In this article we uncover some of the vital considerations you need to understand to go about finding the right product, service or idea for a new online business.
Many marketing people and potential entrepreneurs spend their whole life searching for the perfect business idea or opportunity. Whether that be a product, a service or something else they can take to market. And there’s a reason many never do. They know that to be successful, a product offering has to have something unique and compelling that people need or want enough to buy.
New businesses launch online every day and the vast majority of those fail because they began on the basis of offering the market something they felt passionate about rather than something for which there is actually an identifiable and quantifiable need. Whatever your idea, it must meet a few critical requirements.
Identify a need
To start this process you need to determine where there’s an unmet need that you can potentially fulfill.
Perhaps your idea already stems from an unmet need you have discovered. If so, bravo! It is very satisfying, the moment you have that realization that you have stumbled on an unmet need which could translate into a business opportunity.
If you don’t have something specific in mind then there are several places online where you can go to look for online business ideas. You will not find them listed here because they change all the time. Instead I’m going to suggest you do what all successful business people have to do at some point and that is RESEARCH.
However we can assume that you are here because you already have a business idea and you want to know how to make your idea into an online reality or you have researched as I’ve suggested above and now you are ready to get to work.
Once you have identified your idea, make sure it truly is an opportunity. Search for it on Google, Amazon, eBay, iTunes, Bing and anywhere else that is appropriate for your product. Not a superficial glance, I’m talking deep and thorough research. You don’t want to find out later that you missed someone ahead of you on the curve.
Next you need to confirm your thinking and familiarize yourself with everything on offer that is similar to your offering or may also meet the need you have identified.
Test your idea
Naturally you would use the internet to test your idea and to estimate the potential. For example if your idea is “teach yourself French lessons” and you Googled it, you would find several thousand pages of people offering all sorts of online French lessons from beginner to advanced and from downloadable courses to e-books to interactive options with sound. At this point you would also discover that there are dozens of courses that are being offered for free.
I wouldn’t let that stop you – yet. There is always someone offering something for free. The trick is to work out if it is really free or if there is a catch. They may be offering something for free so that they can sell something else. In marketing we call that a “loss leader” as they are losing something up front to get their customers in. Once captured, they charge their customer for something else. For example, perhaps they are a tour operator who is offering access to free French lessons while charging for French cooking class tours in the South of France or maybe the course is free but the books are expensive. Perhaps they are offering an introductory course for free and then selling the full content that follows.
Hopefully your research will provide you with a totally new and completely different perspective. It is possible that you realize there really isn’t any point in trying to sell online French courses. Alternatively you may decide you need to do some more homework and some more research. For example, is there a need for someone to write an online French course for children?
Is it unique?
Your idea should have some element of uniqueness.
If your idea is the same, or largely the same as other offerings, then there may not be a genuine need for it and if that’s the case you will need to go back to the drawing board.
Just to clarify: your idea could be a consumer product, a business product, a service, a book, information, music, education or anything that can be sold online. But from here on, we’ll be referring to your “product” or your “offering” as the catchall for whatever it is you are planning to sell online.
Many principles are the same no matter what you are planning to sell, especially if you are planning to sell it online.
Understand the competition
If you are scratching your head and wondering how I could on the one hand, suggest you identify a need and make it unique, and then on the other hand have competitors, then let me explain.
Unless you have just invented the first motor vehicle that can fly people to the moon, you have probably come up with something that has an element of similarity to something else.
Actually my frivolous example is a great case to demonstrate my point. If you had come up with a motor vehicle that could fly people to the moon, I’m imagining it would be very expensive and you would have to jump through some major hoops to be allowed to pop people up to the moon. You would have to work with NASA and some other government agencies… enough said about the legalities. The point being, man can already get to the moon and your “competitors” would be Richard Branson and NASA who already have and are planning further trips for every day consumers to the moon.
No matter what your unique idea is, you will still have some competitors. There will still be some other way of fulfilling, or at least partially fulfilling, the need. It might not be as slick or as satisfying as you think your solution is, but there will most likely be an existing solution, somewhere, and you need to know what it is and KNOW IT well.
It is important to identify and understand all your potential competitors. Hopefully there won’t be a huge number of alternative options. Hopefully you have something to offer that has very little competition – because it is unique, but there will be some.
Find all the competitors you can and then download some of their product offerings or order some online and see what they are really selling.
Spend some time researching the products available and get to know as much as you can about the products on offer as well as the companies involved.
It will be a worthwhile exercise to think about their individual products’ particular strengths and weaknesses. In particular how do they compare to your product/idea?
This is also an essential element of your business plan which you will be filling in later on, so it is critical that you have this knowledge.
The USP
The USP is the Unique Selling Proposition. This describes what it is about your offer or product, that is unique. Ideally your USP will articulate why someone might buy your offering rather than the competition.
Interestingly, the USP is a timeless marketing term that has been around since the 1940s.
The USP can be something unique about the product, or it can also be something unique about the marketing of the product. For example you could take a concept or a product that has traditionally been sold into one type of market and redesign it or re-package it to sell into a totally different market.
The product could be largely the same as another, but the packaging and the marketing is completely different.
Here is an example of how this might work: You are aware of a hugely successful heavy-duty, yet organic kitchen cleaning product that has been around for many years and has traditionally been sold only to commercial kitchens. You discover that people who work in commercial kitchens have been taking this product home for years as there is nothing better on the domestic market.
Doing a little research you discover that this product is available locally in bulk and you determine that there is a definite market opportunity for a consumer cleaning product of this calibre. Upon further research into the product’s formulation you discover that it is also known for being hypo-allergenic and suitable for people with sensitive skin.
So while there are literally dozens of cleaning products on the market, you discover that there are very few that can claim to be made of 100% natural and organic ingredients. Even fewer can claim such heavy duty cleansing properties so as to be suitable for a commercial application.
With some clever branding, packaging and marketing you could take a product that already exists and is sold into one market, and sell the exact same product into a totally different market.
So although this product’s formulation is the same as the commercial product, and possibly very similar to other consumer cleaning products, it will have some very distinct and unique qualities.
At this point, you could determine the USP for this product is its heavy-duty cleaning power, eg: “Commercial strength without the harsh chemicals” or perhaps it’s the organic ingredients.
Other USPs may be a product that works faster, is cheaper (be careful not to just launch a product based on being cheap, more about that later), more reliable, available in different colours, more waterproof, extra strong. Certainly one or two unique features will help your product to stand out from the competition.
Differentiation
Product differentiation is a marketing strategy that a business uses to separate a product they bring to the market, from that of their competitors.
Differentiation is extremely important in commodity and price driven markets where there is already solid competition.
Here is a list of some of the key factors applicable to product differentiation:
Innovation.
Packaging.
Reputation.
Service.
Guarantees.
Price.
So to recap, there are three important aspects your idea must have to be potentially successful. You must be sure that your product is needed and needed by a specific group of people or companies, it has to be unique in some way and finally it must have some elements of discernible differentiation.
In our cleaning products example, we would heavily research the domestic cleaning products market to learn everything we could about the cleaning products already available on the domestic market. We would look at the names they use, their packaging colours, their key branding elements and very importantly, their claims.
Then we would start to work on specific ways to differentiate our new cleaning product from those already on the market. There would be a number of key differentiation influencers that we could employ. One obvious claim for our cleaning product could be reputation. We may well have the only domestic cleaning product that can claim to be used in hundreds of commercial kitchens. Another option for our product could be a focus on innovation. We could possibly make the claim to be the only heavy-duty cleaning product to be safe around small children, animals and people with allergies and sensitive skin. Or perhaps we offer time saving convenience with online purchasing and bulk delivery with the service we provide.
Take some time to work on this because this will become the foundation of all your advertising and promotion in the coming months and years.
Your headlines will have to draw potential customers to you and your product. Your uniqueness will be the main game in the battle for customers.
Me too products
While we have covered the importance of a USP and differentiation, sometimes there is little that sets one product apart from another. This is usually the case with what marketers call a “me too” product.
I am going to cover me too products here because every day I see new online businesses launch with a great looking website and fabulous looking products that may look different, but are largely the same as everyone else’s.
These are the kinds of online businesses that fail every day.
Fashion websites selling t-shirts, men’s and women’s clothing and accessories are a good case in point.
I recently read “I launched my website 2 weeks ago and have had 332 visitors to my website, but no one is buying. They add products to the cart but they do not buy. Can you help?”
I visited the website only to discover it is a t-shirt website. If ever there was a me too product, it would have to be a t-shirt!
Unfortunately this business owner has not understood or applied any differentiation factors to her business.
Sure the designs are interesting enough, but they are still just t-shirts!!
On the About Us page I read that the owner quit her job to set up this website. She was working in a garment import/export business, and through her contacts there she was able to access these t-shirts, no doubt at wholesale prices. Hence her decision to quit her paying job and go into business.
In the same forum was a young woman who is selling women’s fashion via a new online business. She has the same question, lots of visitors but no one buying. Her fashion is lovely, her photography is mostly good, but again, there is nothing there to set her fashion apart from any of the millions of fashion websites out there for the consumer to choose from.
Both these business owners have committed a classic marketing error. I would guess they both started their online business journey with the product and not with an identified need. The t-shirt girl has discovered how to source some interesting looking t-shirts and thought she could sell them online and make some money. The young woman with the fashion website has no clear story. Her About Us page says “[Name of store] is an online women’s boutique specializing in the latest trends in boutique fashions and accessories at competitive prices that you’ll adore.”
Why, why, why will I adore them??
Neither of these businesses appears to be meeting a specific need. And both are destined to fail.
Is there a need for another online t-shirt store or another online women’s clothing store? Of course the answer is a clear NO, and that could be why no one is buying these products.
Note: there may be other reasons also, like poor website layout, confusing shopping cart instructions, price too high, expensive shipping and so on.
But even without checking out these possibilities, I can see that these sites are destined for the ninety percent pile!
However, for these guys and for you, if your business idea is a ‘me too’ product or idea, all is not necessarily lost.
There are thousands of online stores making money selling t-shirts and women’s clothing. So how do you sell a ‘me too’ product online and become a success?
What are the successful stores doing differently?
There’s that key word again!
We have talked about uniqueness and differentiation and you may think that a ‘me too’ product has nothing unique or different to offer.
Well, maybe the product doesn’t, but there are many clever marketing ploys you can use, and to find those, you will need to think outside the square and do some research.
Ask yourself what would make you choose to buy a fashion item online? What makes you choose one online store over another? Can you dig deep and identify a related need? Perhaps there is a need for an online store selling maternity t-shirts.
Other questions to ask yourself include, who is the target audience for your product, what do you know about your target audience and what motivates them?
No one is going to buy your t-shirts unless you can provide a compelling reason for them to buy from you rather than the competition. This is indeed a challenge and one you must address now, before you go into business selling a ‘me too’ product online.
Not just any differentiation
Interestingly, the t-shirt store I mentioned is also offering a numerology reading for free, which some may think is a great differentiator. Unfortunately it would be a pretty long shot to find a person looking to purchase a t-shirt in one of the ten designs she is offering, who is also looking for free “astrological advise” (her wording and misspelling).
So being differentiated is not just a simple case of offering something else you happen to have, for free. You will need to identify your potential customer and understand his or her motivations. On the following pages we will be working on identifying the target market and target individual for your offering.
In the meantime, and particularly if you are new to business and new to marketing, make sure you have identified a need and have a product or idea with a good USP and a business which can be clearly differentiated.
Still need convincing?
Judging by the sadly worded blog post that our t-shirt store owner posted in the month leading up to her go live date (the date the site became live to the world), this new store owner was expecting sales to be flooding in – even before the site was finished! The site’s blog suggests that although the site isn’t 100% finished yet, they are taking pre-sales orders. They ask the site visitor to make their purchases and they will endeavour delivery at the earliest time.
I find this so sad because in the weeks leading up to her launch she was no doubt full of anticipation and the expectation of great sales. Then four weeks later and after the site had been live for two weeks, not a single sale.
Failing online stores are everywhere and it takes me only 5 minutes to find yet another t-shirt store complaining of no sales. Only this one has had 4,000 visitors and no sales! I googled the brand name and see that this store is selling the very same t-shirts as at least three other online stores. Same price too. But this store has nothing compelling about it, in fact it is downright boring. Two rows of white t-shirts the same as everywhere else. Again a poorly worded About Us page which might as well say “don’t buy from me, I’m just a university student hoping to bring in some cash” because that’s the overall message.
Nothing new, nothing unique, nothing compelling. Four thousand people can’t be wrong!
There are many successful businesses who sell products and services that are largely similar to others, but they will all have something important in common. A compelling offer and a clear differentiator.
Sometimes, the only differentiating factor for an online product or service, is purely that it is being sold via an online channel, as opposed to in the bricks and mortar retail world. That’s potentially a great differentiator – as long as you can establish that there is a need for it to be available online.
Another survival opportunity for a ‘me too’ product could be a growing demand, a sudden fad with websites selling out fast. Although potentially rewarding, these opportunities tend to be short lived!
Grasp the fundamentals
Me too products can and do survive, but it is not likely to be an accident or by chance!
Of the 90% of online businesses that fail, I would speculate that a good number of those were businesses that failed to fully grasp the concepts of uniqueness and differentiation.
Same product, different market opportunity
There’s one final consideration for a product that is largely like the competition. Perhaps you have determined that there is a section of the market that your competitors have not been successful in penetrating and that’s what you are aiming for. If that’s the case, do the research and make sure that there is a market there. Sometimes you may find that the competitor doesn’t market his product to that market for a reason, for example, he may not market to schools, because the funding for this kind of offering is never there in schools.
In summary, your idea should start with an identifiable need, a perceived gap in the market that you can fulfill. Your product/solution to that need must have some unique qualities and you must be able to point out how your offering is substantially different to anything else that is out there and available to the same market.
The time will come when you will be looking for headlines and copy that sells your product. Headline copy and advertising copy are quite difficult to get right. Even harder when there isn’t anything new to say.
Back at our t-shirt website, there is no headline, no offer, nothing compelling at all. There is an image of each t-shirt with a brief description letting us know that it only comes in one colour.
Unfortunately, this store owner has no idea what she has missed.
Don’t let this be you. Hopefully by now you understand why there must be something to set your product or offering apart from everyone else.
Next…How to determine if your idea will sell (know your market)