When you're setting up your ecommerce shop, it's important to think about the products you'll be selling. After all, you want to make sure you're choosing items that have a high margin and will be profitable for your business. There are some types of items that are commonly avoided by ecommerce sellers because they have low margins and aren't very profitable. In this blog post, we'll discuss some red flags to look out for and why they should be avoided!
Too Much Competition
Some items are just too competitive to have a lot of success in. Some types of items can be saturated with tens of thousands of sellers selling the same type of item. For example: cell phone cases, wallets, and other low-cost items. When there's that much competition, it becomes very difficult to stand out and make sales. You'll likely end up selling at a low price point just to compete, which will eat into your margins and leave you with little profit. I recommend doing a quick search to see how many results come up when you search for your product on a site like Amazon. If there are thousands of results, it's probably not worth selling that item.
Commodity goods are goods that are interchangeable with other goods of the same type. They're often low-cost and have low margins because there's not much differentiation between products. For example, selling a generic brand of laundry detergent is going to be very difficult because there are already so many big brands that dominate the market. Generic brands often have to sell at a lower price point, which means lower margins for you. I recommend avoiding commodity goods unless you have a very unique spin on the product.
Items that Require a Lot of Support
Some items just require a lot of support and customer service, which can be costly for your business. For example, selling electronics can be tricky because they often break or have issues. If you sell an item that requires a lot of support, you need to make sure you have the resources to provide that support. Otherwise, you'll end up losing money on returns and customer service. I recommend avoiding items that require a lot of support unless you're confident in your ability to provide that support.
Another red flag to look out for are low-cost items. When I say low cost, I'm talking about items that are less than $10. Lets assume you pay $1 for your item from a wholesaler. After fees such as shipping, transaction fees, and advertising, you might only make $0.50 profit per item. That doesn't leave much room for error or a lot of wiggle room to increase your price. Not to mention, low-cost items generally have low margins to begin with so it's not worth the risk in my opinion.
Heavy or Oversized Items
Heavy or oversized items can be a red flag for a few reasons. First, they're generally more expensive to ship which will eat into your profits. Many carriers have oversized and over weight surcharges that can add up quickly. Additionally, these items are more likely to be damaged in transit which can lead to angry customers and refunds. Not to mention, returns are also generally more expensive for larger items. Lastly, they can be difficult to store and fulfillment can be a challenge. If you do decide to sell heavy or oversized items, I recommend using a fulfillment service that may have discounted shipping rates and access to equipment to handle these types of goods. These types of items can be very profitable, but they also come with some challenges that you need to be aware of.
Items With High Advertising Costs
Something many sellers do not think about is the cost of directing traffic to your online listings. Some keywords and search terms are cheaper than others. Some of these terms can be very expensive for certain categories. If you plan on selling an item that has high advertising costs, you need to make sure you have a solid plan to drive traffic to your listings. I recommend doing some research on the cost of advertising for your chosen product before making any decisions.
In conclusion, there are a few red flags to look out for when choosing what to sell online. I recommend avoiding commodity goods, low-cost items, heavy or oversized items, and items with high advertising costs. Do some research on your chosen product before making any decisions to ensure you are getting the most bang for your buck. Thanks for reading!
I hope this was helpful. If you have any questions, feel free to leave a comment below. Happy selling!