Often times, finding the right market to pursue is the hardest part of starting your store. Here are 5 things to consider when choosing which market segment to attack.
Choose an Area or Set of Products That You Are Passionate About
Many people make the mistake of opening a store and selling a product just because a particular product is hot. If a product is hot, chances are there will be lots of competition and unless you are truly passionate about what you are selling, you will not be able to differentiate your store from your competitors.
Having expertise in your products will also allow you to easily distinguish good and bad products when deciding what to carry in your store. The ability to write in depth reviews and product descriptions about items you love will instill confidence in a buyer as well.
Most importantly, selling products that you love will provide you with the necessary confidence and determination to persevere. For the first 6 months after the launch of our online store, we were only making about 100 dollars a week in revenues. But because we were passionate about our products and the added value we provided to customers, we were able to stick it out until business started picking up. The first 6-12 months in the life of your store is the toughest time. You will feel despair, anguish and remorse when business is slow or nonexistent. If you don’t feel strongly in what you are selling, you won’t make it through.
Choose a Market Segment That Has Room to Grow
Even though you may be extremely passionate about a particular product or set of products doesn’t necessarily mean that you can make money from it. For example, if my passion happened to be edible insects, even if I cornered the edible insect market, there might not be enough edible insect aficionados out there to support my business and overhead costs. Ideally, you want to choose a large target market of which you can conquer a small niche. This will allow some room for your business to expand as the money starts rolling in.
Pick a Product That is Generally Hard To Find
If you just sit down and think about it, you can probably come up with at least a dozen items that you need right off the top of your head that you wish you had but can’t easily find in any store. Just the other day, I was looking to buy a full length sunscreen for the back window of my car so that the sun wouldn’t get into my baby’s eyes. You would not believe how difficult this was to find. In fact, after a weeks worth of searching, I still haven’t found one that suits my needs.
If you have problems coming up with anything, the best way to brainstorm is to take a vacation to another country and look around. As you are traveling, look for items that aren’t available in your home country and make a note of it. While you are there, go the extra mile and look up local manufacturers of that product and talk to them directly. Find out what the pricing of their products to sell is in bulk and inquire if they will ship to your home country. When tax time rolls around, go ahead and expense your entire vacation in the name of your business!
Pick a Product That Has High Margins
Ultimately you should follow where your passion takes you, but it certainly helps to sell a product that has high margins or a greater perceived value. Items that are handcrafted or personalized will carry a much larger premium whereas technology items tend to face constant margin pressure and price drops over the lifetime of the product. I would tend to stay away from tech products in general unless you can add significant value or can get special pricing from the manufacturer. Tech items are generally more popular so you will definitely face fierce competition. Coupled with the fact that as technology becomes obsolete, you may end up with useless, unsellable items on your shelves.
Choose a Market Where You Have Connections
If you have relatives or friends that run successful businesses, make sure you use them as a resource. People with existing businesses probably have a pretty good idea of what will and will not make money in their particular area of expertise. Furthermore, they probably have lots of good ideas that they’ve thought up in the past but never had the time to pursue. The key is not be afraid to ask questions. You’d be surprised how helpful even total strangers can be. If any reader of this blog has any questions for me, I welcome them to ask.
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