Starting an eCommerce business from scratch: Identifying a product

I recently decided to challenge myself to start a new eCommerce business from scratch. There were a few reasons for challenging myself, some personal; to create more income, and to further diversify my income streams. But also to see if I could build something from scratch, with very little investment, and grow it to be a profitable business with minimum touch. I hope this series of posts can help others out there to do the same.

Criteria

There were some criteria and goals I set myself in doing this:

• Must be a physical product (I’ve never had a physical product business before)
• Must be a market I have no experience in… yet
• Must be simple to ship
• Must be fully open to automation
• Must fund it’s own growth after initial investment
• Must create my own branded products (see Become Your Own Commodity)

Identifying a product

The first stage was identifying a product and market. I began by looking on popular.ebay.co.uk to identify popular search terms. One stood out for me above the rest; UV Nail Gel’s. And in a coincidence my wife had recently started to use UV Nail Gels at home, so I was able to actually physically handle the product, and had a potential in-house product tester.

I began to look at the products available in the UK, there wasn’t too many on the high street, the ones that were available were extremely expensive, most around £18-£20 per bottle. On eBay and Amazon they were around £5-£8 per bottle, however they were very generic imported brands that had many sellers.

I decided after studying the market a little more, to import a generic brand in to the UK and begin selling on eBay. The steps needed were to search for the brand on alibaba.com to find the manufacturers. I made contact with the sales representatives from the manufacturer and began negotiating price and MOQ (minimum order quantities).

Tips for sourcing on Alibaba.com

Do lots of research. Do lots of research. Do lots of research. Chat on skype to the traders agent, and try to make multiple contacts to ensure you are receiving the best pricing, and to ensure authenticity of any proposals sent to you. Always have samples sent to you, don’t buy products without thorough testing. Use escrow, or Paypal. Paypal offers good protection, especially if you have already tested the products. Negotiate a low MOQ to limit your risk.

The plan

The plan was to sell enough generic but recognised brand, to enable me to have my own brand manufactured and in the process grow a new customer base by offering outstanding customer service.

Next steps:

• Launch eBay store
• Identify packaging & postage costs
• Decide on pricing
• Find a USP (unique selling point) to differentiate from competition
• Start shipping
• Build eCommerce store

Look out for future posts on starting an eCommerce business from scratch.