This is the part many people skip – because it isn’t always easy.  But this step is the key to success for all businesses.  You’ve found a solid market segment.  You’ve found a product or line of products that they want or need.  But the bottom line question now is: “Can I make money selling this?”.

Once again, I am going to recommend that you read the book “What to Sell on eBay and Where to Get It”.  There is some invaluable information presented about how to contact and communicate with potential suppliers. 

What Comes First? The Business or the Supplier?
One problem beginners will run into with sourcing product is that all legitimate suppliers will require that you have a tax id.  You will need to get a tax id eventually, as well as a checking account, in order to work with suppliers and credit card merchant accounts.  Now is a really good time to go ahead and apply for at least the tax id.  It can be an intimidating first step, but it’s really not that hard.  Your tax ID is through your state and all processes are slightly different – but just go to your state’s IRS site for more info. 

Some may also require financial references such as a business checking account and references from other suppliers.  What they are really looking for are two things: a) Are you a legitimate business?  and b) Will they have problems getting paid?  As long as you let them know that you are not looking for any financing, such as Net 30, and that you are willing to pay for everything up front, you shouldn’t have a problem if you don’t have these things yet.

Several suppliers also want to see that you are legit by looking at your website.  If you are working on this step as a preliminary one to actually jumping into this market, let them know that.  A word of caution here – some distributors and wholesalers are going to hold pricing close to the vest - don’t be pushy, just move on to the next one.

It’s a bit of a “catch 22” – you want to know what kind of pricing to expect to estimate your margins.  And the distributor wants to know you are a legitimate retailer before they give out confidential information such as their dealer-direct pricing model.

You will find suppliers to work with here.  Just be patient and know that it may take several calls to find the right one.  Be respectful even if you are rejected – you never know when you may work with them in the future.

Once you have this information, you need to compare it to the top competitors’ pricing to find out if you might have a good profit margin. 

Product Sourcing
Once of the easiest ways I found to source product is to work with the folks at World Wide Brands.  They have made their business to locate and negotiate with suppliers around the world on behalf of the small business owner.  They have already screened their distributors to be sure they are not only legit, but are willing to work with small business owners. 

 
Manufacturer Direct
Another tactic I have used in the RC business is to start out with distributors and once we were really good at SEO, I would contact the manufacturer directly and highlight our ability to rank for their top products.  Many times we would be coming up #1 for their top product, which would show them that we were serious about their product line.  This worked especially well with the smaller, less-known manufacturers.

Get More Information on Market Research and Getting Started in eCommerce at www.OnlineBizConsulting.com

Some of you are looking for the overall idea for a new business. Others are looking for idea after idea as to what products to sell on a platform like eBay. And as I mentioned in my last post, you should really consider choosing your market before a product. With all of these strategies in mind, there are so many ways to keep your eyes open and start to come up with ideas. Once you have an idea, you will need to perform market and competitor research, but that’s another post . . .

When I started looking for my first eCommerce idea, I looked within my own hobbies and interests. However, as you know, I ended up going with a product idea that was completely outside of my own hobbies which has worked out great.

One must-read book in my library has helped me a great deal on this topic. It is What to Sell on eBay and Where to Get It. It has some terrific idea generation techniques and the section on “where to get it” is invaluable. One of the habits that I have formed after reading this book is to keep a notebook with me at all time for ideas. I’ve expanded into a “business journal” will all ideas regarding products, marketing, business management – you name it. But for the purpose of this discussion, it is important to have something with you at all times to remember your ideas.

Product ideas are all around you.

Most importantly, you want to keep your eyes and ears open to market trends and consumer desires. Kick off the process with newspapers, magazines, trade journals and newsletters. If you are targeting a specific market, pick up the consumer magazines targeted to that market – there are a flood of ideas based on what both the content AND the advertisements. Trade Journals show you what the manufacturers and distributors are doing which is golden as well.

Something to consider if you have chosen a specific niche or market is to attend trade shows relating to your market or niche. These events, like the trade journals, will give you a mountain of information and ideas as to what is hot in that particular market place. Once you have chosen your market and product line, trade shows are a must to build relationships and stay informed.

Trend Watching

There are several websites, as well, that focus on trends, such as www.trendwatching.com. Keeping an eye on what is hot overall or in the target market you have chosen will keep you on the right path.

I have only scratched the surface on places to find product ideas. You get the idea – hang where your market hangs; Understand their needs, desires and problems. The important outcome of the activity is to generate many ideas. Once we have these ideas, we will research their viability using market and competitor research tools and techniques we will describe in another post.

However, let me give you some food for thought that might help you to really nail down ideas that can help you build a viable and successful eCommerce business:

Choose a Market First

Instead of choosing a product, choose a target market.  You might start with a couple of product ideas, but then take those ideas to the next level and think about the market you will be selling to. 

By market, I mean the demographic that will be interested in your products.  In my case, my market is RC car enthusiasts.  But yours might be young stay at home mothers, golfers, cyclists, etc.  The list is endless but I strongly suggest that you try narrow down a smaller niche.  For example, golfers is a huge market and it can be daunting to try and understand and market to all of the niches in that market – you might want to focus on beginner golfers or young female golfers or maybe children golfers (well, their parents, really).

Understand Their Needs and Desires

The reason for selecting a market first is that you can study them and dermine their needs and desires which will lead you to think of products and services that will fill those needs and satisfy those desires.  Rather than thinking of products first and then trying to figure out if there is any demand – think of the market first and see what they are demanding! 

It’s Okay to Move Out of Your Comfort Zone

Similar to our last discussion on passion vs. profit, you can choose a market that you are deeply familiar with or one that you need to learn about.  I’ve done both and yes, it is easier to market to a group that is similar to you – you already understand their needs, they are easier to “speak” to and they will readily identify with you. 

But don’t limit yourself, there are so many profitable markets out there you may miss out on if you only focus on your comfort zone.  Plus, in my case, focusing on a different demographic has allowed me to work closely with my husband to get to know his mindset and passion for the hobby – and that has been alot of fun and very rewarding.

Connect With Your Market

The bottom line is that if you choose your market and research them thoroughly, you will not only be better equipped to choose products that will truly appeal to them, you will be ready to connect with them in many different ways which will lead to good customer relationships and SALES!

What Products Should I Sell?

There is an ongoing debate in many of the internet marketing circles about where to focus your attention when deciding what to sell.  Some feel that you should focus your attention on products that you are passionate about.  What do you love to do in your spare time? What gets you really excited?

Others feel that you should forget about your personal passions and just focus on what makes money.  What are the profitable markets? Where are other people spending their money?

Passion is Motivating

There are many advantages to going with your passion.  First, and probably the most important, is motivation! Selling something you are passionate about can be very motivating.  And as you know, motivation can be a very large problem for the work-at-home entrepreneur. 

I took this concept a step further and chose a market that my husband is passionate about.  For all of you that have fought tooth and nail with your spouse about starting a home business – chew on this angle for a moment.  You are building a business around and selling something that they are excited and passionate about – there is no better way to get the ultimate “buy-in” from your second-in-command!  It has worked wonders for us and made it into a true family business that we both get excited about – for different reasons.

Second, you will have a vast knowledge about your products and your market. You are your market – what better way to understand them?  Both writing and marketing become a lot easier when you are submerged in your passion instead of trying to study your market. 

Hobby or Business?

If it isn’t profitable, it’s a hobby.  Yes, it can take some time, but in the big picture, you are doing this to build an income.  In researching your target product and your market, you should always focus on profits – passion or not.  If this business is something you want to pay your bills with and build your retirement on, you need to be serious about the numbers.

You need to conduct the proper market research up front (more on this in coming posts) to understand whether the long term potential exists.

Without profits, all of your hard work and passion won’t mean a thing.  There are many products and markets out there that sound great at first, but once you dig into them, you realize that the margins are so tight, you couldn’t possibly squeak out the profits you are looking for. 

Don’t disregard different ideas just because they don’t match your personal desires.  You may find new hobbies or markets to get excited about that you never even knew existed.

Sell What Sells

So the moral of the story here is that I want you to be sure to research, research and then research some more before you put your heart and soul into this business. You certainly can start with your passions and see where they lead, but in the end, make the decision based on the numbers.

I think I can actually hear you all asking “But, How?” and that’s the plan – We’ll talk more about how to go about that research in the next few posts.