Roughly around 250,000 products are launched per year globally, with an average of 85-95% failure rate. So, if you are planning to start an online business, this is not to dishearten you. Take this article as your learning guide to an exciting, and yes, also a challenging task of choosing the best products to sell online.
This article outlines an ultimate step-by-step process to help you identify opportunities in selecting the best products to sell online, think the freshest and innovative product ideas, present potential outcomes, and lastly, locate suppliers with the best terms and deals.
It may sound really rigorous, so we’ve broken the process down into four simple phases for you to follow: Assess, Strategize, Select, and Implement.
Each phase will require you with several steps to fulfill. Questions will be constantly asked and checklists will need to be ticked. This is to help you direct and redirect where you are headed in selecting the best products to sell for your online store.
This complete 10-chapter guide takes days to finish. How about downloading an ebook version to read on your Kindle for bedtime reading or while you’re on the train?
The assessment phase is where the first brainstorming happens. You need to sit down with your team and analyze two factors: internal and external environments. These two factors are constantly pulling each other up or down because of their inherent negative and positive influences.
The gravity of these two influences could potentially birth to product ideas depending on how you capitalize the positives and solve the negatives.
1 – Internal Assessments: Strengths and Weaknesses
The first thing that you need to assess is your internal environment and forget any other factors that you cannot control. You should ask yourself: what are my competencies? What are the things that make me vulnerable?
Strengths (Positive Influence)
Be self-centric and brag a little, but do not magnify yourself. It has to be as truthful as possible.
A – Your Own Interest and Passion: Let’s not go far, what is it that you are passionate about? What makes you want to get up early in the morning? Every day, what is the thing that never fails to come to your mind? Follow your heart, they say. And, sometimes, it does lead you to create the best products to sell online.
B – Your Experience and Expertise: You need to look back and recall what are the things that you have been doing for the rest of your life that you know no one else can do better. It makes you stand tall and proud because people remember this of you. This part focuses on the things that you are not just good at but you’re definitely the cream of the crop.
The founders of Primadonna Woman Fashion had an extensive experience in the fashion industry before deciding to venture into online business to meet the needs of modern women.
C – Your Sustainable Competitive Advantages: Competitive advantage, in a nutshell, is what makes you unique amongst the rest of your competitors. What is it that you do that cannot be found anywhere else? However, competitive advantages do not end with what makes you unique for now. Because, in order to make it more powerful and lasting, you need to add a secret ingredient, and that is ‘sustainability’. Nowadays, replication is rampant. So, you need to make a product that cannot be duplicated in the long run.
Weaknesses (Negative Influence)
Your task here is not to let yourself down. This is a perfect opportunity for you to gain more knowledge and skills that could potentially be used in creating a product or as service.
A – Your Areas of Improvements: What are the things that you don’t have that you wish to acquire? What could you improve on? And if you think that you could address these weaknesses, could they potentially be a breakthrough? Some skills can be taught. And, some of the best products have originated from rigorous training before coming to fruition.
The famous chef, Julia Child did not learn to cook until she met her would-be husband, Paul, because he grew up in a family very interested in food. She enrolled in a French cooking class and became a very popular chef with various acclaimed cooking books.
B – Your Hates or Dislikes: Sometimes, what you hate doing is what you need to start building. What you dislike could be a potential product or service that you can sell online. For example, you don’t want to do your own laundry so you begin your own laundry service. Instead of doing the things you hate, your business will do otherwise. In that manner, you are earning by trying to augment what you are apathetic about.
2 – External Assessments: Opportunities and Threats
Now that you have evaluated your internal environment, let’s now focus on the things outside of you. No company, product or individual is immune to outside events and forces.
This step requires you to become aware of your surroundings. This will be beneficial in taking advantage of potential opportunities that are just waiting to be discovered. It will even help you to predict hurdles and reroute you to a more suitable direction.
Opportunities (Positive Influence)
In this step, you will need to focus on the attractive or positive factors of the outside environment that delineate a product to likely prosper.
A – Keyword Searches: Keyword searches are search terms that people enter into search engines when looking for a matching subject. It helps you find out what your audience is actually looking for. Every search is an indication of your audience’s interests. By analyzing these search terms, you could potentially discover viable product ideas that you could build into fruition.
B – Early Trends: In this step, you need to have an open mind to actually identify which trend is a feasible product to sell online and how you can take this trend into a new and creative offering. You need to capitalize on trends before they fully soar. This will give you more time to redirect your product or make necessary changes so your products endure in the long run.
C – Market Demands and Consumer Needs: Comparable to your internal assessment of your own passions and interests, this task is for you to answer the same questions but from the viewpoint of consumers. Recognizing what consumers are passionate about or what are they currently gearing towards is a viable option for best products to sell online.
Fitbit founders realized that technology for sensors and wireless had been so advanced that they could be used to bring products that improve health and fitness. Thus, catering to health and fitness enthusiasts.
D – Market Gaps: Earlier, we have discussed what you are lacking internally. This time you will have to identify the insufficiencies or unavailability of a product. You need to ask yourself, what are the things that are currently not in the market? What are existing products that you wish to have certain features but are not yet available? Market gaps give you a glimpse of what the market needs to be filled up. Create solutions that could potentially address these gaps.
Threats (Negative Influence)
Threats pose a potential risk to a business. When making the assessment on this step, you have to take a mental note that you have no control over these factors. However, by controlling the things within your reach, you could come up with a product offering that could address these threats.
A – Scarcity of Supply: In an economic standpoint, scarcity is present when the supply of a product is limited but the demand for that product is high, causing a mismatch between the equilibrium of desired supply and demand. When this happens, this makes a viable idea to solve the scarcity of supply by adding more options to the consumers. Because the current supply is scarce, your entry to the competition augments that fiasco.
B – Product Fads: A potential threat to the longevity of a product is turning into a fad. Fad is a craze for a certain product for a short period of time. However, the craze soon dies out and the product becomes valueless. Research on the past product fads and identify the specific factors on why they became a hit. Use the positive factors to strengthen a product idea. Pinpoint the reasons why the buzz was just short-lived. Use the negative points to tweak your potential offering.
Beanie Babies exploded to $1.4 billion sales in 1998, now the craze for these stuffed animals have died out completely.
C – Slice of the Market Share: In a competitive landscape, the chunk of the market share is mostly shared by the bigger corporations. Thus, leaving small and medium businesses with an even smaller portion of the pie. However, this available segment holds a promising opportunity since you can now create products that can address the segment’s needs, wants. You need to ask this: what prevents them from buying products from these big companies? Start evaluating their reasons and craft a product that specifically solves their issues.
Now that you have assessed things internally and externally, the strategy phase will help on how more effectively and efficiently you can get from Point A to Point B.
This part serves as your tool in generating the right ideas and inspirations to know what to sell online. This is a crucial step before finally deciding what is the best product for your online store.
3 – Look for Product Ideas to Leverage on Strengths and Opportunities and Combat Weaknesses and Threats
From the assessment phase, list down the highlights of your environmental scanning. You may have a gist of what exactly you are looking for a product. So, now let set that in motion by using these strategies to find the most profitable products that meet your criteria.
Tools and Platforms to Find Profitable Products:
A) Online Stores Sales Data:
The most obvious way to find profitable products is by analyzing the sales data of the biggest global eCommerce sites. The idea here is to get product ideas based on these eCommerce sites’ best-selling products, trending items, and even the least selling products to help you understand the products to include and avoid in your final selection of product ideas.
1. Amazon: Amazon has the biggest eCommerce market share in the United States. It has also become a global standard for online stores, selling some of the most profitable products online. Thus, Amazon’s sales data represents a realistic view of what the online market demands.
Above is Amazon’s product page. We have pointed the areas to look for product ideas: 1) Best Sellers, 2) Hot New Releases, 3) Most Wished For, 4) Gift Ideas
2. eBay: Like Amazon, eBay is a multi-national eCommerce company, facilitating online sellers worldwide. Thus, it is a great starting point to look for plausible products to sell online, especially that you do not have the sales data available at hand.
a. Popular Destinations – a landing page of product categories that are mostly viewed by online shoppers.
b. Trending on eBay – a real time page of products that are getting buzz from the online visitors
c. Etsy: Etsy is an eCommerce website with peer-to-peer platform. This site is a hub of handmade and vintage merchandises, as well as on handmade or vintage items and supplies, as well as unique one-of-a-kind or uncommon items.
d. Alibaba: Alibaba is a Chinese eCommerce business that serves as a sales service portal for many sellers worldwide.
B) Online Trendspotting Sites:
Trendspotting is marketing intelligence tool used to find and track the general behavior and interest of online consumers by closely monitoring their day to day online activities such as the number of times a keyword has been searched, tweeted, posted, blogged or shared online.
1. Trend Hunter: The company claims to be the number one in trendspotting because of its large collection of innovative ideas from 195,000 influencers worldwide. They provide trend reports and product innovation ideas to many companies around the globe.
2. Trends-spotting Market Research: They offer customized trend research reports and innovation consultations by identifying key industry trends and current market overview.
3. Springwise: Springwise is a worldwide source for business intelligence delivering the most up to date trends and insights to different companies to help them identify the most feasible products to offer online.
4. TrendWatching: This trendspotting site has a global network of trendspotters in around 50 plus countries. They help companies understand new customers and find profitable opportunities to sell.
C) Business and Product Review Sites:
The type of data in consumer and product review sites are also a helpful avenue for you to find an inspiration for a product. Depending on what industry you want to cater to, there are vast networks of sites that focus on collecting reviews from a variety of online consumers globally.
1. Yelp - Yelp collects consumer reviews for restaurants, services, shopping and mostly all business establishments worldwide.
2. Yahoo Local Listings – Yahoo Local Listings acts primarily as an online business directory. But, the site also gathers reviews from various consumers globally.
3. Tripadvisor – Tripadvisor is a travel companion site that allows customers to book hotels and flights online. The site has spawn globally that it also has a massive collection of customer reviews for restaurants, hotels, and other business establishments.
4. ConsumerReports - ConsumerReports showcases unbiased tests of products. It is an independent testing company that provides product recommendations and product ratings.
5. Amazon Customer Reviews - With millions of customers globally, Amazon has a massive collection of product review submitted by real online shoppers to determine their favorability and opinions regarding a product.
D) Social Media Sites:
Social media sites contain the most direct and honest place to get relevant behavior, interests, opinions and reviews that could instigate a creative and innovative product idea to sell online.
1. Instagram - In the recent years, Instagram has become an avenue for sprawling small and medium entrepreneurs to engage with their potential customers. If you want to get a dose of creative entrepreneurs globally, then Instagram is straightforward and fresh social media site. You can take those global products and turn it into a potential local offering too.
2. Pinterest - Pinterest’s tagline is “The world’s catalog of ideas”. And with that, it is but rightful for you to check the site for inspirations that could turn into a million dollar idea.
E) Local Communities:
Do not go elsewhere, instead look around your backyard. Traditional brick and mortar stores around your local neighborhood could be a budding online store success. Look for products that your local community is raving about. Go to food parks or visit community bazaars and find the products that could be best-seller worthy online.
The selection phase is where your decision will take place. With the rightful amount of data from the previous two phases, you are now ready to shortlist product ideas and evaluate the most viable one for your online store.
4 – Evaluate Key Areas to Select the Right Products to Sell
Unlike the assessment phase, you have now a concrete vision of where you want to be headed. Everything is much clearer now. However, this phase will help you validate key areas that could potentially push or pull your product to succeed in the cutthroat environment of eCommerce.
Trim Down Your Product Ideas
Remember we’ve asked you to shortlist at least five to ten product ideas from the strategy phase? Now you will need to trim down these product ideas using these following initial evaluation filters.
The goal here is not to select the top 3 or top five best products to sell online. However, you need to understand the viability of each of the idea. If in case all of the product ideas are deemed feasible, then you can shortlist them again to the final evaluation process. You are looking at potential in this task.
For illustration, Let’s take the following five product ideas into test:
- Custom Watch
- Organic Food
- Dried Fruit
- Online Clothes
A) Compare Product Ideas via Google Trends: Google Trends is a platform that displays the frequency of a certain search term relative to the search volumes. It could easily give you a visual representation of the linear trend of a particular search term.
How to Use Google Trends to Compare Product Ideas
To guide you in using Google Trends in product idea comparison, here’s an overview of a step-by-step guide.
1. List down 5 product ideas for comparison: Google Trends allows you to input 5 search terms at a time.
2. Customize your selection based on the four boxed areas above:
a. Country – Currently, there is no selection by region or continent. But, you can choose a global view by selecting ‘Worldwide’.
b. Time Range - Google Trends allows a custom time range based on how recent or how old the archives for search terms are.
c. Category - You can filter the data based on a specific category such as Entertainment, Travel, Finance, Shopping, Sports and a lot more.
d. Source - This selection can filter the source of data where the user searched for the term. You can either choose between the following: Web Search, Image Search, News Search, Google Shopping or Youtube Search.
3. Interest Over Time - According to Google Trends, “numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity of the term. A value of 50 means that the term is half as popular. Likewise, a score of 0 means the term was less than 1% as popular as the peak.”
4. Interest by Region – By Google Trends standards, “values are scaled from 0 to 100, where 100 is the region with peak popularity, a value of 50 is the region where the term is half as popular, and a value of 0 means that term was less than 1% as popular as the peak.”
5. Each of the search team will be presented with an in-depth analytics for you to help narrow down your product idea and find your niche.
6. Related Queries – According to Google Trends, “Users searching for your term also searched for these queries. You can sort by the following metrics:
* Top - The most popular search queries. Scoring is on a relative scale where a value of 100 is the most commonly searched query, 50 is a query searched half as often, and a value of 0 is a query searched for less than 1% as often as the most popular query.
* Rising - Queries with the biggest increase in search frequency since the last time period. Results marked “Breakout” had a tremendous increase, probably because these queries are new and had few (if any) prior searches.”
7. Let’s say, for example, I want to analyze Organic Food. Based on the “Top” filter results below, the search term “organic food” is mostly associated with “baby” or “health”. This gives me a potential niche.
8. If I change the filter to “Rising”, I could also get a glimpse of the increased frequency of related queries for organic food within the recent period. I can now validate that people are searching for food products near them.
9. I can also click each of related queries, to know how they are trending. I can see that currently, the interest of people with the related query “organic food near me” is tremendous. Thus, giving us the idea to further evaluate organic food.
Select Your Top Products and Evaluate
The pre-filtering evaluation will trim down your shortlisted product ideas into more viable products. This time, you are ready to evaluate your top product into a series of high-level scrutiny. This task will pose you with different questions to answer and checklists demanded to be ticked.
A – Evaluate Market Demand: In this task, you will have to answer the following:
1. Is there a demand in my target community? If there is none, are there closer neighborhood with the demand for my potential product?
2. How big is my potential market size is?
Recommended Tool: Google Trends can still be a resourceful platform to discover the market demand for a particular product. You can also use Google Searches for this.
B – Re-apply Google Trends to Isolate a Product Idea: If you want to further test your chosen product idea, you need to explore it again using Google Trends to see what countries searched the product the most and what related queries are made by the users.
- For example, I have selected Organic Food and want to know more about it.
2. You can also find for the niche by playing with the data results.
Recommended Strategy: You can also use a more traditional approach through a feasibility study of your target community to determine the viability of a product.
C- Evaluate Competitive Landscape: After knowing where your target market is and how big they are, you need to understand what the level of competition looks like.
- Use Google Search, input your product in the search key and check the results page if there are any companies with online presence offering your potential product.
- If there is any, how many are eCommerce companies? How many are brick and mortar companies?
- How long have they been in the business?
- Do they have other product offerings aside from my chosen product?
- Are they a corporation, partnership or small and medium enterprise?
- Do they have other locations aside from my target location?
Recommended Tool: Google Search can help you understand the online presence of current competitors. This will determine your advantage if you want to pursue an online store.
D- Evaluate Your Costs: Your expenses will determine many other underlying factors, the very first will be your selling price, your profitability and your return-on-investment.
E – Evaluate Your Selling Price: Based on your projected expenses, you need to determine how much can you sell the product online.
- You can conduct a feasibility study asking your consumers how much are they willing to pay if this product is offered to them.
- You should also check how much are your competitors are selling them currently to determine the pricing strategy you will implement.
E- Evaluate Product Features and Benefits: Determine the physical attributes and advantages of your product in this step.
- What makes your product stand out from the competition?
- Is it durable, perishable or consumable?
- What is the size, weight or shape?
- What is your primary and secondary packaging?
- How will your product benefit consumers?
F – Apply Product Assessment with Strengths, Weaknesses, Opportunities and Threats Analysis: You can apply what you did with the Assessment Phase, to scrutinize your selected product idea.
Recommended Tool: Bizplan is a modern business plan maker which gives you a guideline on solidifying your business idea with financials, industry and market analysis.
During this phase, you already have the informed decisions about how you want your product to be, its features, characteristics, and benefits. The Implementation Phase is making your decisions into a concrete plan.
5 – How to acquire your product
Acquiring your product sounds an easy task. However, before you can even arrive at this part you need to know what to buy, when to buy it and how much to buy. You also need to decide if you will make it from raw materials, or buy in retail or wholesale. There are still factors to consider so let’s break them down into the next step.
Four most common methods of acquiring your products and inventory:
A – Make: This means that you will make the product yourself
B – Manufacture: If you choose this type of acquisition, you will find a business partner who will manufacture the product exclusively for you.
C – Wholesale: If you want to consider wholesale, you will purchase a product from another vendor and resell it yourself.
D – Dropship: This type of supply chain management method does not keep goods in stock but instead transfers customer orders and shipment details to another third party vendor that ships the orders directly to the customer.
6 – How to locate a supplier
By making it this far, it means that you have a foolproof product ready for its online commercial success. And yes, it is a painstaking process before you can finally go to this task: locating a supplier.
Sourcing your materials based on your supply chain method will determine how you will engage with your suppliers. In essence, the following are what you need to take note:
- If you decide to make the product, you will source the raw materials.
- If you choose to manufacture it, you will need to source the third party maker.
- If you select to wholesale it, you will engage with manufacturers or other distributors.
- If you consider to drop ship it, you will need an agreement with manufacturers or distributors that will drop ship on your behalf.
Domestic vs. Overseas Sourcing:
A – Domestic Sourcing: Domestic Sourcing happens when the delivery or manufacturing of products are contracted within the buyer’s local country bounds.
Benefits of Domestic Sourcing
- Supply chains are shorter, thus the increased probability of faster delivery times and lower costs
- Easier for quality assurance inspections, management, and planning
- Increased brand image by investing in the local community
Disadvantages of Domestic Sourcing
- Possible ethical issues due to closer physical connections between supplier and staff
- Easier to encourage potential local competition
B – Overseas Sourcing: Overseas sourcing happens when the delivery or manufacturing of products are contracted across geopolitical boundaries.
Benefits of Domestic Sourcing
- Augmenting resources that are not present in the local country
- Finding more alternative choices for suppliers
- Taking advantage of a more efficient and sophisticated supply chain management systems
Disadvantages of Domestic Sourcing
- The difference in time zones and languages provides an increase in costs
- Political and financial risks posed by geopolitical differences
Where to search for suppliers:
A – Online Searches: The internet has a wide array of directors just at your fingertips. Plus, a supplier online presence is a good sign for your online store.
B – Online Directories: The following sites contain domestic or overseas directories.
C – Local Phone/Business Directories: Many of the telecom companies provide local business information including business phone numbers and addresses.
D – Newspaper: Some business postings can be found in your local newspapers.
E – Referrals, Social and Local Networking: You can ask your family, friends, and officemates for the referral. Networking via social media groups and local trade events are also good means to find legit suppliers.
Closing terms and deals with suppliers:
A – Request for quotation: A request for quotation, often called RFQ, is a typical business procedure which serves as an invitation to suppliers to bid on particular products or services.
The RFQ must contain all relevant parameters of the intended purchase, such as:
- Price per item or per unit of service
- Quantities/Volumes/Minimum Order Values
- Quality Levels
- Delivery requirements
- Terms and condition
The table lists the most common contract types according to Project Management Hut
|Fixed fee||Fixed fee for the goods or services provided. Nice and easy.||The vendor has the risk of cost overruns.|
|Time and materials||You pay for the time and materials to complete the work.||Low risk as long as the contract includes a “not to exceed” (NTE) clause as a price cap.|
|Unit price||Fee per item or hour purchased. Sometimes these plans include incentives such as “Buy more items and the cost per item drops.”||Low risk.|
|Cost plus (anything)||Cost of the goods and services plus a fee or percentage of the cost. Who uses these anymore? Not too many folks.||High risk for the buyer, as waste means you get to buy more and pay more.|
|Incentive fee contracts||These contracts award a bonus if the project is done early and can include penalties if the work is late or lacking in quality.||Usually low risk|
One of the hardest parts of building an online store is to figure out what product to sell online. Often, you are standing at a crossroad. Each road leads to some unexpected surprises. It can be short, a detour, a one way or a quite memorable journey.
This is true in choosing the right products to sell online. Any aspiring online retailer must go through different phases before eventually arriving at a decision. As you’ve learned with this article, assessing both the internal and external environments provide prospects for product ideas. Then, strategizing on where to find these ideas into concrete plans can help you narrow down a vast sea of opportunities to identify which are the most viable products to capitalize on.
But, your online store’s journey doesn’t end after choosing the best products to sell online. It is, in fact, just the first step into many endeavors to follow.