Although e-commerce might seem like a relatively new trend – it’s not. The world has been buying products online for decades now. While certain customers still have a different level of comfort between pressing the ‘buy’ button versus entering a physical store to person, much of the purchasing decision is down to price point, shipping and the availability of information on the product.
7 Tips to Selecting the Right Products
- Comfort Pricing. Everyone has their own comfort levels when shopping online. Often the lower the price, the more comfortable the customer is about purchasing the item. However, if they are purchasing an unfamiliar item priced over $1,000, the customer will more likely want to speak to a sales representative. So, if you plan to sell high-priced items you will need to make sure that your margin is large enough to justify any pre-sale support for your customers.
- MAP Pricing. Some manufacturers will set a minimum advertised price (MAP) for their products. This means they will require you to price their product at or above a certain level. Depending on your product, this could be a positive or a negative. If your closest competitor is a big box retailer, MAP pricing will benefit you as they will be unable to offer lower prices than you. Instead you will need to compete on customer service and delivery. If your tactic is to sell high volume and low price products, this pricing will not benefit you.
- Marketing Potential. Think about the target market for each product and how you will be able to market it. Will you be able to guest blog on other websites? Can you run promotions with online communities? Are there forums which you can give advice on and link to your products? Can you afford to run online advertising on social platforms? How will you reach your target audience?
- Multiple Accessories. As a general rule, low priced accessories have higher margins than high-priced items. For example in the pet industry, food has limited margins, while accessories like collars, leashes and toys have a high percentage margin. It is therefore a good sales tactic to choose high-priced items with lots of accessories. Once your customer has committed to spending $200 on an item they will not think twice about spending the odd $10 here or $20 there for accessories.
- Limited Versions. The best sales tactic for online sales is to provide information rich, education heavy content applicable to each of your products, whether that’s the product listing, reviews, blogs or how-to videos etc. This takes time and energy. If you choose to sell products that are updated with new models every six months or year, your content will have a low lifespan and your margins will reduce with the mountain of work each new product creates.
- Not Available Locally. British Columbia is composed of many different communities and backgrounds. Whether you have moved from Ontario or come from Japan, there is likely something you miss from home. If your business plan is to focus on your local market, analyze those communities to uncover what they can’t find in their local stores. If a person can’t find something, they will likely turn to Google, which is where your drop shipping business could be.
- Smaller is Better. Think about how you are getting your products to your customers. Shipping is expensive, and it’s a cost that many customers expect you to swallow as the retailer, offering them free shipping. The smaller your product, the smaller the shipping cost and the less impact it will have on your margins.
Whether your business is online or offline, choosing a profitable niche is not easy. Balancing your knowledge of products, size margins and shipping needs can be a complicated puzzle. However by completing your market research and creating a solid business plan you can reduce complexity and be on your way to drop shipping success.