Introduction
This series of blog posts aims to share the insights and knowledge I gained while understanding online business and how it is structured. I want to share what I know about online business and build upon that knowledge by writing it down. I hope this will last a long time, so I can refer back to it later.
I am taking a Web Business Creation class at BYU-Idaho, taught and led by Kent Lundin. He has his own blog (kentlundin.com) and has had several students with successful online businesses. I study at least two new case studies each week with specific scenarios that I will be referencing throughout this series. I will include brief excerpts to help with clarification and future reference.
Demand and Competition
In one of the case studies this week, we talked about demand and competition and how we can measure it. One of the tools suggested to take a look at was The Hoth Keyword Planner. This was a useful tool to take a look at the demand for certain products. As we discussed, I thought of how understanding the demand is important, but also finding that sweet spot when it comes to competition can make or break a product. If there are too many competitors for the same product, it easily becomes an oversaturated market, and coming in too late means less profit.
I have experience when it comes to private labeling on Amazon, and I understand a little bit about keyword research. If you can find a product that has high search volume and low competition, you’ve hit a certain sweet spot. If everyone is selling the same product, it’s going to be difficult to be unique. This thought process bleeds a bit into the sourcing discussion we had.
Overall, understanding the demand for a specific product and the competition for that product usually results in what will be more or less profitable. As I continue to learn more from this class, I hope I can come up with a business where I can thrive online.
Sourcing Products
This specific discussion intrigued me the most. When we talked about how to source, we specifically focused on international platform sourcing, US-based sourcing, and manufacturer sourcing. In the scenario we talked about, the options were to pick one of these sourcing methods for “aviator sunglasses”.
Examples of Sourcing:
- International Sourcing: Alibaba.com, Aliexpress.com
- US-Based Sourcing: Costco, Winco, OlympicEyewear Wholesale
- Manufacturer Sourcing: a Taiwan supplier
Since the keyword research was technically already done, I focused more on the benefits and drawbacks of each of the sourcing methods and thought of how it would fit into the criteria given. From my perspective, the case study individuals were looking to learn through trial and error in an online business. They wanted to learn the ins and outs of online business and try something that might work for them. This means they don’t have a lot of money to invest right off the bat, and they are trying to test a product.
With this in mind, I thought that a US-based business would be best. The pricing is not terrible, although more expensive than the others, and overall, the shipping and MOQ would be considerably less. This would give them a chance to dip their toes in the water, test the product, and see if they could make a profit. If the product tests well and several people like it, then it just makes sense to scale it up to an international platform level.
Personal Reflection
These lessons have helped me put myself in the shoes of a business owner. I have learned to think more like a business owner and think of the pitfalls or even the benefits of doing business online. This takes into account factors such as demand, competition, and sourcing all through the medium of the internet. Below, I share a little bit of my own process if I were to run an online business with the knowledge that I gained.
If I were running an online business, I would look at the search volume through some keyword research to see if people are searching for the product. Once I’ve established an actual demand and low competition when it comes to the number of sellers selling that product, I would move on to find a supplier. I would start with a US-based supplier to test the product first.
Once I’ve tested a product with a US supplier and confirmed legitimate profit, then I would go straight to the manufacturer to see if I’d be able to modify the product a little. Even see if I could obtain an exclusive license, so that no one else can sell that product. Some of these manufacturers are willing to put your logo on their product, and this makes it so that other people who are buying your product can trust your brand.
Conclusion
Moving forward, I hope to keep these first building block steps in mind as I continue to think about how to run an online business. Understanding the demand and competition for a product you are selling and the options of where you can source these products are essential for any business. And it’s all made simpler and easier online.