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choosing the right product for your ecommerce brand is one of the most important pieces of the puzzle but how can you tell that you have the right product well you can't really tell until you validate your idea and that's why one of your first steps should be making sure that you've picked a winner now if you do skip this step you run the risk of wasting your time or even worse you run the risk of sinking a bunch of money into products that people aren't willing to buy so to avoid all of that this video is going to teach you how to properly validate your product idea these 16 questions will help you gauge whether your product is viable so that you can enter the market [Music] confidently if you have just stumbled upon this video welcome to learn with shopify this is a channel for small business owners that are really looking to start and grow their ecommerce business so if you're an entrepreneur definitely consider hitting that subscribe button we have tons of great content that covers every aspect of running an online business so without further ado let's just hop right into it here are 16 questions that you can be using as a framework so for this i'm just going to be using a coconut hair mask as an example but you would just plug in your own product okay so our first few questions are going to look at the market as a whole what is the potential market size or demand you're going to want to look into this before you invest a lot of time money or energy into an idea and this can be as simple as using a service like buzzsumo so buzzsumo will show you how many people are talking about your product per day but by far the most popular tool is google keyword planner tool it's a free tool which will help you determine how many people are searching for specific words each month using google and you're going to want to use this tool to search words that are related to your product idea so we use google keyword planner tool for our coconut oil hair mask and it looks like there are over 73 000 searches per month and then using buzzsumo we were also able to determine that there were about 150 tweets per day mentioning our main keywords now this information doesn't give us a hundred percent certainty that our product will have buyers but it is a vote of confidence that there's interest out there next you're going to want to do some research on who your competitors are the more you understand about the competitive landscape beforehand the less surprises you'll face later so research your competition on google especially in the countries that you plan to sell in let's hop back into our example so we've done our research and from our analysis we discovered that there are three areas of competition pure coconut oil like the kind that you would find in a grocery store diy recipes and commercial products sold by large businesses for us we didn't find any true market leaders for our hair product but instead we found a very fragmented market of manufacturers and retailers so we don't have the full picture yet but this may indicate some opportunity for us is it a trend fad flat or growing market just as important as knowing your potential market size it is also important to understand which direction the market is going the last thing that you want is to realize that you've actually missed the boat and the market is rapidly declining right so for our product we know from google trends that the search interest has grown significantly over the last several years but even though coconut oil is trending as of right now the beauty industry is always going through marketing shifts that push new ingredients as breakthroughs so it's important to recognize that at some point in time this trend may die out and that will obviously cause a decrease in demand so if you're not sure whether a trend is going to continue upward or die out just do a bit of research and use tools like trend hunter also a lot of entrepreneurs report on using just their gut instinct when it comes to capitalizing on a trend so your intuition can be valuable as well can your potential customers buy the product locally so if your product is readily available locally that's just one less reason for people to seek your product out online so let's go back to our example coconut oil as a raw ingredient is pretty widely available online and offline but coconut oil based hair care products are definitely much more scarce offline and it would likely require a specific trip to find it so if you're also finding that your product is hard to find in stores then that's definitely a good sign who are your target customers before you fully decide on a product it's important to get a sense of who your potential customers are you don't want to find out too late that your potential buyers are living somewhere that you can't ship to for example so if you're in a market that has major players you can use channels like alexa to find out more about the demographics of your target market but in our case it's definitely a little bit more difficult because there aren't really any major competitors with websites that we can analyze and just you know spy on so if you're in the same situation you can just get a feel by using social media so try twitter for example you can check out tweets that mention your keywords and just take a closer look to see who exactly these people are we did an analysis of our keyword coconut hair masks and most of these people tweeting we're female based on credible profile images we can also assume that the average age is between 18 and 35 and then having used google trends we know that our target customers are mainly in the us and in canada from this information we know that we can really easily reach our potential customers and then we also did a little bit of extra research that basically indicates that our particular demographic is not shy about spending money online so that's definitely good news for us so now it's time to move on to our product-based criteria these are going to be the questions that will consider factors about the actual product itself and they're going to help you get a better understanding about what your product strengths are and what are some potential pitfalls what is your potential selling price the lower the price the lower potential profit per unit it has been generally accepted by many top ecommerce entrepreneurs that products sell between 50 to 150 hit a certain sweet spot where you can make an acceptable amount per unit but not too high that customers are hesitant to purchase online or expect premium services like phone support for a hair mask we looked at about two dozen comparable products from different brands we determined that we would be able to charge around nine dollars to twenty dollars for 120 milliliters now for us this is a little bit of a low price point that means our margins are going to be small and it's going to make it difficult when using paid advertising channels especially when we're just starting out so yikes that's a little bit of a red flag but this is our first red flag in our research so far and frankly that is okay right not every box is going to be checked when doing this exercise so let's just go ahead and take a look at the next questions if you're looking to get started building an online business but maybe you're not sure what to sell or you need help finding a product then make sure that you're checking out our free 40-minute webinar it's going to teach you how to find winning product ideas how to validate those ideas and how to get started so just click the link in the description box below to get started with your free training now what is your potential markup markup is the access amount after the cost of your product this amount will cover your expenses to run your business and it's going to be your profit now remember when you're looking at your potential markup you may also want to consider how it's going to change as your business grows so for example we're just starting out right so we're going to be ordering small quantities but as we grow we're going to start to get some bulk pricing and that's gonna mean our costs go down and there's gonna be some more leftover money like we just talked about we know we can comfortably sell anywhere between nine and twenty dollars now we did some research on our costs including ingredients and packaging and it's going to cost us a 583 to produce a hundred units so if we were to sell our product for nine dollars which was at the lower end our markup would be a concern for sure but if we aim for the higher end at twenty dollars we can still enjoy a pretty healthy markup all right next up how many skus will you have to stock so skews refer to types or styles of products like sizes and colors and in general more skus just mean more potential headaches so a lot of skus are going to increase your cost for inventory and storage and it's going to increase the chances that you might make a shipping mix up so finding a product that has only one sku is definitely a bonus in our case our product choice is just going to begin with one skew now there's also potential to create an entire line with this concept and that's great because that's going to open the door for opportunities further down the line question number nine can you offer a subscription so subscription-based models are definitely not necessary to build a successful online business but the ability to do so is definitely very desirable and that's because subscriptions increase recurring revenue and it saves you costs on acquiring new customers for a hair mask there's a potential that this could fit into a subscription-based model because it is a consumable but it's important to be realistic a customer is likely just going to go through a couple of these a year so our subscription plan would definitely have to reflect that need question number 10 what is your product's size and weight the size and weight of your product can have a big impact on your sales and your bottom line if your product is oversized or maybe it's super heavy that's going to result in expensive shipping costs and those costs can deter potential buyers and it can eat into your margins all right so let's take a look at how this would affect our product most shipping companies would consider ours to be a small package both in weight and size so you can even do your own research as well visit your carrier's website and put some rough numbers and then you can get a feel for how much things are going to cost you all right question number 11 how durable is your product a durable product is obviously ideal a high quality product is going to decrease returns and overall durability is going to ensure that your product isn't damaged as it's being shipped so again going back to our example of our hair mask so maybe we would want to use a plastic container because that's going to be cheaper and it's going to be more reliable than shipping glass well also heavily better ingredients to make sure that they're safe and effective which is going to ensure a high quality product in the end now don't forget that when you're asking yourself this question you're thinking about all the different factors that make your product durable whether that's the packaging or the product itself question number 12 will you face seasonality swings seasonality refers to swings in purchasing behavior over the course of the year so for example christmas trees of course they're going to be extremely seasonal all of them being purchased in the months of november and december seasonality swings are very important to keep in mind because of the effect that they can have on your cash flow as well as the overall viability of your business we used google trends to better understand if we would potentially suffer from seasonality swings now we can definitely see that there are some subtle spikes in the searches in january and we're just assuming that people are looking for a bit of a rescue in the colder months but other than that there doesn't appear to be too much seasonality that would affect our product choice but we'll definitely keep this data in mind for when we market our product in the winter question number 13 does your product serve a passion or does it solve a pain products that solve a pain point or serve a passion just make finding customers that much easier now products that are maybe just you know nice to have might be a little bit tougher now for us it's definitely safe to say that our product choice can solve a pain point for people that are suffering from dry or brittle hair and arguably it also serves a passion as well since some people are invested in this hobby of keeping their hair looking healthy and looking good alright next question is your product consumable or disposable a consumable or a disposable product is going to be good from a business standpoint that's because it's going to provide you a better opportunity for repeat business as a hair care product our product choice is definitely going to fall under the consumable category so other consumables might include food or cleaning products for example question number 15 is your product perishable choosing a perishable product is going to pose a risk for you especially if you're struggling to make sales because that might mean that you could be throwing out some of your inventory if it goes bad so this is definitely an important question that you want to ask yourself before you stock up so going back to our case study coconut oil has an approximate shelf life of three years or longer this should give us more than enough time to figure out our marketing plan and to sell our product plus we'll also want to consider the time that it would take for our customers to actually use the product up question number 16 are there any restrictions or regulations for your product restrictions and regulations are normal for many businesses however it's definitely best to learn about this before you invest time and money into your business so for us in our product as far as we've been able to determine there aren't really that many regulations or restrictions that required but if you're getting into food cosmetics or even baby toys for example you're definitely going to want to make sure that you're doing your research first so after looking at our case study and taking into account the market and the product itself we feel strongly about our product idea and the potential market for it so some highlights that have really been standing out to us to give us this indication are the low cost to start the business the strong search demand the trend trajectory and the keywords that we could potentially rank for in google however we do have a few concerns that prevent this from being a complete slam dunk and some of those being the low product price point and the competitive landscape a large part of the potential success for a product is going to come from building a beautiful brand around this product and then we're also going to want to make sure that the product itself is more effective than just coconut oil on its own once you have your product idea and you've validated the potential market for it you're going to be ready to start building your online store shopify makes selling online really easy really fast and definitely scalable so you can get started with a free 14-day trial and you actually don't need a credit card at all to get started and it's gonna give you a full two weeks to build a beautiful ecommerce store so that you can start selling right away i will leave a link for you guys in the description box to get started with your free 14-day trial all right so hopefully you found this example helpful make sure that you're asking yourself these questions just to do the proper research before you just go ahead and jump right in and that way you're going to have a clear objective understanding of whether your product idea is viable and if it is you're going to enter the market more confidently if you found this video helpful make sure that you're giving it a thumbs up that helps our channel and it helps our community grow learn with shopify is a community of entrepreneurs so if that's you feel free to hit subscribe to join our crew but other than that i'm glad that you were able to join me in today's video my name is michelle bally and i will see you in the next one bye [Music] you