How Many Products Does My Store Need To Make Money?
Matt Stafford | Jul 06, 2016Reading Time: 4 minutes
- 0:04 Your Products
- 0:30 The Core Products
- 0:49 We Launch With 3 Products
- 1:48 What if you already Have 30 Products
- 2:26 Pareto Principle
- 2:52 Are they getting their fair shake
- 3:20 Focus On Bread Winners
- 3:45 Spread to Thin
- 4:28 Time to Do Some Triage
- 4:35 Closing Remarks
What’s up guys? Tanner Larsson from Build Grow Scale. I want to talk to you about your products, all right, and your product line, how many products do you need? I get tons of these questions and I’ve been doing these videos for a while now. These are the questions I get all the time.
“Hey, I have my brand. I’ve got 10 products, how many more do I need? I’m starting out from scratch, how many products do I need to start with?”
Everybody focuses on a number of products. Whereas, focus on the product.
What is the core product that you want to offer to your marketplace. What is the core product that you’ve engineered the best margins into, is the most hot, 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 three, five, ten, one hundred products. When we launch a new brand we try to launch with three products, our core product and then two ancillary products that are complementary, and that we can use as upsells or downsells in the sequence.
We don’t try to launch with ten, or twenty, or thirty products. Why? Because we haven’t run the store yet. We haven’t run the niche. We don’t know what the market’s going to do, how they’re going to react, we only have our research data.
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. Ideally, we want to hone in on our market with one core product and then two accessory or ancillary products that are designed to support and would make nice add-ons, and that you could build into a funnel. 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.
Now, the next side of that coin is, what if you already have ten, twenty, thirty products? I would bet practically anything that if we looked at your products 80-90% of those products that you have are not selling that well. You probably have 10-20% of the products in your complete catalog that are actually selling and bringing in the money. The rest of them sell onsies, twosies here and there but they really don’t do much for you, okay. 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. It always winds up that way. You have that 80/20 rule, the Pareto Principle that plays in everything, specifically in your products; 20% of your products are going to drive 80% of the revenue, okay, which leaves 80% of your products that are sitting there soaking up money. All your sunk capitol, inventory costs, warehouse space, other efforts of marketing, and all of that, but they’re only producing 20% of the results.
The reality here is that you should look at those products and say, “Hey, are they getting a fair shake? If you’re just half-ass marketing them but they’re a really great product that’s a different story. If you’re putting out good marketing and they’re still not selling as well as your other products well, then, maybe it’s time to fire sale that product, sell it out, eliminate if 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 that are in that 80% that you feel that could be bumped into a winner.
This way you can reallocate your budget, reallocate your spending and really focus on the bread winners, okay. Some of the most successful eCom brands out there have less than five products and they’re doing hundreds of thousands of dollars, if not millions of dollars, in revenue every single month, okay. They don’t have forty, fifty, seventy, one-hundred skews, okay.
You don’t have to have that. You don’t need it and most of the time people who do that they’re so wide in their skew catalog that if they ever sold more than a couple units they’d be out of stock and wouldn’t have the money to turn over to go ahead and buy another set of inventory, because they’re spread too thin.
Don’t go crazy and don’t over expand in your product line. If you’re just starting out find that one product and then research two ancillary products which could be, if you can’t afford to go into multiple products, find an affiliate product, or drop ship product, or even an arbitrage product that you can supplement until things get going. Then, once that does work start expanding into your next product line. Again, three. If you already have a ton of products it’s time to do some triage, all right. Look at them.
Find out what your top 20%, or which ones are the ones that are driving the most revenue for you and double-down on those, and the ones that are driving the least revenue for you, if you are giving them a fair shake and you are marketing them effectively but they’re just not quite as hot sellers, start phasing them out and reallocate that budget, all right. Talk to you later.