Step 1: Find Goods To Sell Online
Finding the right products to sell online is one of the most important aspects of starting a profitable online store and is easily the place where most people screw up.
Now I've been teaching ecommerce for quite a while and I can't tell you how many people sign up for my class with preconceived notions of what they want to sell.
For some reason, everyone either wants to sell t-shirts, wedding accessories or baby clothing.But you know what? All of these markets are way too competitive.
Now that's not to say that it's not possible to make money in these large markets. But you'll find yourself going up against industry giants which will make it difficult for your little shop to stand out.
Keep in mind, the goal here is to find a niche that will make enough money to allow you to live the lifestyle you want.
Creating a profitable online business does not have to be about starting the next big thing.
It's not about sacrificing your livelihood and working 100 hour weeks to start the next Amazon.com.
It's about finding that niche that will make you a nice six figure per year payout.It's about finding a niche that allows you to work a minimal number of hours so you can spend more time with your loved ones.
So with that in mind, our main goal is to find products that are in high demand but not terribly competitive either.
Ideally, you want to find products that people are looking for that can not be found in brick and mortar stores in quantity or variety. In addition, you also want to find a niche that is very specialized and narrow.
Ok great. How the heck do you do that?
Unfortunately, the answer is not black and white and if I were to try to explain the exact process in an email, this email would be many pages long.
But I can tell you this. Choosing the right niche matters!
Finding the right balanced niche is somewhat of an art form, but it is definitely something that can be taught.Below is a short video I put together on one of the processes I use to find and evaluate profitable niches.
First off, I would recommend picking items to sell that meet the following criteria
- The product should not be fragile and easy to ship
- The product should not take up much physical space
- The product's inherent value should be ambiguous. For example, I would never sell electronics because there is a set value for your goods that everyone is aware of. On the contrary, keepsakes and informational goods are much harder to place a price tag on.
- The product should be timeless. Once again, I would never sell electronics because they lose value the longer they stay on the shelves
Can You Make Money?
The second problem is determining whether you can actually make money selling your product. The key is to not get too hung up on any given idea because if the target market is not big enough, your product may not be worth selling.
Personally, I use a quick and dirty way to determine if my online store idea is viable. Assuming your market potential is large enough, you should check the frequency with which your product search terms appear on the search engines.
Pick three to four of your main targeted search terms and use a keyword tool such as Long Tail Pro or Google's keyword tool to determine the frequency that people search for your items.
Take the aggregate numbers that you get from these keyword tools and make a reasonable assumption for the click through rate and conversion ratio. The click through rate (CTR) is the frequency with which someone will actually click on your ad or link within a search engine.
The conversion ratio is the percentage likelihood of someone buying something once they've clicked onto your site. So what are some good assumptions for these two metrics for your business?
I first calculate the potential market by assuming a 37% clickthrough rate (#1 on the front page search results). In terms of conversions, I usually choose a ratio of 1-3%.
As an example, roughly 33100 people search for earth shoes every month. Looking at some of the stores who sell earth shoes, it looks like the average selling price is around 80 dollars for a pair.
So if I assume a 37% click through rate and a 2% conversion ratio, that comes out to about $19595 a month assuming each customer only buys a single pair. Pretty quick and dirty but it does the trick!
Note: These numbers only reflect the people that are searching for that exact keyword in Google. Once you have a live shop, there will be many other keyword terms people will search for to arrive on your site. Also, these estimates don't account for other traffic sources that you will receive as well. Nonetheless, doing keyword research in this way will give you a pretty good idea about your potential target market.
Finally, the biggest problem is that even if you manage to choose a product or a set of products you want to sell, where the heck are you going to source your products from? How and where do you contact the manufacturer so you can get wholesale pricing? Before I tell you the best way to find your vendors, there are several things to consider right off the bat.
Do you want to deal with only domestic ( United States) vendors?
Dealing with vendors in the US is much easier because everything is familiar to you. It is much easier to contact your vendors because they are in a similar time zone and they speak the same language. However, because the manufacturing costs are much higher in the US, you will end up paying more money for your products which will negatively affect your profit margins. The main advantage is that shipping arrangements can be easily made and it's generally easier to obtain the products you want to sell.
Do you want the absolute lowest cost for your products?
If you want the absolute best deal for your products, then you might want to consider looking at our Gold Standard Suppliers to source your items. These days, you'll find that most quality products are made and sourced from U.S Why? It's because they really believe in their brand. However, if you do manage to get the process down, the profit margins are unbeatable.
Do you want to carry inventory or drop ship?
Drop shipping is great since you don't have to carry inventory, but you are still responsible for making sure that your customer is happy and satisfied with the purchase. As a result, you have to make sure that the vendors you choose are absolutely reliable. If you choose to drop ship, you don't have to carry inventory or house products. You won't have to ship the products, and all you really need is internet.handling returns can be a major hassle. Deciding to drop ship is a very wise choice.
Wholesale Vendor Services
Going to tradeshows and contacting vendors you find online can be extremely time consuming and expensive. Fortunately, there are wholesale and drop shipping experts like our company that aggregates and screens out wholesale vendors for you to choose from. Today, if my wife and I were to start all over again, we would probably use these services over traveling and screening vendors by hand, especially since we now have kids. If you are not convinced, here's an example of how a company like Dropshipwholesalepros.com can save you time.
Dropshipwholesalepros.com offers the following services at a very reasonable price:
- We provide a list of pre-verified drop-ship wholesalers, light bulk wholesalers (orders under $500), high volume wholesalers, liquidation wholesalers and import wholesalers. The best part is that Dropshipwholesalepros.com has a screening process to make sure that you are dealing with legit companies.
- We provide all U.S Based Gold Standard suppliers so you know your products will sell
- We do the product sourcing so that you can spend more time on getting sales
From experience, I can tell you that it can be very difficult to locate wholesale vendors just by doing random web searches. Why waste your time when we have aggregated the data for you already?
Keep in mind though you still have to take the time to contact each and every vendor and create your own business relationships. Finding good vendors and establishing trust is the key to good product sourcing.