Chapter 2 How to Evaluate Market Viability for Your Products
There are many things to consider when discussing the market potential for your product, including the ability for your business to produce profit and ultimately scale.
However, these can be complex, expensive and time-consuming.
To make it easier, we’ve compiled a list of things to consider when determining if there’s a commercial market for your product.
Things to Consider During a Product Viability Analysis
To start, you’ll need to ask yourself some serious strategic questions about your product’s viability.
- Is the idea practical?
- What obstacles lie ahead?
- Will it need support services of some kind to ensure customer satisfaction?
After you answer those, it’s time to consider the more tactical aspects of your product and business.
1. Consider product size and weight.
The size and weight of your product will have an impact on how much you sell.
If the product you’re considering is large, awkwardly shaped or heavy, you’re going to have some high shipping costs. UPS & FedEx rates and prices fluctuate, which could further impact your costs.
Think you can pass the cost of shipping on to your customers?
Not necessarily so.
Shipping cost is a top reason for cart abandonment.
Online retailers that offer free shipping have increased conversion, and free shipping is now even considered the norm by many in the industry.
Free shipping however is tightening profit margins across all industries. In order to stay competitive while generating revenue, your best bet is to keep your product small and minimize shipping costs.
2. Consider product fragility.
Fragile products need extra attention when shipping to ensure they arrive in perfect condition.
Typically, durable products cost less to ship and lighten your customer service and reparation burden for products that break en route to the consumer.
They also usually cost less to store.
Fragility shouldn’t completely dissuade you from offering a certain product, but just keep in mind that opting to sell fragile goods will increase costs for shipping, inventory and customer service.
The Dryer Test
I always tell first time entrepreneurs to test out their shipping by putting their most fragile product in a box and packaging it correctly.
Then, put that box in the dryer.
Then, put a couple shoes or books in it.
Then, turn the dryer on and see what happens.
That’s going to be the shipping life of your product.
Make sure yours can pass the test!
– Mindy Regnell, Product Marketing Specialist, BigCommerce.
3. Consider SKUs.
Many entrepreneurs forget that a single item can often contain multiple SKUs.
A SKU, stock keeping unit, typically refers to color, size and other variations of a single product.
In general, the more SKUs you have, the more attention, time and money you will need to spend in tracking and maintaining inventory.
Let’s look at how a t-shirt breaks down in SKUs to get a good idea of the process.
You’ll not only need to stock a variety of sizes (small, medium, large)…
But also colors in each size (small and red, medium and red, etc.)…
And perhaps even male, female and children’s sizes (small, red and women’s; medium, gray and children’s; large, blue and men’s).
Don’t let SKUs discourage you, but do be aware of the additional costs and reparations for product mix ups during fulfillment.
Also be aware that there are plenty of tools and resources to help you with inventory management to streamline this process.
4. Consider product lifespan.
Having a consumable or disposable product is great from a business perspective, because it provides you a better opportunity to earn consumer trust and build your business off of repeat sales.
Think of the grocery store model. Inventory churn is high, competition is fierce, but location and price point generate loyalty, pulling in consumers on a weekly basis.
Better yet, consider the subscription box business model, in which your customer signs up for monthly deliveries and payments.
Think recurring, if possible, when considering your product offering. Overall this can help lower your marketing costs and increase your average customer lifetime value.
The Downside of Pursuing Perishable Products
There are many successful businesses out there that sell perishable products, including:
- The Cake Store: Beautifully crafted and ornate cakes for every occasion
- Jeni’s Ice Cream: Quality, handmade ice cream and frozen yogurt with unique flavors
- Joe Knows Reefs: Rare and exotic live ocean corals
- Tortoise Supply: Live tortoises
However, there are some obstacles to overcome with this type of product, including storage, shipping and production.
You’ll need to set proper expectations for clients on timelines and cost to help overcome reservations around purchasing.
Tortoise Supply does a particularly good job of providing details around who they are, how they care for and ship the animals they sell, how customers should care for them, and more.
As a result, they’re considered a thought leader in the pet shop space, offering a personalized and convenient experience that their customers prefer to local pet shops.
5. Consider seasonality.
Seasonality means that there are different levels of demand for a product throughout the year.
- Do you buy sunscreen in winter?
- How about holiday decorations in the summer?
Of course, there are different aspects to consider, including where your target audience is located (your winter could be their summer).
Seasonality is not at all an exact science and there are multiple solutions to the issue, including running timely promotions and shipping internationally.
Seasonality does affect revenue for all online stores, making seasons like the holidays much more profitable for some –– whereas a back-to-school event could be more profitable for others.
You’ll need to determine your own business downtime, and work to off-set expectations and costs during those periods.
6. Consider solving for pain points.
Selling a product that solves for a pain point doesn’t necessarily prevent you from offering a luxury item.
That said, if you choose to pursue a product that solves a pain point or services a passion, you’ll naturally find it’s much easier to acquire customers than if you sell a luxury item.
Rock Tape solves a literal pain point for a large consumer segment –– athletes and those in physical therapy –– by producing a product that alleviates physical pain and discomfort.
7. Consider competition.
If your items are sold locally and readily available in major retail stores like Target, WalMart, Amazon or other online outlets, your ecommerce journey just became an uphill, snow-covered journey from the get-go.
That’s not to say that you can’t be successful selling a commonly found item, but the more niche your products, the less competition you’ll have.
Don’t let this deter you – after all, competition can be a good thing – just be sure to let it inform your market viability research.
Know your competition, but don’t focus on them
Be naive. Don’t turn your head for a second to focus on your competition.
Understand what it is that sets you apart and roll with it.
If you spend too much time trying to knock someone off or invest in a battle with competition, you’ve already lost.
– Steven Kocerka Owner, Declaration & Co.
8. Consider yourself.
Yes, on top of choosing a product that’s viable in the market, you should select one that you actually enjoy yourself.
Building a successful business often requires long hours, and those can either fly by or drag on endlessly depending on how passionate you are about what you’re selling.
Be passionate, find yourself a niche and start selling to other passionate people just like you.
Next up, we’ll dive into some areas that tend to get folks hung up when starting an online store.
Grow Your Own Dream
Get started. The most important “secret” of business is picking something you are passionate about and working at it every day.
Use cost effective testing, learn from each test and keep going. Avoid “bet the ranch” type actions. Instead, use lots of small bets.
Use BigCommerce and all the help they and the internet have to offer.
Because being able to build something that is yours if invaluable. We live in an amazing country that affords everyone the opportunity to build their own dream.
With companies like BigCommerce, MailChimp, Instagram, Facebook, Pinterest it is easier than ever to start and grow your own dream.
– Shari Lott, Spearmint LOVE
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