As a small business owner, you may want to start selling products online. According to the U.S. Census Bureau, e-commerce sales in 2012 were 5.2 percent of all retail trade. Of that, 4.4 percent was from non-store retailers. You probably don’t have endless cash or a logistics department to compete with major retailers. With all the choices, which products are best for your small business to sell online? Researchers have studied online selling, and the Census Bureau collects retail sales data -- findings which can help guide your choices.
Fashion, collectibles and electronics do particularly well in online sales. According to the U.S. Census Bureau, in 2012 the five top-selling categories of products from electronic shopping and mail-order houses were clothing and accessories, other merchandise (collectibles, souvenirs, auto parts, and jewelry), electronics and appliances, and furniture and home furnishings. These categories are fairly broad - but when we take a closer look, products sold online have common characteristics.
Products marketed successfully online have some similarities, according to a study published in the journal Decision Support Systems. Tangible products that can be accurately described with a written description and photographs are good choices. This makes it simple for potential customers to see what they are buying without having to touch it, try it on or test drive it. For example, clothing stores provide a standard sizing chart for each brand of clothing they sell. This makes it easier to decide if an item will fit properly. These products don’t require a lot of effort to purchase. For example, a shopper might purchase an off-the-rack shirt online, but will visit his tailor in person to be fitted for a custom-tailored suit.
Price matters. The item shouldn’t be too expensive or too cheap: Online retail site Shopify suggests an optimum price range of around $75 to $150. Consumers tend to want to examine more expensive products in person.
Finally, competition is intense in the online shopping world. A good product is one that is unique and stands out from its competitors, and that can’t be easily bought in local stores. Shopify gives the examples of luxury toothpicks and high-end playing cards. Hand-crafted items can be sold online either from your personal website or an online storefront on sites like Etsy, eBay and Yahoo.
Digital products include photos, electronic books, digital artwork and software programs. The U.S. Small Business Administration calls these items "soft goods." Other soft goods are training products like videos and recorded lectures. Many entrepreneurs make a living selling their artwork or books online. These can also be the easiest products to handle online because they require no physical storage and no shipping costs. Your production costs will be for the time it takes to develop each product and for the website itself.
If you sell physical items that must be shipped to your customers, choose ones that are easy to package and transport. Small, lightweight and durable items such as jewelry or folded clothing can be boxed up securely and shipped at low cost with little risk of damage.
Many consumers expect free shipping because it is offered by large online retailers. The U.S. Postal Service and other courier services offer small-business rates, including returns. Determine what your products would cost to ship, and mark up the sales price enough to cover those costs.
Products alone will not sell themselves: presentation, customer service and marketing are important. Keep your business plan and market niche in mind when choosing products for your store. Any products should fit in with your brand image and take advantage of market trends.
Items that don’t sell well online, especially to first-time buyers, are generally those that need to be touched, smelled, tasted, tried or test-driven. Consider your target market as well. If your typical customers are senior citizens who don’t tend to shop online, they likely won’t buy your product online.
- U.S. Census Bureau: Monthly and Annual Retail Trade, Latest Annual Trade Report
- Shopify E-commerce Marketing Blog: How to Find the Perfect Product to Sell, by Mark Hayes
- U.S. Census Bureau: E - Stats - Measuring the Electronic Economy
- Decision Support Systems: Marketing on the Internet - Who Can Benefit from an Online Marketing Approach?