How To Make Money Online – The Business Plan

It would be foolish to launch any new business without a business plan yet so many people do. Of course many of those people fall into the category of failing in the first year.

I have included a business plan template below and I strongly recommend you follow through with it.

You could also Google business plan templates and you will find there are dozens online. Choose one that works for you, but avoid skipping this step entirely.

It may take you some time to complete, but that is time extremely well spent. If you can’t answer all the questions, then perhaps ask yourself why not? You should be able to address most of the issues surrounding a potential new business. If you can’t answer a question, then either research the answer or move on. I would recommend you make every attempt to answer every question and for those that you absolutely cannot, highlight them and come back to them later.

One bonus outcome of a business plan could be that you realize you shouldn’t start up the business in the first place. And how much better would it be to find that out before you start, rather than after 6 months of lost time and funds.

the-ten-percent-club-business-plantemplate

How To Make Money Online – Pricing Strategy

If you want to know how to make money online, it is vital that you understand pricing strategy. The price you charge for your product or service is key to the success of your product in the market place.

Price is one of the four key components of the marketing mix. The others are Product, Promotion and Place which are also covered in this book.

Developing an effective pricing strategy is an essential element in your new business. It is from the price of your product that you receive revenue and it is this revenue against costs that ultimately determines if you have a successful business.

To determine the price of your product you will need to know all the costs. You will need to work out what it will cost you to put your product up for sale from the cost of the goods (usually called cost of goods sold and written as COGS) to the cost of transport to get your goods where they need to go, to warehousing, to packaging to promotion and so on.

At the same time, you will need to know the competition’s prices, understand the market’s perception of the right price and potentially consider a range of price points for your product distribution.

Pricing Strategy

Pricing strategy is something you really need to understand. Get this wrong and you could regret it for a long time. Get it right, and you will be counting your blessings.  I could write an entire book about price however, I suggest you do some additional reading. It is a very complex subject with many potential pitfalls for the uninitiated.

There are many good websites devoted to pricing strategy and I would encourage you to read through a couple and devote yourself to understanding the crucial role pricing and pricing strategy plays in your ultimate success. One good example is the Small Business Development Corporation in Australia who have a good amount of information on pricing strategies. But don’t stop there, do as much research as you can to fully understand this vital business strategy.

You will need to be careful if you intend to discount your product or beat the competition based on price. This is not a strategy I generally recommend. A race to the bottom can be devastating for a market and can be ultimately devastating for your product and business too.

Likewise, a cheap product can have a devastating effect on the perception of your brand. Think about products that you buy that are cheap and how that has translated into your perception of that brand.

Also, if you are first to the market with a product it is then also absolutely vital that you get the pricing exactly right because once you dictate the price, it will become a benchmark for other market entrants.

You cannot underestimate the importance of the right product at the right price in the right market.

Customer Lifetime Value

What is customer lifetime value?

Don’t just think about the first sale, think about subsequent sales. For example if your business is jewelry – perhaps you make bracelets or earrings – then think about how you can sell something else to the same customer after they’ve made their first purchase from you.

The same applies to a product that is a “consumable” – that is, a product that your customer uses all up and has to buy again and again. It is less costly to sell a product to an existing customer than it is to a new customer because you don’t have to advertise to an existing customer and you already have their email address. When you summarize the costs involved in your marketing and your subsequent conversion-to-sales metrics, you will see that there is often a high cost associated with the acquisition of each new customer. We call that the “Cost of Acquisition”. Sometimes (particularly when developing a new market or breaking into a very competitive market) this cost could even be equal to the revenue from the first sale.

Clearly it is not workable or advisable if the cost of acquiring a new customer is equal to the revenue gained from the sale! However, if there is potential to sell to that same customer over and over again, then a break even “cost of acquisition” could be workable.

Once you have that customer on board and they trust you, then there is the opportunity to sell them something else. The cost of acquiring that customer is then spread out over the lifetime of that customer – known as the “Customer Lifetime Value”.

It is important to work out the lifetime value of your customers from the beginning as this helps to inform your future sales potential as well as the amount you can afford to spend on advertising and marketing.

You could work it out like this:  A customer spends $50 on his first purchase but needs to buy again in three months and again and again every three months. If he then buys four times a year, then that customer is worth $200 per year to you and over the lifetime of him being your customer (let’s say three years), his total lifetime value therefore is $600.

Sale value x number of purchases per year = lifetime customer value

How To Make Money Online – Understand Your Market

Once you have followed all the advice in this post: How To Find Out if Your Product Will Sell you are ready to move onto the next stage: Understand Your Market.

Consider the use of the internet among your target audience (eg. plumbers) and check internet usage in the country in which you plan to launch this online business.

Many countries have low penetration with less than 20% of the total population having access to the internet.

This chart (Wikipedia.org) shows internet users by region and as you can see there are many regions where the internet usage is below 50%.

wiki-image

Therefore consider where you got your potential market size numbers from and reduce your total potential market size number by how many users will have access to the internet in your market and therefore the ability to access your online business.

SWOT Analysis

I can’t stress enough that you need to understand any market you are planning to enter with a new product.

The total market size which we’ve covered will give you some idea of future potential.

It is always a good discipline to do a [1]SWOT analysis of a market and while you are not investing millions, this kind of detailed analysis may seem like overkill. But it is a very useful and good discipline to get into the habit of doing.

I have included a the-ten-percent-club-swot-analysis-template so I suggest you spend a few minutes on it and you may find some worthwhile ideas or thoughts you may not have already considered.

For example, a threat to your market may be technology getting cheaper and while you can charge $10 for that app now, you may have to sell it for $1 down the track. Perhaps an opportunity is the changing tastes of your potential customers which could spell the demise of a competitor.

You will need to know your competition inside and out. Read all their marketing, buy their products, subscribe to their newsletters and thoroughly read their websites.

So you know the expression “keep your friends close, but keep your enemies closer”, well I believe it is always worth keeping that in mind in business. It really pays to know what your competition is doing and if you can find out what they are planning to do or not to do (although that may be difficult), then even better.

Surveys: Ask the market

One great way to test your proposed product and validate its place in the market is to stage a short survey. This will cost a small amount of money, however it can be an excellent way to gain some knowledge from potential online customers. This is also one way to determine your potential market penetration as mentioned earlier in this chapter when we were estimating the total market size.

Armed with these survey responses you can adjust your offering. You may find words or terminology that your customers use that are new to you.

Here’s a very brief step by step process to set up an online survey using a free online survey tool called Survey Monkey (www.SurveyMonkey.com). Note that this does require some website knowledge so you may need to seek assistance for this:

  1. Set up a Survey Monkey account (this is a free online survey tool)
  2. Devise your ten free questions. Be sure to have a combination of multiple choice and free form text. While it is definitely important to gather some useful statistics with multiple choice, it is also very important to listen to the words your potential customers use.
  3. Set up your Google Adwords account if you haven’t already and perform the keyword research covered earlier

Note: If you do not have any experience in setting up a Google Adwords account then I suggest you get help with this. Alternatively if you are great at following detailed instructions then Google itself provides many step by step instructions. There are also YouTube videos on the subject.

  1. Depending on how you’ve set up your Google Adwords account you may be able to insert the survey’s URL into your ad. If not, you will need to create a webpage with the link in it. You can set up a WordPress webpage for free for this.
  2. Create a few ads that will capture your target audience’s curiosity
  3. Set a daily budget that you can afford (suggest at least $10)
  4. Set your ad campaign to live and if you have got your keywords and ad wording right, you should have survey responses within a few days

[1] A SWOT analysis comprises Strengths, Weaknesses, Opportunities and Threats

How to Find Out If Your Product Will Sell Online

So now you have your idea and you have identified that a certain type of individual or company needs it. The next step is to determine if there is a viable market for your product. How do you find out if your product will actually sell?

How many people have this need?

In order to test your idea and to really be sure that there is a market for it, you will need to try to determine how many people or companies could potentially buy.

One great place to start this process is to set up a Google Adwords account (http://adwords.google.com) and utilise the Google Keyword Planner to get an idea of how many people are searching online for a solution that your product can solve.

Since you are setting up an online business you will need to determine how many people ONLINE are going to be potentially looking for you.

Google Terms

Before you set up a Google account, you will need to familiarise yourself with some of the most common Google terms:

Keyword (or search term): The words people use when searching for something. Google keeps a record of every keyword and groups of keywords people use. You can find out what these are and how many people have searched using any keyword you can think of.

Click through rate (CTR): The number of people who click on an advertisement on Google. This number is always a percentage of the number of people who had the opportunity to see the ad (impressions)

Impressions: The total number of people whose Google search matched the keywords and who therefore had the opportunity to see any advertisement that appeared on the Google search engine results page (SERP).

Cost per click (CPC):  The cost that Google charges every advertiser for each time their ad is clicked on.

Traffic: Traffic in Google terms is the number of people searching on a particular keyword or group of keywords. You use this number to determine the total number of potential buyers or interested parties.

How to use Google to determine your market size

Start by writing down all the search terms you think someone might type into Google if they were looking for your product. If your product is an online French course then you would type into the Google Keyword Planner search terms like:

  • Learn French online
  • Online French courses
  • Learn French at home
  • Easy French lessons online
  • Learn French fast
  • DIY French lessons
  • Best Online French Lessons

Use the keyword planner to suggest more terms, as you won’t know them all.

Once you have all the relevant search terms (there could be hundreds), then copy and paste them or upload them and choose the option to get traffic forecasts.

Select a country or multiple countries. For this exercise I chose USA and Australia. The results are shown below in the table below where you can see that the number of searches per month varies between about 1 million and 1.5 million in the two countries I have chosen.

That’s a very decent market size and so naturally, the competition in that market will be strong with many advertisers looking for customers searching the “online French courses” keyword alone.

The ideal number of searches

You would probably like someone to tell you a particular number of search results that you should be looking for to determine if a market is viable. However, the actual number of searches you are looking for depends on whether you are looking globally or locally, whether your product will be downloaded or has to be shipped. While 15,000 searches per month in your region for a product you have to physically ship may not be too bad, for a global downloadable product that’s never going to be enough, unless you are aiming to dominate a specific niche (1).

The higher the number of searches per month on your given keywords, the better and more lucrative the market is likely to be. But suffice to say, do your research using Google’s Keyword Tool (free) or Long Tail Pro or Market Samurai  (both of these have a cost) and thoroughly research the competition.

If you find there are no advertisers but millions of search results then you are very unlikely to make any money there (unless you have discovered something incredibly and undeniably unique). If there are no advertisers, that is usually because the particular keyword isn’t lucrative. Also with so many search results you are very unlikely to be able to get your page to the *top of the search results.

*See paid search versus organic search covered later.

Other avenues for quantifying your market are industry magazines and websites and you will usually find that government websites have useful statistics.

Using Google to quantify sales potential

When looking at Google results to determine a market size you could conservatively look at an expectation of around 1-2% CTR (remember the click through rate is the number of people searching who would potentially click on your ad, should you have an ad directed at that specific keyword). While much higher CTRs are possible and common, my advice is to plan your business around this generally accepted average and then work on ways to increase it once you understand the levers.

Once a potential customer gets to your site, you can expect around a 3% conversion rate. Conversion rates are generally higher for niche products and lower for products with lots of competition and poorly designed websites and landing pages (take note!). We will cover this later in the blog post on building your website.

To determine if this market can make you any money do a sum something like this (These numbers are low to make the sums easy, but you would ideally want much higher numbers of searches than this):

Let’s say there are 5,000 searches for your primary keyword each month and you can expect 2% of those people to visit your site, and 3% (of that 2%) to purchase. The total potential sales in one month based on these numbers, therefore is 3 sales per month. In this scenario you are paying for 100 clicks (2% of 5,000) and so you need to know what the potential cost per click (CPC) is for that keyword. If the cost per click is say, $0.70 then that is a potential cost of $70 to get those 3 sales.

Number of Searches/month 5,000
Average CTR 2%
Total Clicks to your website 5,000 x 0.02 = 100
Number of visitors converts to sale 3%
Total sales per month 100 x 0.03 = 3
Google cost per click $0.70
Cost of clicks per month $0.70 x 100 = $70
 

Cost of Google advertising per sale:

Total Cost per sale $70 ÷ 3 = $23.33

 

From this exercise you can see that, while advertising on Google has a direct association with the number of sales you can expect, it also has a comparable cost. You will need to know this if you are considering using Google as a source of traffic to your website.

In Google’s keyword planner you can change the amount you are prepared to pay per click and your daily budget. Do this a few times and watch what that does to the number of clicks Google expects you would get.

Needless to say you need to make sure you have an appropriate margin in your product to make this market size a viable option.

Naturally you wouldn’t build an online business based on only one keyword. So that’s where google keyword analysis comes in again. Keep going back there to find more keywords and test them with their various CPCs. Some popular keywords can cost many dollars per click!

In summary, use lots of different methods and tools to determine the potential size of your market. If you have a product that would be purchased by men aged between 35 and 50 then make sure you know how many men there are in your geography that fit into that category.

Below is another, and very common method used to work out potential market size. Note that this method doesn’t relate to the number of people searching for a particular solution online. However I have added it in here because you really should know your total potential overall market size. Once you have this, you can work out what percentage of that total market is buying and searching for your kind of product online.

Estimate the total market size

You can estimate the total size of a market by using the generally accepted method outlined below. It is important that you do this for business and marketing planning and also for budgeting purposes. Also, if you intend to look for an investor or a partner at some point, he or she will need to know what the market potential is for your product or service. When determining if your new business idea has potential, you also will need to know the total potential market size.

First, determine who will be your customer. For this exercise we will use plumbers.

So using your available government statistics and the plumbers association you can determine how many plumbers there are in your target market. Let’s say there are 5,000 licensed plumbers in your target area and your product will cost them $200 to purchase and they will only need to buy it once.

It would be unlikely that all plumbers will need, want or be able to afford your product. You would need to do some research to determine just what percentage of plumbers are likely to purchase your product. (We cover a good online research technique in this post under “SURVEYS”).  Let’s say that after some market research you determine that 60% of all the plumbers surveyed said they were likely to purchase this product.

We call that the penetration rate. The penetration rate therefore is 60%.

To work out the market size you need to multiply the number of plumbers by the penetration rate.

Total number of potential customers x penetration rate = market size

5,000 x 60% = 3,000 plumbers

Estimate the total value of that market

You now need to work out what that total market is worth, in dollars.

Earlier we said that each of these fictional products cost $200 for the plumber to purchase.

Market size x sale value = market value

3,000 x $200 = $600,000

So the total potential market size for this new plumbing product in the target market chosen is 3,000 units at a total value of $600k.

Next you would check the Google searches for this product or for the problem that this product solves and from here you can estimate total expected sales.

Note that these formulas are provided for you so that you can start to estimate whether your idea can potentially provide an income stream.

Individual products and markets are affected by many outside forces such as competition and price and many internal forces such as quality and customer service.

(1) A niche market is very specific subset of a larger market focused on a specific product or need. For example offering online French courses for children would be considered to be a niche market.

Next… Understanding your market – Part II

Finding the Right Product for Your New Business

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)

Have YOU got what it takes to become an entrepreneur?

There are several key elements to a successful business and they are all covered on this website. But one of the non-negotiables, the one thing that simply cannot be changed, at least initially, is YOU.

How will you rise to the challenge? What part will your skills play in the success or otherwise, of this new venture?

I want to encourage you to take on this challenge, no matter where you have come from or what you have done in the past. Anyone can be an entrepreneur – even YOU, as long as you have, or are willing to acquire a few vital skills.

The term entrepreneur was originally a French word that first came to light in the 16th Century. Like many words that have been around for that long, it has evolved many times and its meaning today has many aspects to it.

The most common definition is “an individual who bears the risk of operating a business in the face of uncertainty about the future conditions.”

Or perhaps put more succinctly “a person who sets up a business or businesses, taking on financial risks in the hope of profit.”

What stands out for me in these and many other definitions are the words  uncertainty and risk. Who would take on such an undertaking, other than a fool?

Well my friends, the answer is – YOU… and ME!

And the key difference between you, me and the rest of the non-entrepreneurial world are two unmistakable characteristics: an Innovative Spirit and Discipline.

No matter what your education or your past successes or failures, if you have the ability to be innovative and the discipline to endure, you have the foundation for a successful business.

Read on and learn. YOU can make become one of the ten percent!

Next…how to identify the BIG IDEA or PRODUCT for your new business