Innovative Product Ideas for E-Commerce
It seems like everyone is earning extra income by having a side job of some sort. Most of what is popular include using e-commerce marketplaces like eBay, Amazon, Etsy, Bonanza, and Walmart, among others, to list merchandise and generate sales. However, as the entry barriers for these types of activities lowers with the availability and accessibility to technology and product, more competition appears, thus reducing the prices. As supply and demand lower prices, the margins and returns on investment lower with it. Therefore, how can individuals engaged in the business of e-commerce remain competitive in such a fierce market?
The answer to the preceding question is both simple and complex. Although this sounds like an oxymoron, competitiveness depends partly on the basic economic principle of supply and demand. Therefore, the simplicity of competition is a factor determined by how much of a product is readily available (supply) and how much of the product is desired by consumers (demand), where the price is a balance between these forces. If your price is lower than the market’s price, and supply and demand are constant and balanced, the product should sell easily. However, the complexity of competitiveness increases because supply and demand tend to fluctuate. More so, small organizations or individual marketplace sellers tend to be affected by these forces instead of influencing the forces.
For smaller organizations or for individuals running a small operation from home, competing with other companies can be difficult because of the economies of scale. While larger organizations have access to capital and can hold higher volumes of inventory, small businesses depend on rotating inventory quickly to produce cash flow and return on investment. This is not to say that large businesses do not worry about inventory rotation. The point is that larger businesses can finance their operations and short-term inventory rotation will not negatively affect their decision-making process. Instead, smaller companies may have to make tough decisions to meet short-term liabilities and may not have the patience or time to wait.
However, small businesses can take advantage of their size and their ability to change rapidly. While large organizations need time to adjust, micro-businesses can change immediately, thus taking advantage of evolving market trends. Also, smaller organizations can produce customization to customers, thus adding a personalized touch to products and services. For example, e-commerce platforms like Etsy provide independent sellers with the ability to make handcrafted items, jewelry, toys, and other handmade products. For small companies, the marketplace makes sense, as they can tailor products to meet a specific niche while keeping profit margins higher.
Home-based businesses or independent e-commerce sellers can also focus on products with a very specific market. Although these types of products will not sell as quickly as an iPad listed on eBay, sellers can obtain excellent results because less competition exists. For example, some e-commerce businesses focus on products like Kunkle valves or exclusively sell parts for a specific car model. Such specificity allows the organization to target a specific type of customer, and such targeting results in less expensive marketing campaigns and highly-customizable messages.
Lastly, individuals selling on marketplaces like eBay can leverage the power of other marketplaces. For example, Amazon is the largest e-commerce platform in the world. With the size comes the problem of handling returns. Programs such as Fulfilled by Amazon (FBA) provide the organization with massive amounts of inventory. Such inventory also means many items get returned to Amazon warehouses. To solve the issue, the company sells Amazon returns pallets by the truckload. Companies buying entire loads then offload the merchandise by selling single pallets at low prices to small companies looking for product. These small companies, in turn, list the items below the product’s real value, thus enabling themselves to compete.