[Course] 5 Steps to Select Products

[Course] 5 Steps to Select Products

March 14, 2023
Author: Krystal

Business Model

Since 2021, Amazon has been monitoring sellers more strictly, and very many sellers have been affected, with funds frozen and even accounts closed. In the future, boutique and branding has become an important trend. For new e-commerce companies, "positioning business model" is also set up as the first step in the selection process.

The first thing to consider is the business model

SupplyProduct labelingFactory SupplySelf-developedFactory Customization
ProdutProduct labelingFactory SupplySerializationBranding
Platfrom/MarketThird-party e-commerceCrowdfunding platformsOmni-Channel
TrafficIn-platform traffic, such as search, ads Multichannel Marketing

Then, consider the business strategy

Multi-brandIndividual CategorySingle SKU
WhatCreate a product and brand matrix by demographic, Enhance product premiums through brand powerSubdivision of categories, in-depth creation of products to serve different consumer scenariosProduct with unique innovations, exclusive technologies, and new consumer needs
HowMulti-category help each other and cross-trafficBuild core products first, then use supply chain capabilities to expand the categoryIn-depth research, continuous iterative optimization
AdvantagesBroad influence and mutual helpCategory and Industry ExpertiseCrowdfunding Unicorns
DisadvantagesRequires a large and experienced team and high operating costsClearly defined products roadmapHigh risk and the need for continuous product innovation capabilities

Market Insight

Market insights to identify market opportunity points by studying the market size and development of the category.

First, we can get the market data and reports from the following websites

Then use the Ansoff matrix to identify the most attractive categories
Fill in the market size and annual growth of the categories into the Ansoff matrix, and select the top 3-6 most attractive categories in the market

Existing CategoriesDeveloping CategoriesUndeveloped Categories
category namecategory name category name
Existing Marketsmarket sizeYOYmarket sizeYOYmarket sizeYOY
Developing Marketsmarket sizeYOYmarket sizeYOYmarket sizeYOY
Future marketsmarket sizeYOYmarket sizeYOYmarket sizeYOY

Competitive Analysis

The competitive landscape depends on two main aspects:

  • through the market share of the category, analysis for entry there is no space,
  • by analyzing the situation of competitors swot, compared to whether the company has a competitive

We integrate data from reports of research institutions, annual reports of companies, and market channel optimization tools, and use GE models to calculate market competition

Category Score
Market AttractivenessStageRating Dimension
M1Market size
Profit margins
Market growth rate
Competitive rivalry (if high, give low score)
M2+M3Threat of new competition (if high, give low score)
Threat of disruption (if high, give low score)
Capital cost to enter (high = good barrier)
Technology/R+D costs (high = good barrier)
Innovation required (high = good barrier)
Power of channel partners (if high, give low score)
Macroenvironment change (if high, give low score)
Government regulation (high = good barrier)
Enterprise CompetitivenessM3Brand equity
Market share
Customer loyalty
Innovation + R&D
Product differentiation
Logistics/production expertise
Channel relationships
Strategic alliances
Strategic/marketing expertise
Strong capital + cash flows
Big data access + usage

GE Example

Calculate cost and profit

Once we have identified the category on the GE chart, we also need to use the tool to try to calculate the cost and profit for new categories that have never been explored before. For example, we need to look at the average cost of BSR 5, or even BSR 100 products sold on amazon. Amazon's cost structure is divided into: manufacturing costs, freight costs, warehousing and logistics costs, transaction commission, marketing discounts and traffic promotion.

In general, we can use tools to determine the cost structure of the product.

Find product design opportunity

Finally, we need to look at the product in the consumer satisfaction, concerns and expectations. Here, we need to use the VOC methodology and tool to look at negative customer review analysis, expectations and search trends to find opportunities.

Compare customer needs scenarios with actual product scenarios to see if there is a gap
For example: see if there is "unsatisfied" between customer needs and existing products in terms of device, people, location, and target dimensions

Compare the competitors swot on the market to find the most unsatisfactory pain points of customers

Use search engine trends to find the evolution of consumer needs

In summary, the five-step method of product selection is a combination of multiple scientific methodologies. Using data and models, we first conclude what business model to choose and what category and sales channel to choose. Then determine the product from the perspective of competitors swot analysis, cost and profit, and consumer demand.

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