After finding a product and a supplier, you may believe that all that’s left to do is sell it online. This is not the case. With no continuous market research and product sourcng, your earnings will quickly begin to erode. There is a limit to how long a product may be popular. What sells at a premium today, you may not be able to give away tomorrow. That’s why you need to keep an eye on your product’s life cycle, so you know when it’s time to phase out older products and bring in new ones.
Keeping An Eye on the Product’s Efficiency
Early in a product’s life cycle, demand is strong, supply is limited, and prices are high. It will be tough for you to enter into the competitive phase, which is where most online sellers make their money. As competition increases and supply increases, demand remains unchanged. Although prices have begun to fall, conversion rates have remained quite stable.. At the conclusion of this phase, demand begins to drop, and a product enters the decline phase.
There are various reasons why demand may decrease. There are many reasons why a product may become obsolete or out of season; or there may be so much competition in the market that prices fall so low that you can’t compete and make money. Seeing a product’s sales drop is a good sign that you should stop selling it altogether and start selling something else.
Observe the Signs
Always begin the process of updating your product selection with market research. Research enables you to source the products your customers want, when they want them. There’s two parts to understanding what items you should be sourcing – demand and direction.
- Demand: To determine the demand for a product, you must consider the number of users searching for it, the number of times it sells in a given time period, and the average selling price. Different research resources can help you pinpoint the numbers you’re after, and interpret what they mean to you as a seller.
- Direction: Determining the direction in which a product’s demand is moving allows you to determine its life cycle stage. You do not want to source inventory that is on its last legs, thus you must monitor your items throughout time. For example, a product’s total sales over a thirty-day period do not indicate whether its demand is increasing or decreasing. However, studying the same thirty days as four distinct periods of approximately one week each will reveal the trend of these numbers.
Finding new products to sell, and hence new supply sources, is a never-ending process. Your business will be successful in an ever-changing marketplace if you never stop picking up and delivering items, conducting research, and evaluating new products and suppliers.
Big Rocks Engineering takes a comprehensive approach to product development and strives to be an indispensable partner to our clients throughout the product life cycle. Contact us today to know how we can help!