It doesn’t take long to find low-cost products online from a variety of Chinese manufacturers. I searched for ‘earbuds’ on Alibaba.com and there was a wealth of available options to choose from:
These products have already been designed and developed by Chinese manufacturers and you can buy them ‘off-the-shelf.’ This is what many drop shippers do with great success these days, for example.
But if you sell these inexpensive products directly, it’s unlikely that you’re going to be able to make a lot of profit on them, as you’re competing in a very saturated market with a lot of similarly priced alternatives.
But what if you could take a ‘cheap product’ like generic earbuds, make some changes to it, and then be able to sell it at a much higher profit? That’s the dream for many importers, and I’m going to share 5 tips you can follow to hopefully make it happen!
Listen to this article in podcast form.
Why choose low-cost products?
Products you design and develop from scratch are probably highly customized and fill a unique gap in the market. The original iPhone, AirPods, GoPro cameras, Tesla autos, etc, are good examples of groundbreaking products that didn’t really exist before. These take a good amount of time and money to bring to market, as we’ve discussed many times before, such as here and here. If you’re looking at taking a lower-cost product and boosting its profitability, a custom-made product with advanced and unique features like these probably isn’t going to be the right choice, because these products cost more to bring to market and sell at a higher price point due to having a strong demand from a specific niche market that wants and loves their USPs.
Instead, ordering more generic off-the-shelf products from Chinese manufacturers (and there’s still a good market for similar alternative products, as not every product needs to be revolutionary), like the earbuds shown above, allows you to start low and then build more profitability into a product without needing to invest a lot of time and money into new product development. But how?
1. Add value to the product.
Let’s assume you are not buying from a trading company, but directly from an OEM or ODM manufacturer. The manufacturer will, hopefully, be able to make some changes to their base product just for you and should be able to make suggestions about what they’re capable of doing and the additional costs to do so.
These profit-boosting changes might be suitable:
- Improve its quality (use more premium materials, add a nicer finish or color, etc)
- Enhance its style to make it more attractive (select nicer colors, better branding, a nicer enclosure, etc)
- Make the product even more useful (larger battery, more features, etc)
- Improve reliability (give the manufacturer a series of reliability tests, such as drop tests, to run the product through)
- Bundle it with other products or services consumers will also like (this could be related accessories like phone cases, exercise and diet plans, etc)
A word of warning, manufacturers will be more open to making changes to their design if you are ordering a good amount, such as thousands of pieces.
2. Target a Niche Market.
Generic low-cost products, like the earbuds above, are competing with lots of similar versions. You can still sell, but in a crowded market, sales will be tougher ad profit margins lower. By making changes that cater specifically to a niche market, you zero in on a smaller group of potential customers who want exactly what your product offers and should be prepared to pay more for it than the generic cousins. For example, you might take a phone case and adjust it to have a specific pattern and design relevant to gamers. The plan is that the gaming community will be more interested in your case than the similar, but generic ones, that don’t have the features for them.
3. Improve the packaging.
Even if your changes to the product itself are subtle, improving its packaging can boost its perceived value in consumers’ eyes. A plain cardboard package doesn’t scream ‘this is a quality product,’ whereas a pleasant-looking and feeling package made from quality card and nicely printed suggests that the product is more premium.
You may, for example, focus on better quality packaging materials, attractive designs and colors, and functional packaging design, such as where the product and its accessories and manual are nicely divided in their box.
Bear in mind that people actually sell their empty iPhone boxes, so this shows that they’re an example of packaging which holds a perceived value:
4. Upsell and bundle.
If you offer related products that add some value to the consumer with your base product, it makes it easier for them to add them the to cart at the same time and provide you with more profitable orders. Amazon does this all the time! Here’s an example of a cheap digital camera offered with a memory card and camera case, two items that, logically, consumers will also probably need.
What accessories go with your product?
Recently selling subscriptions has become more popular as they’re a guaranteed income during the subscription period beyond the physical product itself. So, let’s say you sell a fitness product, offering a subscription to an online fitness program for the product’s users to get workouts, etc, is also a profit booster.
5. Invest in marketing.
Good marketing, at least that is better than your competition, can help you sell even products that are relatively similar at a higher profit margin.
Here are just a few ideas for where you might increase your marketing budget:
- A slick and modern website that really shows your products off in a good light
- Getting professional photography and graphic design for products and/or the website done
- Quality videos that make the products look great and highlight their features and benefits
- More and better online advertising on search engines and social media to get your product seen more and you can run tests to find which works best
- Paying influencers to review and endorse the product
Any questions?
If you’d like further advice about making changes to your product we can help. Get in touch and we’ll offer you some friendly advice.
