Part 3 : My Ideal Product To Sell Online
When it comes to starting a business, often times the advice about finding a “product-market fit” or making sure that there’s market demand reached out to my ears. Granted, it’s a common sensical advice. Why sell something that people don’t want?
However, I often noticed that there’s little, yet equally important part that wasn’t given much emphasized upon, which is the supply aspect. The ability to supply the goods demanded by the market is an important one, because you’ll need resources in various forms to produce and deliver the products.
Which is why I realized that before I put forward my feet into the realms of market research, I first need to establish my strengths and weaknesses, and my capacity and ability to supply the future goods that my business will sell.
Due to the fact that I’m planning to run a side-hustle business, there are few constraints or limitations in how I would run the business, such as:
- Time: I’m currently holding a full-time job working 9 to 5.30PM (excluding commute, which totalled about an hour thirty minutes back and forth). By the time I reached home, it’s almost 7PM. I would need about 6 hours of sleep every day or else I won’t be able to function normally. As such, my weekdays left only a few hours for me to work on my business. I could take some time during my working hours to work on my business as well, but it depends on my workloads and how much spare time I have. However, my weekends are mostly free for me to work on my side-hustle.
- Money: As someone born without a silver spoon and a recent fresh graduate with a junior executive’s salary, I don’t have thousands of Ringgit in my bank account that I could use as a capital to start my business, which mean I could only start with a few hundred Ringgit and build up from there. I’m also wasn’t sure or planned to attract external funding as of now.
- Knowledge: I’m generally literate when it comes to business related matters (read: Online business), having gained knowledge from both my formal and informal education, and past experience as well. However, I have little to no specific skills or know-how towards any particular expertise. For example, I don’t know how to bake, so if I plan to start a homemade bakery business, I would need to equip myself with such knowledge first before I could start the business.
The above constraints requires me to visualize my “perfect” or an ideal product to sell. A saleable product, or products that would fit in nicely into my daily routine without me having to disturb other life components that I currently have. A product that I would be able to manage as an operator while fulfilling the demand of the said market. That’s the ideal product.
So here’s some of the product criteria checklist that I would want to sell. By no means this is an exhaustive list nor its absolute requirements, but it helps me to follow the logic around this checklist and evaluate future product ideas.
Note: The checklist below is seen through the supply side, not demand.
- Small and lightweight: The product, preferably has to be both small and lightweight, mainly to combat the logistic and storage issue. In eCommerce, shipping fees are one of the main reasons for abandoned shopping carts. High shipping fees also correlates with product size and weight. The heavier or bigger the product, the higher the cost. Large size product means more space taken inside the delivery truck, eating up space within the truck — space which could have gone to another paying customer. In order to compensate for the items unable to include into the truck, they would charge a lot more for the large item. As for storage, my house is the only place currently available to store my products, and the spaces available aren’t plenty. Lightweight product also prevents me from getting sore arms trying to lift them up, and help save time as I could carry many quantity at ones.
- Non-food/perishables: I’m still considering on whether or not to sell food products. Here in Malaysia, Malaysians are generous with their spending when it comes to food. Many micro businesses sell food. It seems like a good idea to build a business upon this observation and generate quick income. However, the problem with food business lies in its perishability. Food doesn’t last long, some last only a matter of a few weeks (For some food, days). Supply-wise, I’m on a risk of having unsold products that would be gone forever, causing me a loss. Another problem is production. There are two ways on how I can sell food products; make it myself or outsource. The former requires some knowledge on making the product, which I don’t possess. I have basic cooking and baking skills (Refer to the “Constraints” point above). The latter would be much easier, but finding a manufacturer to produce the food comes with a risk of health hygiene and regulation constraint.
- Non-complex/technical: As as side-hustle business, it’s imperative that I don’t use too much time managing the business, which means that the business has got to be, in some ways, ran itself without me having to participate in every operational aspect. A complex or technical product means I need to always talk to the potential customers/buying customers about the product features and usage. That is not an ideal business to be in. I remember working with my current company, and we’re trying to find a software product to buy and use for one of our business. We asked from a few software companies and it took months for us to figure out the product features that we want and the how-tos of using the product. I need a product that doesn’t have this problem. Something as straightforward as a piece of clothing. You don’t need a user manual on how to wear a shirt. I plan to have my own website with a dedicated Q&A page where the public could find all the information they needed from that page alone.
- Scalability : In every business, there are two possible scenarios on each end, worst and best. For the former, a worst case scenario is lack or no sales, which could lead to the cessation of the business. As for the latter, there’s a lot of sales, maybe too much to the point that the demand outstrip the supply. Having considered this two scenario, I realized that my product need to be able to seamlessly adapt to the demand, without having to disrupt much of the operational aspect. For example, if I were to run my own homemade baking business, the quantity or amount of the product is directly correlated to how much time I spend in the kitchen. More orders means more time is spent baking, and that’s less than ideal. It’ll create a ripple effect across the supply chain and it won’t be sustainable. Having said that, if I intend to sell physical products, scalability will always be an issue. If I were to use a manufacturer, I may have to buy in a lot of quantity and manufacturer usually have a minimum order quantity (MOQ) that is required to be purchased at one time. There’s no guarantee that I would be able to sell off all of my inventory (Which is usually the case).
- Regulation friendly: A product that requires me to pass any form of regulation is something I prefer not to sell, as it almost always mean that I need to fork out substantial amount of money to get an approval prior to me selling the product. Think cosmetics, a product that needs to pass safety regulations before you can sell to the public. Of course there are businesses who just doesn’t care and would sell their products regardless, but this is not a behaviour I want to adopt. Regulation helps to safeguard the wellbeing and rights of the consumers, so either I conform or sell other things.
- Limited number of product variants: I don’t want to carry an inventory of a product that has 50 different sizes and color combinations. First, it’s going to cost me way too much money to purchase my initial stock, which is risky. Second, things start to get too confusing and complicated trying to manage inventory for many products and it increases the chances of customers getting wrong versions, sizes, colours, etc. that will end up costing me time and money to correct. Ideally, I want a product that has no more than 15–20 Stock Keeping Units (SKUs). I want to keep it simple and help my customers decide by limiting the choices for them. Less is more. (Credit to this blog post).
- Markup: Markup is important. There are lots of little fees that will eat away my profit margins, so I need to be able to cover those costs and still make a decent profit. It has been recommended by other professionals to choose a product with a minimum of 5–10x markup. So if the product retails at RM20, the unit cost should be around RM4 or RM2. (Credit to this blog post)
Once again, the purpose of this evaluation is not to try to find an eCommerce product that fits into as many categories as possible. It’s about organising my thoughts around some key points and bringing to the surface some information that I may miss out or overlook upon. God-willing, in the next post I will talk about the demand side of the ideal eCommerce product to look for.