Ecommerce Solutions: How Many Products Do I Need For My Store?
What’s up guys! Tanner Larsson here from Build Grow Scale … and I want to talk to you about your products, your product line, and how many products you need.
I get tons of questions—I’ve been doing these videos for a while now—and these are the questions I get all the time. It’s like, “Hey, I have my brand, I’ve got 10 products, how many more do I need?” or “I’m starting out from scratch, how many products do I need to start with?” Everybody focuses on a number of products, but you should focus on “the” product. What is the core product that you want to offer to your marketplace? What is the core product that has the best margins, is the most “hot,” and has the best chance of blowing up in your marketplace? That’s what you should be focusing on.
You don’t need a product line of 3, 5, 10, 100 products. When we launch a new brand, we try to launch with three products:
- Our core product
- And two ancillary, complementary products that we can use as upsells or downsells in the sequence.
We don’t try to launch with 10 or 20 or 30 products. Why? Well, because we haven’t run the store yet; we haven’t run the niche. We don’t know what the market is going to do, how they’re going to react. We only have our research data. So, why would we want to go out and invest in inventory on all these different products to test them … just hoping? We could arbitrage some products, and we do that on occasion, but ideally, we want to home in on a market with one core product, and then two accessory or ancillary products that are designed to support, would make nice add-ons, and that you can build into a funnel. And then, you don’t even need an ecommerce store—you could literally just use a direct response funnel to start testing these products, getting them to sell, and get going. OK?
Now, the next side of that coin is this: What if you already have 10, 20, 30 products? Well, I would bet practically anything that if we looked at your products, 80 to 90% of those products are not selling that well. Probably 10 to 20% of the products in your complete catalog are actually selling and bringing in the money. The rest of them sell onesie, twosies here and there. But they really don’t do much for you. And I have products like that in my own catalog, my own products, my own niches.
We expanded onto some products that we shouldn’t have in the past, and it always winds up that way. You have that 80/20 rule—the Pareto Principle is at play in everything, specifically in your products. Twenty percent of your products are going to drive 80% of the revenue, which leaves 80% of your products sitting there, soaking up money, all your sunk capital, your inventory costs, warehouse space, other efforts of marketing, and all of that … but they’re only producing 20% of the results.
So, the reality is that you should look at those products and say, “Hey, are they getting a fair shake?” Because if you’re just half-ass marketing them but they’re a really great product, that’s a different story. But if you’re putting out good marketing and they’re still not selling as well as your other products, then maybe it’s time to fire sale that product. Sell it out, eliminate it from your product catalog, and take all the effort and money you were spending on that product and direct it towards one of your other products that is a winner in that top 20%, or one of your other products in the 80% that you feel that could be bumped into “winner” status. And this way you can reallocate your spending and really focus on the breadwinners. OK?
Some of the most successful ecom brands out there have fewer than five products, and they’re doing hundreds of thousands of dollars, if not millions of dollars, in revenue every single month. They don’t have 40, 50, 70, 100 SKUs. You don’t have to have that—you don’t need it. And most of the time, people who do that are so wide in their inventory/SKU catalog, that if they ever sold more than a couple units, they’d be out of stock and wouldn’t have the money to buy another set of inventory, because they’re spread too thin.
So, don’t go crazy, and don’t over-expand your product line. If you’re just starting out, find that “one” product, and then research some ancillary products. Which, if you can’t afford to go into multiple products, find an affiliate product, or a dropship product, or even an arbitrage product that you can use to supplement until things get going. And then once that does work, start expanding to your next product line. But again, three products, alright? If you already have a ton of products, it’s time to do some triage. Really look at them, find out what your top 20% are—the ones driving the most revenue for you—and double down on those. And the ones that are driving the least revenue for you … If you’re giving them a fair shake and marketing them effectively but they’re just not good sellers, start phasing them out and reallocate that budget.
Alright? Talk to you later.