Want To Set Up Your Online Store? Source Your Products Wisely!
(This post is inspired by startup bros. Startup bros is a website that aims to assist people to not have jobs but instead be entrepreneurs. I am tailoring their wildly popular article for our Filipino entrepreneurs)
Once you found a good product to sell, you already solved 90% of your problems, and the rest depends on how you handle your customers, orders, and of course your store/ But however, many of us just go with the trend, and not think about how a good product could impact our profits, and how long we can sustain it. So here is a guide for online sellers on how to grow your business.
1. Define what for you is a “good product”
As I have said, many of us focus on the trends, the “uso” as we say. Actually there are many “uso”, hence it is hard to find what is the “uso” where we can earn profit. Many of us become confused because we sell everything that we see trending on Instagram or Facebook. So to make our lives simpler, we should be looking for a single, profitable, product, and work from there.
An example would be the strategy of Amazon. When it was just beginning, it focused on selling books, and built a library of it. As it became bigger and business becomes scalable, it began to expand on apparel, home & living, electronics, etc.
Startup bros tell us of a “sweet spot” of good products to sell. Here are some criteria for you:
- Small and light enough that you can pick it up – this is because the cost of shipping from the beginning could overwhelm you. Bigger stuff also takes more storage, we don’t want our houses to become a warehouse.
- Specific, niche products– here is where creativity begins. We just don’t want to sell tops. We want to find a specific top, like “striped and tasseled festival crop top”. This criteria is very similar to finding keywords when we do advertisements. We focus on more specific keywords where we can compete competitively.
- Price point of 300 pesos to 5000 pesos – We have to understand the relationship between volume and price, and profit. Products that are lower priced tend to have a small profit, but huge volumes. Whereas products that are priced higher tend to have bigger margins, but volume isn’t huge. So we have to weigh in our capital and work with our margins from the beginning.
- Consistency of customers – we want to sell something that has a steady market, that is the product is not seasonal, and there aren’t many changes regarding the product’s specifications (like cellphone cases, they change once newer models come out). Think of selling consumables.
- You can sell it twice the amount you bought it – if you source the product for 300 pesos, it means you can sell it at 600 pesos. This is a standard wholesale pricing.
So what are those bad products?
- Products with high quality standards coupled with warranties – unless you’re an expert on this, don’t attempt to sell these items if its your first time.
- Sold at SM or your nearest sari-sari store – What’s the point of offering something that you can find elsewhere? Remember that we are trying to find an item with a steady stream of buyers so and we can have a price advantage. Also, as a first-timer, we need to reduce your risk.
- Fragile and require careful handling in shipping – we don’t want to deal with damaged items.
- Having multiple high-volume sellers – If you are thinking of selling doll shoes, you don’t need to compete with thousands selling the same doll shoes. Why? Because you can’t undercut the price (remember low price, high volume). We need to find products that don’t have a lot of sellers but with consistent buyers.
- Trademarked – We know there’s a lot of class AAA+ to class B of LV bags. We don’t want to deal with counterfeit problems in the future.
We still need to do a bit of market research, though how much we rely on “gut feel” or the number of shares or comments on Facebook, we always need to validate our assumptions.
2. Start searching: Where do ideas come from?
We all have our own ways on getting through ideas in our head. Here are some of the ways we can let our ideas wander:
- Just look at things around you and try to give it a bit of flavor.
- Trending stuff- lots of ideas in Pinterest. Remember, TRENDING, not the ones that are already in spotlight.
- Things those impulsive buyers buy- like souvenirs, home and dining accessories, etc.
- Randomly clicking an item on eBay or Amazon
- You can also take a look at top 10 lists or top searches.
If you already thought of 2-5 products, take a brief pause to answer these questions:
– Will my product have a high refund rate?
– How much is it to ship?
– How frequent it will be bought (3 months? once a year?)
– Are people expecting it to function for a long time?
– What are the people expecting regarding customer service and information?
3. Finding and contacting suppliers
This is the fun part. Most experts recommend purchasing samples. However, as some of us don’t have sufficient capital to buy samples just for testing. Hence it is important to rely on our best judgment to think of a very good and profitable product. But if you have means to do so, purchasing samples give you a way of gauging product quality before you buy in bulk.
Startup bros gave a small spreadsheet guide in finding and comparing products, prices, and suppliers. Take a look below:
For the buy price, we should always take into account the highest one, as it will give us the worst-case scenario. The same goes well with the selling price. The margins that these guide will enable you is that you can prepare for unexpected costs such as returns, damages, and your operations cost like phone calls, internet, etc.
I added another one, which is “competitor”. It doesn’t need to be the competitors that are selling the exact similar product you are thinking, but the closest one.
In this way, we can expect the worst when it comes to pricing and margins. Remember that we are not trying to sell everything, but finding something we can manage and grow to be sustainable.
4. Once you already have the products and ready to sell, here are some ways on how to grow your sales:
- Your own channel- it could be your IG account, or Facebook. However, with growing sales, you need a steadier platform where you can automate ordering and monitor your products.
- Listing via marketplaces (eBay, Lazada) – this gives your product a greater exposure. However, take note of the fees of selling in these platforms. Make sure that your margins can cover them.
- Think of new products to sell- you can sell within our niche or branch out to other niches. You already have a customer base; it would be easier to start on this one.
- Getting better prices from supplier- higher volume purchase, you can negotiate for a discount
I am sure most of you would still have some questions. Please don’t hesitate to email us at email@example.com. We would like to hear from you!
Author Background: My Sourcely is a rising platform for first-time resellers to source products from global brands. You can learn more at http://www.mysourcely.com. Brands and resellers are welcome to put forward their questions.