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Best Product Decision Tree for Shopify
Introduction
When selecting a product for your Shopify eCommerce store, the choice you make is crucial as it will significantly impact the potential revenue of your store. The concept of product-market fit is vital here. To guide you in choosing your next product and determining which products to test, I've developed a decision tree that has been instrumental for me. Here is the breakdown:
Step 1: Physical or Digital Product
The first question to ask is whether you want to sell a physical or digital product. Initially, I didn't consider this question because I always opted for physical products, but there are numerous digital products that you can also sell on Shopify. Digital products can offer advantages such as no inventory management and high-profit margins.
Step 2: Generic or Unique Product
Next, determine where on the spectrum of generic to unique products you want to be. Generic products are the classic AliExpress-type items that anyone with an internet connection can copy. The barriers to entry are low, which means the competition is high. While you can find gaps to make significant returns, these gaps are quickly eroded as the market saturates. On the other hand, unique products are those that you invent yourself and may even patent. These have higher barriers to entry, reducing competition and potentially offering more sustainable profits.
Step 3: Low Ticket or High Ticket
Finally, decide if your product will be low ticket or high ticket. There's a considerable difference between selling a product for $ 20 versus $ 200. Low ticket products usually have higher sales volumes but lower profit margins, while high ticket products have higher profit margins per sale but may have lower sales volumes. Your choice will depend on your business strategy and market research.
Keyword
- Shopify
- Product-market fit
- Digital products
- Physical products
- Generic products
- Unique products
- Low ticket
- High ticket
FAQ
Q: What is product-market fit? A: Product-market fit refers to the degree to which a product satisfies a strong market demand. This concept is crucial for determining the potential success of a product in the market.
Q: What are the benefits of selling digital products on Shopify? A: Digital products offer advantages such as not having to manage inventory, typically higher profit margins, and ease of distribution since they can be delivered instantly online.
Q: What are the drawbacks of selling generic products? A: The main drawbacks of selling generic products include high competition and low barriers to entry. This means that the opportunities for significant returns are often short-lived as the market quickly becomes saturated.
Q: How do high ticket products differ from low ticket products? A: High ticket products generally have higher profit margins for each sale but tend to have lower sales volumes. In contrast, low ticket products usually sell more frequently but have lower profit margins per sale.
Q: Why is it essential to decide between physical and digital products? A: Choosing between physical and digital products can significantly affect your business model, including factors like inventory management, shipping, and profit margins. Understanding the nature of the product you wish to sell helps align your business operations accordingly.