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Today, when starting an e-commerce business, the first step for you and your business to do is to choose the right product, as the products you do select determine your target market, your sales strategies and marketing campaigns, and the potential profits of your business.
As such, your product selection must be based on thorough research and a comprehensive understanding of the demands and needs of the marketplace.
This article will discuss how to choose the right products for your e-commerce business and explain and unpack the factors that you and your business need to consider.
It is imperative that you understand current trends, consumer needs, and existing competitors in the marketplace before you and your business decide upon what products you want to sell.
Tools such as Amazon Best Sellers, Google Trends, or social media platforms such as Facebook (meta), TikTok, and YouTube can help you identify products that are being the most talked about and have the most hype and buzz.
Moreover, market research will give you invaluable insights into the most desired, sought-after products, what market gaps there are that you can leverage to market your (new) products, and what products are in the least demand.
To compete in today’s highly competitive e-commerce marketplace it is important to ensure that your product has an unique value, and a Unique Selling Proposition (USP) such as a product design, feature, quality, or customer service.
Because products and services that stand out from what is already available easily get customer attention.
For example, if you plan to sell beauty products, ensure that the product you and your business have in mind to market and sell has a distinct advantage over others, such as using natural, organic ingredients or that they deliver proven results.
Market trends greatly influence product demand, and trending products usually sell faster, especially if you can capitalize on their trending momentum.
However, you must be cautious with short-term fads, so be sure to consider whether the trend is a temporary phenomenon or a long-lasting trend.
The easiest way to track trends is through large e-commerce platforms such as Tokopedia or Shopee.
These platforms enable you to explore the most searched product categories and determine if these products align with the business you want to build, and the products that you want to market and sell.
ALSO READ: Digital Marketing Strategies to Boost Your E-Commerce Sales
Beyond popularity and trends, you must ensure that you and your business select products and services that provide good profit margins.
Profit margins are calculated by the difference between the purchase price and the selling price; if the margin is too small you may struggle to cover operational costs, such as marketing, packaging, and shipping.
Moreover, before settling on the selling price, factor in all of the costs involved in the distribution chain, and ensure that there is adequate profit.
Those products that are priced too low might be attractive to the customer but they won’t sustain your business.
Today’s competition in the e-commerce marketplace is intense, and as such, it is important to evaluate your competition before deciding on what products and services you are going to sell.
Look at existing competitors, and study their strengths and weaknesses.
If the marketplace is saturated with similar products, you may need to consider other alternatives or offer more competitive price points.
Through this evaluation, you can determine whether the product or service is worth your while selling.
Or alternatively, ask yourself if you need to introduce innovations to stand out amidst the crowded competition.
A key factor towards the success of your e-commerce business is shipping; large and/ or heavy products incur higher shipping costs which can either burden your customer with extra costs or reduce your profit margin, whereas compact, lightweight products are cheaper and easier to ship.
As such, when choosing products to sell, consider their logistics, especially if you plan to offer free shipping, or are targeting an international market.
Selecting products that align with your interests and/ or knowledge, as well as your target audience, can be advantageous.
This is because it makes it easier for you to understand the marketplace, to create effective sales strategies and marketing campaigns, and provide better customer service while running a business.
Moreover, if you enjoy what you are marketing and selling, it will make the process easier, and motivate you to keep growing.
In today’s crowded marketplace, careful consideration is required when choosing (the right) products and services for an e-commerce business.
Conducting thorough market research, paying attention to market trends, considering profit margins, and evaluating your competition, enables you to make informed decisions and maximize your chances of success.
However, you must always ensure that your product or service choices align with your target market and your customers' demands and needs so that your e-commerce business thrives, and is not, in itself, a short-lived fad.
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Direktorat Jenderal Perlindungan Konsumen dan Tertib Niaga Kementerian Perdagangan Republik Indonesia
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