If businesses are able to find an interesting low-cost product (we’re focusing on those that can already be bought off the shelf from Chinese suppliers) and make changes to it, it might be possible to turn it into a high-profit product. But how can it be achieved? Andrew Amirnovin shares 5 ways to boost your profits here.
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Should you sell expensive or low-cost products?
An expensive product is probably one that you design and develop yourself from scratch and will likely be highly customized with unique features and/or functions that make it stand out in its market, maybe because it has a niche demand and solves a definite problem. They are more likely to sell at a higher price and have higher demand from their market from the start because they’re so unique. These products are rare, though, GoPro cameras revolutionized the camcorder market replacing bulky handheld camcorders, for example. Dyson vacuum cleaners and the Apple iPhone are two other similar examples.
More generic off-the-shelf products that don’t offer unique solutions and are just another alternative in a marketplace filled with similar competitors are fine, but they’re riskier to market at a high price as they maybe don’t offer unique features and benefits to warrant the cost and so won’t sell enough without some changes.
Walmart tends to focus on lower-cost products from China bought for cents in the dollar and private label them, making some small changes to increase their appeal and then marking them up a lot to make high profits.
Dropshippers also seek out hot product categories from Chinese online sources like Alibaba.com, for example, and try to make sales while the product is popular. But the smart ones will also try to make some adjustments to the product to differentiate it from the competition and enjoy more sales for longer until the next big thing comes along that they can focus on. (03:06)
1. Add value to the product.
To transform a cheap product into a high-profit one is making changes to the product that make it:
- More useful (bigger battery, more features, etc)
- Higher quality (nicer finish, better materials, etc)
- More attractive to potential users (different colors, branding, etc)
- More reliable (product is put through some/additional reliability tests)
- Bundled with other related services or products (such as a diet program for fitness watches)
It may be possible to request that the supplier of the product makes small changes like adding or moving a button, or performs some reliability tests like a drop test to increase its reliability. You might also request higher-quality finishes or materials in order to improve the overall quality of the product. Bear in mind, though, that suppliers of these products probably won’t be keen to adjust their product designs for you unless you’re placing sufficiently large orders…think into the thousands of pieces. Cooperative suppliers should be able to give you suggestions about what can be improved in the base product and potential costs once you start giving them your requirements. (08:11)
2. Target a Niche Market.
Without differentiating your product from its competitors somehow, sales will be tough. If the product targets a niche market it will be more likely to justify a higher price tag. For example, a gamer-focused phone case with unique gaming artwork, perhaps for a popular game that everyone plays, and features specifically required by gamers is a common product made to appear to a specific niche. Another example would be focusing on a specific niche of the camera market that values a solar-powered or waterproof camera, for example, maybe fishermen, as these features really appeal very specifically to them. They would probably pay more for this camera than a typical one as it appeals more to their needs even though it is not actually very different to other cameras. (16:23)
3. Improve the packaging.
Product packaging has an impact on the customers’ perceived value of the product. Low-cost products usually don’t have particularly high-quality packaging, and it just adds to their ‘cheap’ image. Enhancing a product’s packaging with attractive artwork and bright colors, as well as using higher-quality packaging materials and designs is a good way to be able to sell an ordinary product at a higher price. For example, there is a huge difference between a plain cardboard carton and a sleek, quality iPhone box, and this is reflected in the perceived quality of the product contained inside. (19:50)
4. Upsell and Cross-sell.
In fast food restaurants, the cashier will always ask if you want fries with your order, and many people say yes when offered in this way. This is upselling, and you can do the same with your low-cost products. For example, if you’re selling a generic cellphone you may upsell a selection of different types of headphones with each phone.
Combining items together for a discount or with some being free is a way to upsell more to your customers and boost order values. A coffee maker is a good example, the buyer can buy just the machine, but it’s possible to upsell additional filters, coffees, mugs, etc, with each purchase and increase profits that way.
Some businesses will also bundle an ongoing subscription with a product which is a lasting source of revenue, such as online exercise programs sold with an exercise product. (25:10)
5. Invest in marketing.
Even if a lower-cost product is not a revolutionary one, good marketing can help it sell for more in higher quantities as it will stand out from its competition. Importers may invest in:
- Good videos demonstrating the product in use and its functionality and benefits
- Advertising the product on social media channels
- Paying influencers to review and endorse the product
- Having a nice website
- Professional artwork and photos for the product
The beauty of online advertising is that you can test different platforms and the appeal of different products in your portfolio without breaking the bank until you find which formula works best for you. (30:03)
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