e-commerce business

Effective Product Research for E-Commerce: Using Excel to Evaluate Potential Products

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Doing thorough research before launching a product is crucial for any e-commerce business. In this text, we will discuss a systematic approach to product research using an Excel spreadsheet. We will explain why it’s important to focus on products that sell more than 150 times a month and why seasonal products should be avoided in the beginning. We will also explore various criteria to consider while researching potential products such as demand, size and weight, variants, selling price, start-up capital, complexity, and competition. By following this approach, 22Bet Argentina can make informed decisions and increase their chances of success in the e-commerce business.

The best way to do research is to create an Excel spreadsheet in which you enter all the products that sell more than 150 times a month. Why exactly 150? The launch of a product initially requires work and capital. If an already established product sells less than 150 times or the entire niche is in this area, the potential is simply too small. In fact, the labor and capital required will be no different than developing a product with 300 orders per month.

Systematic product development is always linked to the same steps and most manufacturers do not accept orders of less than 500 pieces. So if a product sells 100 times a month, you would severely limit your cash flow and unnecessarily tie up capital to goods that also cause higher storage costs. The goal should be to always have stock for 1-2 months. This gives you enough time to reorder, does not go out of stock and does not tie up more capital to goods than necessary. E-commerce with physical products is a very cash-flow intensive business, which is why you should always keep an eye on your liquidity and plan ahead.

At the beginning you create an Excel spreadsheet in which you list all potential products. This is important because in the second step the products are checked using various criteria. In the end, the right product is filtered out and you can continue with the patent research, the USPs and the product calculation. That’s how it works: 

Demand: If a product has no existing demand, you increase the risk of making a bad investment. Demand can be checked by niche by typing the main keyword into Amazon and applying X-Ray to the result page. This gives you a tabular overview of all products and their key figures on the first page. The depth of the market and the number of sellers do not play a role in the evaluation. If there is sufficient demand, you will also be able to launch successfully with better unique selling propositions. 

Size & Weight: The heavier and larger a product is, the more expensive it is to ship. You should be aware of that, but it is not a criterion for exclusion. Only with the rough product calculation will it become apparent how much start-up capital is required. Larger products may also require more capital to procure the goods. 

Seasonality: Some products, for example, sell more often in winter than in summer and vice versa. This means that the sales success is linked to a season. Anyone who is just bringing their first product onto the market should rather not focus on seasonal products in order not to take any risks at the beginning. You can find out the seasonality of a product via X-Ray (click on the listing and check the sales history) or Google Trends.

Variants: If you buy e.g. clothes, you can usually choose the size and maybe also the color within the listing. That’s called variants. A product is therefore available in more than one version. The more variants there are, the more complicated inventory planning becomes. A T-shirt with three sizes and three colors already gives 9 variants! If variants are essential, it is best to limit yourself to a maximum of 5 variants for an attribute (e.g. color or size). Remember, this is still a listing. Variants increase the effort, but not necessarily the sales.

Selling price: The more expensive a product is, the higher the purchase price and profit are usually. The impact of price on sales depends entirely on the niche. For example, there are markets in which premium products are very popular, while interested buyers in other niches are more likely to look for the cheapest offers. The price category for a product also depends on the available financial resources.

Start-up capital: Although you cannot directly read how much a product costs to buy on Amazon, you can estimate the rough costs. As a rule, the purchase price is around 25 percent of the sales price. If you multiply this number by the monthly sales, you get the approximate investment for 30 days of stock. If the result exceeds the available start-up capital, this product is eliminated. 

Complex products: In principle, one should not exclude products based on prejudice or principles. Nevertheless, there are categories that are less suitable for the beginning, since extensive certificates or guidelines have to be observed. This includes all products over 18, food and supplements and, above all, electronic products.

Competition: One of the most important factors in research is competition. Listings and ratings are particularly relevant here. The more good reviews the competition has, the more difficult it will be at the beginning. Another criterion is the optimization of the competition. If this already has a top optimized listing with good ratings, it will of course be more difficult to get started. Nevertheless, it again depends on the USPs of the product and the general demand in the market. If the competition does not have an optimized listing or even bad ratings, this is an ideal opportunity for a successful entry into the market.

After you have checked each product or niche for these properties and recorded the results in the Excel table, you only have to decide on a product. Especially at the beginning it can happen that there is no suitable product in the table in the first rounds. This is completely normal and should not discourage you. The product research can take some time, after all it forms the basis for all further steps and the success of the first product.

In conclusion, conducting thorough product research is crucial for the success of any e-commerce business that deals with physical products. The use of an Excel spreadsheet to list potential products and assess them based on various criteria such as demand, size and weight, seasonality, variants, selling price, start-up capital, complexity, and competition is an effective way to filter out unsuitable products and identify the right one. It is important to keep in mind that e-commerce with physical products is a cash-flow intensive business, and planning ahead and managing liquidity is key. Additionally, patience is required as product research can be a time-consuming process, but it forms the basis for all further steps and the success of the first product.