The next step involves choosing the products you are going to sell. If the plan is to make the products yourself, the decision-making process will be relatively straight forward. If you are a tailor, you might want to sell suits online; if you are a baker, you might want to sell cupcakes; if you brew your own beer, you might want to sell bottles of beer. You will only be able to sell whatever you are capable of creating and you will have to accept the limitations associated with each product. If you decide to sell cupcakes, for instance, you will be confronted by the fact that cupcakes have a short shelf life, low price point, and poor margins, not to mention the fact that they are incredibly difficult to ship. These issues may not matter a great deal when you are first starting out, but they will present a lot of challenges in the future that will affect your bottom line. If you aren’t able to produce products yourself or you realise that there are too many issues associated with the products you are able to produce, you also have the option of having products made by another person or company on your behalf.
This is where the decision-making process becomes a lot more complicated. As a starting point, the only factor that should limit your imagination is your budget. Contract manufacturing is a very common way for a person or company to exchange money for a finished product that they otherwise wouldn’t be able to create themselves.
When thinking about products, the first thing you should ask yourself is whether the product presents a good product-founder fit. Does the product make sense for you? If you enjoy spending time at the beach and have ten sets of bikinis at home, it may make perfect sense for you to start a business selling bikinis. Without knowing it, you will already have an insight into the market and will already have an idea about pricing and fabrics and how trends have changed over time. For someone who never wears bikinis and hates going to the beach, it wouldn’t make a lot of sense to start the same company. It doesn’t mean that that person can’t learn about the market and also do well, but there will be a much steeper learning curve and a higher failure rate. You should think about what is organic to you. What jumps out as something you are passionate about want to spend all day thinking about? Your business is something that could take up years or decades of your life, so it should be something that you actually want to do.
It’s a foreign concept for many people. You have to ask yourself: what do I actually want to do? You have made the decision that you want to start a business, now you have to figure out what you will be doing with your time. You could start selling meme cups that you source from Aliexpress, but is that what you really want to be doing with your life? Is that something you want to be doing when you are 36 years old? If you spend all of your time on Instagram, it may make perfect sense to start this company. However, just because you can do something, doesn’t mean that you should. You should live and breathe the products you are selling and embody the brand you are trying to create.
In the first instance, you shouldn’t worry about profit margins and pricing and all of the limitations of a given product. You should do something that is natural to you. If nothing jumps out at you, keep thinking. It may very well be something that you don’t realise you have an interest in.
A woman in her mid-30s who has worn eye-glasses her whole life may recognise that eye-glasses are incredibly over-priced and start a successful company selling cheap frames online. She wouldn’t need to do any further market research to recognise that an opportunity exists. Eye glasses have a high price-point, great margins, they are cheap to manufacture, easy to ship, easy to market, easy to store, and don’t have an expiry date. For her, it’s a company that makes sense. If another person who has never worn glasses before starts the same company, they may not be as successful. When you do something that isn’t natural to you, there is a tendency to follow the decisions of competitors rather than thinking for yourself.
Followers will be unable to recognise trends or respond to changes in a market. The problem, however, with choosing a product and getting lucky is that you won’t know why you have been successful. Most successful people in business have no idea why they have been successful. As a result, they create other products and businesses that are destined to fail.
Most people think that they have to be original — that they have to reinvent the wheel. This couldn’t be any further from the truth. Right now, there are hundreds of thousands of watch companies around the world and, despite this, you could still start a company selling watches tomorrow and be incredibly successful. It all comes down to naming, branding, and whether you can access your market. It comes down to your brand story and whether you are able to position your products as unique in an already crowded market. It comes down to supplier relationships and reliable fulfilment. The reality is that even if you create a unique product, you should expect imitators. Imitation is almost impossible to avoid. All you can do is focus on building a strong brand that customers will prefer when faced with the choice of choosing your products over a competitor’s. Love them or hate them, people still buy Crocs because it has a strong brand identity and the name has become ubiquitous with foam clogs. People will still buy Levi’s even though there are far superior companies out there supplying a better product at a lower price-point. People will still buy Havaianas jandals even though generic jandals cost 1/10th of the price.
The "give it away" test
The best products are ones that can be given away for free. It sounds obvious, but most direct-to-consumer products don’t satisfy this requirement. If you create a t-shirt brand with a strong brand identity that people want to wear, you will find that you can access customers and influencers with ease. A company like Gym Shark (www.gymshark.com) has done a fantastic job in creating a strong brand identity and athletic clothing that has a broad market appeal. Because of this, they are able to access a range of influencers who turn away a majority of the companies that contact them. Of course, these influencers are paid in return for promoting Gym Shark products. However, the fact remains that if money was taken out of the influencer equation, these same influencers would be happy to receive and promote Gym Shark clothing for free. The same can’t be said for companies marketing weight loss tea through social media. Influencers would only post about a weight loss product if they were getting paid. There’s a reason half of the Kardashian family promotes Flat Tummy Tea on a regular basis and it has nothing to do with the effectiveness of the product. If you took money out of the equation, very few people of influence would be willing to promote a weight loss product. Having a product that you can give away for free is vital for direct-to-consumer businesses. If you create something that no-one wants, you will have to throw a lot more money into marketing and in the end, you will have very few authentic customers and the customers you do have will turn away from your brand once the influencer promotion stops.
Products designed to improve someone’s external appearance will always be in high demand. Companies promoting make-up, clothing, jewellery, work-out guides, teeth-whitening kits and any product in between have done well as direct-to-consumer brands because these products focus on changing someone’s external appearance. These products do well because they are much easier to market. A key marketing concept that for direct-to-consumer brands is social proof. Consumers want proof that products will work. If you can take a before and after picture showing how an outfit has transformed someone’s physical appearance, the average consumer will think that it can do the same for them. This is a key reason weight loss tea exploded on social media in 2014. Brands frequently posted before and after pictures with captions championing the weight loss qualities of the tea. If an after picture showed someone with a flatter stomach and had the following caption, it would be difficult for potential customers to ignore: “Just completed my 14 day teatox and I feel incredible! I lost 5kgs and I finally feel confident enough to hit the beach again! Thanks Skinny Tea Co!!!” Since tea and many of the herbs that are passed off as tea are natural diuretics, it is possible that someone could feel less bloated after consuming a weight loss tea as a result of expelling excess water from their body. That person could then notice that their external appearance has changed by virtue of them having a slightly flatter stomach.
While this form of social proof worked for weight loss tea, it doesn’t work as well for other ingestible products. Consider an ingestible product like whey protein powder, which if consumed regularly and in the right quantities, should increase the muscle mass of anyone who consumes it. Even if we assume that the marketing claims are true, most people who consume whey protein powder will gain weight, but not muscle mass. Why? To get results, you would also need to be putting in the work at the gym. Most people don’t want to do work—they want instant change and instant gratification, without having to make any real changes in their lives. Since most people won’t notice a change, it is a lot harder to present reliable social proof. Protein companies simply pay body builders to endorse their products leading impressionable consumers to think that the protein powder did all of the work.
In general, it is best to avoid ingestible products — even if you have a product that will provide the requisite amount of social proof. It is much harder to get an influencer to ingest something than it is to have them do something that will change their external appearance in an instant. You have to think about how you will market your product before you create it. If you are planning on using influencers to promote your products, they will have to like it. It is much easier to have someone put on a dress than it is to have them ingest any sort of food product or vitamin.
Triangl is a bikini brand that exploded on Instagram in 2014 (www.triangl.com). The founders quickly went from selling one or two bikinis a day to selling several thousand each and every day. Within 24 months they were generating over A$40m a year in revenue. Why were they so popular? There is nothing particularly revolutionary about Triangl’s products. In fact, at the time they launched, there were dozens of companies selling similar products. What made them stand out was nothing more than a bit of luck. Not long after they launched, Kendall Jenner discovered their products on Instagram and proceeded to purchase a few bikinis. She then posted about how much she liked them on her Instagram page. The rest is history. Not only did they save hundreds of thousands of dollars in marketing costs, but they were able to use this exposure to generate millions of dollars of sales and get in front of other influencers who wanted to promote their products for free.
Aside from the lively colours that were used on the bikinis, the real genius was the material that was used. The original bikinis were exclusively made from a neoprene material that is commonly used in wetsuits and orthopaedic braces. One of the features of neoprene is that it is very supportive and no matter the body shape or type, most women will look great in wearing clothing made from neoprene. It is the same reason Lululemon leggings are so popular. They improve the physical appearance of woman and make women feel less self-conscious when exercising or engaged in leisure activity during a day.
Say you have a budget of $5,000 and you would like to start a company selling vitamins. You have no idea how to make them yourself, so you are going to try to find a supplement manufacturer to do it for you. You currently live in Melbourne, Australia and would like to have the vitamins manufactured in Australia so you can promote the Made in Australia brand when marketing your products. The first step involves finding a supplier who is willing to work with you. You will then need to talk through minimum order requirements and the costs associated with the production process. For $5,000 you may only be able to get one type of vitamin manufactured. You had your heart set on a multi-vitamin, but you decide instead that there might be more of an opportunity selling a pre-natal supplement. Women consume pre-natal supplements while they are trying to conceive and throughout their pregnancy, so you know there is a market for them. You do a little bit of market research and find that there are very few widely marketed pre-natal vitamin supplements out there. You also know that there are a lot of popular Instagram influencers who are pregnant who might be willing to promote your product. Assuming the manufacturer agrees to work with you and all of the costs line up, you decide to schedule production in one month’s time. This will give you the time you need to choose a name and a logo and have the label designed for the bottle. On the surface, it seems like a great choice. The truth is that you won’t know how well it will go until you have a physical product in your hand and you have started to market it. No matter how prepared you are, most of the drawbacks only come to light once you start selling.
At this stage, most people will already have a good idea of the products that they would like to sell. There are dozens of things you should think about before you pursue a business idea. You shouldn’t be put off if some of the qualities of the product aren’t appealing. You simply need to understand that there will be limitations that will affect how far you can take your business. These limitations should be embraced because they will help in framing your thinking. Are you going to make the product yourself or is someone else going to make it for you? How fast will it move? Is it something customers buy once or will they come back to repurchase on a regular basis? Is it trend-based and something that won’t sell in a year’s time? Can it be shipped internationally? Is it easy to store? Does it have an expiration date? How often is it consumed? Can you easily access your market? Are there any legal considerations that you need to think about?
The decision-making process will vary depending on the products you choose. Selling stationary will be different from selling men’s shorts which will be different again from selling watches. The product(s) you choose don’t have to be perfect. There will always be drawbacks with every product. It’s important that you have a good understanding of what those drawbacks are and know whether those problems can be overcome. For instance, a product with a short-self life may be fine if you can quickly move through a lot of stock and you have marketing channels open to you. Conversely, a product with a longer shelf life may be less desirable because it has higher storage costs and won’t move as quickly. As you build up your company’s product range, you will find that each product is different from the last. A product that is easy to ship might be difficult to store, while a product that is cheap to buy from a manufacturer might have a very high minimum order quantity. Equally, if you decide to have your products made in your home country, rather than China or another manufacturing hub, you might find that they are easier to make but the cost means that it isn’t worth pursuing.