Thinking about opening a business to sell products? Wondering if you should add a selection of products to your service business? Looking for ways to improve your existing product sales? If so, you need to be aware of the unique risks and difficulties involved with product sales. Before launching a new product line, make sure you are ready to tackle the following challenges.
Upfront Costs and Pricing
Filling your shelves with products involves several upfront costs. If you’re developing your own products, you have to spend time and money on research and development., and once you have a prototype, you often need to do a bit of additional testing or market research. Finally, you have to pay for all the materials and labor related to manufacturing. Even if you aren’t developing your own product, you still have to buy the goods you want to sell.
Keep all of those costs in mind as you price your products, but also, don’t forget about shipping. If you send products to clients, you either need to tack on extra for shipping and handling, or you need to build those costs into your pricing model.
Getting the products and pricing them is just the first step. You also have to decide where and how to display your products, and that varies based on your final goals. To explain, let’s say you’re a hairdresser and you decide that you want to offer a line of hair care products. You probably already have a space where you cut hair, but you have to invest in shelves or display cabinets and you need to set up everything so it looks enticing to customers.
If you decide to focus on online sales, you don’t have to worry about setting up beautiful displays in a storefront, but you have to deal with similar challenges online. In particular, you need compelling photos of your wares and an easy-to-explore website. In both cases, it helps if you have an intuitive sense of what looks appealing.
Unfortunately, if you have customers or employees near your products, there is always a risk of theft. To reduce the risk, you can pull in safeguards such as cameras or security tags to outwit shoplifters. You also may want to do background checks on your employees and take steps to create a culture built on trust with a focus on minimizing internal theft.
If you hold your goods for too long, you run the risk of obsolescence. This happens both when consumers lose interest in a trendy product and when a product hits the end of its shelf life. To deal with obsolescence, you need to keep an eye on product demand and expiration dates. If you think a product isn’t going to sell, consider a heavy mark down rather than forgoing revenue completely.
Regardless of your product niche, returns are inevitable. Before you start selling, take some time to draft a return policy. In some cases, you may want to set time limits or only accept returns of products that have not been opened. On the other hand, you may want to have a completely expansive policy where you’re willing to offer a full refund on any product at any time. Ultimately, you need to choose a policy that reflects your brand image and works with your bottom line.
Selling products is an entirely different business than providing services. To be successful, you need to be aware of the challenges and come up with ways to meet these unique problems head on.