Building a profitable eCommerce store means carefully selecting items balancing healthy markups against robust demand. Smart digital sellers search out niche inventory carrying higher profit margins with lower risks than over-saturated merchandise categories dominated by mammoth retailers. The following overview details strategies for small eTailers to identify and incorporate unheralded yet lucrative products perfect for grabbing expanded online slices. After pinpointing target niches using calculators and custom reports, entrepreneurs can activate new wholesale supplier pipelines through vendor fairs, trade publications and other business resources.
Understanding Profit Margin Goals
Know Your Numbers
The first step toward actualizing higher store margins is establishing benchmark targets and key performance indicators (KPIs) to gauge progress. Initially, overall net profit margins determine suitable goals given business models and competitive spaces. Retail industry averages hover around 40 percent for brick-and-mortar stores and 20 percent for eCommerce channels given lower prices. Start by adding items incremental margins exceeding 30 to 50 percent.
Selecting Merchandise Categories
Online tools now reveal hidden market niches ideal for testing. For example, eRank’s Profit Calculator lets retailers enter hypothetical product costs, then suggests appropriate pricing for custom profit goals. Users also adjust business-specific expense factors like shipping, transaction fees and advertising to fine tune margin targets. Creating these custom profitability reports exposes high-potential merchandise gaps available for new wholesale orders.
Activating Wholesale Supply Channels
Finding Vendors
Having identified promising merchandise categories, eTailers must locate appropriate wholesale suppliers and manufacturers, like OE Sunglasses, also known as Olympic Eyewear. Industry trade shows offer discovery that showcases the latest niche inventories such as jewelry, handbags, and wholesale sunglasses in curated vendor halls.
Building Relationships
Great suppliers become trusted business partners that share goals of growth and profitability. Smaller online sellers should emphasize their marketing assets when pitching vendors. Digital storefronts access global shoppers through targeted advertising and SEO visibility simply unmatched locally. Highlight engaged email subscribers, social media followers and community partners as proof of customer reach. Share success metrics like repeat purchase rates and reviews. Prove the case for placement to access inventories aligned with expansion plans rather than settling for leftover scraps.
Negotiating Minimums and Terms
Manufacturers structure wholesale partnerships across various tiers, each with corresponding benefits and obligations. Retailers lacking bargaining power may accept less favorable pricing structures and higher minimums to access national brand inventories, while niche suppliers offer flexibility catering deals to startups. Explore dynamic pricing models like stepped programs, increasing discounts alongside sales milestones. Secure extended payment terms easing cash flow until merchandise starts moving. Be creative balancing both partner needs.
Streamlining Operations and Accounting
Inventory Management Software
High-volume order management requires robust software centralizing procurement workflows. This is especially so when sourcing goods internationally. EBay and Shopify integrations help smaller merchants go from DIY accounting to streamlined back-end systems, while accurate inventories minimize costly stock-outs and overstocks.
Quickbooks for Finances
Once goods start moving, understanding precise merchandizing performance means integrating sales data with accounting and reporting. Quickbooks remains the go-to platform syncing invoices, bank feeds and financial statements into insightful dashboards and customizable reports grounded in real metrics. Profit and loss statements breaking down sales, costs of goods sold and gross margins by inventory class expose actual net earnings by product lines, suppliers and other custom filters for smarter decisions.
Conclusion
Ambitious eCommerce merchants must look beyond moving commoditized wares in search of niche products offering wider profit margin potential and defensible market positioning. Following profitability analysis models and tapping undiscovered supplier relationships facilitates scaling unique inventories aligned with margin expansion and revenue goals. Streamlining back-end inventory and accounting tools ensures high-volume operations stay on track as product catalogs grow. Commit to continually testing new merchandise and making data-driven decisions.