Do You Know Your Ecommerce Business' Core Products?
Entrepreneur's New Year’s Guide
The Pareto principle -- which says that 20 percent of your invested input is responsible for 80 percent of the results you obtain -- holds true in many areas of life and business, including your ecommerce operation.
Identifying a core line of products is essential to generating sales on an ongoing basis. Once you've established your key products, you can better orient your business around the most profitable, most popular offerings, which in turn will produce 80 percent of your results.
But finding that balance is tricky, at best. If you have too many products, they can be hard to brand and manage. And if your entire business is dependent on the sale of just a few products, your business will be at risk, because someone else could easily become your competitor.
Do you know your ecommerce’s core products? If not, it’s time to fine-tune your product strategy. Here's how.
1. Identify your core products -- and your focus.
If you’re tracking your sales, you shouldn't find it difficult to determine which of your products are the top sellers, assuming there are no major anomalies or discrepancies.
But what if you don’t have adequate sales to identify these core products? What if you aren’t even sure what products to sell yet?
There are several things you can do to determine where to put your focus. First, analyze your competitors. What are they selling? Is there anything they’re not selling that you could be? Are there any gaps in the market? The presence of competition isn’t a bad thing, because it shows that there is money to be made in the market. But, when you’re looking to enter a certain niche, you should develop an awareness around what’s already available, and what you can do to differentiate yourself.
Second, research keywords. Are there any terms in particular you could be ranking for? Could you create helpful content on a topic that your target customers are interested in? Finding profitable terms can take time, but if you can satisfy an itch in the marketplace, you can carve out a niche for yourself.
Third, test and iterate. Even quality research can sometimes yield subpar results. You’ll know when you’ve found a winner, because it will outsell all of your other product offerings.
2. Market your core products.
Using the steps outlined above, you hopefully have a better idea of what your core products are. And while you've identified them as being among your top sellers, you're not yet in a position to just sit back and watch as the sales roll in on autopilot. Your products will still need to be marketed.
The good news is that there are many ways to do this.
Organic search traffic tends to be among the top drivers of traffic for ecommerce businesses. This means several things. First, you need to research profitable keywords and create content to target those keywords. Second, you need to optimize your product listings. Third, you need to use a responsive design for your site so that it’s accessible and easy to use on mobile devices. This is basic SEO.
Content marketing is a great long-term traffic-generation strategy. But, in the short term, you may also want to initiate pay-per-click campaigns so that you aren’t constantly competing for rankings in search. Use Google AdWords to boost high-performing products, and also consider the use of social media and Facebook ads.
Another popular strategy is to sell through multiple channels. Customers like to use a variety of different methods to shop online, and it’s important to cater to this behavior. Create a consistent brand experience across different channels and make it convenient for your customers to buy, no matter where they might be.
Finally, don’t underestimate the power of passive marketing. Although no strategies are 100 percent passive -- they will always require an investment of up-front time and effort on your part -- you may be surprised at what you can accomplish by setting up the right infrastructure now.
3. Find a reliable supplier.
Popular products are going to sell at higher volumes, and that’s great for business. But, don’t forget that unless you have a reliable supplier, you could have issues keeping up with demand. Even a short interruption in service can be difficult to recover from.
Unfortunately, there aren’t any secrets or hacks to finding a reliable supplier. Unless you get lucky, you're going to have to expend lot of time and effort. Here are several tips to help you streamline the process:
- Obtain proof that you’re an actual online retailer. Get your EIN number and a copy of your resale certification.
- Determine how you fit into the supply chain of your industry. Smaller suppliers are better for niche products, and large distributors are more dependable suppliers when you’re offering a wide range of products.
- Do a deep dive. Don’t just search Google for suppliers. Look in industry magazines and trade journals. Many suppliers aren’t with the times: They aren't search engine-optimized like you are.
- If you are going to use Google to find your perfect partner, realize that companies with bad, outdated websites often offer great service.
- Pay attention to logistics. Where is the supplier located? Does its location affect its ability to ship products to you, your warehouse or your customers?
- Place test orders with your supplier to ensure the quality of the product, as well as the shipping time involved.
- Use suppliers utilizing the the latest technology, which can simplify logistics.
Part of your product strategy should be to increase the stability of your business and reduce exposure. If and when the time comes to sell your business, stability will factor into your ecommerce valuation. Every business has its vulnerabilities, but investors are often looking for properties they can improve. The key is to build a solid foundation.
In sum, product concentration can put you at risk. A competitor can easily swoop in and take business away from you. If your offerings are too diverse, they can be difficult to brand, manage and promote. So, you will need to find a healthy balance. Get focused on a core line of products without sacrificing your customers' overall buying experience.