Building e-commerce software means that I see a lot of success stories: people that quit their day job, get their store up and running, and start growing their own business and that's awesome. Really awesome. But for each success story there's a story of someone who tried to open a store and it didn't go well. Maybe they made a product that no one is interested in, maybe their product isn't different enough from competitors products, or maybe they didn't take into account item breakage and returns into their pricing.
There are a lot of facets to e-commerce and thinking about your business model before you start thinking about the e-commerce software will help you make sure it really is the right venture for you. By thinking about the different types of products within an industry you should be able to pick the right product for you. We're all in different situations with different amounts of time, skills, and money to spend so you need to pick the best option for you.
Pick an Interest
The first thing you need to do is pick an interest. This can be anything that you want to look into. It could be a hobby like running, video games, sewing, etc. Or it could be an area where you think there are gaps for new products. This could be a growing field like home automation with products like the Nest.
Choosing the Type of Product
Once you pick an interest you want to explore all of the possible products out there. For this blog post I'm choosing to look into the yoga industry because it's something that most people will understand.
Products That Do Something
The first e-commerce idea everyone has is selling physical goods and these are usually products that do something (as opposed to products that provide information). If you're into yoga that could be yoga mats, yoga clothing, yoga props, etc. There's a nearly endless number of products you can get your hands on. If you're interested in selling physical goods the next step is to think about the different ways to manage inventory and deliver the goods to your customers. I know it sounds boring but looking at this ahead of time is crucial so you don't make the wrong choice and have a 1,000 yoga mats in your garage.
Create Your Goods
The first option is perhaps the easiest to get started. You can create the goods yourself. I know a yogi that created their own wooden blocks from wood scraps leftover from their work. They asked their boss for the scraps and started creating wooden blocks. If you have a skill you can create all sorts of products from scratch. Creating the goods yourself is a really cheap way to get started but it's quite time intensive. Many store owners want to grow their business and it can be hard to scale a business that relies on your time to create the products.
Wholesaling usually involves buying a large amount of products form a manufacturer and then you do the marketing and sales on your site and sell the products with a markup. These businesses are easy to scale because you can reinvest your capital into more products but they aren't easy to get off the ground. You need to have capital to buy the initial shipment from the manufacturer and your capital is then tied up in these products. You don't get your investment back until they start selling and if they don't sell you could have a negative return on investment trying to get back your initial capital.
You also have to have space for inventory, ship the goods yourself, and manage all of the interaction with the customer.
A pretty popular option that gets a lot of attention on blogs and podcasts is dropshipping. This is where you take orders and then send that information to the manufacturer where they figure out the logistics and send the products to the customer. This option doesn't require a huge investment from your end and it usually requires very little interaction with the customer. You will have to do some marketing to sell the product but the rest is handled for you. If you can find a dropshipper for products that you want to carry I think this is an excellent place for a business owner to start.
If you have confidence that you'll be able to sell a lot of units you can contact a manufacturer and work with them to create huge batch orders of products which you'll manage and send to the customer. Some businesses that start out making products by hand and then move to manufacturing once the time commitment becomes too costly. Manufacturing a product takes quite a bit of time, effort, and money to setup. You should definitely make sure that your products will sell before ordering a thousand products.
You could of course create virtual products that don't take up any space. These could be software products like a WordPress plugin or scheduling software for yoga studios. Virtual products can take a while to create but once they're created they can be sold over and over again with very little maintenance on your end. If you don't have experience in the software industry there can be a pretty big learning curve managing software. I personally have several Ninja Form extensions and in addition to making people's websites better they bring in money every month with very little effort.
If you aren't interesting in creating products that do things like yoga mats or yoga blocks you can look into products that share information about yoga. Many information products don't do things like a yoga block but they help you learn more about yoga. They could teach you a skill, help you organize all of the information about yoga, or create a special community all about yoga.
Write a Book
It's never been easier to find a publisher or self publish. You can publish your own e-book on Amazon and you can even create a physical copy via CreateSpace. There's so much information out there in the world that we need curated information which could be someone knowledgable in an industry who collects and organizes all of the relevant information into an easy to consume book or video. We need people to share their opinion and thought leaders to start the conversation. There are over a million books in the Kindle library but there's still plenty of space to create your own book.
Create a Course
Courses are a great way of sharing structured information. They can be a bit more interactive than books. You can have sections, quizzes, and followup from the instructor. If you have a skill that you want to share with someone you could package it into a course and sell it over and over again.
Create a Community
By surrounding yourself with the right people you can achieve just about anything and that's why communities are so powerful. Create a community with the very best and brightest in your industry and watch everyone grow. Creating a community site takes a lot of marketing on your end but once it's up and running can be easy to hand off to someone to maintain. There are a ton of WordPress membership plugins that make the technical parts of this route easy.
Recommending Products (Affiliate Marketing)
If you have a trusted name in an industry you can use your reputation to sell products. When you get a commission after recommending a product that's called affiliate marketing. You have to have good content so people find your recommendations which takes quite a bit of time. On the other hand you never touch the product and don't have to worry about returns or talking to customers. Affiliate marketing is easy to get started but to build it up to the point where you're making a normal salary can take quite a bit of work on your end because you need to have amazing content so that people find your recommendations.
Service Based Products
When you're selling a service you're selling your time and your experience. If you've never created a product before it may be best to start out by offering a service that people are used to. Before building a tool that can help people create websites it's worth your time to work directly with a few people to build a website for them and see what their needs are. It's the perfect way to make money while researching your target market. Services are time intensive so they don't scale very well but they're very easy to get off the ground.
Services could be just about anything from building a website to offering one on one yoga classes.
Consulting is a very broad topic and can be applied to just about any industry. If you have insight into a particular industry or technique you could be a consultant. Sites like Clarity.fm make scheduling and getting paid for calls very easy.
What Comes Next?
Once you pick how you want to make money online you have to start looking at who you're going to sell to. There's a big difference between selling to yoga practitioners and yoga instructors even if it's the exact same product. Deciding on who you're going to sell to will determine your marketing and business model but should only be done after you have an idea for what you want to tell.
Finding out your target is one thing in building up your business. But maintaining your passion and determination for it to become successful is a whole other story. This is a very informative and helpful guide for all hopefuls out there. Great job!
I totally agree. I’d like to look into that more. Any links you’d like to share about passion and determination?
Third factor to be considered in finding hot selling products is finding out the general interest level about the product. General interest in a product helps us to gauge where our demand and competition numbers fall into the big picture. Simply saying, if there isn’t much demand for the product, and there isn’t much competition, it would seem that it might not be good a good put up for sale. But the research doesn’t stop here; there is one last thing to be considered to exactly find the hot selling products that you’ve been looking for. We must also learn how others are advertising those products. If there are a good number of them doing so, it may mean that it’s a good product to get into. Coming to the last phase of the process is analyzing and evaluating all the information that has been collected. We have to look at all of the data we have collected on demand, competition, and advertising, and make decision as how they all balance out.
Hey, Patrick! This blog is amazing, I’m going to go through and read all of your posts. 😍 You’re doing a great job! Another fantastic article that is well laid out. – Jessica