2021-07-30T07:23:07-04:00July 29th, 2021/Ecommerce/By /

Ecommerce: A Step by Step Guide to Validating an eCommerce Product [with a Low Budget]

It’s fast to validate campaigns in the affiliate marketing world.

You get some offer recommendations from your affiliate manager.
You reverse engineer competitors with a spy tool to see what’s working.
You “borrow” some landing pages.
And you come up with some angles to make the campaign your own.

I’ve simplified the process, but you can go from idea -> traffic within a few hours. I’m not saying it’s that easy to become profitable, but you can get a sense of the campaign’s potential within a few days.

Speed is important in the online world – the faster you move, the faster you learn.

Many affiliate marketers have transitioned to the world of eCommerce in the past few years. In eCommerce, campaigns launches are slow. Idea -> validation can take months for some people.

And there are more risks involved.

If your budget is less than a few thousand bucks, you can’t afford the “throw shit at the wall until something sticks” method.

What happens if you fail at an affiliate marketing campaign? 90% of the money that you lose is traffic costs. The advertiser takes on the risks of carrying inventory and fulfilling it for the customers.

How does that change with eCommerce? In most cases, you have to take risks with holding inventory and fulfillment. If your supplier requires a minimum order quantity of $2,000, what happens if you’re unable to sell the inventory? You’re stuck with unsold inventory sitting in your garage.

And not to mention the time and energy costs you devote.

That’s why it’s so important to go through the stage of product validation—making sure people want to buy your product before you commit resources.

Here’s one cycle I’ve seen people fall into.

  • Get excited over an idea for a product.
  • Spend thousands of dollars in inventory. They wait for one to two months for the products to arrive from China. 
  • Spend a month building out their Shopify store and creatives.
  • Launch.

Crickets. There’s barely even any “add to carts” in their Shopify dashboard! They wasted thousands of dollars in inventory, and several months of effort.

Here’s the truth: You might have to go through and test 15+ products before you find your big winner. You can do all the research you want, but the market decides the winners.

One mindset I have is to view campaigns as bets—each product you launch is a bet.

The more bets you can place, then the higher the chances you have of winning big. You should be trying to validate your product in the fastest, and cheapest way possible. This gives you the ability to make more bets.

And here’s the best part: your probability of winning increases with each bet you take. You’re leveling up with each launch. 

You’re learning how to negotiate better prices.
You start understanding the ad platform more and more.
You start figuring out which landing page style works the best.

The most important thing is that you keep placing bets.
Nothing guarantees success. You have to keep placing bets and stacking the odds in your favor.

One book that influenced my thinking several years ago was The Lean Startup by Eric Ries. Their framework revolves around speed and focusing it on the 80 / 20.

Today I’m going to share some ways for you to validate your ideas faster and cheaper so that ultimately you improve your chances of success.

Bad Ways to Validate a Product

Everyone understands that you want to vet an idea before going all in. But most approaches to product validation have some flaws.

01. Surveying People You Know

Asking people what they think about your idea is horrible.

Me: Hey what do you think about my idea?
Your Friend:  Holy shit that’s an amazing idea! I’ll totally buy it when you have it!

*A Month Later*

Me: Hey you know that product I was telling you about? Well, I have it now in stock! Did you want to buy it?
Your Friend: Oh uhh… Sorry, I’m running low on funds right now. Good luck though!

Surveying can lead you to a false positive. A better way to do a survey is to ask for the sale.

Me: Hey what do you think about my idea?
Your Friend:  Holy shit that’s an amazing idea! I’ll totally buy it when you have it!
Me:
Thanks for your support. Well, I can get some inventory here within a month. I’m actually taking pre-orders now. I can take Venmo or PayPal.
Your Friend: Oh uhh… Sorry, I’m running low on funds right now. Good luck though!

What happened? People don’t like conflict. They might think it’s a horrible idea, but they don’t want to discourage you from your dreams. So they’d rather do the song and dance than tell you that your product sucks.

Men lie. Women lie. The numbers lie.” – Reminder, Jay Z

Asking for money upfront will reveal the truth.

02. Dropshipping 

Dropshipping was the rage several years ago. You sell the product, and the manufacturer sends the product to the customer.

The main problem is that people expect their product within a few business days (you can thank Amazon Prime for that).

Most manufacturers are based out of China. It can take several weeks or even months before the customer gets it. So what happens if it takes them longer than expected? Complaints. Chargebacks. Facebook and Google are now doing post-purchase surveys with the customer.

Bad experiences will get your account penalized. 

Something else I’ve noticed is that some Americans have become anti-China due to the pandemic. Seeing a package shipped from China can trigger them emotionally (even though 90%+ of the stuff in their house is made in China).

Dropshipping could work if the manufacturer is close enough to the customer. Try to get it to the customer in under one week.

The Lean Product Launch Method

I’m going to share a rough framework for launching a product. With this framework, you can go from idea to launch within a few days.

Your goal is to find a winning product as quickly and as cheaply as possible. Don’t waste time on things that don’t matter. 

1.1. Product and Niche Selection

The first step is to choose a product. Here are some of the things I look for in a solid product.

A. Is this part of a growing trend?

You always want to be a part of a growing trend. If you’re entering a market too late, then there’s going to be way too much competition.

Google Trends: Keyword trends straight from Google. If more and more people are searching for something, then there’s growing demand. 
Trends.co: A publication dedicated to researching growing trends and businesses.
JungleScout: Product data from Amazon. It’s amazing to see how competitive different niches are.

B. What are the problems with the existing solutions? How does your product aim to solve that?

People buy products to solve problems. There’s a high probability that you already have competition for your idea.

One mistake people make is that they give up when they see that the idea already exists.

ah man, the idea’s already done. I’m already too late

Don’t be scared. Competition means that your idea is validated. Imagine the opposite and there’s no competition. You’d be wondering if it’s because your idea sucks.

Realize that every business has an Achilles heel—a weakness you can exploit. Imagine if Google got scared because of Yahoo! Or Apple being scared of Nokia.

The sweet spot is being able to offer improvements over the existing incumbents, rather than offering “me too” products. Research what people are complaining about with the existing solutions. You can go to YouTube comments, Amazon reviews, TrustPilot, etc.

Complaints = opportunity. I’ll share an example of this approach.

One product that has caught my eye recently is Monkey Feet. This is a device that allows you to attach dumbbells to your feet. There’s a growing trend towards working out at home. And this product solves a problem (it’s hard to directly strengthen your hip flexors).

I’m on their website and reading all the negative reviews. People are complaining about two things.

  1. It’s uncomfortable. There isn’t enough padding, and it hurts using it.
  2. It takes forever to put on and off. It’s an inefficient design. 

This tells me there’s a ton of opportunity to improve the design. Imagine if you could create a version that’s more comfortable, faster to put on, and more stylish.

You’d crush it.

C. Back of the Napkin Math

You have to be able to sell your widget at a cost where you’re making a decent profit margin. Open up a spreadsheet and do some simple math.

Estimate the shipping and fulfillment, taxes, traffic costs, your profit margin, cost of goods sold, etc. This can be hard if you don’t have experience. 

If you want to keep it simple, you can use the 4x rule. Sell the product for 4x your costs.

If buying the product costs $10, sell it for $40. This should cover the cost of goods sold, traffic costs, and leave you with a decent profit margin.

With eCommerce, think about the business model that you’re going for.

One framework is to think about the average order value and the frequency of purchase. Here are two that I’ve seen work over and over again.

1. The first one is a high average order value, but a low frequency of purchase.

High profit margins with each order, but people are not purchasing them frequently. The biggest example that comes to mind are luxury handbags or watches.

D2C mattress companies such as Casper and Purple also come to mind. Having such high average order value is what gives them the profit margins to run such aggressive campaigns. 

2. The second is a low average order value, but a high frequency of purchase.

Think Dollar Shave Club.

There’s not a lot of profit in razor blades. Their goal is to get you onto the subscription program so that you’re charged monthly. 

Imagine if you’re stuck in the middle:

Low average order value + low frequency = dead store.

This explains why supplements and skincare can be such great businesses.

(Credit to Nik Sharma for the above framework)

High profit margins + monthly subscriptions = GOLD

High average order value can also come from bundling products together. While you’re focusing on a single product, keep in mind what else you could bundle together in the future.

If you buy a mattress, what else would you be interested in? A pillow, bed sheets, a bed frame, etc. If you buy a skincare cleanser, you might be interested in a toner, moisturizer, sunblock, etc.

Some items are harder to bundle. If I buy a watch, I’m not really interested in buying anything else to compliment the watch. 

D. What if Your Product Doesn’t Exist?

eCommerce sellers tend to fall into two categories.

1. Resell Alibaba Products. You find a product with some potential on Amazon. A great story and fancy packaging can take you far.

This is the fastest way to approach eCommerce. The main problem is that anyone can easily rip you off. Once you gain some traction, then you should work with the manufacturer to make some customizations to your best-selling products.

Remember, make tweaks that benefit the customers!  

2. Creating Products From Scratch, aka Inventors.

Most people naturally fall into the creator category when they first start.

You identify a problem, but what happens if no product is solving it in the way that you want?

You could manufacture this product from scratch. The problem is that it’s expensive and time-consuming. You’re taking on substantial risks if the idea isn’t validated yet.

The solution? You should try to sell the closest thing possible to your idea.

I can’t emphasize this enough—creating a custom product from scratch is a time-consuming and expensive process. It’s much better to validate the niche first and make sure you have a solid form of distribution. THEN you can start creating.

You have so much more leverage once you have an established customer base. You can do a small test run with your existing audience through pre-sales. Or you can launch a Kickstarter.

Advanced: Let’s say you’re dead set on creating a product from scratch. You could always hire someone to create 3D renders of your product.

Create a landing page and feature renders. Run the traffic. If the idea is validated, THEN start bringing your idea to life.

I’ve written quite a bit on product brainstorming over the past year. If you want to read more, here are the links to those articles.

2.2 Lean Fulfillment

You’re taking a risk when you hold inventory for the first time. Let’s say that the manufacturer has a minimum order quantity of $2,000.

What happens if you order $2,000 worth of inventory, and you’re not able to sell any of the product? 

You’re out $2,000—unless you want to give your inventory out as Christmas and birthday gifts for the next few years. 

So, how can we sell the product while keeping the risks low?

Here are two ideas.

The first one is to launch without any inventory in stock. If you get an order in, then just refund their order. 

Email them immediately.

“Hey [First Name],

I’m so sorry, but your [Widget] is out of stock. It literally just ran out of stock a few seconds before your order was placed, but our database didn’t update in time.

We’re still facing some supply issues due to the pandemic, and I estimate that we won’t have it again in stock for another 4 weeks.

I’ve gone ahead and issued you a full refund. Once again, I’m so sorry for this!

However, I can offer you a discount code for 30% off for when we do get it back in stock. Let me know if you’re interested!”

– John Smith, Founder

P.s. what was the #1 reason that you decided to buy this product? We’re a small family-owned business, and it would really help!”

Be careful with this tactic. I don’t think the payment processor’s going to be too happy processing so many refunds. 

The second idea: Order on Demand from Amazon

If you’re interested in selling an item from AliExpress, then chances are that someone else is already selling it on Amazon.

Here’s what you can do:

  1. Sell the item on paid traffic. 
  2. You get an order!
  3. Order the item from Amazon to yourself via Prime Shipping. Re-package the item once it arrives. Ship it to the customer. The customer gets it within a few days of their ordering.

No, this isn’t the most efficient method. But remember that the point is to validate demand. Once you validate the demand for the product, then you can order directly from the manufacturer with confidence.

Note: Some people will be wondering, why would someone buy from your Shopify store if they can buy the same thing on Amazon? Great question!

You’re giving people too much credit. Most people are impulsive buyers. If they see your ad on Facebook, their first thought isn’t to go find it on Amazon. And depending on what you’re selling, they may not even be sure how to find it.

2.3 Creating a Converting Landing Page

Landing pages can make or break your campaign. You don’t want to have an amazing product and have the campaign fail because your landing page sucked.

This is the one area I’d recommend spending a significant amount of time on.

The biggest mistake I see people make is they send traffic to a product page, rather than a landing page.

What’s the difference?

  • Product Page: Designed to give general information about the product. It’s meant to appeal to the masses. Think of it as a page in a catalog.
  • Landing Page: Stand-alone page designed to convert cold traffic. They’re usually longer and contain more information. 

Here are two examples from the brand Kettle & Fire.

Product Page

Kettle and Fire Product Page

The product page is pretty standard. It’s short and to the point. It’s designed for people who are familiar with the brand.

Landing Page

Kettle and Fire Landing Page

What difference do you see? It’s much longer, and there are way more “conversion levers” on the page. It’s designed to sell to someone who has never heard of bone broth before.

Which one do you think converts better on cold traffic? The landing page, of course.

So, why don’t more people send traffic to landing pages?

First, because most eCommerce people don’t have a background in running paid traffic. Sending traffic to a product page is the simplest route.

Second, it’s hard to customize the product page on Shopify. Shopify’s product page customization sucks. It has been on their roadmap to release “sections” for years.

So what are your options now to build a landing page in Shopify?

1. I recommend building a landing page in Unbounce. Then you can connect Unbounce to Shopify for the actual fulfillment. 

2. You can use a Page Builder designed for Shopify such as PageFly or Shogun. Be careful that sometimes these page builders can slow down your site speeds.

How do you design a converting landing page? Even though eCommerce landing pages all look different, they tend to follow a general framework.

Here’s a Simple Framework You Can Use:

  • Hero Shot – Headline / Product Shot
  • Big Media Social Proof – As seen in the New York Times! Skip it if you don’t have anything.
  • Value Propositions – This is where you share your biggest value propositions. You have to illustrate it in a way that’s easy for people to understand. Show, don’t tell. Videos, animated GIFs, and comparison tables do well.
  • The Product – Various Photos. Bullet points. For this section, look at what the top sellers on Amazon are doing. 
  • Testimonials – Text-based is okay. Conversation rates skyrocket if it’s video reviews where the customers are holding your product.
  • Guarantee – Share your refund policy. The stronger the refund policy, the better. 
  • Reviews – Your product reviews. Don’t have any product reviews? Use Loox where you can “import” reviews. I’m going to keep it real—most people just make up reviews until they get some legit ones in.  

I have two pieces of advice to improve your landing page.

The first is to demonstrate visually. Imagine you’re selling green superfood powder. You need to have a section explaining the ingredients in your supplement. 

Here’s the most basic way of doing that. 

Ingredients: Moringa, Mint, matcha green tea, wheatgrass, beets, spirulina, chlorella, etc. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You grab some stock images and type some text. Easy doesn’t stand out. 

Let’s look at what Organifi does. They created an infographic that is so much more visually impactful.


 

Pro tip: You can easily create something similar yourself. Or pay someone on Fiverr to do it. It’s these small details that elevate your store to look like a brand.

Which one do you think leads to more conversions?

My second piece of advice is to show proof. People are skeptical online. The more proof you can show of your claims, then the higher your conversion rates.

Think of it in terms of levels. 

Level 1: Text-based.

“This organic green juice is so awesome. I love it!” – John Smith

It’s all right, but this can easily be faked. How do people know you didn’t make this testimonial up? And this testimonial doesn’t move the customer emotionally.

Level 2: Pay someone on Fiverr to do a video review.

You can pay people on Fiverr to do video reviews. This is leagues better than a simple text-based testimonial. 

Level 3: Video review from someone real

Once again, people are skeptical. In the back of their mind, they’re wondering if your reviews are legit or not.

The highest level is when you can prove that the review is legit. For example, a YouTube Video review from someone with over a million subscribers. Or you share a video review linked from a customer’s Instagram profile.

You might have to settle for “level 1” when you’re first starting. But as you gain more experience, you have to advance the levels of proof to increase your conversion rates.

Let’s talk about store design. It matters. You want to come across looking like a high-end D2C brand, rather than a run-of-the-mill marketer using the Debut theme.

Some ideas:

  • Upgrade your theme. If you have the budget, I highly recommend upgrading your Shopify Theme. Out of the Sandbox makes the best themes. I recommend Turbo.
  • Professional photos. Sometimes you’ll get lucky and the manufacturer has solid photos taken. What if they don’t? If you have some budget, you can send the product to a photographer on Fiverr. That’s the simplest way. You can always learn basic photography skills and take the photos yourself. You can also throw in some professional photos from Pexels. Don’t steal photos from a competitor.
  • Good fonts and color scheme. Good fonts and color schemes are the cheapest way to make your store look more “premium.” You can use different Chrome extensions to see what fonts and what colors a store is using. Good fonts + color schemes + professional photos from Pexels = solid looking store for free.  

2.4 Generating Traffic

It’s time to send targeted traffic to your landing page. There are only a few traffic sources that are capable of sending targeted traffic.

1. Facebook Ads / Google Shopping Ads

Facebook and Google Shopping are the kings. They are the most targeted traffic sources you can use. If you can’t make it work here, then you won’t be able to make it work on other traffic sources.

These should be your main focus.

2. Instagram / TikTok Shout outs 

An alternative to Facebook and Google ads are influencer shout outs. I’m not as big of a fan of them because it’s much more time-consuming. You have to find the pages to target and negotiate with each one.

There are two types of Instagram pages. The first are influencers, and the second are meme pages. Influencers are people. They’ve built expertise and trust with their audience. If you’re going this route, go for the Nano influencers. They typically have between 5,000 – 10,000 followers. Their audiences are more engaged, and the prices are more affordable.

Meme pages are pages full of memes usually created by anonymous people. Meme pages tend to be a lot cheaper for shout-outs, but the traffic doesn’t convert as well.

The opportunity with influencers is price inefficiency. Some TikTok influencers are new to the game and may not know their true value. You can take advantage of that.

2.5 Is This Product Validated?

How do you know this product has potential?

First, you have to spend money generating traffic. I think 10x the sales price is a decent number. If your product sells for $50, spend at least $500 on traffic.

I can’t emphasize this enough, but the more you can spend, the better. You need to spend enough for statistical significance.

From there you have to see what the ROI is.  

If you’re profiting, congratulations, you have a winner! You can confidently go “all in” on this product because you’ve barely optimized it yet. 

For most people, I suggest trying to get at least a -30% ROI.

That means if you’re spending $500 in traffic, are you generating at least $350 in sales?

Yes, you’re losing money. But remember that you haven’t optimized anything yet!

Where’s the future profit coming from?

  1. You’ll have additional products. More products means you can bundle them. You can increase your average order value.
  2. Economies of Scale. Instead of ordering the MOQ, you can place bigger orders. Bigger orders mean bigger discounts.
  3. Paid Traffic Improvements. Keep split testing your creatives. If you’re running Google Shopping, you’ll see which keywords are converting.
  4. Landing Page Improvements. Your paid traffic strategies will be more efficient. Split test your landing pages. Get a professional to take better product shots. Redesign your Shopify store.

So what happens if you’ve spent $500 and you have no sales? It’s time to move on to the next campaign.

You’ll know a winner when you see it.

Be careful of getting emotionally attached to your idea. I’ve been there, done that. You’ve put so much time into building your store. You still think it’s a great idea. If people aren’t buying, then you don’t have a business. It’s simple as that.

Go back to the drawing boards and launch the next product.

This is what separates the winners from the losers.

Success consists of going from failure to failure without loss of enthusiasm.” – Churchill

Speed is King

I was watching an interview with Kobe Bryant. One thing that resonated with me is how he woke up at 4 am to practice.

Most professionals practice twice a day. By getting up at 4 am to practice early, he was getting one additional practice in. How much does that add up after five years?

A large part of success is getting reps in. If I want to improve at chess, I can go to chess.com and play dozens of games a day. There’s no cost to me getting in reps other than time.

Let’s bring this back to any sort of online marketing. You have to get your reps in. It took me 14 tries until I got my first profitable affiliate marketing campaign way back in the day.

That’s the same mentality when it comes to eCommerce. Each product you test out is a rep.

Learn how you can get more reps in with the limited amount of resources that you have.