One of the first questions people struggle with when they want to start a business is finding the right product to sell.
Market research has shown that people often take too much time researching the brands/products that they want to sell leading to procrastination and second thoughts.
Hopefully after reading this article, you can have a clearer picture of what are the important aspects to look for when finding a product, which could help cut down on the time you spend deciding what product to sell.
The Different Phases for Brands
There are a few categories of brands, they are separated by their level of marketing presences and brand perceptions. Some brands, being established, are dominant in the market while others are continuously rising, aggressively winning market share to further secure their brand’s place.
Established brands are brands proven for demand and have huge marketing dollars invested in over a significant amount of years. Whether globally or domestically, they already have a firm market share on the industry.
Reselling products from an established brand revolves around the association of the reseller’s store to the brand. To sell effectively, the reseller would revolve a strategy to switch consumers’ loyalty from existing vendors that often results in higher spend, lower margins dilemma due to market saturation.
Think Nike, Adidas, Underarmour
Trending Brand (Brands that are growing rapidly)
Trending brands are brands that are still proving for more demand. They will seek to increase marketing dollars spent in attempts to reach their peak on the market share within the industry.
With the momentum for demand, resellers are able to leverage on the growth and fulfil the surge for demand. Imagine getting the coveted first-mover advantage and selling products from a brand that does collective marketing, resellers can generate sales and acquire new customers with minimal marketing.
Likely, the barriers to enter as a reseller will be low as a response to an attempt to win market shares aggressively. Having almost similar advantages with other resellers/competitors, it will be a race to outperform each other based on sales performance and territorial dominance. Indubitably, the top performers would be rewarded duly as the brand grows.
Rigorer has since been well-loved in China, Korea & Singapore, already having over 3 million customers and over 400 million in sales. With their support and sponsorship for basketball associations, the brand is actively engaged in the basketball community in numerous regions and looks to make an even bigger impact on the community.
OEM exist to fulfil demand from the product functions’ perspective. Usually the cost-leader in the industry and they prefer to position their products like commodities.
OEM often allows white-labelling, giving freedom in customisations, the option to include your own labels and even add-on features. Ultimately, products in this category are price sensitive and slight changes in margins/costs are often game-breaking. Resellers can even further customise their products to suit the needs of their customers and market accordingly as a brand of their own.
Your target audience
Understanding who your products appeal to will be crucial in your business. Products you are selling would determine the main demographics of your audience and ultimately where they are purchasing from.
Luxurious products are sold with a huge mark-up at the expense of scarce-marketing. They are produced exclusively and marketed with limited stocks. Their value brings about exclusivity and status.
Mid-range products are constantly compared and benchmarked at in order to show value to their consumers. Pricing amongst competitors are usually similar with small differences in margin and tend to stand out by a few key differentiators. Differentiation can include branding, features, aesthetics and alternate functions.
Products in this range does not mean that the cost is low, it could just mean lower margins at the absence of a much differentiated branding; functions etc. Often marketed as no-frills and brings the most bang for a buck. Naturally, competition is usually based on prices with slight differentiators on the brand.
Think FMCG products like batteries…
Products related to tech and yet of no consideration on tiers could mean that the product was innovative and probably patented. Most tech products today would tie into services which then further categories by tier else they focus on post-sales services for their customers.
Calculating profits & margins
Margins or profit margins represent what percentage of sales has turned into profits. Simply put, the percentage figure indicates how many cents of profit the business has generated for each dollar of sale.
For instance, if a product has a 35% gross profit margin, it means that it had a gross income of $0.35 for each dollar of sales generated.
To calculate the Net Profit Margins, you will need to expand further by including your variable and fixed costs.
Costings to consider:
Cost to ship - are fees that are incurred when you purchase products overseas. Fees are usually determined by the weight and the general bulkiness of the shipments and is further optioned to either air freight or sea freight.
Cost to fulfill - are fees that you might incur when fulfilling your customers’ orders. Mostly charged by the volume of orders and it gets cheaper with higher volumes. Check with your local couriers/logistic partners for rates and coverage.
Cost for idling inventory - occurs when products are hoarding spaces for too long, preventing additional new inventory to hold. Though not easily measured in dollars and cents, it’d be best to factor in space and product turnaround so as to not over purchase and end up with idling leftovers.
Found the perfect brand, product with favourable margins? It is time to go more in-depth what other factors to consider:
Minimum Order Quantity (MOQ) - Depending on the distributor/manufacturer, a MOQ can be imposed on the reseller, requiring them to buy in a fixed amount of inventory either each order, each month or each year.
Copyright - Most brands have copyright clauses that ensure trademarks and marketing materials are not misused. Often, it is a collective way to protect the brand’s image. Certain brands have regulations that control how marketing materials are being used which could lead to less freedom in a reseller’s marketing strategies.
Ease of doing business - Depending on the native country, it is much preferred if a common language is spoken throughout the conversation. Ideally, the ordering process should be smooth with minimal follow-ups.
Have you found the right products to sell?
Hopefully this article has provided you some useful information on the various types of brands and what kind of products are available to you on the market. We do hope that we helped narrow down the decisions and helped you single out the more important decisions to make when selecting a product to sell.