be more difficult to find customers, and it will be more expensive to reach out to them, restricting the potential of your business.

Google’s Keyword Tool can help you determine how many people are searching for your keyword terms and give you an idea of the market size you will be catering to. Combine this with sound judgement and searches on your target niche and you can more or less have a grasp of how viable your market is.

Who’s your competition?

How many competitors do you have in your chosen product category? If there are a lot of established market players, you may have to do something different to attract customer interest and build market share.

For example, while online hair extensions store Luxy Hair isn’t the first in its category, its marketing strategy of offering free video tutorials on YouTube attracted 700,000 followers in just two years, making them one of the biggest hair extension retailers in the world.

Again, Google’s Keyword Tool can tell you how many businesses are bidding for your selected keywords. Keep in mind, too, that the more people bidding on your keywords, the more expensive they will be.

Is the product a trend, or is it here to stay?

Know where your product can be classified. Is it a fad, a trend, or does it have a stable or a growing market? A radiation detector would have sold a lot after an earthquake but since it has a very specific purpose, it might not sell so well now.

Google Trends which we have previously spoken about can help you see whether something is a trend or if it is here to stay. If there are unexplainable spikes, try to search for possible causes as this may be a one-off event.

Google trends is great for finding products that have growing interest.


Is your product available locally?

If your merchandise is available locally, people may not be compelled to look up your product online. They could simply go to the nearest supermarket or department store for it. Set it apart from the rest by offering a wider and better selection, higher quality, or a more reasonable price point.

Knowing your customer will make it easier to reach and sell to them.

Who is your target customer?

Know your target market and their online behavior. Teenagers, for instance, might not have a credit card for online purchases. Senior citizens, on the other hand, may not have a good grasp of technology and how online stores work.

If you find another company selling similar products, use Alexa to get information on their visitor demographics to help you define your own target market.

How high is your markup, and how much can you sell it for?

The truth is, there will be lots of other small fees associated selling your product online that will eat away at your margins. Having a strong initial markup will help you manage variable costs. A rule of thumb is to always go for at least a 100% markup to counter this.

Try to find an example of the product you are interested in on Alibaba or Ali Express. Email a few manufactures to find out pricing and minimum order quantity (MOQ). From there, use Google and research on how much sellers with the same product are charging.

You can also send out survey questions to your social networks via Survey Monkey and ask them what price they would be willing to pay for your product.

If you are dropshipping or starting small with something like AliExpress, your minimum order quantity should not be a concern, as you are reselling single items. However, the ability to pre-order and work at a certain volume will help you  have more margin and ultimately profit in your sales.

Validate your price point and do a mock up website with tools like Weebly and try to entice a customer to order. This will help you prove your concept before putting too much effort into your work from home startup.

A price point between $75 to $150 is generally recommended. This reduces the need to find a large customer base to earn a decent margin while giving you enough leeway for marketing costs. Prices in excess of $150 will raise customer eyebrows and create a longer and more difficult sales cycle.

Can you offer a subscription?

In general, it’s easier and more affordable to sell to a current customer than to create new ones. A subscription-based business model allows you to sell to the same customers on a regular basis. There are generally two types of subscription-based ecommerce businesses: discovery and replenishment.

In a discovery based business, a seller sends customers something on a schedule but they don’t know what it is. These are usually beauty or fashion products.

A replenishment-based ecommerce business, on the other hand, is based on sending customers things that they consume and constantly need, like personal care products.

A subscription ecommerce model is particularly important for low-margin products such as those that sell at a $1. If they didn’t sell to that same customer on an ongoing basis their business model would not work.


Is your product easy and affordable to ship?

Product size and weight are important factors to consider as these would have a huge impact on your sales and bottom line. As more customers grow accustomed to free shipping services, products that require costly shipping fees can deter potential buyers. Shipping costs are actually the main reason why online shopping carts are abandoned and never make it to the checkout point.

Is it possible to drop ship products, or source the product directly from the manufacturer and not go through the usual distribution channels? Are you working with an overseas manufacturer? This can affect warehouse costs and can add to the shipping cost of your product.

A popular yoga mat retails for $99 but shipping it to other parts of the globe can cost as much as $100. Clearly, this will be hard to justify to consumers. Customers are only willing to pay so much for shipping.

Start out with small and easily shipped items. If you are using drop-ship suppliers this issue is minimized, but small durable products with easy shipping will still help your bottom line as customer returns will be reduced.


Is your product durable or perishable?

Breakable products will require higher shipping and packing costs and have the risk of more customer returns and exchanges. Even if it’s the shipper’s fault, you as the online seller are ultimately responsible for that entire experience.

Test product samples and push them to the limits. Leave them in extreme weather conditions, apply pressure, and subject them to physical wear and tear. It’s very important you know exactly the quality of your potential product.

Perishable products that have a short expiration date already pose risks in a physical store – even more so in an online one. These require speedy delivery and special handling arrangements; shipping can thus be expensive.

Is the product seasonal?

Businesses with seasonal products such as Christmas decorations can have an inconsistent cash flow. Ideally, the product should have a sufficient demand for it all year round. At the very least, be aware of seasonal demand fluctuations to plan accordingly.

Look at Google Trends for seasonal product/niche keywords.

Does your product serve a passion, relieve a pain, or solve a problem?

When a product relieves a customer’s pain or problem, marketing costs tend to be lower since customers are actively seeking out a solution, as opposed to randomly discovering the product online.

Mouth guards that prevent teeth grinding, for example, will be sought out by people who have this problem and would not need to invest heavily on advertising.

Is your product fast-moving?

Products that constantly need to be updated such as seasonal clothing or accessories for the rapidly evolving smartphone and tablet market pose higher risks, as the inventory might not be sold by the time a new product is launched in the market. Know how fast your product turnover may have to be.

Are there product restrictions and regulations?

Make sure there are no regulations or restrictions on your product, or these are at least manageable. Certain chemicals, food items, and cosmetics can be restricted by countries you are importing and shipping into.


Is your product scalable?

If your product is handmade or contains difficult to find materials, this may affect how fast your business takes off. Should you have a sizeable order, will you be able to outsource manufacturing? Will you have to increase your manpower or will you be able to maintain your current team size?

Choosing the right product is one of the most important business decisions you will have to make in setting up an Ecommerce business. While the perfect product may not exist, this set of questions can minimize the risk by helping you select an item that has a lot of things going for it, and increase your overall chances of success.


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