Choosing a product to sell is the first step towards sales of any kind. But how do the most successful retailers do it? Do they just magically conjure up a list of things they know will sell, and then go about doing just that? Fortunately, the answer is no. There is a logically sound, result-driven process you can follow to choose products that you can be sure of making sales of. Without further ado, we list out the steps you need to follow in a good product assortment strategy.
This guide assumes that you are yet to decide what products you’d like to sell. If you manufacture something niche, or if you believe in a product idea, read more about selling online in the US, or read this account of a niche product retailer who is making big strides in e-commerce.
What is product assortment?
Simply put, your product assortment is the mix of products you choose to maximize your chances of selling. Some products naturally tend to sell more, such as FMCG goods, because everyone needs them. Others, such as jewelry items, move more slowly. However, they tend to have higher profit margins.
Your product assortment strategy needs to be a clever mix of these two kinds of items to achieve maximum profits over time.
7 Steps In A Good Product Assortment Strategy
All sales on the planet cater to one demand- need. Even before you start making a list of products that you think might bring in sales, do you know what the consumer wants? In this scenario, a customer is just a faceless entity with unknown preferences, so let’s get to know them a tad bit better.
Denise Johnson is an urban woman in her thirties, and an avid online shopper. She loves to browse for unique products, especially in the wellness segment and is willing to buy products from relatively new retailers. Josh Stiller is a married father of two and is wary of online shopping after a scam he was subjected to. However, tight on time, he often buys cereal, diapers, and household products from Amazon Prime.
Just by observing these two customers, you may be tempted to start selling loads and loads of household and wellness products. Will this approach be successful? That depends on how many other consumers also want these same things. Market surveys are a great way to understand what consumers want.
Understand The Customer On A Large Scale
- Employ someone to do keyword research to see which products you can rank for, and then sell those products.
- Observe sales trends for a variety of products on Google Trends (we talk about this later) and pick those that are fairly consistent.
- Ask as many people as possible, and don’t limit yourself to friends alone. This is especially beneficial if you have your mindset on a niche product. Ask in sales forums and Facebook groups about the interest people may have in buying these products.
- Spend some time researching products on major marketplaces. Pick out those products that you think have great utility, but seem to be receiving bad reviews for retail reasons. Consider how you can plug this gap. Sometimes, being a smart retailer is all about exploiting an opportunity that already exists.
Choose What Motivates You
Once you have a broad list of products ready, a good way to shorten the list is to eliminate those products that don’t inspire you in any way. For example, I absolutely loathe anything to do with cricket, and would not be caught dead selling related products. Likewise, there will be things you are either unwilling to sell or don’t have the logistics to procure.
Specifically, consider food products and perishable goods. If you plan to start out on a marketplace such as Amazon, they have very strict rules about expiry. Fail to push your products through in a certain time window, and they are virtually unfit to be sold later. If this is a challenge you have the resources to handle, don’t hesitate to go right ahead.
Else, if you want to eliminate as much risk as possible, you must strike all perishable items off the list first. What you are essentially doing in this step is picking those products (and associated challenges) that motivate you, as opposed to the ones you find daunting. If you are not convinced that a product will sell, it most probably won’t.
Observe Common Trends
As we mentioned earlier, Google Trends is a great resource to get data on trends across a large sample size. After all, asking friends and Facebook groups can only take you so far. By using the Trends tool, you can observe historical trends over several years for a variety of products. The results you see are the ‘expression of interest’ in a certain search term over time. While by itself, it cannot tell you how many actual sales have been made, a trend such as this tells you whether there is any market interest in a product or not.
Let’s do this with an example. If you want to sell shower curtains, and look up ‘shower curtains’ on Google Trends, here is what it looks like:
You will see that general interest peaks in summer and falls sharply in winter, perhaps suggesting that people don’t take as many baths in winter as they do in summer. From this trend, you can safely assume that the suavest and stylish shower curtains may not find many takers in winter. This is not to say that you should be selling deodorant and dry shampoo in winters instead, but simply that at this point, you may want to augment the loss in shower curtain sales either with other products or by offering discounts on you shower curtain range.
We’ve also done this for several other products in the article, Here’s What Consumers Will Buy From Retailers This Winter. Take the products from your earlier list and run a simple search such as this to understand global trends.
Using Keyword Tools
Another way to predict trends is by using keyword research. While it is best handled by an SEO expert, there are aspects you can keep in mind, such as considering all possible keyword combinations that can lead to your product page. You can use Google’s Keyword Planner tool to determine what keywords and keyword combinations are searched for most often on Google. Next, to each entered keyword, you will be able to see the search frequency and density, which will help you decide what keywords to use in your product description. This approach works to build organic traffic to your online store. It also helps your product be listed on top of Amazon’s search results for a generic product.
What you’re doing here is shortlisting a few products and seeing how far their reach goes in a specific area. The greater the search volume, the more inclined you will be to sell a certain product.
Keywords also work after you choose your product assortment. For example, you list a product that is herbal shampoo. Apart from the usual suspects such as ‘herbal shampoo’, ‘natural shampoo’, ‘natural hair care’, etc. using phrases such as ‘get long, lustrous hair’ in your copy will help you rank for a more broader search that is often the hallmark of the undecided customer. In a digital shopping experience, using the right keywords can help build organic traffic to your websites.
Select Your Products, And Specialize
Once you have done this research, you are standing on solid ground. Take a look at the products that remain on your list after all the rigorous checks the list has run through. These are products you want to sell and also have a greater probability of being sold.
Specialization comes in very handy at this point. If you’re selling in the FMCG category and you notice soaps and shampoos selling well, you may do better selling in the bath and body niche. Since the products all fall under a relevant category, you can design your web store around a common theme. Choose products to sell that you think would be relevant to your target audience.
Another major advantage of specialization is that you can showcase your abilities and credibility in a certain niche or domain. In essence, you are slowly building up to become a product leader in a certain category, and when you come to be known as a brand, your sales will begin their upward climb even faster.
Also, demand for the same product or the same set of products fluctuates through time. If you choose products that are currently in vogue, you always run the risk of being left with too much inventory when the trend runs out. There are two things you can do to keep your overall sales constant over a short to medium period of time.
Things To Consider
One, choose products that have stable trends. A few dips and spikes are okay, but you’re looking for products that have crazy graphs. If a product sells extremely well in a certain season and at no other time, it is wiser not to make this your primary product for sale.
Two, choose the specialized product assortment itself such that dips in sales in one product are complemented by spikes of another. Going back to the shampoo example, menthol shampoo may be great in summers, while winters call for strong scents or even dry shampoo.
Identify The Right Suppliers
Unless you are manufacturing your products yourself, you are dependent on other vendors for your product supply and quality. It is very tempting to choose vendors who offer very competitive prices, but is that the only aspect you look into?
As you begin to make consistent sales, product quality will begin to play a major role. The better the products are, the lesser returns you receive and the more trust is built in your brand. If you have products that are inconsistent, faulty or otherwise unsatisfactory, it won’t be long before customers abandon you.
When choosing a seller, be sure to evaluate an entire batch of products sent by them. Would you buy them? Also, for vendors outside your country, consider how long the demand fulfillment time will be. It isn’t so much about how long or short it is, but about how consistent it is. A standard demand time lets you sell without worry.
Using a vendor management system is also recommended. It may seem like a lot to keep track of manually, so vendor management systems can give you a clear picture of orders that you have raised and are pending delivery. Some intuitive systems can also alert you when stocks are low, and send a purchase order to vendors when this happens.
Know Your Competition
Competition can be both inspiring and exhausting. Once you have chosen what products to sell, evaluate the competition, both in online marketplaces and stand-alone web stores. In almost every category, there will be brands that are well-known. We are not trying to replace them.
Instead, we are trying to eat a chunk of the pie, and perhaps replace those retailers who are unable to deliver on their promises. Observe how other retailers in your product category are functioning. Have they used the omnichannel approach to their advantage? Do they have a message that resonates with their audience?
Also, study those who are on the brink of failure. What did they do wrong? Most product retailers fail to maintain a consistent supply chain, thus leading them to too much or too little inventory. On the front end, your customers only see an ‘unavailable’ message and they don’t care about the ‘why’. Investing in a good inventory management software when you begin can save you a world of pain in the future.
Ensure that the products you have chosen have enough demand to sustain several market players at a time. Else, if you’re selling a unique product, target the right audience from the very beginning.
Constantly Evaluate Your Choices
Once you have chosen your products and have begun selling them, you’ll have real-life insights to depend on. Observe sales trends for different products over time, removing those that may not be selling too well. And remember, your product assortment does not have to be constant all the time. You can swap the slow-moving inventory with products having greater demand. You can also add new products to the assortment as you begin to feel secure. Also, you can choose to enter into a new product niche too.
Most crucially, always review and re-evaluate to see what is working for you and what isn’t. Choosing your product assortment is a continuous process.
What is the worst product assortment mistake you have witnessed being made? Tell us in the comments!