Through my eCom Hacks Academy, I have mentored and provided online courses to over 2,500 students on how to go about starting an e-commerce store. One value that I deliver through the academy is assistance through research and software that helps my students identify products that they will have success with selling online. Through my experience, I’ve identified simple indicators to consider when selecting products that can result in big profits. I’ll be sharing those indicators with you here.
The 1/10 Rule
Many e-commerce beginners get nervous when they are selling products online and they are not making a profit right away. This situation is typical, and failure usually means that success is right around the corner based on the odds. From my experience, one out of every ten products is a winner. If you’re sharpening your skills and have more experience, I’d still only be willing to bet that you’ll just be seeing two or three successful products out of ten.
So again, if you’re testing ten products, you should be satisfied if one is a winner. Now, not everyone can afford to test ten products right away in the beginning, so it could take some time before you hit that jackpot product. It’s these winning products that will generate most of your store’s revenue. The bottom line is to be patient, and don’t get discouraged!
Look for High–Margin Opportunities
Selling a product online is not as easy as it seems. While it offers many conveniences vs. brick and mortar, it’s still a business that needs a fair amount of attention. It’s essential that you consider all factors of cost when selling a product, especially when it comes to your profit margins so you can ensure you’re making money.
Profit margins on the product you sell should be at least 75%, meaning if you sell a product for $120, it should only cost you about $30 to buy it and advertise it. I consider the 75% mark to be the lowest margin that I’d ever sell, so aim for products that can give you higher profit margins if possible. Regarding product price points, I like to sell products that cost $30-$70 to purchase. Research my team and I have done indicates that products marked at these prices sell the best!
One thing that people tend to overlook when it comes to their profit margins is the cost of social media advertising. To be profitable, you need to consider both the cost of ads plus the cost of goods. You need that number to be under the price you sell the product for, and as I mention, still obtaining a profit margin of 75%.
Offer Simple Products That Wow
When just getting into e-commerce, what I’ve found to be most impactful is to offer products that are rare, simple yet interesting, and easy to understand in 30 – 60 seconds. Since you’ll be advertising on social media, the product you select needs to fit into a short video, and under 60 seconds is ideal so you can advertise on Instagram. Your goal is to have a potential buyer view your ad and feel that this is a product that they can’t buy anywhere else and that it isn’t found in stores. The exclusivity factor creates a sense of urgency and a willingness to purchase from you. If you’re providing unique products for a fair price with excellent customer service, you’re rocking out!
Nothing is a guarantee in e-commerce, but you need to put yourself in the best position to succeed. Selling the right product is one of the essential elements to seeing success!Opinions expressed here by Contributors are their own.