How to Choose the Best Products to Sell Online (Beginner‘s Guide)

Hi there!

Starting an online business can be one of the most rewarding things you‘ll ever do. I‘ve been running my own ecommerce stores for over 15 years, so I know first-hand how thrilling it is to turn your passion into a profitable company.

But one of the biggest struggles new ecommerce entrepreneurs face is finding the right products to sell. Picking the wrong products can doom your business before it even gets off the ground.

Not to worry! In this beginner‘s guide, I‘ll share the exact step-by-step process I‘ve refined over my career for choosing winning, high-potential products to sell online.

Let‘s dive in!

Step 1: Choose the Right Ecommerce Platform

The first key decision is which ecommerce platform you will use to launch your online store. Your platform will impact everything from your website design capabilities to payment processing, shipping rates, and more.

Here are some top options to consider with the pros and cons of each:

Shopify

A fully hosted, end-to-end solution for ecommerce stores.

Pros

• Very easy to set up – get your store running in under an hour
• Optimized for sales conversions with beautiful themes and built-in marketing tools
• Handles security, speed, scalability so you can focus on your products

Cons

• Monthly fees are higher than other platforms – ranges from $29-299/month
• Transaction fees on top of payment processing costs can reduce margins
• Less flexibility to customize site design and functionality

WooCommerce

A free, open-source WordPress plugin to build an online store.

Pros

• 100% free plugin with no monthly fees beyond web hosting
• Host on your own server or optimized WordPress hosting platforms
• Extremely customizable with WordPress plugins and themes
• Great for blogs and content sites along with ecommerce

Cons

• Requires more technical skill to install, configure and manage
• Must pay for security, performance, and scaling enhancements
• Support and troubleshooting handled by you instead of the platform

BigCommerce

A flexible SaaS ecommerce platform with built-in tools.

Pros

• More affordable than Shopify at $29.95/month for standard plan
• Includes web hosting and a free SSL certificate
• Robust shipping and fulfillment features

Cons

• Transaction fees are high at 2.9% + 30¢ per order
• Less design flexibility than Shopify or WordPress
• Must pay extra for advanced features and integrations

*Data source: Software pricing estimate on G2.com as of January 2024

I‘d recommend beginners start with Shopify or WooCommerce first. Both platforms have the biggest app ecosystems and community support. Once your sales volume increases, BigCommerce can be a great option for scaling your business.

Step 2: Understand Shipping Logistics and Costs

Shipping and fulfillment costs can truly make or break an ecommerce business.

According to a Business Insider study, high shipping costs are the #1 reason shoppers abandon their online shopping carts.

Data source: Business Insider

My advice is to carefully consider the size and weight of products you plan to sell and how that impacts shipping costs.

Here are some tips to help minimize shipping expenses:

• Source locally whenever possible – Products made closer to home have lower shipping rates and faster transit times.

• Offer free shipping above a minimum order value – This incentive convinces customers to add more items to their carts to hit the free shipping threshold.

• Charge flat rate shipping – Simplify shipping with a single flat fee. Just ensure it covers your average costs.

• Negotiate carrier discounts as volumes increase – Growing businesses get better shipping rates from carriers like UPS, FedEx and USPS.

• Consider selling digital products – No physical shipping required for ebooks, online courses, stock photos, music, and more. Newbies may want to start here!

Thinking through shipping early helps avoid painful surprises eating into your margins down the road.

Step 3: Focus on Niche and Specialized Products

One of the biggest ecommerce product mistakes beginners make is selling the same generic items everyone else has.

Products like phone cases, yoga mats, or iPhone charging cables face endless competition on Amazon and big box sites. Profit margins get crushed competing on price alone.

The smarter strategy is to target specialized niche products that have less competition.

For example, instead of just selling toys, become experts in STEM learning toys. Or specialize in handmade quilting supplies.

Here are some major advantages niche products provide:

• Higher profit margins – Less competition means you can command higher prices

• Less marketing needed – You can precisely target a smaller audience of enthusiasts

• Unique offerings – Specialized products readers can‘t easily find on Amazon

• Opportunity to specialize – You can build authority around your niche with focused content

• Brand loyalty – Niche buyers are more likely to come back and buy more

I‘d recommend browsing marketplaces like Etsy to find creators of specialized handmade and vintage products looking to expand their sales channels. You can also attend craft fairs and niche trade shows to discover new suppliers.

Step 4: Use Data to Validate Demand

Never choose products to sell based on hunches or guesswork alone. Smart ecommerce entrepreneurs use data to validate product-market fit.

Here are some of my favorite free tools to assess demand:

• Google Keyword Planner – Shows monthly search volume for relevant keywords

• Google Trends – Graphs search interest over time to find rising trends

• Amazon category sales data – Bestseller lists show you what‘s hot on Amazon

• Etsy and eBay sales data – Reveals trends for specialty handmade and vintage items

• Facebook and Instagram hashtags – Hashtag volume indicates consumer interest

• Online surveys – Quickly validate interest by asking your target customers directly

For example, let‘s say you think meditation cushions could be a hot product. Punch "meditation cushion" into Google Keyword Planner and you see there are 1,600 global monthly searches for that phrase. Then check Google Trends and find interest has doubled over the past 5 years.

This data signals strong growing demand worth investigating further!

Step 5: Vet Suppliers Thoroughly

Once you‘ve identified high-potential products, the next step is sourcing them from suppliers, manufacturers and vendors.

Here are key criteria to evaluate any potential supplier:

• Quality – Order samples to inspect product quality firsthand

• Reliability – Check reviews to confirm consistent fulfilment and good service

• Pricing – Compare wholesale rates across multiple suppliers

• Minimums – Ensure MOQs (minimum order quantities) align with your budget

• Location – Consider proximity to reduce shipping costs and delays

I recommend building relationships with multiple suppliers to compare pricing and find the best products.

Use supplier directories like SaleHoo to find thoroughly vetted suppliers and manufacturers especially when importing products from overseas.

Step 6: Estimate Costs and Expected Margins

You‘ll need realistic cost estimates to determine your final price and profit margin per product. Factor in:

• Wholesale product cost per unit
• Inbound shipping to you
• Storage and inventory management
• Packaging, branding, customization
• Outbound shipping to customers
• Platform selling fees + payment processing
• Operating overhead like web hosting and software

Don‘t leave out hidden costs that eat into your bottom line. Build in a 25-35% profit margin buffer on top of your costs to account for unexpected expenses and seasonal sales fluctuations.

Let‘s break down a sample cost calculation:

Wholesale product cost: $10/unit
Inbound shipping: $2/unit
Storage: $1/unit
Packaging: $2/unit
Outbound shipping: $3/unit
Platform fees: $1/unit
Software/web hosting: $1/unit

Total Costs: $20/unit

Retail Price: $30/unit (33% margin)

Profit: $10/unit

Tracking your exact product costs and margins will be key to running a profitable business. I recommend using Freshbooks or QuickBooks to monitor the numbers closely.

Step 7: Research Successful Competitors

Conduct in-depth store and product research across your potential competitors.

Analyze:

• How competitors position and market the product
• Unique angles and selling points in their listings
• Which product variations and bundles sell best
• Product photography and lifestyle imagery
• SEO keywords and conversion optimization tactics
• Pricing strategies and discounts

This intelligence helps you craft differentiated and compelling product listings. Just be sure not to directly copy competitor content or images.

Helpful analysis tools include BuiltWith to see what platforms and tech competitors use. And SimilarWeb to analyze their traffic sources and digital marketing strategy.

Step 8: Prioritize Visually Appealing Products

Here‘s an ecommerce truth I learned early on: nothing impacts conversions more than high-quality product photography.

That‘s why you should favor products that look visually appealing and photograph well. Characteristics to look for:

• Small products that fit nicely on lightboxes
• Bright, bold, contrasting colors
• Distinct shapes, lines and patterns
• Tactile textures that translate on camera
• Ability to style in aspirational lifestyle scenes

Be prepared to invest in pro gear – like cameras, lighting, lenses and editing software. Or hire a professional photographer skilled in shooting products.

Great photos drive sales. Don‘t underestimate their importance!

Step 9: Verify Legal and Regulatory Requirements

Some products come with special legal or compliance requirements. Be sure to thoroughly vet these factors:

• FDA oversight on drugs, medical devices, supplements

• CPSIA regulations on lead and phthalates in children‘s products

• FTC guidelines on truthful advertising and disclosures

• CPSC mandates banning certain hazardous products

• Copyrights on intellectual property like branded fabric prints

Treading into heavily regulated industries like health care can expose you to substantial risk as a new business. Consider staying away until you have more experience.

Consult an ecommerce legal expert if selling any products with potential compliance considerations.

Step 10: Align with Your Passions and Values

My last piece of advice: choose products aligned with your interests and values.

Selling items you have no personal connection with is incredibly challenging. Without genuine passion, it‘s hard to gain the deep knowledge and enthusiasm needed to succeed.

Maybe you‘re an avid gardener – sell specialized gardening tools and organic soil blends. Or a motorcycle fanatic – offer custom bike parts and biker apparel.

Let your passions guide you to niche products you‘ll genuinely enjoy learning about and spreading awareness of.

Additional Tips and Resources

To take your product research even further, here are some additional tips and helpful resources I recommend:

• Calculate your breakeven point and ROI goals when pricing products

• Factor in seasonality – some products sell better at certain times of year

• Get customer feedback early – survey potential buyers or run pre-sales

• Product Mafia – Product research training community

• Jungle Scout Product Database – Find trending Amazon products

• Google Shopping Insights – Analyze Google Shopping search trends

• Trend Hunter – Get insights on emerging consumer trends

• Cloud Living – Trend reports across home, fashion and beauty

I hope you found this beginner‘s guide helpful! Choosing the right products is so crucial to ecommerce success. Take it from me – carefully following this process will set you up for sustainable growth.

Wishing you the best of luck on your entrepreneurial journey! Let me know if you have any other questions.