“How do you pick the perfect ecommerce product?”

This is one of the questions I get asked the most. It’s understandable–with hordes of products to choose from and a wide array of Amazon categories, choosing just the right product is overwhelming. If your business is bootstrapped and your products are not selling well, you are pretty much doomed. In this case it’s not just overwhelming–it’s downright scary.

So in today’s episode I will share with you the method I use when picking the perfect products to sell. Before we begin though, let me just clarify that “perfect” is relative–what works for me might be something you don’t like at all. But if you’d like see just how I chose my current home-runs and why, then this episode is for you.

Potential products must go through a checklist before I consider selling them. I developed this product selection criteria out of frustrations I encountered with the products I used to sell in my old business. Those headaches gave me a clear understanding of what a headache-free perfect product should be, which would be the following:

  1. Small, light, and easy to ship
  2. Hard to damage
  3. Doesn’t have a high return rate
  4. Is not a fad (what happened to all the fidget spinners?)
  5. Is not seasonal
  6. Is not an electronic device and has no electronic component
  7. Is preferably not oversized
  8. Consumable, or at least something that customers are more likely to purchase multiple times
  9. Has high margins
  10. Can be sold between $25-$100
  11. Can be differentiated
  12. People can be passionate about
  13. Has a direct correlation with a Facebook audience for which you can do free plus shipping offers

I explain each point and why I came up with them in more detail in the podcast. As you can see, some things might not work for you (electronics might be something you’re passionate about). But if you’re just starting and have absolutely no idea what products to choose, the checklist is a good place to start.

Resources mentioned:

MyEcomCrew
Treadmill.com
EcomCrew course
How Ezra Firestone Spends Money Growing His Businesses

Thanks for listening to this episode. Until the next one, happy selling!

Full Audio Transcript

Mike: This is Mike, and welcome to episode number 129 of the EcomCrew Podcast. So glad you could join us today for this episode. And just as a reminder, you can go to EcomCrew.com/129 to get to the show notes for this episode. Leave us a comment if you have any. We would love to hear from you. This episode is going to be about picking the perfect product to sell in e-commerce. I often get asked this question.

I actually got asked this question earlier today on another podcast I was recording for someone else, how do you pick the perfect e-commerce product? And then ironically Madeline our new director of marketing was asking me the same thing. I’m like you know what, let’s get on the microphone and record this episode. So it’s going to be all about that. We’ll see you on the other side of the break and we hope you enjoy it.

Hey everyone, welcome to this edition of the EcomCrew Podcast. So glad you could be with us today. And today we’re going to be talking about developing the perfect product. This is something that people ask me all the time. Obviously a lot of people who listen to our podcast are just getting started and they’re in that enviable position of having a clean slate and starting from scratch.

But even if you’re not, one of the things that we’ve been able to do a good job of is pivoting and creating products that have a lot of these characteristics. Over the last few years, we’ve changed our business model significantly. If you think back to when we first got started with treadmill.com for instance as a lot of you know, that was our first e-commerce site. Treadmills don’t follow any of the things I’m going to talk about in here. In fact it’s pretty much the opposite of every single thing that I have listed.

And the way that we pivoted with that business was to sell it and get into something else. And then we got into ice wraps and we were selling other people’s products. I realized that we had to learn a lot more and could develop different products and new things, and eventually realized that we could do something else and pivoted there.

And so over time, we’ve realized that the way to kind of handle this is to learn and adapt and to build. But if I was to say let’s say sell all of Terran, which is our holding company that does everything that we do, if we were to sell all of Terran in some magical world and someone said you got to do that and then the next day come in to work and start over again, what would you do? That’s kind of what this list is. And these are things that we’ve learned over the years. And if I was to develop a perfect product, it would hit all of these things.

And consequentially like basically everything that we do moving forward even though we aren’t going to sell Terran, we have plenty of products that are a good business that don’t fit all of these things. As we move forward we try to have all of these things covered if not all of them almost all of them. So yeah, let’s dig right into the list and start talking about what these things are.

The first thing is small, light, and easy to ship. Again starting with treadmill.com, it was a disaster. Shipping things that are over 150 pounds which means that you have to ship via LTL, which is less than truckload shipping. Not shipping with a common carrier like UPS or FedEx was a total disaster. These guys don’t understand what it’s like to keep an appointment at all. They’ll schedule an appointment for 8:00 AM to noon like a cable guy would, and then show up the next day at 2:00 PM.

This is a disaster when people have taken a half a day off of work and they’re expecting their new $2,000 machine the show up on time, and then they end up having to take another half day of vacation. It just becomes this disaster that we didn’t want to deal with. But over and above that, smaller items, you can get more of them in a container. Lighter items are typically easier to ship. If you get in a situation where you have to do air shipping for some reason, they’re easier to deal with. They fit in flat rate boxes.

These are all really important factors that we’ve discovered after doing lots of shipping. And if you can be really lucky like a lot of my friends that are in e-commerce, if they happen to be sending out packages that are under a pound, you can do that first class and now your shipping costs become a fraction of what they are for me.

It’s ridiculous, I mean it cost 8, 9, 10 dollars to ship certain gel pens because it’s over a pound and it’s under two pounds or right about two pounds whatever it is, but it’s over that magical one pound mark. And we now try to focus on things if we can that are under that one pound mark. Basically the things that you can develop that have high value in a lightweight package are like the Nevada of e-commerce. So again, small, light, easy to ship.

The other thing is hard to damage. It can be small light and easy to ship. It could be a wine glass for instance that’s light and small, but it’s not very durable and it’s easy to break a wine glass. Think of all the touch points that a wine glass has from the minute it’s manufactured till it gets in your customer’s hands.

It’s got to actually get manufactured in a plant in China let’s say, that they’re going to put it in a box which then goes into an outer package crate, which then goes on a pallet which then goes in your container and then it’s going to do that in reverse and go into your 3PL. And then it’s got to be either shipped in somehow in the Amazon, whatever it is LTL or FedEx, and then Amazon is going to handle it and put it in their warehouse and move it around.

And then you got to get it from Amazon to the customer and the customer might return it. And by the time all that happens, the chances of it getting broken are very high. So we look for things that are hard to damage because of all of this. The other thing that we look for is things that don’t have a high return rate. It’s something we’ve learned from selling clothing. Clothing has a high return rate because it doesn’t necessarily fit you or things that have sizes, we’ve tried to eliminate from our business.

This is something new that we’ve learned. Again it’s always a learning process. So I think the ideal thing has one SKU. It isn’t something that has to have a lot of variations or sizes and things like that. I think that that’s something that you want to be looking at as well. Moving on the list here I have something that isn’t a fad. I think of fidget spinners as the latest fad in this industry these days. And fidget spinners are basically come and gone.

You don’t want something that is going to be a fad where it’s here today and gone tomorrow because inventory is basically like investing in gold that’s a liquid. And the only way you can sell your gold is to sell the item. And if you get in a situation where fidget spinners are no longer relevant and you can’t sell them. That’s a pretty painful exit. And we try to stay away from that because of that specifically.

The other thing we look at in a similar regard is seasonal items. I don’t particularly want to be in seasonal items. I know people that sell things like Christmas lights as a for instance, and they do all their business in ten weeks of the year which is good and bad. Some people like this environment. For me, we’re looking to have a normalized business over the course of the year. And I don’t want these crazy spikes and valleys.

But some people like to work three months or four months a year, do all of that and then go fishing the rest of the year. So if that’s your business plan, your business model, that’s perfectly fine. But for us again we’re looking for the opposite, that we want a business that can be 12 equal months if we possibly could. And we’ve gotten pretty close to that because of something like ice wraps that has a summer seasonality, versus our other products which have a Christmas seasonality, we’re able to normalize that pretty well. So that’s another thing that we look for.

Another thing that I’m pretty against is electronics. And this is something a lot of other people talk about. First of all electronics have a UL and other certifications you have to deal with. And while I’m not against certifications, I think that certain certifications can be a competitive advantage, I do think that electronics are bad because electronics change so quickly. Today’s battery charger or power brick is not going to be the same as the one six months or a year from now.

They keep getting smaller and lighter, and more powerful. The same thing happened with treadmill.com. This is one of the things I learned from treadmill.com. Every year there was a new model of treadmill and it was really, really frustrating. And we spent all this time, energy, money, and effort taking photographs and SEOing and doing videos and YouTube stuff, and then the next year the model is obsolete.

So we want to stay away from electronics because of that. Not because I have a problem per se with electronics, but because I want things that are going to be relevant and in their exact same form for multiple years. The next thing is I don’t really want oversized items. Now this is for a different reason than I think a lot of people are afraid of oversized items. But for me it’s a few different things.

First of all again, the shipping is much more expensive, a lot fewer of them fit in a container, getting them in to Amazon is much more complex. Those are the main reasons. Now if you have — we do have some oversized items. These are things that I am willing to bend on. I think that if you can find an oversized item that the profit margins are just too good to ignore, that’s fine. But make sure that you fully understand all of the cost and value involved with shipping and dealing with oversized items. It’s significantly more expensive dealing with those than the standard sized items.

And again you can only fit so many in a container which just kind of ruins your shipping efficiencies when you’re talking about cost per item for shipping. So, something to definitely think about. Now one of the other things we’ve added to our list recently is looking for something that’s consumable. We want a product that ideally someone has to order more of the same. If you’ve already convinced someone to buy one and they enjoy it, it’s way easier to sell them more of the same.

For us it’s things like our pencils and our gel pens. We are working on developing some personal care products in the baby space, things that are consumable. Parents that like that stuff will continue to buy it forever. Other things that come to mind are makeup, and cosmetics and shampoo and these types of things. This is a great market to be in because it’s consumable; people have to buy more of it.

And our marketing tactics lend very well to selling people more stuff. We’re good at email marketing, we’re good at Facebook ads, we’re good at customer retention in general. And I think that this is an important factor that we have started to integrate into our business model now. But if consumable is impossible, its good brother, its half brother if you will would be something that you can sell people more of the same.

So a lot of times if you think of something like a head lamp for instance which we’re going to develop for Tactical, people want more than one of that, which is great. You can put that in your car, in your backpack, in your tool box whatever, that’s really good. Or things that people, at least a brand that people will buy other products in your lineup over time because they work so well together.

So this is kind of a three-pronged approach and if you can get all three of those things that work together that’s great. But at the very least we want one of those things as we’re dealing with it. The next thing is high margins. We are done with low margin products; buying for one and selling for two is not anywhere near our radar anymore. That was kind of like what we were doing as a reseller of other people’s products, and we moved to buy for one and sell for three, and have recently kind of graduated to the buy for one and sell for four model.

But we’re really at a point where we really want to get things that are buy for one and sell for five. We haven’t quite gotten there yet, but margin is the great equalizer. It helps eliminate mistakes. It helps you spend more money on ads. It really helps fuel your business. And selling things at thin margin, competing with people on price, having a race to the bottom and having no perceived value is definitely out of our wheel house now. We have moved on to other products that allow us to have better margin.

The reality is that you’re going to spend the same amount of time developing each product. I’ve talked about this on the podcast before. Every product we develop let’s say has 250 man hours in it, or 500 man hours, whatever it might be. Why wouldn’t we want to yield the absolute most out of our time every single time we develop a product? We want higher margins; we want things that people are going to buy more of the same of.

There are hundreds of products we can develop that fit this criteria, why on earth would we go outside of this and put our money to work and tie it up in thinner margin products? To me it doesn’t make sense anymore. So we’ve moved on from that and are working on higher margin products that help fuel our business even more.

The next thing is the price point. We prefer to be over $25, but under $100. This is something again you can wiggle room this a little bit, but $100 is kind of a magical number. When you get from 99 to 100 or 101, people’s mindset changes significantly subconsciously. And they will think much more about that buying decision than if it was something that is under 100 bucks. Of course the closer you get to 100 bucks, the more people will scrutinize it, and the closer you are to 25, the less they will scrutinize it.

Now we do products that are in this yellow window I call it. So greens like kind of above 25 and under 100, we have this cautionary window that’s above ten and below 25 where we will do it, but we greatly prefer not to. And we want to make sure it fits a lot of other metrics and standards. The reason being again, you’re going to put the same amount of effort into those products than you would of a more expensive product.

So the thing that we look for there is we have to make sure that the volume is there to make up for it. So if we can get a product that is in that 10 to 25 dollar range and it can have substantial volume, we will definitely look into that. The next thing on the list here is something that can be differentiated. We do not want to be a private label company moving forward at all period, end of story. We do not want to go to Alibaba, find a garlic press, put our name on it, throw in a poly bag, and ship it.

That is not our business model at all. It was something we did in the early days. But now we’re looking at things we can differentiate. Can we put our team on it and differentiate it to our business model which is to improve the product in some way but not reinvent it to bundle things in some way but not reinvent it, and also improve the packaging in the user experience to the point where the perceived value is significantly higher than it really is?

And you think of a lot of brands that have done this well like a Coach purse for instance or a Louis Vuitton, something that people are buying basically the same product that’s ten times less without their name on it. But because it has a brand name on it, people are willing to pay more for it. We try to create that illusion if you will. Now obviously we want have a real high quality product.

It’s funny in my mastermind the other day, someone was talking about how as they started to get some money, they bought a really expensive purse, and the strap fell off of it. And they had never experienced something like this before when they were buying cheaper products. So it’s funny that sometimes you buy something for more money and it actually isn’t higher quality. We don’t want to be in that spot. But we definitely want people to differentiate and we want people to like our products and them to have that perceived value if you will.

The next thing is something that people are passionate about. I think this is really important and if you look at the four brands we have, you can see the evolution of when we figured this out. We started – actually it seems like back to the treadmill. People aren’t passionate about treadmills. People hate working out. People don’t want to talk about how they ran a mile on a treadmill today. That is ultra boring; it’s something they’re not going to talk about ever.

Same thing happened with ice wraps. It’s just you’re not going to talk about how you put an ice pack in the freezer and it got cold and that’s a revolutionary thing, and I joke about this all the time. It’s a boring product. And while there’s a spot for boring products and you can make a lot of money selling boring products, it isn’t what we were looking to do with our business moving forward.

We realized that passion is really important. So move fast forward to the new brands that we have; things like ColorIt, Wild Baby and our Tactical stuff. These are things that people are highly passionate about. Why is that important? Well, if you’re passionate about something, you will tell other people about it. Again you’re not going to tell someone about how an ice pack cold, but you will tell them about this amazing coloring book that you got with hardback covers in a spiral binding and the paper is able to be torn out, it’s perforated pages, and the paper is only printed single sided and it’s super thick and durable and blends really well and absorbs alcohol markers well.

The designs are clearly all handmade and they aren’t clip art, and menus are super awesome, and I just colored it and check out my design like look, look, look everyone. That is passion, something that people are really ultra passionate about. They’re going to tell other people about your products at a much higher frequency than something that everyone else is doing and isn’t differentiated, really, really important for us.

Same thing when it comes to Wild Baby. Show me a parent that isn’t just like into their kid, right? Everyone loves to talk about how good their kid is, and how smart they are and all these cool things that they do. Everyone’s kids are relatively the same, but they’re most proud of their kid. And I don’t have kids yet, I hope to experience that. I can tell you I had a similar thing about our dog. I always thought our dog was better and smarter and more obedient or cuter or whatever than other people.

This is just human nature, but people are very passionate about what their kids wear, what they eat, what they put on their skin for good reason. So this is something that we think about a lot more developing new products nowadays. And it’s ultra important to us to develop products that people are passionate about. They’ll share it on social media more. Again, they’ll talk about it word of mouth. They’ll be an advocate for you; they’ll be an affiliate for you. They’ll participate in contests and giveaways and give you user generated content. Passion is ultra important.

The last thing on the list I have here for today for this episode is something that has a direct correlation, Facebook audience. I talk about this all the time as well. Facebook is an interruption marketing platform. So people are looking at something else at that exact moment. They’re looking at kids’ photos or their dogs’ photos or vacation photos or whatever it might be, friends. And all of a sudden you’re hitting them up with a product advertisement.

If you don’t have your advertising done and perfectly to someone who exactly wants that product, it makes it much more difficult. Life is difficult enough already. So we look for things that have a direct correlation to audience. Again, using some of our brands like Tactical. Tactical is a very deep space, camping, hunting, fishing, survivalism, prepping, guns, all these different types of things. All of those things have passion and all of those things have a direct correlation to Facebook audience.

Wild Baby, there is an audience on Facebook of expecting mothers, of mothers with kids from zero to two, mothers with kids of three to five and so forth and so on. There is a direct audience for the exact products that we’re offering that makes it really easy. And the other thing that goes with this is something that has the availability to do free plus shipping offers. This ties in with the advertising.

We have found that free plus shipping offers have rocket fueled our business, something that relates to our brand allows us to offer somebody something for free. Just pay shipping and handling to get them introduced to our brand. We’ve documented what we’ve done with ColorIt many, many times that we have a free plus shipping offer of ten sample drawings. Just pay the 3.99 shipping. It allows us to get our product in the customers’ hands, experience it and have that visceral, oh wow, this is an amazing product feeling.

And it changes the narrative of we’re trying to sell you something to the customer saying, how do I give you my money, this is freaking awesome. So we want a product and a brand that can fit that mold. Again, something like Wild Baby. This works really well for the Tactical space, it works really well for — there are tons of products that have a cost to us of a dollar or two dollars or less that we can ship and create all in and get it in the customers’ hands with a high perceived value that will introduce us as a brand to them and then give us an opportunity to market to them over a long period of time, over multiple devices, multiple moods, multiple bank account balances, et cetera to try to sell them over a longer period of time.

This is incredibly important to us, and that’s the final thing on the list. So we hope you guys have found the stuff valuable. Just a quick plug for our courses. We do have a course that gets into this. You can go to EcomCrew.com/course. But this is the bulk of what we talk about on this particular topic on how to build a seven figure brand and continue to do that through having things that fit these criteria, set yourself up in the position of the greatest possible success.

Again it’s hard enough in business to make money otherwise. I mean having all these things against you like again; I look at treadmill as a business. Now the one thing I do want to mention here is don’t be frustrated if you are already in business and have a struggling business, a somewhat successful business, a very successful business. Whatever it might be, wherever you are on the spectrum and your products don’t fit this, I wouldn’t worry too much about that.

Again this is if you’re starting from ground zero, what can you do in a perfect world? And one of the things that Ezra Firestone mentioned on a podcast he came on and did is you’ll find where you’re at in that situation. Just find something in your current business where you can apply some of these things. You’d be surprised if you sat down and thought about your current business.

If I went back and if I was still doing treadmill.com, and I had a only operate treadmill.com, I could come up now that we’ve been doing e-commerce in this type of marketing strategy for many years, I could come up with tons of ideas of how I can market treadmill.com at a very high price point, a low margin business that’s mostly dropship. How can I do free plus shipping offers and free downloadable content, and do advertising?

I would make other products that are accessories and things that go around the treadmill business. The treadmill would be the long term sales game, but treadmill.com could have a sister brand that works on other fitness and tips and other things that would work really well. So you could come up with this stuff too. It’s very easy and hard at the same time to do, which is a tough combination of things to produce. So again we hope you guys found this interesting. And until the next episode everyone, happy selling, and we’ll talk to you then.

And that’s a wrap. I want to thank you guys again for listening to episode number 129 of the EcomCrew Podcast. You can go to EcomCrew.com/129 to get to the show notes for this episode. We’d love to hear from you. Tell us about some of your products, some of your ideas. Ask us about some of the things that you’re struggling with if you have any ideas about that. Again we’d love to hear from you.

And if you want more information about this, again you can go to EcomCrew.com/course. We talk about the stuff in our courses if you want more information on that. But again EcomCrew.com/129 to get to the show notes. Until the next episode, happy selling and we’ll talk to you then.