Running your very own e-commerce business is often a fun entrepreneurial adventure, yet there’s no way to deny that countless online stores fail to make a profit.
There are various factors that could cause the store to fail, but one of the major problems is the incapability to identify a profitable product niche. As you search to narrow down the products you want to sell, remember to conduct an analysis of the marketplace so you can identify an area that speaks to you and make a long-lasting impression. Check out these seven ways to identify profitable products so you can make money with your e-commerce store.
See what’s trending.
You aren’t going to make it far if you opt to duplicate an already-existing idea. When you examine which product niches are trending, brainstorm other possibilities within that category. This might give you a new angle that is necessary to launch an e-commerce store that will thrive.
There are various places online that you can search to get a general idea of which categories are trending in the land of e-commerce businesses.
Know the margins.
Selling the product is one thing, but it’s an entirely different story when it comes to selling it and making a profit. According to research by Marketing Sherpa, e-commerce stores with annual revenue of less than $100,000 have a 30 percent median gross margin. The most successful online stores identify whether they are able to compete on value or price and use the knowledge to sustain these margins.
When you evaluate a product, you cannot simply set a price point. It takes research to learn how much your target audience will pay for the product and you must account for expenses such as web hosting, manufacturing, and shipping. Thin profit margins make it tough to adapt to changes in marketing circumstances.
Solve a problem.
As with all business ideas, an e-commerce product will be the most successful when it solves a meaningful, actual problem. Use your personal experiences to spark ideas or talk to your neighbors or friends to see what challenges people are experiencing. Every customer wants to find solutions to their problems, so if you can deliver, your business will be off to a good start.
Once you know what problem to solve, it’s time to learn to speak your customers’ language. Banish the buzzwords when writing content and instead, focus on finding the right words instead. Do keyword research to help you make sure you’re using the right words to attract customers.
Seek out recurring sales.
The Harvard Business School research shows that even a five percent increase in customer retention may increase profitability by up to 95 percent. Knowing this explains why profitable e-commerce niches hone in on areas where customers are likely to make repeat purchases.
This is one reason behind the success of subscription services. Every customer turns into a recurring source of income. It also makes items that have been replaced, such as food, skin care or craft materials, a smart choice. If you deliver a high-quality experience on your first encounter, your customer is likely to turn into a repeat customer.
Understand your interests.
Many entrepreneurs love what they do – it’s the reason behind starting their business in the first place, ranked ahead of the freedom to work when and where they choose.
It doesn’t really matter how lucrative an e-commerce product might potentially be. If you’re not passionate about your idea, you will fail to have the necessary drive to power through the inevitable unexpected issues. You also may not have the drive to think of new, better products and services. Owning a business comes with a lot of challenges, so unless you have the passion to see it through, you may find yourself ready to throw in the towel. You need to find a business idea that you’re interested in – even love — so you’re more likely to stick with your business no matter what comes your way.
Once you select your product niche, it will define every single thing about your e-commerce store, from the way you market to its target audience. Determine the niche that interests you, so you can prepare to run a highly successful e-commerce business from the start.
Discover a gap among online competitors.
There is a good chance that if a niche has potential, there are already other stores selling a product that’s similar. That does not mean you need to ditch the idea. Instead, use it as an opportunity to learn exactly who you are competing against. Thoroughly research your competition so you can identify areas where products do not quite meet the customer needs.
Once you pinpoint the areas where your competition is lacking is where you enter and establish your unique value proposition.
Protect your brand’s online reputation.
The success of your online business relies heavily on having a good reputation. A mistake can taint your brand, so stay in control. You can set up a Google Alerts notification for your brand so you can inspect every mention of it and can respond as needed.
Set firm guidelines so anyone that posts on behalf of your business and brand is aware of what is expected. Take the time to deal with and resolve customer complaints and adopt a problem-solving mindset, even if the customer is the one who is incorrect. Always address your customers and strive to make things right. Communication is vital and without it, your business will suffer. Remember the key is to remain professional in every circumstance and if you fail to maintain a professional attitude your business will suffer.
Running a business of any size and time is inherently risky. Utilize these ways to ensure your small business makes a profit and finds success. One of the smartest investments you can make in your business is taking the time to identify a product niche, then working to mitigate the risks of failure so your business will thrive.
How did you identify a profitable product niche? Feel free to share how you found some lucrative product ideas for your own e-commerce store.