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How to Find and Validate Winning Products: The 16 Step Product Research Guide - YouTube
Channel: Learn With Shopify
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choosing the right product for your
[1]
ecommerce brand is one of the most
[3]
important pieces of the puzzle
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but how can you tell that you have the
[6]
right product well you can't really tell
[8]
until you validate your idea and that's
[10]
why one of your first steps
[12]
should be making sure that you've picked
[14]
a winner now if you do skip this step
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you run the risk of wasting your time or
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even worse you run the risk
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of sinking a bunch of money into
[22]
products that people aren't willing to
[23]
buy
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so to avoid all of that this video is
[26]
going to teach you how to properly
[27]
validate your product idea these 16
[30]
questions will help you gauge whether
[31]
your product is viable
[33]
so that you can enter the market
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[Music]
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confidently
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if you have just stumbled upon this
[47]
video welcome to learn with shopify
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this is a channel for small business
[51]
owners that are really looking to start
[53]
and grow their ecommerce business so if
[55]
you're an entrepreneur definitely
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consider hitting that subscribe
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button we have tons of great content
[60]
that covers
[61]
every aspect of running an online
[62]
business so without further ado let's
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just
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hop right into it here are
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16 questions that you can be using as a
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framework so
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for this i'm just going to be using a
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coconut hair mask as an example
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but you would just plug in your own
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product okay so our first few questions
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are going to look at the market as a
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whole
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what is the potential market size or
[84]
demand
[85]
you're going to want to look into this
[86]
before you invest a lot of time
[88]
money or energy into an idea and this
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can be as simple as using a service
[93]
like buzzsumo so buzzsumo will show you
[96]
how many people are talking about your
[98]
product
[98]
per day but by far the most popular tool
[100]
is google keyword planner tool
[102]
it's a free tool which will help you
[104]
determine how many people are searching
[106]
for specific words
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each month using google and you're going
[109]
to want to use this tool to search words
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that are related to your product idea
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so we use google keyword planner tool
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for our coconut oil hair mask
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and it looks like there are over 73 000
[120]
searches per month
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and then using buzzsumo we were also
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able to determine that there were about
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150 tweets per day mentioning our main
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keywords
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now this information doesn't give us a
[131]
hundred percent certainty that our
[132]
product will have buyers
[134]
but it is a vote of confidence that
[135]
there's interest out there
[137]
next you're going to want to do some
[139]
research on who your competitors are
[141]
the more you understand about the
[143]
competitive landscape beforehand
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the less surprises you'll face later so
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research your competition
[149]
on google especially in the countries
[151]
that you plan to sell in
[152]
let's hop back into our example so we've
[155]
done our research
[156]
and from our analysis we discovered that
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there are three areas of competition
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pure coconut oil like the kind that you
[162]
would find in a grocery store
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diy recipes and commercial products sold
[167]
by large businesses
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for us we didn't find any true market
[170]
leaders for our hair product
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but instead we found a very fragmented
[174]
market of manufacturers and retailers
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so we don't have the full picture yet
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but this may indicate some opportunity
[180]
for us
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is it a trend fad flat or growing market
[186]
just as important as knowing your
[187]
potential market size it is also
[189]
important to understand
[191]
which direction the market is going the
[192]
last thing that you want is to realize
[194]
that you've actually missed the boat and
[195]
the market is
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rapidly declining right so for our
[198]
product we know from google trends that
[200]
the search interest has grown
[201]
significantly
[202]
over the last several years but even
[204]
though coconut oil is trending as of
[206]
right now
[206]
the beauty industry is always going
[208]
through marketing shifts that push new
[210]
ingredients as breakthroughs
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so it's important to recognize that at
[214]
some point in time
[215]
this trend may die out and that will
[217]
obviously cause a decrease in demand so
[219]
if you're not sure whether a trend is
[221]
going to continue upward or die out
[223]
just do a bit of research and use tools
[225]
like trend hunter
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also a lot of entrepreneurs report on
[228]
using just their gut instinct when it
[230]
comes to capitalizing on a trend
[232]
so your intuition can be valuable as
[234]
well
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can your potential customers buy the
[237]
product locally so
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if your product is readily available
[241]
locally
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that's just one less reason for people
[244]
to seek your product out online so let's
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go back to our example
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coconut oil as a raw ingredient is
[250]
pretty widely available
[251]
online and offline but coconut oil based
[254]
hair care products
[255]
are definitely much more scarce offline
[258]
and it would likely require a specific
[260]
trip to find it
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so if you're also finding that your
[262]
product is hard to find in stores
[264]
then that's definitely a good sign who
[267]
are your
[268]
target customers before you fully decide
[270]
on a product
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it's important to get a sense of who
[273]
your potential customers are
[275]
you don't want to find out too late that
[276]
your potential buyers are living
[278]
somewhere that you can't ship to for
[279]
example
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so if you're in a market that has major
[282]
players you can use channels like
[284]
alexa to find out more about the
[286]
demographics
[287]
of your target market but in our case
[290]
it's definitely a little bit more
[292]
difficult because there aren't really
[293]
any major competitors
[295]
with websites that we can analyze and
[297]
just you know spy on
[298]
so if you're in the same situation you
[300]
can just get a feel by using social
[302]
media
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so try twitter for example you can check
[305]
out tweets that mention your keywords
[307]
and just take a closer look to see who
[309]
exactly these people are
[311]
we did an analysis of our keyword
[314]
coconut hair masks
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and most of these people tweeting we're
[317]
female based on credible profile images
[319]
we can also assume that the average age
[321]
is between 18
[322]
and 35 and then having used google
[325]
trends we know that our target customers
[327]
are mainly in the us
[328]
and in canada from this information we
[331]
know that we can really easily
[332]
reach our potential customers and then
[334]
we also did a little bit of
[335]
extra research that basically indicates
[338]
that our particular demographic
[340]
is not shy about spending money online
[342]
so that's definitely good news for us
[344]
so now it's time to move on to our
[346]
product-based criteria
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these are going to be the questions that
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will consider factors about the actual
[351]
product itself
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and they're going to help you get a
[353]
better understanding about what your
[355]
product strengths are
[356]
and what are some potential pitfalls
[359]
what is your potential selling price the
[362]
lower the price
[363]
the lower potential profit per unit it
[365]
has been generally accepted by many
[367]
top ecommerce entrepreneurs that
[369]
products sell between
[371]
50 to 150 hit a certain
[374]
sweet spot where you can make an
[375]
acceptable amount per unit
[378]
but not too high that customers are
[380]
hesitant to purchase online
[381]
or expect premium services like phone
[383]
support for a hair mask
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we looked at about two dozen comparable
[387]
products from different brands
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we determined that we would be able to
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charge around nine dollars to
[392]
twenty dollars for 120 milliliters now
[395]
for us this is a little bit of a low
[397]
price point
[398]
that means our margins are going to be
[399]
small and it's going to make it
[401]
difficult when using paid advertising
[402]
channels especially when we're just
[404]
starting out
[405]
so yikes that's a little bit of a red
[407]
flag but this is our first red flag in
[409]
our research so far
[410]
and frankly that is okay right not every
[413]
box is going to be checked when doing
[414]
this exercise
[415]
so let's just go ahead and take a look
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at the next questions
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if you're looking to get started
[419]
building an online business but maybe
[421]
you're not sure what to sell
[422]
or you need help finding a product then
[424]
make sure that you're checking out our
[426]
free
[426]
40-minute webinar it's going to teach
[428]
you how to find winning product ideas
[430]
how to validate those ideas and how to
[432]
get started so
[434]
just click the link in the description
[435]
box below to get started with your free
[437]
training now
[439]
what is your potential markup markup is
[442]
the access amount
[443]
after the cost of your product this
[445]
amount will cover your expenses to run
[447]
your business
[448]
and it's going to be your profit now
[449]
remember when you're looking at your
[451]
potential markup
[452]
you may also want to consider how it's
[453]
going to change as your business grows
[455]
so for example we're just starting out
[457]
right so we're going to be ordering
[459]
small quantities
[460]
but as we grow we're going to start to
[461]
get some bulk pricing
[463]
and that's gonna mean our costs go down
[465]
and there's gonna be some more
[466]
leftover money like we just talked about
[468]
we know we can comfortably sell anywhere
[470]
between nine
[471]
and twenty dollars now we did some
[473]
research on our costs
[475]
including ingredients and packaging and
[477]
it's going to cost us a
[478]
583 to produce a hundred units so if we
[481]
were to sell our product for nine
[483]
dollars which was at the lower end
[485]
our markup would be a concern for sure
[487]
but if we aim for the higher end at
[489]
twenty dollars
[490]
we can still enjoy a pretty healthy
[492]
markup
[494]
all right next up how many skus will you
[496]
have to stock
[497]
so skews refer to types or styles of
[500]
products like sizes and colors
[502]
and in general more skus just mean more
[504]
potential headaches
[505]
so a lot of skus are going to increase
[507]
your cost for
[508]
inventory and storage and it's going to
[510]
increase the chances that you might make
[512]
a
[512]
shipping mix up so finding a product
[514]
that has only one sku
[516]
is definitely a bonus in our case our
[518]
product choice is just going to begin
[520]
with
[520]
one skew now there's also potential to
[522]
create an entire line with this concept
[525]
and that's great because that's going to
[526]
open the door for opportunities further
[528]
down the line
[530]
question number nine can you offer a
[532]
subscription
[533]
so subscription-based models are
[535]
definitely not necessary to build a
[536]
successful online business
[538]
but the ability to do so is definitely
[541]
very desirable
[542]
and that's because subscriptions
[544]
increase recurring revenue
[545]
and it saves you costs on acquiring new
[547]
customers for a hair mask there's a
[549]
potential that this could fit into a
[551]
subscription-based model
[552]
because it is a consumable but it's
[554]
important to be realistic
[556]
a customer is likely just going to go
[557]
through a couple of these a year
[559]
so our subscription plan would
[561]
definitely have to reflect that need
[564]
question number 10 what is your
[565]
product's size and weight
[568]
the size and weight of your product can
[570]
have a big
[571]
impact on your sales and your bottom
[573]
line if your product is oversized or
[575]
maybe it's super heavy
[577]
that's going to result in expensive
[578]
shipping costs and those costs can deter
[581]
potential buyers
[582]
and it can eat into your margins all
[584]
right so let's take a look at
[585]
how this would affect our product most
[587]
shipping companies would consider ours
[589]
to be a small
[590]
package both in weight and size so
[593]
you can even do your own research as
[594]
well visit your carrier's website
[597]
and put some rough numbers and then you
[598]
can get a feel for how much things are
[600]
going to cost you
[601]
all right question number 11 how durable
[604]
is your product
[605]
a durable product is obviously ideal a
[608]
high quality product is going to
[610]
decrease returns
[611]
and overall durability is going to
[612]
ensure that your product isn't damaged
[614]
as it's being shipped
[616]
so again going back to our example of
[618]
our hair mask so
[619]
maybe we would want to use a plastic
[621]
container because that's going to be
[623]
cheaper
[623]
and it's going to be more reliable than
[625]
shipping glass well also
[627]
heavily better ingredients to make sure
[629]
that they're safe and effective
[631]
which is going to ensure a high quality
[633]
product in the end now don't forget that
[635]
when you're asking yourself this
[636]
question
[637]
you're thinking about all the different
[638]
factors that make your product durable
[640]
whether that's the packaging or the
[642]
product itself
[643]
question number 12 will you face
[646]
seasonality swings
[648]
seasonality refers to swings in
[649]
purchasing behavior over the course of
[651]
the year
[652]
so for example christmas trees of course
[654]
they're going to be extremely
[656]
seasonal all of them being purchased in
[658]
the months of november
[659]
and december seasonality swings are very
[662]
important to keep in mind
[663]
because of the effect that they can have
[665]
on your cash flow as well as the overall
[667]
viability of your business
[669]
we used google trends to better
[671]
understand if we would potentially
[672]
suffer from seasonality swings
[674]
now we can definitely see that there are
[675]
some subtle spikes in the searches in
[677]
january
[678]
and we're just assuming that people are
[680]
looking for a bit of a rescue in the
[681]
colder months
[682]
but other than that there doesn't appear
[684]
to be too much seasonality that would
[686]
affect our product choice
[687]
but we'll definitely keep this data in
[688]
mind for when we market our product in
[690]
the winter
[692]
question number 13 does your product
[694]
serve a
[695]
passion or does it solve a pain products
[698]
that solve a pain point or serve a
[699]
passion just make finding customers
[701]
that much easier now products that are
[703]
maybe just you know
[704]
nice to have might be a little bit
[706]
tougher now for us
[708]
it's definitely safe to say that our
[710]
product choice can solve a pain point
[713]
for people that are suffering from dry
[715]
or brittle hair
[717]
and arguably it also serves a passion as
[719]
well since some people
[720]
are invested in this hobby of keeping
[723]
their hair looking healthy
[724]
and looking good alright next question
[728]
is your product consumable or disposable
[731]
a consumable or a disposable product is
[733]
going to be good from a
[734]
business standpoint that's because it's
[736]
going to provide you a better
[738]
opportunity for repeat business
[740]
as a hair care product our product
[741]
choice is definitely going to fall under
[743]
the consumable
[744]
category so other consumables might
[746]
include food
[747]
or cleaning products for example
[749]
question number 15
[751]
is your product perishable choosing a
[753]
perishable product is going to pose a
[755]
risk for you
[756]
especially if you're struggling to make
[758]
sales because that might mean that you
[760]
could be throwing out some of your
[762]
inventory if it goes
[763]
bad so this is definitely an important
[766]
question that you want to ask yourself
[768]
before you stock up so going back to our
[770]
case study
[771]
coconut oil has an approximate shelf
[773]
life of three years
[774]
or longer this should give us more than
[777]
enough time to figure out our marketing
[778]
plan
[779]
and to sell our product plus we'll also
[781]
want to consider the time that it would
[783]
take
[783]
for our customers to actually use the
[785]
product up
[787]
question number 16 are there any
[789]
restrictions or regulations for your
[790]
product
[791]
restrictions and regulations are normal
[793]
for many businesses however
[795]
it's definitely best to learn about this
[797]
before you invest
[798]
time and money into your business so for
[801]
us
[802]
in our product as far as we've been able
[803]
to determine there aren't really that
[805]
many regulations
[806]
or restrictions that required but if
[809]
you're getting into food
[810]
cosmetics or even baby toys for example
[812]
you're definitely going to want to make
[813]
sure that you're doing your research
[815]
first so after looking at our case study
[817]
and taking into account the market
[820]
and the product itself we feel strongly
[823]
about our product idea
[824]
and the potential market for it so some
[826]
highlights that have really been
[827]
standing
[828]
out to us to give us this indication are
[830]
the low cost to start the business
[832]
the strong search demand the trend
[834]
trajectory and
[835]
the keywords that we could potentially
[837]
rank for in google however we do have a
[839]
few concerns that prevent this from
[840]
being a complete slam
[842]
dunk and some of those being the low
[844]
product price point and the competitive
[846]
landscape
[847]
a large part of the potential success
[848]
for a product is going to come from
[850]
building a beautiful
[851]
brand around this product and then we're
[853]
also going to want to make sure that the
[854]
product itself
[855]
is more effective than just coconut oil
[858]
on its own
[859]
once you have your product idea and
[861]
you've validated the potential market
[862]
for it
[863]
you're going to be ready to start
[864]
building your online store shopify makes
[867]
selling online really easy
[869]
really fast and definitely scalable so
[872]
you can get started with a free 14-day
[873]
trial and you actually don't need a
[875]
credit card
[876]
at all to get started and it's gonna
[878]
give you a full
[879]
two weeks to build a beautiful ecommerce
[881]
store so that you can start selling
[883]
right away i will leave a link for you
[885]
guys in the description box to get
[887]
started with your free 14-day trial
[889]
all right so hopefully you found this
[890]
example helpful
[892]
make sure that you're asking yourself
[893]
these questions just to do the proper
[895]
research
[895]
before you just go ahead and jump right
[897]
in and that way you're going to have a
[899]
clear objective understanding of whether
[902]
your product idea is viable and if it is
[904]
you're going to enter the market more
[906]
confidently
[907]
if you found this video helpful make
[908]
sure that you're giving it a thumbs up
[909]
that helps our channel
[911]
and it helps our community grow learn
[913]
with shopify is a community of
[915]
entrepreneurs so if that's you
[917]
feel free to hit subscribe to join our
[919]
crew but other than that i'm glad that
[921]
you were able to join me in today's
[922]
video my name is michelle bally and i
[924]
will see you in the next one
[925]
bye
[935]
[Music]
[943]
you
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