Listen up: Choosing a product is the MOST IMPORTANT DECISION you will make in your online business. Here’s why: The product you choose will determine your market, your inventory, your expenses, your advertising. Everything you do online will hinge on what you choose.
So, how do you know what to choose? Well, I have written thousands of words on defining a market niche and finding a product to market TO that niche. You can read many of those articles in the “past issues” section of my online ezine:
http://all-in-one-business.com/imm
So, instead of writing today about the SPECIFIC products you can offer online, I thought I would write about the TYPES of products you can offer, and give you some of the pluses and minuses of each.
Products that you can sell online fall mainly into two categories: Hard Goods and Soft Goods. Hard goods are physical products that have to be manufactured, shipped and delivered. A book, a toaster and a phone are all hard goods. A soft good would be anything that doesn’t have to be physically delivered but instead can be delivered with a download or web access. Some examples of soft goods would be a subscription site, an eBook or software. Anything that the purchaser can access directly via the Internet would be a soft good.
Let’s look at hard goods first:
Here are the pluses are selling a “hard” good…
1. It has immediate value. People can see it, touch it, use it.
2. It is difficult to return. In order for someone to send back the product and request a refund, they have to go to the trouble of physically shipping the product back to you.
3. It is easy to obtain. There are literally thousands of sources for hard goods.
But here are some of the minuses…
1. It requires inventory. Either you or your drop shipper will have to maintain some inventory to fill orders.
2. It requires shipping. Someone has to physically fill each order.
3. It is difficult to return. While this can be a plus (see above) it can also be a minus. Some people will not purchase because they know it will be difficult for them to return the product and get their money back.
4. It can be damaged. Hard goods break, that’s just a fact of life. Some will break before they get to you, some will break on the way to the customer and then some of them will break when the customer’s 3 year old plays with them.
5. It costs money. Every hard good has an associated cost. Ideally that cost (the manufacturing cost) will be about 1/10 to 1/8 the retail price, for each one that is damaged, each one that is returned, each one that is lost, there is a fixed cost.
Next, we have SOFT goods…
Here are some of the pluses in soft goods…
1. They can be delivered INSTANTLY. A download or site access can be automatically granted to the buyer so that there is no waiting period.
2. They require no shipping.
3. Returns are not a problem. If someone wishes to return a soft good, all that needs to be done is to have the credit card “credited”.
But these have some minuses as well…
1. They are tougher to prove valuable. Since the buyer is not receiving a physical product, many feel the value is just not there.
2. They are easily stolen. Once someone “has” your product, they can often copy it, and even sell it without your permission. While this can be moderated through the use of various means, it is a real problem.
3. Returns are no problem–for the customer. Returns on eBooks for instance are notoriously high. It is very simple for the buyer to download the eBook and then fire off an email requesting a refund. 10% is not an uncommon figure for eBook returns.
4. Providing something unique can be expensive. The days of buying someone else’s reprint rights and making a fortune are over (if they ever existed). If you are going to make money in soft goods you will need a unique product. Developing software or writing a quality ebook is a time consuming and/or expensive proposition. Without a unique offering it will be difficult for you to stand out from the crowd.
There is one other option that I wanted to mention, though, that combines the strengths of both of these (with less of the weaknesses):
Providing a product that is BOTH a hard good and a soft good. Ken Evoy does that with his Make My Site Sell product: http://all-in-one-business.com/myss.html. Here is how this works…
You offer a product (like a manual or software) that can be delivered in BOTH soft and hard formats–you offer an immediate download of the software, for instance, while shipping out the manual and CD-ROM. This gives the instant gratification of the soft good, while providing many of the benefits of the hard good.
No matter which route you choose to go, soft goods, hard goods or both, do your homework and persevere and you will find your product succeeding on the web.
Kevin Bidwell is owner of
http://www.All-In-One-Business.com/cg-bin/at.cgi?a=274293
Kevin just finished a complete report on building a passive
income. Grab your copy here:
http://www.All-In-One-Business.com/cg-bin/at.cgi?a=274293&e=/pi
