Every aspiring retail entrepreneur wants to know the secret. They all ask the question. I bet you want to know the secret too. First, let’s take a look at the question: What products should I sell? Determining what type of products to sell is one of the toughest choices an entrepreneur will make. The secret is that there is not a specific product that will always be successful. Sure, there are hot products right now; products that are in high demand and have a low supply. I could tell you which products are profitable right now, but that knowledge will only help you through a short time. I would rather teach you how to determine what products will be profitable in the market at a given time; that knowledge will be the key to your success.
To determine what type of product will sell well, you must have a good understanding of how the market works. A little lesson in the area of supply and demand will help you grasp this essential information. Let’s take a look at a few market concepts:
Everyone needs gas for their car; they can’t drive without it. This need creates a high demand for gas. Gas is only available at select retailers; therefore the supply of gas is limited. These two conditions create a profitable market for retailers to sell gas. Anytime a product is in high demand and has a low supply, the product will be successful. Not only will the product sell, it will be profitable. Retailers can charge higher prices when they have limited competition, because consumers would rather pay a higher price than go without the product. The most successful product is one that is in high demand, but is not widely available.
Alternatively, when there is an abundance of a product that can be bought easily, the price will drop. To compete with each other, retailers must lower their prices. Although this is nice for the consumer, it is not profitable for the retailers. Many retailers will end up taking a loss on their products if their supply is too large. A high supply with a low demand equals a bad product choice for retailers.
Another scenario involves a product that is consistently in demand and is widely available. This is an everyday product in which both the supply and demand are moderate. The product is useful, and is carried in a variety of stores. The thought of this type of product may not cause dollar signs to float before your eyes at first, but you might reconsider as we take a closer look. A product that everyone uses or desires, will consistently sell on the market. The product will not be as profitable as a hot product, but the demand is steady. The retailer will regularly make a reasonable profit on a product that has both a moderate demand and supply.
There are things that you can do to increase the sales and demand for your product. If you have the available resources, you can create or increase the demand for a product. Many products become popular that don’t serve a need. Consider the Slinky or the Rubik’s Cube; no one really needed either of these toys, but they became popular nonetheless. Neither product had a useful purpose, except for maybe providing some entertainment. If you have the resources to invest, a market can be created for a product by increasing the demand.
Similarly, changing the supply will create a better market for your product. A product becomes profitable when the supply decreases. The supply can be decreased by either an accident, or by someone buying large quantities of the product. For example, the supply of oil is decreased when there is an incidence of an oil spill. Retailers increase the price when the supply is lowered, because the product is harder to purchase. While I do not recommend causing an accident, you may be able to cash in when one happens naturally.
To control the market, an investor can purchase a large percentage of a specific product. When the investor owns most of the product in demand, they can charge whatever they choose. The investor controls the market and earns huge profits. While this scenario is probably beyond your reach, there are methods anyone can use to increase their sales.
There are two things that you can do to create a better market for your products. Consider implementing a marketing campaign. Think locally at first; you can always increase your campaign to a national level as your revenue increases. Another component to your success is to provide excellent customer service. Customers are crucial to the well being of your business. Treat your customers well, and they will return. You can achieve profitable sales by following a few rules: choose a product that is in moderate to high demand and has a low to moderate supply, provide excellent customer service, and implement an effective marketing campaign.
Supply and demand are key factors in determining a product to sell. However, they are not the only factors that you should consider. It is important to study the market, which includes your competition. Try to gauge how large the market is for a specific product. You can do this by figuring out who wants or needs the product in question. Once you determine who buys the product, you can estimate the size of the market. Consider the availability of the product and how much competitors charge. Look at where the product is sold, and find out how the product is being marketed. Retailers generally do not like more competition for sales. However, they may not react negatively toward a new competitor that increases the demand for a product that they sell.
Set yourself up for success. Take time to research a product before you attempt to sell it. Spend enough time to adequately determine whether the product could be profitable. You will have to determine a variety of factors. Be honest with yourself, and don’t jump in blind. Be market savvy. Study the market and your competitors to determine if product sales will be successful. Product and market research can be difficult at times, but it will get easier each time you do it. Even if you miss the mark a few times, don’t give up. With determination, patience, and your newfound market knowledge, you can become a success. What are you waiting for?