As an early-stage retailer, you’ll need to decide what to sell and/or what services you’ll carry. The products that line your shelves and populate your website help define you as a brand.
As such, it’s important to find the right products for your business — products that your audience wants, and of course, products that will sell. Doing your due diligence on what to sell helps ensure your products/services resonate with your target customers. What products or services best meet their needs? What value will a particular product provide to your customers? These are just a few of the integral questions to ask during the product selection process.
Doing a little homework can make the difference between healthy revenue and unsold products collecting dust on your shelves. And part of that homework centers on finding a product that works well within your niche market. This is called finding a product-market fit. And the right product-market fit is crucial for both online and brick-and-mortar retailers alike.
But what is product-market fit, and how do you measure it? Don’t worry — we’re here to help you navigate this concept and make it work for your retail business.
What is Product-Market Fit?
Product-market fit is how well a product satisfies the demand of the market, or simply the potential of what you’re offering to successfully sell.
Even without knowing the exact term, most retailers aim to find the right product-market fit for their audience — they try to figure out what consumers want, market products that they think people will like, and draw customers away from competitors to gain market share.
Whether you’re just starting your business, looking to rebrand, or want to alter the products you carry, deciding what to sell isn’t a decision to take lightly.
In the article Choosing a Product or Service to Sell, Entrepreneur stresses the importance of reflection before choosing what to sell. Ask yourself a few questions to jumpstart the decision-making process, including “What kinds of products do you like, enjoy, consume, and benefit from? Can you see yourself getting excited about this product or service?”
Your personal interest in a product is sure to be shared with other consumers indicating a demand for that product, but you’ll also be more passionate about selling something you care about, and that will be evident to your customers.
Next, ask yourself: “Can you see yourself selling this product or service for the next five to 10 years?” Of course, not every product you sell needs to have staying power (think of how much money has been made selling fidget spinners in the last six months).
Fad products can be a great way to move product quickly or get a new audience interested in your brand, but it would be difficult to build a sustained brand from exclusively selling the flavor of the month. Having more evergreen products to make up the majority of your offerings (with fleeting interests sprinkled in when appropriate) is a stable way to build your brand and keep your brand identity consistent.
While it’s easier to pick your products first and build a retail business around those offerings, it’s possible to change the products that you sell and rework your business around those changes.
How to Find What to Sell: Identifying Opportunities
From products that you love and want others to enjoy as well, to products that fill a demand that your competitors are missing, figuring out the right product-market fit always involves finding a business opportunity.
In our guide on How to Sell a Product Online, we identify eight types of opportunities:
- Uncover Opportunities in Keywords: Begin with Keyword Research for your industry and audience.
- Build an Interesting and Captivating Brand: Create an interesting, unique brand to sell your products.
- Identify and Solve a Customer Pain Point
- Identify and Cater to Consumer Passions: Conduct market research to learn about the problems of your customers, as well as what they love.
- Follow Your Own Passion: Bring your passions and interests into the business, and product offerings.
- Look for an Opportunity Gap: If you have a few products in mind, research your competition and see if they carry something similar, or if there’s an opportunity for your business to be the first.
- Utilize Your Own Experience and Expertise
- Capitalize on Trends Early: If you’ve decided to sell trending products, be sure to get them in-store and/or online as quickly as possible.
Many retailers carry both kinds of products to keep their customers happy on both fronts — providing them with items that they need and want.
Know Your Customer: Choosing the Right Products
To narrow down the field and focus on an opportunity that will work for your business, you’ll need to understand your audience.
“If you don't know your customer, you won't have much luck figuring out the product-market fit,” Entrepreneur advises in the article 3 Steps to Determine Product-Market Fit. “Developing a deep understanding of the problems facing your customers enables you to relate to them better and ultimately helps builds trust and credibility.”
FURTHER READING: Want to delve deeper into your audience demographics? Read our guide on building buyer personas for your retail store.
You can find out what your audience is interested in by looking at what industry leaders are successfully selling, conducting focus groups or surveys to ask target demographics about products they’d like to see your business carry, and learning about your audience’s interests.
Customers purchase items that they need all the time, but they’re happiest to spend their money on products that solve a problem or something that they’re passionate about. Knowing your audience is the best way to keep them coming back and build long-term loyalty.
Knowing your audience is also crucial because ultimately, when you achieve product-market fit, your customers will recognize the value of your product and do much of the selling for you. Your happy customers become brand evangelists and chat up your product with their friends and family. Word-of-mouth and referrals are a powerful confirmation that you have a product-market fit — and that you’re offering serious value to your customers.
Pivoting an Existing Product: The Art of Finding the Right Market
You may already have a product, but it hasn’t landed well with customers. They’re not buying what you’re selling. So, how do you move forward?
Perhaps it didn’t meet their needs — or maybe it simply isn’t meeting the right needs. You may need to shift your product into another market to kickstart sales and help it resonate with the right customers.
Here are some questions to ask yourself:
- Is your current market saturated? Do you have multiple competitors who make it tough to get a toehold into the niche?
- Is your product differentiated from your competitors? Do you communicate a clear benefit to buying your product over another retailer’s?
- Would your product meet the needs of a higher-end market, where customers are willing to pay more for a higher volume?
- Or is the opposite true — is it better for your product to target more budget-conscious buyers?
Businesses can also change the team working on a particular product, rename or rebrand a product, or any number of other tactics in pursuit of the right product-market fit.
Aligning Products With Your Brand
Once you’ve decided on the products that your retail store is going to carry, it’s important to align your offerings with your existing brand; or, you need to create a new brand that reflects the items that you’re selling.
Creating a brand identity is necessary, whether you make your in-person sales in a brick-and-mortar storefront, or at markets, fairs, or festivals.
In the aforementioned Entrepreneur article, the publication discusses the importance of building credibility: “Customers want to know how your product or service is going to make sense for them, and the easiest way to do this is to inject their needs into your brand's story.”
Weaving the story of your product into your brand presents a cohesive, polished identity to your audience and helps customers remember what you offer.Think of a brand like TOMS, where the story of the brand, the causes they support, and the product itself fuse together into one narrative. Most customers buying their products are familiar with the brand’s story — it’s what brings them back and makes them feel good about buying their shoes.
Product-Market Fit: Measuring Success
Soft Launch Your Product and Track Sales Numbers
After you’ve identified the right products for your retail business, do a soft launch and see how your customers respond. Start with an experiment: place a small order, then set a conservative timeframe and sales goal.
Once that first order is about 75% sold, take a look at how long it took to sell, the rate of customer returns, and how many customers came back to make additional purchases.
While every brand will have their own metrics that are most relevant to their brand, consider how quickly your new product sold out. If most of your sales are online, you may be more comfortable warehousing inventory for longer than the average brick-and-mortar brand. After all, storefronts forfeit valuable shelf space to test new products.
FURTHER READING: For help more on tracking sales success in store, read about 10 Unique Tools Retailers Can Use To Measure In-Store Metrics.
Examine Point-of-Sale System Data
Point-of-sale system data is an invaluable tool in tracking your sales and understanding if you need to adjust your product-market strategy during the testing phase.
To learn more about using POS data to build sales knowledge, check out our POS Data: How to Use Information from Your Point of Sale to Improve Your Business.
TRY SHOPIFY POS: Need a point-of-sale system that helps you better track sales data? Try Shopify POS today.
Monitor Customers Reviews and Recommendations
Now that people are buying your product, track their feedback closely. Are they leaving reviews on your website, social media, or sites like Yelp? Are they having trouble using the product? Do they find that it meets their needs?
In addition to reviews, take a look at how often they share information about your product or brand. If they’re recommending you to their friends and family, that’s a vote of confidence and a potential sign of a great product-market fit.
In addition to actively monitoring customer conversations online, ask for feedback in person. Have comment cards readily available at checkout, offer links to customer surveys on their receipts, or email your customers asking whether they’d recommend your product. This feedback is invaluable in helping you tweak your market position (and give you great ideas for product marketing).
What to Sell: Moving Forward With Product-Market Fit
Did your retail business struggle to find the right product-market fit? Or have you had success with a different strategy for identifying what to sell? Tell us about it in the comments section.