How to Determine Whether an E-Commerce Product Has Demand

Below is a framework to test e-commerce product demand in an inexpensive and quick way.

Product and niche selection

1) Is your product part of a growing trend?

For example, working out at home (WFH) now is a growing trend. That’s one trend you can capitalize on. You can use tools like Google Trends, Trends.co, or JungleScout to identify what’s popular at the moment.

2) What are the drawbacks or weaknesses with the current products on the market?

If you can create a product without these issues, you have a competitive advantage.

3) Know your numbers

You must be able to sell your product high enough to make a profit. When figuring out your price, work backward.

Factor in the cost of goods (COGS), fulfillment, taxes, shipping, and so on.

Rule of thumb: Sell the product for 4x-6x the cost. But be mindful of the price where competitors sell their products.

If people can’t see the value at your price point, you won’t sell. Then again, if you price competitively and can’t make a profit, it may be too saturated to get into.

Lots of big companies – who will be your competitors – get into e-commerce and are content to break-even or even lose money and then sell to customers over and over again.

They make their money on the “back-end” through up-sells, down-sells, repeat sales, and synergies with other products and services in their portfolio.

How to validate the idea

1) Resell Alibaba products

If you find a product that reflects your idea on Alibaba, sell it for the initial test. A great story and fancy packaging can take you far in the beginning. Then, once you gain traction, work with the manufacturer to make customizations.

2) Create products from scratch

If your product doesn’t exist, consider creating a 3D rendering of your product. Test the response to the product using a landing page.

Leaner fulfillment: Securing product inventory can be expensive. Another option is to:

  • Fulfill from Amazon: If you are interested in a product on AliExpress, odds are that someone is already selling it on Amazon. Sell the item with paid traffic. When you get an order, buy the product on Amazon, repackage it and ship it to your customer.

How to know if your product is validated

A -30% ROI is a good start (considering that you haven’t optimized anything yet). Your future profit will come from:

  • Selling more products
  • Economies of scale
  • Paid traffic optimization
  • Landing page optimization

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