I’m betting that in a few years, retailers start having a “black thanksgiving week” sale, just to drum up more business and get more consumers to beat each other up over a free remote control.
Well, Amazon is starting today with their Black Friday Sale.? Fortunately, you don’t have to drive, park, OR wait in line.? I checked it out, and there really do seem to be some good deals.? Like a Leatherman for $13, or a compound mitre saw for $140 (hint hint…), and DVDs are 50% off.? Take a look to see if there’s anything you can remove from your actual black friday shopping list.
Now that we’ve decided to start a wholesale business, we need a product to sell. This post will take us through the process of determining what product to choose.
If you have any ideas for a product as you read this, you may want to jump over to our mind map and jot them down. Just click the link or image below. MindMap of Product Ideas
First, I want to say that the product you choose to sell should interest you. It doesn’t need to be the greatest love of your life, but you should at least enjoy learning about it. If you’re interested in what you’re selling, it will show in your business and your advertising.
Next, there needs to be some demand for your product. Preferably, a lot of demand. Basically, you should start by making a list of products you would be interested in selling. From that list, check out what’s selling on Ebay. I’m not suggesting that you market directly to the Ebay crowd, but they’re big enough that you can get a good idea of the overall market by looking at what’s hot there. A good service for researching the ebay marketplace is Terapeak.? They’ll show you pricing trends as well as average listing prices, selling prices, and how many listings result in a sale.? Go through your research and pick out the products with good sell rates.? (Ratio of listings to sales.)? This is your new short list.
* Update: You may also want to check out pulse.ebay.com for market research directly from eBay.
With the short product list in hand, we now want to research competition.? It’s great if you found a popular product.? However, if everyone and their mother is selling the same product, you should move on.? Not to be repetitive, but Ebay is still a good place to do this research.? Take your short list and search for each product on Ebay.? Note the number of listings and average prices.? You may also be able to use some of the data you got from Terapeak for this step.? At this point, you want to rank your products by highest demand and least amount of competition.? Unless a product is totally flooded with competitors, take your entire short list to the next step.
What will it take for you to start selling these products?? What is the cost per sale?? If you choose a product that requires a large initial cash outlay, you need to be that much more confident that you can drive enough sales.? Does the wholesale source require some sort of membership fee?? You’ll need to work out all of these costs for each product you plan on selling.? This will probably be the most time consuming part of your research, but it’s very important.? If it costs $1000 to get started selling a $10 product, you’re way behind before you even “open your doors”.? It’s also more time consuming because we need to include another step in this process, which is… finding a supplier.
Finding a Wholesale Supplier
You should start by taking a look at our wholesale sources page.? Even being a fairly short list, you should be able to find a source for most products from someone on that list.? As it’s been said before, SaleHoo comes highly recommended because they have a community of people that review all of the wholesale sources.? If anyone has a supplier to recommend, please leave us a comment.? I’d be happy to add quality wholesale suppliers to our list.
Now that you know the costs involved in buying your product, and you’ve done your market research, you should be able to determine what your customers would pay for your product.? If the direct cost per sale divided by the selling price is over 70%, you better have a very efficient system of marketing, advertising, and order fulfillment, or you’re not likely to realize any actual gains from this business.? When deciding on a selling price, always keep in mind that more comes out of your selling price than just the cost of the product.? You need to be compensated for your time.? You need to pay for advertising and marketing.? You may have hosting and other technology costs.? Forget about it if you have employees.? Don’t be afraid of the math on this one.? If you gloss over the details here, you’re in for a rude awakening.
This is a rather general topic, but you need to make the business as easy as possible for yourself.? You want a product that is easy to sell in that it doesn’t require pages of explanation to get someone to buy it.? You want it to be easy to ship or you’ll lose customers and profit to shipping costs.? You want it to be easy to service.? You don’t want to spend an hour on the phone walking a customer through how to use their $10 product.? It may sound harsh or too impersonal, but you really want to be as hands-off as possible.? Of course you need to have awesome customer service, but ideally, you just want your customers to be satisfied without contacting you.
I’ll be going through this process over the next few days to come up with the ideal product for me to sell.? I would really love to hear your ideas on the process so far.? I want this project to have as much community involvement as possible.? I can do the research and make the decisions, but I’d really love for someone to surprise me.
To be continued…
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As a learning experience for everyone, I’ve decided to start a wholesale business, and I’m going to document the entire process throughout the next several posts.? I will take input from all of you and we’ll build a small but well-designed wholesale business.
I don’t know what kind of product(s) I might sell, and that will be the topic of the next post.? The main steps for starting this business will be as laid out below:
1. Choose a product to sell.
2. Find a source for that product. (Part of the decision-making process above.)
3. Pick a domain name that is relevant to the product.
4. Build the site to sell the product(s).
5. Choose a way to receive payments.
6. Determine pricing. Price from suppliers vs. desired profit margin.
7. Advertise and Market our products.
8. Collect the riches.
9. Serve the customers.
I’m sure there will be many items added to that list as this project progresses.? Hopefully, there will be many comments so this can become more of a community project than simply me starting yet another website.
If you’re interested in following along, I encourage you to subscribe to my RSS feed.? That way, you’ll get each step of the process automatically delivered to your reader.? If you read a lot of blogs and you don’t know what RSS is, I suggest you find a reader/aggregator that you like and start subscribing.? (Starting with the SellWholesale blog wouldn’t be such a bad thing.)