What sells online, what doesn’t, and why

Something you need to do before you do any other Market Research when choosing what to sell online, is to assess whether or not that product is likely to actually sell online.

This has nothing to do with researching Demand, Competition, Price Point, Profitability, or anything like that.

The simple fact is that some products just don’t sell well online, for a variety of reasons. “Qualifying” a product is what we do to figure out whether it will sell well online or not, BEFORE we spend time researching the product in depth.

To Qualify a product, we look at two things: Demographics, and Points of Failure.

Understanding the Demographic

Understanding the product’s likely Demographic is the first thing we do in the Qualification process.
As we’ve talked about before, the word “Demographic” simply means “Statistical characteristics of a population”. In Ecommerce marketing, when we say “Demographics”, we’re referring to the characteristics of the people who might buy what we’re selling.

Some of those characteristics are Gender, Age, Income, Location, Career, Home Ownership/Rental, etc. Having a good idea what these things are helps us decide what other characteristics they might have.

For example, older people are more likely to be homeowners, likely to be more financially stable and are likely to be able to afford more expensive purchases. They’re good candidates for higher quality, more traditional products.

Younger people are more likely to follow popular trends but tend to have less money, so they’re better candidates for slightly less expensive but trendier products.

There are products that cut across all demographics to some degree or other, and products that are very specifically targeted to just one particular set of demographics.

Forming a picture in your mind as to who might buy the product you’re thinking about selling is extremely important, as you’ll see in this Lesson.

Points of Failure

Points of Failure are reasons why a product simply doesn’t lend itself well to selling online.
In this Lesson, we’re going to Qualify our potential product choices using some Demographic assumptions, and the 5 most common Points of Failure:

• Market Segment
• Size
• Integration
• Visualization
• Urgency

Let’s go through these Points of Failure and explain what they basically mean.

Market Segment

For our purposes, we’re concerned with three potential market segments. They are:

o Consumer – a product that’s designed for use by the average consumer.
o Prosumer – a product that’s designed for use by consumers who are semi-professional users.
o Commercial – a product that’s designed for commercial/professional use.

Size

This refers to a product’s actual physical weight and dimensions. For example, products that weigh more than 150 pounds are over the standard UPS, FedEx and USPS shipping limits and have to be sent using special delivery methods.

Those special delivery methods (Motor Freight, LTL [Less Than Truckload], etc.) are more expensive, and their pricing changes weekly as fuel prices fluctuate. This makes it impossible to provide your customers with standard shipping rates, and that causes problems with customer service and sales.

Integration

Integration refers to whether a product is a complete product in itself, or if it is a component that has to be integrated with other components from other sources in order to function.

For example, a BBQ Grill is a complete product in itself, and can be sold without worrying about potential Integration. However, outdoor BBQ grill components that are designed to be built into a brick BBQ enclosure are not complete products in and of themselves. Somebody has to build the brick enclosure and Integrate the components into the enclosure in order for the BBQ to be used.

Visualization

There are products that people are willing to buy without seeing and touching them, and there are products that people are not willing to buy without doing those things.

For example, it’s very difficult to sell Wedding Rings online. The Bride and Groom want to see the rings, inspect the jewels, try them on, have them sized, etc.

If a consumer can easily Visualize the product and doesn’t feel like they need to see and touch it physically before buying, that product doesn’t have a Visualization problem. Otherwise, it does, and is not a good candidate to sell online.

Urgency

There are products that people are willing to wait for, and there are products that people feel they need RIGHT NOW.

There are also situations in which a single product can be both Urgent, and Non-Urgent. That depends on the consumer’s frame of mind at the time of the need. The best potential products are those that don’t generally associate at all with a sense of Urgency.

Understanding who is likely to buy the product (the Demographic) goes a long way toward telling us which, if any, of these Points of Failure might apply, and whether they apply enough to decide against selling the product online.

Applying a simple numeric 0 through 5 rating system to each Point of Failure is the best way to Qualify a product overall. 0 (zero) would be no impact at all, and 5 would be maximum impact, and an automatic disqualification of the product.

The “CIP (Cumulative Impact Point) Score”

Use the following system to apply a “CIP Score” to each of the Points of Failure when Qualifying your product:

Market Segment:

Consumer = 0 points.
Consumer products reach the widest possible consumer base. The fact that a product is a general Consumer product has no negative impact on its likely sales online.

Prosumer = 2 points.
Prosumer products reach a narrower consumer base and require specialized knowledge to sell, which makes them a less likely candidate for the widest possible consumer audience and creates a higher level of difficulty in sales.

Professional = 4 points
Professional products reach a MUCH narrower consumer base. These products require professional handling and expertise to use or install. Professionals who use them most likely already have their own physical-world suppliers, and they’re much more difficult to sell online.

Size:

0 Points if the product is under 150 pounds and the shipping dimensions are within UPS, FedEx and USPS limits.

5 Points if the product is over 150 pounds or over any of the UPS, FedEx and USPS limits on shipping dimensions (size of box, etc.) This is an automatic disqualification.

Integration:

0 points if the product is stand-alone and no integration is necessary.

1 – 5 points if the product has to be built into or integrated into something else in order to function, with 1 point being simple integration and 5 points being something that has to be built into another type of product or enclosure in order to function. 5 points is automatic disqualification.

Visualization:

0 points if consumers regularly buy the product online and there is no need to “see and touch” the product.

I – 5 points if the product is something that consumers may feel a need to see and touch before buying, with 1 point being the slightest need, and 5 points being an absolute need. 5 points is automatic disqualification.

Urgency:

0 points if there is no urgent need to have the product in hand right away.

1 – 5 points depending on the potential need of the consumer to want to have the product in hand with some sense of urgency. 5 points is automatic disqualification.

Ideally, the product line you choose would have 0 (zero) CIP Score, which means it scores 0 on all Points of Failure.

Let’s go through a couple of examples of Qualification.

Example 1

PRODUCT:
Consumer-style Portable Hair Dryer

Demographic:

The basic demographic for this product would likely be women ages 15 and over of all income levels. While men do use portable hair dryers, it’s fair to assume that they are mostly purchased by women.
This demographic is very basic and wide. The product is generally not very expensive, and a tremendous number of people use them.

On the surface, this seems like a Qualified product, but we haven’t done a CIP Score yet.

CIP Score

Market Segment = 0 points.
This is a Consumer product, not Prosumer or Professional, so this gets 0 points for Market Segment.

Size = 0 points.
This product is well within weight and size limits for UPS, FedEx, and USPS, so it gets 0 points for Size.

Integration = 0 points.
This product doesn’t have to be integrated into anything else in order to work properly. Just plug it in and use it. So, 0 points for Integration.

Visualization = 0 points.
This is a widely used product that most people are very familiar with. There’s no need to “see and touch” the product before buying, the point score for Visualization is 0.

Urgency = 4 points
When we think about urgency, we have to think about how soon someone feels the need to have the product in their hands. Let’s look at it this way: WHEN do women buy a new hair dryer?

Usually when the one they currently have breaks.

How many women do you know who are willing to walk around with bed-head while they wait 4 days or more for UPS to deliver their new hair dryer?

I don’t know any. The woman whose hair dryer just broke wants a new one NOW, and she’s going to scoot right down to Wal-Mart or the nearest drug store and get a new one right away. So for me, Urgency is a big negative impact on considering this product for sale online.

Total CIP Score = 4 points.

In this example, the Total CIP Score for me is 4 points. Yes, I know that sites do offer hair dryers for sale online, but in my experience that’s simply big box stores who have the product in inventory anyway, and might as well list it on their web sites.

What we’re looking for here is a niche. We’re looking to build an entire web site around one single product niche.

Do I think I could build a successful online store selling only Consumer Portable Hair Dryers? No, because the Urgency score puts it out of reasonable consideration for me.

How did I come to the conclusion that Urgency was a factor? Because I took the time to think about whom my Demographic is. If my Demographic was mostly men, I might have given this product a lower Urgency score, because men are often okay without a hair dryer for a few days. They just need to know where to find the hair gel and a comb.

Women, though, react differently in that situation, and that’s why the high Urgency score.
Even though the Total CIP Score was not a 5, meaning automatic disqualification, it’s high enough that it’s not worth messing around with for me.

Example 2

PRODUCT:
Build-in BBQ Grill Components

Demographic:
These products are the grill, fridge, drawer and shelf components that get built into an outdoor brick or stone BBQ enclosure.

The demographic here is likely a male homeowner who earns a mid to high level of income and does a fair amount of entertaining in his home. He’s currently involved in some type of outdoor home remodeling. He’s probably not doing it himself, since stonework or bricklaying required to build an outdoor BBQ enclosure is a specialized skill.

The particular demographic that would buy these products is extremely narrow overall. I already know which way this is going to go just by looking at the products and thinking about the demographic, but I’m going to do a CIP Score anyway, because real business owners are nothing if not thorough!

CIP Score

Market Segment = 4 points.
This is a Professional product. It has natural gas fittings, so it needs to be installed by a professional even if the buyer knows enough to do the brick or stonework himself, so this gets 4 points for Market Segment.

Size = 0 points.
These are components shipped in separate boxes, so they are well within weight and size limits for US, FedEx, and USPS, so it gets 0 points for Size.

Integration = 5 points.
This product has to be fully integrated into a custom-built enclosure made of completely different materials, so this one gets 5 points for Integration, which is an automatic disqualification.

Visualization = 2 points.
This is a specialty product that will be built into a custom enclosure. However, since I have to assume that most buyers are working with professional installers and have probably seen samples and been given sizes, I would score Visualization at 2 points.

Urgency = 0 points
This is a part of a construction project, and as such there would not be much of a level of Urgency. Most people plan for delivery of components in construction projects when they’re ready, so I score Urgency at 0 points in this case.

Total CIP Score = 11 points.

In this example, the Total CIP Score for me is 11 points. This is WAY over the disqualification score of 5 points.

Example 3

PRODUCT:
Airline Pet Carrier

Demographic:
I see the demographic for this product as about age 25 and older, since people who both own pets and tend to travel enough to bring them along have a more stable home environment than people under 25. Although we’d probably be dealing with more women who would actually use the product, we’re probably dealing with more men (husbands, likely) who would be making the actual purchase. That’s simply because most women tend to defer to men to get the technical details figured out.

Nothing against women, who are more than capable of doing that, but that’s just the way it tends to play out and we have to be honest with ourselves about this research if we’re going to get it right.
This demographic would probably skew a little more toward people without young kids, or kids living at home. People with young kids living at home tend to travel more locally by car for vacations, and they tend to leave their pets at kennels when they travel.

People who are older who don’t have kids living at home become much more attached to their pets and want to take them everywhere they go.

So, while the demographic would include people 25 and up, the actual buyers probably skew more toward men age 45 or higher.

This is also a product that has an emotional component to the demographic, because of the often close emotional bond people develop with their pets. That means that the likely buyer will often be willing to spend more money to insure the comfort and safety of the pet.

On the surface, this looks like a Qualified product already, but let’s do a CIP Score to be sure.

CIP Score

Market Segment = 0 points.
This is a Consumer product, not Prosumer or Professional, so this gets 0 points for Market Segment.

Size = 0 points.
This product is well within weight and size limits for UPS, FedEx, and USPS, so it gets 0 points for Size.

Integration = 0 points.
This product doesn’t have to be integrated into anything else in order to work properly. Let the pet in and go! So, 0 points for Integration.

Visualization = 0 points.
This is a widely used product that most people are very familiar with. There’s no need to “see and touch” the product before buying, the point score for Visualization is 0.
.
Urgency = 0 points
While it’s possible that once in a while somebody would need an Airline Pet Carrier on short notice for an emergency trip, that’s not reason enough to give this product any points on the Urgency scale. Most people who are getting ready to travel know well in advance, and buy their tickets well in advance to keep their prices down. So I score Urgency at 0 points in this case.

Total CIP Score = 0 points.

In this example, the Total CIP Score for me is 0 points. This is a perfectly qualified product with regard to Demographic and Points of Failure.

Learn it and Use it!

Make absolutely sure you understand exactly how this process works.
When you get involved in Market Research, the best practice is to research several different product markets at once in order to choose one new product line for your business. Use this process every time you get into Market Research. It allows you to create a scoring system that can quickly and easily compare the likelihood of being able to sell the product online.

How do I know all this stuff?

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Friday, November 7th, 2014 Surviving EBiz

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