The greatest irony in online business is that the products that sell the best are the products that are the worst to sell.
You know what I’m talking about: iPhones, tablets, digital cameras, and laptops.
These things sell phenomenally well – in fact, more of these probably sell in a single day than a small ecommerce store will sell of their products in a year! Yet you should adamantly avoid selling products like these.
Common mistake in product choice
While it’s good business sense to sell something that a lot of people want to buy (obviously), it’s not necessarily the only criteria to have.
Let’s say you get into online business and start selling iPhones. Here are some of the challenges you will face:
Competition: good luck competing against Apple themselves, as well as Best Buy and Amazon.
Margins: like we said in a recent post, margins are everything for a profitable retail business. You know that $600 iPhone you bought? It probably cost Best Buy $550 to buy. That’s 8% margin. What about the case you bought to go along with it for $40? THAT probably cost Best Buy $10. 300% margins! Skip the phone, but the case…?
Scale: Companies like Amazon and Best Buy get these products from Apple in HUGE bulk – in fact, Apple probably won’t even bother to pick up your call or reply to your email unless you are interested in buying 100,000 units. If you’ve got that kind of cash lying around, you’re better off investing in a promising tech startup!
With this in mind, let’s make a really easy formula to eliminate a product from contention: what Neil Waterhouse (eBay millionaire) likes to call the “pub list”.
What is the pub list? And why a pub?
The “pub list” is a list of items that you could theoretically walk into a pub with and manage to sell before you leave. This includes cellphones, digital cameras, laptops, televisions, tablets, and the like.
More than the list itself, the question “why a pub” is a lot more important. For our purposes, let’s assume this is a regular pub on a street corner – not a sports bar or specialty place.
If you’ve ever watched the classic 1980s sitcom Cheers, you’ll know what kind of pub I’m talking about. If you haven’t, here is a quick primer on the main characters (this is relevant, I promise!):
- Sam Malone, the former baseball player, on and off alcoholic that owns and manages the bar
- Diane Chambers, a sophisticated academic, jobless, forced to be a waitress
- Coach Ernie Pantusso, a retired coach and problem solver
- Carla Tortelli, a cocktail waitress with an attitude
- Norm Peterson, a semi unemployed accountant that ends up doing a ton of jobs
- Cliff Clavin, a know it all postal worker
- Frasier Crane, a psychiatrist
- Woody Boyd, a dull, goofy bartender
- Lilith Sternin, an uptight psychiatrist
- Rebecca Howe, who is the bar manager after Sam
This is a pretty diverse bunch of people, right? Most pubs work the same way – a lot of strangers from diverse backgrounds all grouped together in a pub. Here, the only common aspect amongst the patrons is that they all happen to be in the same place!
If you wanted to walk into this bar and sell something that potentially everyone would want to buy, it would have to be something common, right? Like the things mentioned above: phones, cameras, and electronics.
Yet you should avoid selling products like these at all costs – whether it’s on a marketplace or whether it’s on your own store.
To make the “pub list” even more crystal clear, you don’t want to sell anything that would be snatched in a heartbeat if left in the middle of a town square!
As the classic adage goes, “if everyone is your customer, no one is.”
Now let’s look at some more specific things. Things that are uncommon, and very unlikely that everyone in Cheers would have wanted to buy (for arguments’ sake, imagine that the cast of Cheers was magically transported to 2014).
How about kimono robes?
Bonsai shears?
Gloves designed for farmers that milk cows by hand?
Do you see where I am getting with this? The key to choosing the best product is to be very specific with your target audience. Instead of the pub list, let’s call this one the “club list.”
Wait, what’s the club list?
The club list is the antithesis of the pub list. This consists of items that are highly specialized – items that people in specific clubs would use and need.
For example, kimono robes could be sold (and are in fact sold) to bridesmaids in Japanese themed weddings.
Bonsai shears could be sold to people that grow bonsai.
The gloves mentioned could be sold to farmers that milk their cows by hand.
You couldn’t sell these things in any old pub, but you could sell these in specialized clubs. These are the kinds of things to look for. Instead of sourcing a product and then trying to find an audience for it (like the pub list), find the audience and then sell them something they need.
This is the key to succeeding in business. Build your business for your ideal customer.
Here is an interesting exercise to find your ideal customer. If you have a Facebook account, start an ad campaign and tweak the demographics and interests until you have narrowed it down to a very specific audience.
The Facebook ads dashboard has a little meter (as of this writing) on the right side that goes from very broad to highly targeted. This exercise just goes to show how much you can target and how specific you can be. The more specific you are, the more you will connect with your audience.
Remember, the more targeted you are, the smaller your audience will likely be, but the likelier to buy from you! It’s better to market to 100 people and get 20 sales than to market to 1000 people and get only 10 sales.
Finding online clubs
Thankfully, the Internet is home to every sort of club imaginable. Some of the best places to find ideas are:
Forums: there are probably millions of highly specialized forums all over the Internet on topics from A cappella bands to zebras as pets. Forums are targeted and fit the club criteria perfectly. Of course, before you just dive in with a product, study the forum and see what people are having the most trouble with. If you can solve that problem, or improve an existing idea, you have a winner.
Reddit: Reddit is both awesome and hostile at the same time. If you genuinely participate in the discussion, you will be welcomed with open arms into the community, but if you spam and ask irritating questions, you’ll be downvoted to obscurity in no time.
Reddit is divided into subreddits, which are really targeted groups. The members of those subreddits are usually passionate about the topic, and you can go a long way if you are there to genuinely help people (that’s what your product should do, after all).
Blogs: with a little bit of digging, you may also be able to find highly targeted blogs. If you want to sell men’s accessories, you can look at blogs that are about men’s style and fashion. Not every blog will be a fit, but those that are will be a treasure trove of ideas.
For more ideas, check out this post on Shopify.
Conclusion
In the end, you have to sell something that appeals to a highly targeted audience. As counter-intuitive as this may seem when you start out, if you stick to this plan, you will eventually realize that this is the only way for a small business to survive. Even big brands like Amazon started out just by selling books. They got really good at selling books, and that allowed them to sell everything under the sun!
