February 13, 2024
Blog, eCommerce
What kind of products sell well on e-commerce? Is there a pattern? Do only electronic items do well? I have only heard of big mobile brands getting sold off in the matter of seconds. Or is it Fashion? Does men’s wear work better or women’s wear or should I sell accessories? What price point should you target? These are some of the questions that rattle the minds of the sellers before they have narrowed down on the product that they wish to sell.
The e-commerce market is in a growth phase with annual sales estimated at $50Bn. This represents ~5% of the overall retail market indicating high room for growth. You can see new sellers and products getting added to the marketplace every day. Sellers are able to expand their reach and sell their products to a national audience through e-commerce. As compared to offline retail, e-commerce businesses are cost effective for most categories as they reduce the costs associated with physical retailing through the warehouse-based selling approach. Further they reduce the cost of carrying inventory at multiple stores. With e-commerce, businesses are also able to personalise their offerings to the customer based on the understanding of the customer. With all these advantages, new sellers are getting attracted to sell online.
As more businesses / sellers come online, the e-commerce market is getting more competitive every day. Therefore, right product selection becomes more important for growth in e-commerce. Sellers need to find products where there is demand and figure out what customers are searching for online. However, at the same time, sellers need to find products that are not offered by other sellers but are being searched by customers.
Sellers also need to find products where the competition is less. Competition can potentially erode margins as in a highly competitive market, sellers often engage in price wars resulting in a loss for the sellers. Further, intense competition in a market can result in creating a virtual barrier to entry through lower prices which makes it difficult for new businesses to take customers away from existing sellers. Hence it is beneficial to identify markets with low competition and high search volumes for new product entry.
Approach for identifying the right product
There are two approaches to find the right product to sell. One approach is where you know which categories you have a great supplier base and then start searching for gaps in the market. The other approach is that you do not have any preference for any specific category but believe that you can build expertise in sourcing any category that has potential. As the search in the first approach is narrow, you tend to identify product gaps faster but there are chances that you may not find many such gaps. The second approach is laborious and takes time. Further, many times, it may not be possible for you to source the products identified at the right price resulting in wasted effort.
In either case, none of the product categories are fully served at all the times or gaps exist in the market for eternity. Such anomalies in the markets appear for a short period of time and you need to be vigilant enough to notice them and make profit out of them.
The first step to identifying the right product to sell online is product research. Product research is the process of gathering information about the products that you are planning to sell. The biggest advantage of e-commerce is access to structured data. Based on the data available, you can estimate the market potential of different products based on the search volume, competitive intensity, and pricing data points.
Selection of a niche is a process of identifying a part of the market based on market potential – size of the market, growth rate, competitive intensity, and other such factors.
Once you have selected a niche, you need to build a product line based on the needs and wants of that niche. You can test out a small batch of niche products in the market. Once they find some traction, then you can look at aligned niches in the market which are also of interest to the current set of customers. This way while you started out with a limited range of products, you can expand into related products expanding your offering to its customers.
A niche market is a small segment of the larger market that has its own needs and preferences. The benefit of catering to a niche is the unique ability to cater to these needs and preferences. Products need to be tailored based on these needs and preferences for increased customer affinity. Typically, larger businesses overlook such niche markets since they cater to larger customer segments and find the niche segments too small to cater to.
While choosing a niche market, the seller needs to align it with his / her own interests, skills, and passion. The closer the seller is to the niche, the more he / she will understand the subtle nuances of the niche. This helps the seller cater to latent needs which can help scale his / her brand.
The best way to find a niche is to list down passions and interests and then map aligned customer segments and products they use. Then start researching whether there exists a market for these products and how strong the competition is. You can use resources such as Google Trends and Amazon Bestseller to find products aligned. Next, you need to check the size of the market, and the existing pricing prevalent in the market. Then you need to get a rough idea of sourcing costs and build a comparative around prices to find the most profitable niche.
Now using the shortlisted niche, start with mapping the competition. For each competition player, map product assortment, price, and marketing strategies. This will give the competitive layout of the market which is used to identify its niche and build strategies.
Also analyse the product trend and seasonality. Planning for seasonality and stocking is critical. This planning affects everything from inventory ordering to pricing strategies and marketing approaches. Each has to be tailored seasonality backward. Also, you need to be sure that niches are not too seasonal. This offsets the risk of dead inventory during non-seasonal months. When starting you must try and start with evergreen niches. These are niches that have no seasonality impact. Also, look at trending niches. These are niches that are spiking up and have high potential for profits.
One can find many niche research tools online. These tools can help find niches, check competition, and seasonality, and even do market research.
Product research tools vary in the type of information that they provide. Amazon’s bestsellers page provides us with a list of products that are selling the best in a category. You can find the products, their prices, and reviews on the page. Amazon also provides a page for new releases that are doing well. They also give trending products. These pages together give a full array of information on the new hot products and products that are selling.
You can use Jungle Scout and Helium 10 to find data on product demand, competition, and pricing. You can also use Jungle Scout to find trending new products and opportunities.
Google Trends helps us find the trending keyword search volume. You can also compare keywords and measure the seasonality of keyword searches on Google Trends. Google keyword planner also can be used to find search trends of the products. It also gives the cost of advertising for the keywords.
You also need to find the search volume of keywords aligned with our products. Tools such as Google Keyword Planner and SEMRush will be able to provide data on the popularity of keywords and competition data. You should use this data to find relevant keywords that have high search volume and low competition.
Shopify also provides a wide variety of tools to conduct keyword and product research. You can find the products that are doing well on Shopify and the prices of products. Junglescout is built for Amazon sellers but provides a lot of data on sales, competition, and pricing.
Social media trends topics and hashtags also give insights on new trends. These can be used to find the products that people are interested in and competitor approaches. You also need to check social media such as Facebook, Instagram, and X to track mentions of the product. You can also use social media to conduct surveys and polls and use this data to improve our products and marketing.
Product review websites and complaint forums are also rich sources of data. These give inputs on what people think of products and potential problems with their products. Competitor reviews and product pages are also good starting points to get insights.
Industry-specific literature also gives out new market trends, consumer behaviour, and new products. You can attend industry events and read publications to get insights.
Competitor mapping and understanding is the starting point for mapping and competitive strategy. There are two types of competitors – direct and indirect. Direct competitors compete in the same product segment. These have directly competing products targeting the same customer segment as you are targeting. Indirect competitors are competitors who target the same segment but sell products of a different category. If the other category can substitute for your products then they are indirect competitors.
Make a list of all products offered by competitors. This will also be a potential list for product expansion at a later stage. Build a comparison of your features and benefits vs. those of competitors. Read through customer reviews. That will give insights into what features customers value. Ensure that those features are available and highlighted in the product that you introduce. Also, benchmark the pricing and value proposition to arrive at whether our product is the best value available.
Also, read through negative reviews of competitors. These point towards an aspect where the competitor has disappointed the customer. You can leverage these in marketing. Audit the marketing completely to find which strategies work for competitors.
Always map all competitors to arrive at the gap in the market. Also, check for emerging trends or technologies. These can be differentiating opportunities and might offer the chance to win market share. One more thing to focus on is to highlight the uniqueness of the products across marketing strategies.
You should collect data on sales, marketing campaigns, and traffic for all competitors in the target niche. You use this data to find underserved products, improve product features, and build sharper and targeted marketing campaigns.
Validating a product needs to be really quick. Avoid wasting time and money on products that people don’t absolutely love. Identify any potential problems before launch and work towards mitigating them. You can also do a couple of giveaways in a focus group to get feedback from potential customers to improve the product. You will need to build trust and credibility for our products. You also need to factor in all compliance regulations before you launch a product.
Small-scale product launches are best for testing a small batch. If you have a limited budget for testing with a small group of customers, this approach works. You get feedback quickly from the cohort to improve the product. This makes sure our product is ready for wider launch and reduces the risk of failure. This also gives us insights into target customer behaviour. This is also a relevant channel to identify any potential problems and improve product quality and performance.
You need to collect feedback as soon as possible. You can use feedback widgets, surveys, interviews, and social media to gather the same. You need to have a cadence to analyse the feedback and use these to make improvements over time. You also use feedback and reviews to improve our marketing and sales strategies. Eagerness to understand and implement feedback improves trust with customers.
Product improvement is a continuous process based on feedback. You should always prioritise improvements that will have the biggest impact on the customer. Making changes to the product are necessary to respond to the needs of the customer. Testing an improved product with the customer to get feedback is a great strategy.
Scale only the products that have strong demand. Double down on the product being scaled with increasing cover and improving marketing efforts. Also, work with suppliers to get confidence that in case of a spike they can supply higher quantities. Forecast demand on a weekly basis and maintain cover. Restock and optimise turnover for fast-moving SKUs.
While marketing the products, build a clear plan at the start. Choose a combination of product and marketing channels based on target customer segment clusters. Build compelling marketing messages based on the campaign intent. Track the results of the campaign and make adjustments. Set targets for each of the KPIs and identify areas of improvement to progress.
For any new seller, niche selection is an effective way to enter into the e-commerce market as this allows you to focus on a limited set of products and restrict the marketing effort and budget on a smaller selection with limited competition thus improving the chances of success.
Post Tags :
eCommerce, Marketing, product
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