By January 26, 2014 0 Comments Read More →

Your Product Idea (3)

Evaluate Your Product IdeaPart 3: Evaluate Your Product Idea

As you plan a new business you should think seriously about whether your product idea is a good fit for you, personally.

  • Will you be happy working nights and weekends to start up a business based on your idea?
  • Will helping people solve this problem – for years if you’re successful – keep you motivated and happy?

Think through your own experiences when buying this type of product or service from someone else. Other key factors that could determine the success of your business include:

  • Is your product scalable? In other words, could you have problems meeting the demand as your business grows? Scalable products might include electronic downloads and items made from common parts, while less scalable items might include antiques, original art, and used parts.
  • Do consumers actively seek out your product online? Most products satisfy a need that’s easy to describe and often searched about online. But if you’ve developed a solution that few people realize exist, your advertising could be more of a challenge. My article about advertising online discusses some of the alternatives.
  • Are website visitors likely to be one-time buyers, or repeat customers? Websites that get a high percentage of repeat customers can usually afford to spend much more on advertising to bring new customers than websites whose visitors usually buy once in a lifetime.
  • Can you deliver the products as reliably as customers expect? Think about how you will deliver your product in ways that keep customers satisfied – especially if your product is fragile, perishable, one-of-a-kind, or often needed in a hurry.
  • What level of service is required before and after the sale? Starting an online store takes a serious commitment to customer service, especially if your product addresses an urgent customer pain.
  • Are you selling Vitamins, or Pain Killers? Products that don’t address an acute pain (“Vitamins”) can require lots of information and a more sophisticated web store since customers might have unlimited time to comparison shop. Products that solve urgent problems (“Pain Killers”) can bring in faster sales, but can also require exceptional service because many customers could be anxious and in a big hurry.

Know Your Competition

Take time to search out and document your direct and indirect competition online, and buy from as many different competitors as you reasonably can. In each case, write down their strengths and weaknesses, develop a plan to communicate your better value online, and start writing down the processes you’ll use to deliver better service.

Think carefully about the information you’ll need to communicate to show you’ve got a unique selling proposition.

  • What unique value can you offer to convince customers to buy from your website – and not from somewhere else?
  • What detailed product information will customers need to see before they buy?
  • What unbeatable offer can you provide to convince customers to buy right away?
  • What money-back warranty or other assurances can you offer to inspire confidence?

Remember that your biggest challenge could come from indirect competitors.

NoteAs I launched a web store to sell a DIY repair tool, I learned that our biggest real competitors are service companies throughout the US who perform similar repairs. These local companies can usually offer faster service, and because they charge much more per customer they can easily outbid us for online advertising. These indirect competitors didn’t stop our success, but they have a big impact on our advertising costs, how we prove our advantages online, and the “no questions asked” warranty that we offer to help customers feel confident in our products.

Be aware that you could be in for serious challenges if global online retailers are selling even somewhat comparable products. As discussed in my story about Amazon, you should take these competitors very seriously and use the utmost caution before you consider advertising with these companies.

Next: Get the Right Company Name

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