The Product Research and testing methods| How to do Product research
Product research & testing
So here you are. You have a great business idea, a great idea for a product or service to sell online. How do you transition from a great eCommerce product or business idea in your head to having the physical product in your hand and ready to sell? Let's walk through the process together:
BEFORE YOU EVEN BEGIN TO TEST – Research – Research – Research.
Before you spend a penny on getting a single product samples from a manufacture, ask yourself these questions:
What is the level of competition for my product or service?
Do a quick google search for your product(s). Where can they be bought? How widespread is the availability of your product currently? Are they available at every corner store? Major big box retail stores?
What is average retail price of your products online? What is the highest price you can find? What is the lowest price you can find?
Is there a big price difference in your products, or do most companies sell your products for around the same price? Are there good, better best versions of your products out there? For this question I'd suggest starting a spreadsheet for your research comparing at least 10 different current businesses (if available) and reviewing their price points for a similar or exact product.
What are the shipping costs to get your product to you?
Shipping costs can be broken down into two parts - What is the cost to have your product shipped to you? and... What is the cost to have the product shipped to your customers?
How much will shipping cost me? Is product large? is it heavy? How much (per unit) will it cost to have it shipped to you? What percentage of your cost will be associated with shipping? Where is demographic you will sell your product to and what is the cost to ship your product to your customers?
What is average cost price? Including shipping cost, border and import duties, exchange rates, everything.
What are your customer demographics? Age, marital status, sex, etc.
How wide is your market? Are you targeting only men? Women? Youth? Seniors? Are you targeting only people with a specific life challenge? Status? Political affiliation? Need? Only people who drive? Play Video Games? Use a bicycle? Are hard of hearing? etc. Research your target customer demographics in a reasonable way.
What are 2-3 things YOUR product will have over any competitors products?
What makes you different from the other businesses currently selling your product. What makes your company different? What makes your product different or better?
The obvious answer is price, but there needs to be more that differentiates you from your competition. Longer warranty? Better customers support? Higher quality product? More features? Bigger/smaller? More available accessories? What is it? Write it down and believe in it.
Its possible (and even likely) that when doing the above research your once great product idea is no longer looking as great as you had originally thought. Perhaps there is much more competition then you originally thought after doing your research. Perhaps the shipping costs are too high to get your product to your customers efficiently and still hold a good margin. Perhaps your demographic is too narrow. THIS IS GREAT! You did not waste your time and effort on a product that has major roadblocks to success! Go back and try again!
Rinse and repeat this process until you hare convinced you have a product that is:
- Under represented in the market - You can't buy it everywhere!
- Has a high demographics - Many people want or need it
- You are passionate about this product.
Words of Wisdom: The most successful companies are born from someone with a personal passion for their product or service. If the product or service doesn't speak to you, don't even think of getting in business with it. You need to be passionate and excited to get your product or service to your customer!
Ladies and gentleman… Start… your… Testing…
Once you have satisfied all of these questions, and are happy with the answers, it is now time to dive into the testing of your product. To test your product, you need to connect with 3-5 manufactures of your product.
There are many places online to connect with manufactures, the most popular website for direct manufacturing connection is Alibaba, but you may also consider ChinaBrands, DH Gate, Export Hub, and Made In China - To name a few.
When searching and reviewing potential manufactures for your product, here are some important things to consider:
- Manufacture Response time
- Manufacture Shipping cost
- Availability of product – how many can you get at a time?
- Lead time – how long from between placing your order to the order arriving to your door?
- What are OEM costs? Do you need OEM?
- What is the minimum order size?
- How does different order sizes affect shipping prices?
- Feedback reviews from other people who have used the manufacture
- How long has the manufacture been in business?
Words of Wisdom: If a manufacture is not responding to your requests quickly and accurately this is a huge red flag. Even if their products look great and their prices are excellent, if they don't have the time for you, don't have the time for them. Period.
Once you have your 3-5 potential manufactures, it is time to place your first sample orders. Depending on the cost of your products, you will want to receive several samples from each manufacture, and have prepared a handful of your closest friends and family ready to test the product.
Once your sample products have arrived. Take them through the ringer. Review their instruction booklets, packaging, and everything else. Imagine you are a customer with no prior knowledge of your product.
Narrow down your manufactures to your top two, then negotiate.
Negotiating product purchases
I always always always negotiate with my manufactures. Here are three negotiating tips:
- Complain about high exchange rates - I'm in Canada and have to pay in USD. I discuss these challenges with the manufacture in an attempt to have them reduce costs.
- Competitive prices - Say "I can get a similar product for x dollars cheaper from manufacture y" Or even just ‘c’mon dude you can do better’ – Remember the first price you get from a manufacture is NOT their lowest price. It may be as high as 25% higher then they would be willing to go.
- Sell yourself to the manufacture. Tell them you have had successful business in the past, if they treat you well now they can expect more and bigger re-orders for years to come, etc. Manufactures like consistent long term customers just like everyone does, so providing incentive for long term sales helps lower their initial pricing.
Once you have negotiated with your top 2 manufactures, pick one and make your first order!
Let’s do an actual simulated product idea from start to finish.
I’ll use Alibaba as a good test site. I’ve been really getting into Pickleball recently, so let’s use pickleball products - specifically selling pickleball paddles and balls as a business idea.
Level of competition. – 2-10
Since pickleball is a sport, and there are many specialty sports stores we are kind of behind the 8 ball when it comes to competition. I easily find pickleball products at general stores such as Walmart, Canadian Tire, Costco, Superstore, Target, and specialty sports stores such as Sport Check, Dicks Sporting goods, and more.
Shipping Costs - 6-10
Shipping costs for pickleball raquets and accessories would be middle of the road. They are not as small or light as some other product ideas, and packaging would need to be reasonably sized- about a foot by 8 inches by 3-4 inches, but they are not too heavy a product.
Demographic and market reach 9-10
Who am I targeting to buy my pickleball products? Well – this is a big pro as pickleball is a sport that is popular for all ages. It is easy to learn and offers great cardiovascular exercise. It can be played by 2 to 4 people, and people can buy and set up their own pickle ball courts just about anywhere.
Since the initial cost to get into pickle ball is low, your target demographic can be a huge percentage of the population. From children to seniors, all have the ability to learn and play pickle ball. I would argue that pickle ball is the fastest growing sport among people 65+.
What does your company offer better than your competition? What is your competitive advantage?
This is a difficult question answer without really diving into the competitors products and price points. Before answering this question I would need to do a lot of research both on the competition, whether selling, the prices are, with the features of the racquets and balls are, etc. I would also need to research the price points and information about the manufactures.
I would suggest targeting three competitive advantages.
The first and most common competitive advantage for a new company is price point. Because I’ll be working individually with very little overhead I should be able to create a higher quality product at a lower price than any of my competition.
The second competitive advantage would be artistic creativity. I imagine a pic of all paddles similarly to skateboard in that the uniqueness of it holds great value with the potential customer base. Having fun, bright, and unique rackets will give me a competitive advantage over the majority of generic boring pickle ball rackets currently available. Perhaps customization of pickleball rackets (put your face on your racket) is an option later down the road?
The third competitive advantage could be the more information provided to the potential customers through social media and our website. In my research I did not see many competitors offering instructions or much in the way of information about pickle ball. This could be a competitive advantage as providing free information all about pickleball on our website and social media and laser focusing just on pickle ball should help cement this new company as a pic of all professional business. Perhaps long-term we could look at bringing a local pickle ball professional into the mix and offer free or discounted products in exchange for using his or her face name and information.
Well we can certainly go much deeper into the research portion of this new hypothetical pickle ball business, to avoid making this post 100 pages long, let’s end the research portion here. That being said, if this were an actual business idea, the research portion would be 100 pages long filled with detailed reviews of all competition in the prices, services, available options, return policies, shipping costs, and more.
Once your own research is complete you should have an idea as to the challenges of starting your business, these challenges could be high level of competition, low margins, manufacturing difficulties, etc. Assuming that after the research you have enough positives and feel good about your business idea, now we can move on to the testing process.
As I see it there are two ways to start a pickleball business. The first would be to be a distributor of currently available pickle ball products. The second option is to be a manufacturer where you would create your own custom pickle ball products and sell them with your logos design and branding. For the purposes of this example I will assume that we are going to be creating our own custom line of pickleball paddles and accessories.
If you’re not already done so I would recommend viewing our blogs on creating a business name and creating a logo as these will be an integral process in the design of your business.
Connecting with manufactures:
After just a few minutes on Ali Baba I was able to find three pickle ball racket manufactures.
Here is a synopsis of these manufacturers
- Price point: $12.50 - $14 USD paddle- .50/ball
- MOQ: 100 units (paddles) 500 units (balls)
- 10 years in business
- Customization of paddles
- USAPA Approved racquet
- Lower MOQ
- Only 2 years on Alibaba
- Only 14 transitions
- Only 1 review
- Price Point: $11-$13.40
- MOQ: 300 units (custom request)
- USAPA approved paddles
- Over $50k in sales on Alibaba
- Good response times
- In business for 10 years
- High MOQ for custom paddles
- Price Point $11.25 - $35.95
- MOQ: 100 pieces
- Over $100k in sales
- Good reviews
- Many paddle options – size, shape, & inside build
- Unknown final price point
- Manufacture of all sorts of sports equipment – Perhaps not laser focused on Pickleball paddle quality
Now that we have three potential manufacturers for our pickleball paddle business, the fun will begin. I would reach out to all three of these companies and discuss their pickle ball paddles in great detail. I’d inquire about their lead-time, price point, printing process, warranty, construction material, and once I was satisfied with their answers and request a sample order of any products I was considering selling.
I would also be in contact with several pickle ball players so that once the samples came in I could ask them to give the paddles try and give me their feedback. With each manufacture I would recommend to get in three products for comparison. This way you can see if there’s any differences between the products and look for high quality in the manufacturing process. Having a consistent product with consistent manufacturing is important and if you receive only one sample there’s no way to determine this. It will also help with the testing process having several test products to test simultaneously.
Furthermore, receiving sample products will allow you to evaluate the manufactures shipping practices, the quality of the packing materials they use when shipping in the samples, the lead-times for receiving the samples, and their overall cost of shipping.
Once the testing is complete you should have one or two standout manufactures. If not, go back to the drawing board as there are dozens of potential manufacturers that you could work with. Do not underestimate the importance of finding the best manufacturer for your products. This process needs to be done diligently and with great care as it is one of the most important decisions you will make in your business. If your business is successful you could be working with this manufacture for many years to come so it is important to work out the kinks and understand their business practice early in the process.
Once you down to just a couple of manufacture options it is time to put on your negotiation hat. You want to sell yourself and your business idea to the salesperson into the company. The more the manufacture believes you’re in it for the long term and will likely have a successful relationship with them the more flexibility they may have on the price points and minimum order quantities.
Remember that the majority of manufactures on Ali Baba have salespeople that are commission based so they are motivated by long-term commitments from you. They are always negotiable and there is a great deal of competition in most areas so take that to your advantage.
And that’s really all there is to it. I hope you found this article useful! If you have any questions feel free to reach out to us.