There is a lot of exciting and promising news about the future of e-commerce in Kenya, as a result, the temptation to start building a beautiful website, or order a ton of handbags from a supplier is hard to ignore. But wait, before you jump into the deep end, it’s important to do some meaningful and extensive research to ensure you’ve got the right product/market mix for you to win at e-commerce.
We’ve compiled a list of 6 actionable research and product development steps to help you navigate the e-commerce minefield before you plunge in and start selling. These are:
- Identify your target market
- Identify a product that meets your target market’s need
- Identify a scalable product
- Identify a price point that is profitable
- Identify the right distribution model
- Identify the right online and offline presentation
Ok, let’s dive into it! (Anyone else enjoying these swimming puns as much as I am?)
Identify your target market.
“Everyone is not your customer” Seth Godin
A thorough understanding of your customer is the difference between shifting volumes of product and sitting on dead stock. You’ll need to do research on what your target market looks like which will result in a customer profile that answers these questions (although this is by no means an exhaustive list of details to learn about your customer).
- What demographic does your customer fit in: are they teens, first time home movers, new mums, sports fanatics?
- What are their interests?
- What is their income bracket?
- What do they care deeply about?
- What is their occupation?
Identify a product that meets your target market’s need
‘Don’t find customers for your products. Find products for your customers.” Seth Godin
Have you ever had a conversation with someone but felt like they clearly were not listening to a single thing you said? That’s exactly what it’s like selling a product to a customer who does not need nor care about it. There’s only one way around it, figure out a problem out a problem your customer has that you can solve. This could be:
- Busy parents looking for healthy on the go baby food
- First time home movers looking for affordable decor
- Teens looking for cheap party costumes
- Gym goers looking for trendy affordable sportswear
Identify a scalable product
Once you’ve got an idea of potential products you can sell to your target market the next thing is to understand how scalable the products are. Here are a couple of things you need to look at in your research:
- Is the product or demand seasonal?
- Can you find a supplier who can scale with you?
- What are the supplier minimums and maximums for the product?
- What is the production time for the product? Is the lead time 2 weeks from order? A month?
- Is the product easy to source? If you are making it yourself you need to ensure that your raw materials are in abundance and easily sourced to ensure your business keeps up with your growing demand.
- Can you scale production of your product easily without compromising on quality?
- Do you or your supplier have the right certification to be producing the product (Particularly for food and skincare products. Not getting this right can compromise your brand should anything happen down the road)
Identify a price point that is profitable
Great, you’ve identified an awesome product that you’re customer desperately needs. Now you need to ensure that you can actually make money from selling it. Here is what you need to consider while setting your price:
- What price point do you want your customer to buy the product at? This will depend on if you are selling a premium product or a mass market product. Remember to factor in the cost of distribution here.
- What margin do you need to ensure your business is profitable? As a rule of thumb, your gross margin (revenue — (cost of goods sold + direct costs)) should never be below 30%. A low gross margin means that your retained profit at the end of the year will be very little or non-existent. Nobody wants to work that hard to end up with no retained profit.
- If you are selling on an e-commerce platform like Jumia or Masoko, remember to factor in their margins into your pricing.
Identify the right distribution model
To recap you’ve now got a product, you’ve got a price point that is either competitive or indicative of its premium nature and you are fairly certain it will fly off your e-commerce shelf because you did in-depth research on your target customer and made or sourced a product they desperately need!
Now we need to figure out just how it will get to your customer. Here are the key points to consider when setting up your distribution:
- Should you outsource distribution or keep it in-house? By choosing to outsource your distribution you can focus on selling your product without worrying about the logistics of getting it to your customer.
- Who will pay for delivery? Depending on the margins on your product and the customer experience you are trying to deliver, you can either push the delivery cost on to your customer, share the burden or choose to pay for the delivery.
- Where will you store your product before distribution? If you’re starting up with relatively low quantities there is no need to seek a warehousing solution immediately. However, if you are dealing with a sensitive product eg one that needs to be kept chilled, it is important to find a warehousing partner that can store your product properly before shipping.
Identify the right online and offline presentation
“Don’t deliver a product. Deliver an experience.” Unknown
The presentation of your product on your online store or e-commerce platform is absolutely critical! This is the last touchpoint your customer has with your product before they click to buy — or not. Here are a few simple tricks that can help you drive your e-commerce sales:
- Ensure you take clear photos with uncluttered backgrounds that draw attention to your product.
- Label your product correctly and provide as much detail as possible on your store page. If a customer cannot understand what you are selling, they will not buy, which would be a shame after all the research you’ve done on them and knowing it’s exactly what they need.
- Provide serving suggestions or examples of use cases for your product to encourage your customer to visualize themselves using it.
- Ensure you’re packaging surprises and delights your customer. Companies like Net-a-porter, Glossier and closer to home L’heritier 1789 have done a fabulous job on winning their customers over with beautiful, thoughtful branded packaging.
Do you have any tips on choosing the right product to sell on e-commerce? Comment below and share with us.
