Chapter 3
IN THIS CHAPTER
Choosing trending products for your Shopify store
Exploring different sales channels
Dropshipping products through your online store
Make no mistake, it’s rare to succeed in ecommerce without a great product, and a great product is one that fills a gap in the market or solves a problem for your customer.
Many online retailers sell a generic line of products, such as clothing, without really identifying their niche in the market, which is why I’m going to help you find the products that you can take to the bank!
In this chapter, I give you some tools to check if your product ideas are trending up — meaning you are supplying a product that is in demand. Luckily, Shopify provides some great resources for new online business owners to help get your creative juices flowing so you can find products that sell, so I share some advice on using these resources.
To ensure you have a good handle on all the channels through which you can sell your awesome products, I also review the different styles of selling (business to business, business to consumer or direct to consumer) so you can decide which route is best for you.
You may have seen a bunch of YouTube videos about how to get rich using dropshipping, so I take some time to unpack the pros and cons of this ecommerce model too. Finally, I cover selling through marketplace channels, such as eBay and Amazon, and choosing the marketplace that’s right for you and your business.
There’s a good chance that many of you have a product in mind already that you’re working out how to sell and make a living from it — or at least an income — and that sure is exciting! However, it’s important to make sure that your product is in demand, or trending, as the best online businesses I have seen are always driven by good products — followed by well thought out operations, great people and effective marketing.
A favorite saying of mine is to fish where the fish are. In other words, dangle your products in front of the people you know want them, rather than trying to convert cold leads that aren’t really that interested in what you’re selling.
In the following sections, I share some tips on where to start your product search and how to assess the demand for your products, plus I look at the ways Shopify can help you identify trending products.
There are plenty of websites where you can browse products to start your online store. You can also visit trade shows (which are expos or conventions where suppliers of products will exhibit in booths, and potential customers can visit and browse their products and place orders). However, with travel restrictions resulting from the COVID-19 pandemic, you can expect to see an even bigger swing towards using websites to source products, so I’m going to focus on digital platforms for sourcing products.
Here are three of my favorite digital platforms for sourcing new products, in my order of preference:
Using any of these three websites, the principles of sourcing products are the same. You simply search for the product you are interested in and apply any filters that are relevant.
The concept of supply and demand is a simple one, however you may be surprised at how often it’s not considered during new product launches. Put simply, supply is the products you provide, in a certain quantity, to match the demand — the interest in your products from consumers. Ideally, you want to match supply to demand so you can maximize profits and minimize spend. When I say minimize spend, I mean that you don’t want to be outlaying capital (your initial cash outlay) on stock that isn’t going to move or that will sell slowly. You need to find the balance of the right product, at the right time, in the right quantity.
When you think of how people search for products online, you probably think primarily of Google or Amazon. Imagine if you could collate the search data of millions of people all over the world to get an insight into what they are actually looking for! Well, the good news is you can.
Data-led buying is a strategy you can use to find out what people are actually looking for by scraping various pieces of data from a variety of sources. Don’t worry, I’m not about to get the tarot cards out or show you how to read minds — thankfully, tools are available to help you figure out what people want to buy.
One such tool is Google Trends. Go ahead and type trends.google.com
into your browser — this will show you the current trending topics, in terms of what people are using Google to search for (Googling) in different countries. If I do this today, the example Google Trends shows me is Kim Kardashian and Taylor Swift.
While celebrity stories may be interesting, you will not find them particularly useful for your product research. You primarily want to see if your product idea rises or declines in popularity, in terms of trending searches, so you can check the validity of your product idea. You can also use these tools before you have a product in mind to give you ideas around what you can sell on your online Shopify store.
Conversely, if I type the word ‘DVD’ (see Figure 3-2), the search volume appears to be in steady decline (although there is an interesting bump at around Christmas, which probably indicates that DVDs are still a Christmas present for some). It’s safe to say that DVDs show decreasing demand. If I were weighing up selling one of these two products, smart watches are by the far the more lucrative in terms of matching a product to demand.
You can also use Google Trends to compare products over time, if you want to see one product pitched against another. Similarly, you can search for topics; for instance, you may want to create something in the field of environmentally sustainable products. If you find a trending topic, you can then play around with products in that field to see if any are trending. It’s a little like going down a rabbit hole, but it’s a lot of fun and can be incredibly useful.
The homepage of Amazon is also really useful, as it will generally fill the homepage with ‘Trending Products’ and ‘Top Sellers’. If you stick to these two websites, you’re likely to get some good ideas flowing! Checking Amazon at the time of writing, the trending products include Apple AirPods, a Wi-Fi Extender, a Nintendo Switch and a Lamaze Peek-A-Boo book for children. If that’s too generic and you want to check what’s trending across a particular category — for instance, if you have decided that your online store is going to be based around pet supplies — then you can click on any of the trending products on the Amazon home page and then scroll through the filter on the left-hand menu, until you find ‘pet supplies’, which you can click through to. By following that path, I find cat litter, poop bags, scent-removing spray and a roller hair remover listed.
Alibaba provides much of the same, although more from a bulk ordering, or business to business (B2B), perspective, which of course is still useful (I talk about B2B and other sales channels in the section ‘Introducing Online Sales Channels’). For example, if I navigate to the ‘Top Ranking Products’ section and narrow this down to ‘Sports and Entertainment’, the top products are bicycles, fishing lines, baseball bats and plastic jump ropes. The great part about researching trending products on Alibaba is that you can then connect with the leading manufacturers of those products and commence the product sourcing process.
If you want to have any sort of commercial scale to your online business, you need to dive deeply into your product research, unless you are one of the very, very, very few who manage to master a niche that few others can — for example, perhaps you have a unique set of skills that means you can craft a certain kind of in-demand product yourself, such as custom-made surf boards. That’s great, but if you’re a generic brand aiming to sell printed t-shirts then you’re joining a long queue, because it’s busy inside that category unless you can stand out.
Shopify provides great data on what products are trending on Shopify — and given the number of products it has listed, it’s no surprise that you can do much of your trending product research on Shopify directly!
Here’s a list of Shopify’s ‘Trending Products To Sell’ from early in 2021:
There are different kinds of sales channels to suit just about any business or individual. Whether you’re selling your boyfriend’s old size 32 Levi’s that he just won’t fit into anymore (despite what he thinks), or you’re wholesaling product all over the world and you want to make it easier for your clients to log in and place orders, the chances are that there’s an online sales channel for you, and it’s probably available in Shopify.
Wholesale trade is the practice of a supply or manufacturing business selling products to a retail business, which then sells them to the end customer. People often refer to wholesalers as an intermediary or ‘middleman’.
If you think about all the times you’ve used the internet to purchase something, it can seem pretty ridiculous how many options you have. I’ve bought and sold cars online, found a breeder for my Rottweiler, studied from afar, paid my council rates, sourced cheaper gas and electricity … and I can’t remember the last time I bought clothes in a physical store. The breadth of industries that can prosper via some form of online sales channel is enormous!
In the following sections, I introduce you to a few of the most common online sales channels.
This is probably what springs to mind when you think of a typical ecommerce business — and it’s probably what you’ve signed up to do using Shopify. Direct to consumer (D2C) sales are when a brand or manufacturer sells items directly to consumers without the need for an intermediary (like a wholesale or retail store). D2C sales can be applicable across a whole range of industries, whether it be a winery selling wines online without going through the local liquor store, or your favorite fashion brand starting a website and taking customer orders, rather than, or in addition to, stocking retail stores.
Many early online shoppers favored online shopping for the perception that there were discounts to be had thanks to businesses cutting out the person in the middle, who needed to make a share of the profits. Going direct to customers allowed manufacturers to reduce their retail prices, rather than having to cut in the wholesalers.
Platforms like Amazon and Alibaba are examples of online marketplaces where manufacturers can engage in D2C sales by creating their own stores on the marketplace and listing their products so that customers can place orders directly with them. In many cases, selling online via D2C channels has opened up a huge new revenue stream for manufacturers who were previously focused on B2B (business to business) revenue.
D2C channels have put a lot of strain on the traditional wholesale customers of manufacturers, as often they can end up competing against one another. I’ve seen this happen to a business I was involved with. We had placed a large order of men’s footwear, only to see that our manufacturer had also listed the same styles on Alibaba at half the price we were selling them for. Pricing rules and other agreements and restrictions are sometimes agreed upon to ensure that manufacturers don’t undercut their wholesale customers. On the flip side, a lot of wholesalers have gone further upstream or become more vertical and explored creating their own brands or manufacturing plants as a way to enjoy D2C benefits. Going vertical (or upstream) is essentially going back up the supply chain to source your product. If you’re a retailer buying from a wholesaler, you may decide to skip the wholesaler and try and go directly to the manufacturer.
Business to consumer (B2C) sales are when businesses that are not manufacturers, like Walmart, stock multiple brands to sell on to consumers. The business is not manufacturing the goods themselves but buying them from manufacturers, before on-selling them to consumers.
Shopify powers many of these sites around the world. Shopify is not concerned with how the product is sourced, or whether or not an online retailer manufactures their own products or buys them, as its purpose is to display content and help you sell it.
In an online context, think of websites like Revolve, Zalora, The Iconic, or the digital versions of retailers like the afore-mentioned Walmart. Most of these kinds of businesses are likely to have their own private labels as well; in other words, labels or brands that they have created, where they source its products from a manufacturer to increase the profit margin.
Typically, a B2C online store carries desirable brands, which is often a method to attract customers to their online store, at potentially a lower cost, as customers are actively seeking the brands. If you are contemplating starting your own brand, you may have to work a little harder or spend a little more money to bring traffic to your store and alert people to who you are. (My book Selling Online For Dummies talks more about the pros and cons of creating your own brand versus stocking existing brands.)
B2C retailers may make a little less profit per product than a D2C business (as they are effectively the intermediary), but this is not always the case, and it varies from industry to industry. Some of the largest online retailers in the world are B2C businesses — think Walmart, Target or the Zalora websites across Asia.
Although not the focus of this book, the flexibility of many ecommerce platforms allows for businesses to sell to other businesses — business to business (B2B) sales; in other words, a wholesale distributor can offer products online to retailers to buy, and then on-sell them to individual customers. An example of this may be a manufacturer receiving wholesale orders through a website, or from its stockists or distributors. This method has allowed for sales to be made from the office, with less dependency on travelling salespeople or print catalogues.
Online wholesale sales portals are commonplace these days. Shopify has created an app called Handshake (which can be found in its app store) where retailers can log in and order stock from their wholesale supplier without needing to visit their showroom or meet with a salesperson.
Wholesale trade conducted through online channels allows for a reduction in friction. The buyer can log on at any time and place an order whenever they want, from the comfort of wherever they are. I was recently part of an ecommerce build for a B2C business with 150 stores across Australia, and as part of the scope of its website build, the business constantly repeated the need for its stores to be able to log in to the website and place stock replenishment orders; in fact, the business was more excited about the potential of this service than the opportunity the new website provided for finding new customers across the country who had never seen their stores!
Dropshipping is when an online store lists products on its website that it does not actually have on hand. It is essentially all about how you fulfil an order. As a dropshipper, you don’t hold any inventory and your supplier sends the orders to your customers directly. Your role in this relationship is to build an online store, list a supplier’s products on your site, market the products, gain sales and forward the order details to your supplier to ship. You only pay the supplier after the customer pays you.
For example, if I started an online store and researched manufacturers in China who make single unit orders, I might ask them if I can list their products on my site and send them notifications when I get an order, so that the manufacturer may then send the order to my customer. Thankfully, Shopify automates this process for you, using cool apps like Oberlo, which I talk about in the later section ‘Dropshipping on Shopify’. It can be perceived as a little sneaky but, if fully disclosed, there’s nothing ethically wrong with engaging in good dropshipping.
There’s more than one way to run an online store that relies on dropshipping, and in the following sections I look at the different kinds of dropshipping, the pros and cons of dropshipping, and how dropshipping works on Shopify.
Dropshipping is perfectly legal, and some retail dropshippers will even inform their customers that the order is being shipped from a third party (it will also be made clear that the paperwork will be from the dropshipper rather than the third party). This more transparent process is known as white hat dropshipping. Black hat dropshipping is when a retailer simply lists products from other suppliers but doesn’t disclose anything about the supply chain to the customer; in fact, the retailer will even leave all the paperwork from the original supplier, which can leave a very bad taste in the customer’s mouth because the customer may feel deceived by the fact that they have purchased from an intermediary when they could have gone directly to the supplier, often at a cheaper price.
I’ve seen black hat dropshipping in action, and it wasn’t pretty. In an omnichannel business I was working with (omnichannel meaning multiple sales channels, in this case online and wholesale — as opposed to pureplay online, meaning online sales only), a wholesale customer was bidding aggressively on our keywords on Google, meaning they were paying to rank higher than us in search results when shoppers were searching for our brand. However, the wholesale customer wasn’t carrying any of our stock — not since its first orders when it became a wholesale customer! We found out that this customer was listing our products online at 30 per cent cheaper than our retail price to gain traffic, advertising this discount in its ads (to entice shoppers to its own website, instead of ours) and then placing wholesale orders with our wholesale department (at a 50 per cent discount!) so that it can pocket the 20 per cent difference. The wholesale customer established a wholesale relationship with us, but then stopped ordering stock at a wholesale level and started dropshipping products without our knowledge!
This is typical black hat dropshipping — and although the customer in this instance got a good deal, they may not be so happy if the next order they purchase in the same way is available cheaper than the price listed on the online store they shopped from. Needless to say, the practice outlined in this example was not sustainable as the retailer was no longer allowed to stock the brand.
If a wholesale account is undercutting the prices of the brand they are selling, the business relationship goes south pretty quickly. Bidding on your suppliers’ keywords and using clickbait (like discounted pricing for a specific brand) in your ads is considered unethical, although not illegal.
An acceptable dropshipment model here would have been for the seller to ask permission to become a dropshipper, as opposed to taking the customer’s money and then placing orders without making it clear to the brand that this is what they were doing.
Here are some of the fair, white hat dropshipping models you may consider trying when you set up your Shopify store:
Product reselling: The dropshipper sources products from a variety of suppliers and lists them on his or her site for resale. Typically, the website has a theme, such as pet supplies, and the online store focuses on that niche product range while providing value to the customer through offering benefits such as good customer service, excellent product knowledge and fair pricing.
This model relies on your business being an effective marketing machine — the product is sourced from a third party, so there is little to no product development, and the dropshipper’s goal is to bring in traffic to move the product.
Print on demand: Print on demand is a popular dropshipping business strategy. An example is where a dropshipper sells a product that can have an image or print on it, such as a mug, apron or t-shirt. Every time a sale is made, the dropshipper raises an order with the print on demand supplier, which sends the order out. For this style of dropshipping, you need an arrangement with a print on demand supplier that considers all the product requirements — for this example, you’d need to agree on the image format the supplier can accept to produce the products to an acceptable quality standard, and also agree on the range of products the supplier will print on.
If you find a niche market, such as ‘we print your pet’s face on a t-shirt’, this dropshipping model can lead to a fun novelty gifting business.
Dropshipping can be a good way to get started in ecommerce, but remember to weigh up the pros and cons before you rush on in.
The benefits of dropshipping are impossible to ignore: zero capital outlay on stock; the ability to hold an enormous range of SKUs (stock-keeping units); and fairly low barriers to entry (which is why you see so many young people, sometimes still in school, telling their story of how they got rich quick via dropshipping). You only pay for stock when the orders come in, so it’s a cash-positive business, meaning you have the cash from the sale to pay for the order from the manufacturer and pay for other costs, such as marketing and wages.
Profits from dropshipping are generally slim, so you will need to move some serious volume in order to scale the business to a substantial size. It isn’t uncommon to see profit margins of 10–20 per cent on products, which doesn’t leave a heck of a lot for wages, marketing and other expenses — there isn’t much fat, in other words.
The other thing you lose is control — control over your shipping times, control over the accuracy of the picking of orders, and quality control of your products and packaging. You need to trust your suppliers if you’re planning to set up a sustainable dropshipping business model.
I’ve built two dropshipping stores on Shopify, mainly in my early days of using the platform, as a cheap way to get started and work out how to use Shopify. I found the process to be straightforward, and Shopify has some great resources for sourcing products you can dropship and automating the order process.
You can find just about anything through Oberlo. As well as listing the identified products on your site, Oberlo automates the ordering and fulfilment process for you. When your online store gets an order, Oberlo raises an order to the supplier of the SKU in your store and places the order automatically, including the delivery address of the customer — asking you only to enter the payment details and select your shipping service.
As well as providing Oberlo, Shopify also recommends another group of dropshipping sites:
When you hear the word marketplace, the obvious ones that come to mind are eBay, Amazon and, more recently, Facebook Marketplace. An online marketplace is exactly as the name suggests — a platform to bring together sellers and buyers in a common environment. Sellers can be retail merchants or individuals, and they are open to selling virtually anything lawful.
Some marketplaces are free, like Facebook Marketplace, while others charge a commission for each item sold, or a monthly subscription fee. Some online businesses offer a hybrid model that includes a D2C or B2B website, as well as offering a marketplace where brands can list additional products. An example of using a hybrid model is Zalora, which buys stock up front from brands under a traditional wholesale model but also provides a marketplace offering.
The benefits of a marketplace model for businesses is that they do not have to outlay capital for the stock; instead, they make their money when an item is sold, when they can charge a commission. Stock can be either held at the marketplace’s warehouse or at the brand’s location, depending on the agreement.
Typically, a marketplace integrates with your ecommerce platform or your inventory management system via an API (application programming interface) or PIM (product information management) system. API is an abbreviation you’re going to be hearing a lot. Basically, an API is software that connects two applications to each other. An API is like a messenger delivering a request from one application to another, and then brings back the response. So, you have an API connection to a marketplace, from wherever your inventory is housed, and the inventory details, including quantity, cost and often product descriptions, are pushed into the marketplace, which saves you the time of listing each product individually.
In the absence of an API (such as when smaller businesses are just getting started), some marketplaces will offer the option of a spreadsheet to upload your products to their platform; however, this method doesn’t operate in real time, so it doesn’t update your master inventory records — relying on you to do it manually. An API deducts the inventory as the sale occurs, which provides more accurate and current data on available stock.
Without getting too much into the technicalities of it (that will come in Chapter 11, where I look at managing your inventory), a marketplace is a great way to get new eyeballs on your brand, particularly in a new market. The downside is that the marketplace owns the customer, so in reality you are bringing them customers, and they are bringing you orders, but you don’t really get the chance to nurture that customer for life, whereas there are various methods to communicate to the customer, post purchase, when you sell through your own website. Marketplaces are very protective of their customers, and usually won’t even let you use your own branded mailers.
Usually, these apps are third-party apps. For example, eBay has an app in the Shopify app store, so Shopify isn’t responsible for integration with eBay, or providing support — eBay are. Shopify simply allows you to add the app to your store and list your products on eBay using the app.
If you browse apps in the Shopify App Store (apps.shopify.com
) and search for ‘eBay’, you’ll see plenty of options to add eBay to your Shopify store — meaning you can list your products on eBay via your Shopify store rather than having to list products one by one on eBay. The trick to choosing any app you install in your store is to go and read all the reviews and look at the demonstrations inside the apps before you choose one. For instance, the app ‘eBay App Integration’ has a higher star rating than the actual eBay-owned app, so just because eBay created that app, it doesn’t mean it’s the best one out there.
I’m a fan of using marketplaces to grow your business, particularly in the early days when you may find it hard to grow sales and get traction. Marketplace sales help to boost your cashflow and can be quite lucrative, despite the commission you pay on each sale.
Here’s a list of some of the marketplaces that you will have access to when you build your store on Shopify:
eBay.com
Amazon.com
Walmart.com
Etsy.com
Wish.com
Ecart.com
Catch.com.au
Sears.com
Mydeal.com.au
Onbuy.com
Rakuten.co.jp
FR.shopping.rakuten.com
All told, I recommend marketplaces to new or existing brands looking for expansion, as long as the commission suits your gross profit margins — a commission over 22 per cent rings alarm bells for me. So, remember to check the marketplace’s commission and try and keep your gross profit over 50 per cent — there’s no point gaining sales if they aren’t profitable.