Before you can open your own Internet shop, you must decide what you want to sell to your customers in your online store — and how to source your products.
Even the best shopping cart software solution such as ShopFactory can't make this decision for you. This article has been written to help you solve these two questions.
Find out how to avoid the most common mistakes made by eCommerce start-ups and how to find the products you can sell.
A large number of people doing business on the Internet have found financial freedom and independence by setting up their own eCommerce site.
In some cases they started their online store as an extension to an already existing brick and mortar shop. Others saw an opportunity to start their own online business with low upfront costs and went for it.
At some stage they all had to decide what they wanted to sell online. Some picked a hobby such as scrap booking or photography; others decided to take a more hard-nosed approach and started looking for a groups of products.
Is one approach better than the other? Not really, provided you do your homework.
Hobbyists who want to turn their hobby into a business often fail, because they look after their business as if it still were a hobby. As a result you will find much advice on the Internet on how you should never turn your hobby into a business, as you will fail horribly.
However if you love what you sell you will have a passion others will find hard to emulate. If you can maintain your passion and run your online store like a real business, there is no reason why you should not be successful.
If you don’t really care what you sell, as long as it generates an income, you are more flexible, but you will still have to do your homework. You must be willing to learn about the products you finally decide to offer in your online store.
After all, to get the sales you will have to provide customer service — and this includes mostly answering customer questions about your products. While the right shopping cart software such as ShopFactory can make your website easy to navigate, it can not make up for unanswered customer emails.
Simply trying to sell products by offering the lowest price is not a good business model, as others can always undercut you.
That’s why eBay has become such a tough business environment.
However how do you establish which products to sell? Let me start by telling you which products you should be wary of.
Don’t sell what everyone else is selling. It makes business a lot harder.
Especially don’t sell what you can pick up in any big department store. DVDs, books, well known clothing brands and other such items will be difficult to sell, as there will be little extra value you can offer.
People know these products, have few questions, and are happy to pick them up in a department store without any advice or by buying them for the best price online.
However if you need advice before buying a product, the large chain stores are not where you would go. Their sales staff often knows less than you about the product you want and may even give you misleading advice.
This is where you and your online store can add extra value and make the sales.
A large number of people go online to look for and research the products they want to buy these days. If you have what they are looking for, and you also provide the information they need on a professional eCommerce site, there is no reason why they won’t buy from you.
Unless your prices are outrageously higher than your competition.
So here is another point to consider. Before you decide what you can sell, you must know what you will have to charge for it to make it profitable for you.
This is not a simplistic calculation based on “I don’t have to rent a shop in the city so my costs will be lower so I can sell the products cheaper” made without taking a breath.
You will actually have to find out who will supply the products to you, and at what costs, how much your shopping cart software costs as well as your hosting
This isn’t very difficult — but it does take some time and effort. It also may require you to change your mind, if you can’t source the products you want cheap enough to be competitive.
Here is why.
A manufacturer creates a product and sells it to a wholesaler. The wholesaler may distribute the products directly to shop owners or may work through distributors in various areas who sell to store owners. So before you get the product, there have already been multiple levels of profit taking.
A large chain store can often go directly to the manufacturer or wholesaler. This cuts out at the very least one level of profit taking, and sometimes several. The result is the large store can sell these products cheaper than you, even though the cost to run their store is higher. As they already have many customers visiting them every day, they will also sell more products, which will help them get a bigger discount from the wholesaler.
You on the other hand will have a lower overhead, but will most likely have to pay more for the products.
This is why it is important that you get as close to the source of the product as possible. The closer you get, the better your buying price will be, and the higher your profit margin.
Get the picture?
The stuff everyone sells usually comes from larger manufacturers who will not sell directly to you. Not even their wholesalers will sell directly to you. May be not even their local distributors (See "How you can source products for an online store" for some advice on product sourcing).
And the further you get from the source, the more expensive the product becomes.
However even if you pay more to get the products, your overhead is low. So, depending on the products you decide to sell, you may even have the upper hand when it comes to pricing.
This is why your research is so important.
This is also why much advice about starting an online business directs you towards niche products.
But what exactly is such a niche?
In my view products which not everyone sells, or a category or group of products you would not easily find in one location.
So niche does NOT have to mean a small shop or a small number of products.
There are many niches out there, some bigger and some smaller, some with more and some with less competition. No matter what you will sell though, you will have competition — that's just part of running an online business; or a brick and mortar store, for that matter.
I hope these thoughts will help you discovering what to sell online or to review if what you are planning to sell will work for you.
Once you have discovered a niche for your online business and settled on it, consider what other products might complement your main offerings.
You’ll quickly be able to put together an interesting eCommerce site for your customers.