We talked about the logic behind product selection: product lifecycle, seasonality, and purchase frequency.
Now we can talk about the dominant factors, such as price, number of comments, market competition.
When we talk about the price, sellers will think about two points.
1. The relationship between price and profit. Although the profit of the product is determined by the price, the high-profit product often will soon attract a large number of sellers poured in. If the product has no competitive advantage (no difference product), then the price difference can only influence the user purchase decision. This is the price war.
For any product reaches maturity, the gross margin will be bounded to reach the market average unless there is a high barrier to entry.
2. The effect of price on the supply chain for small sellers, or for sellers who want to enter a new category, during the trial sale phase, if the price of the product is high, it means that the production cost is very high, and if it is unsold, the backlog cost is also higher.
3. But there is a deeper logic behind the effect of price on product selection.
First of all, the price range determines whether the user is an impulsive consumer or a rational consumer, such as the product is less than 30$, Impulse buying factors are much higher. Whether impulse buying determines the size of sales opportunities, if not impulse buying, users may browse 5-10 pages, and compare the functional elements of the product and comments, as well as refer to the various Google reviews.
It means that sales opportunities are 1-3 times larger than impulse purchasing, and other persuasion strategies (soft, brand marketing) can affect users.
For example, iphone 7 case, Basically, the top 50 ( A few sellers ) of this kind of products ( search or category navigation ) accounts for more than 70 % of the sales volume. If you want to enter this market, the promotion cost of 1 million RMB is basically impossible to occupy a market. Amazon traffic is very concentrated, unlike the market of the mobile phone, and traffic is basically a balanced distribution of counters, any small corner of the sales opportunities.
The price range determines the target user level. It's the price we usually understand that affects the user's purchase decision, for example, iphone 7 cases. The $20 user group and the 40-$80 user group are not the same. The latter is the quality suitor. Part of the user base is naturally much smaller.
When selecting goods based on price, we do not calculate the average price of goods, but we divide the price of this kind of products according to different regions, and then look at the number of goods in each section (degree of competition).
If we want to build a boom or have a high market share, then it must be targeted at the general population, which means that it must be a civilian price. As a daily example, international chains with high popularity must not be high-end brands abroad, such as KFC and Starbucks.
Product pricing should be based on consumer expectations. In general, asymmetric information products are priced at a higher level, such as when a floor-sweeping robot launched on the market. People don't know the cost of manufacturing it. Also, the ostentatious consumption is also mainly based on consumers. Rather than based on cost and competitive pricing, such as cufflinks and belts.
When researching product reviews, the average seller will pay attention to these aspects:
1. A concentration of comments if comments are focused on the first three pages (search or category navigation), this means that the product is highly competitive.
2. The use of the product can be found from the scene and bright spot.
3. From the evaluation, we can find the improvement space of the product, which also means the market opportunity, which is very helpful for the development of the new product. But if the product is not generally rated well, we should be careful, and the cost and risk of solving this kind of problem may be very high.
Get a product, all the reviews, and you can get this competitive intelligence. The number of comments can indirectly reflect the sales volume of the product, and the rate of stay in the Amazon market is generally around 1%.
The product shelves time because some products do not show the time of the shelves, so we need to speculate, usually in the first 0-2 months before the commentary.
Product seasonality analysis adds monthly comments to the bar charts, such as the 6-8 annual growth of reviews.
The product lifecycle if the product has been on the shelf for several years, but the monthly review growth curve is relatively slow, indicating that the product life cycle is longer; if the monthly growth data gradually atrophy, it may mean that the product enters a recession, or is not competitive.
The relevance of products is essentially based on the relevance of consumer usage scenarios. For example, swimsuits and diving glasses, barbecue grill, and barbecue mat.
When we are selecting products, we should plan the related products in advance.
I repeat that the essence of associated sales is to increase the sales of goods without increasing marketing expenses.
Market competition analysis, the core is to study the concentration of sales of the head product (the first 3 pages of the core keyword and the first 3 pages of the category navigation page) Because online sales are usually presented in the form of a list, the user's attention is usually focused on the head, with a sharp decline in the back.
Amazon's thousands of people, although it can partially solve the uneven distribution of traffic, in practice is difficult to implement, in any online retail market, there is a pyramid structure, with 10 percent monopolizing more than 80 percent of sales. Because only so that the system can be stable: incentives for high-quality businesses.
The most intuitive way to study market competition is to look at the number of reviews of goods, especially the distribution chart of reviews of goods because the number of reviews is a reflection of sales.
Generally speaking, comments are focused on the top three pages of the market, which is very competitive. There is no apparent traffic pyramid structure.
In addition, refer to the sales data, sales trends at the bottom of the rankings, which are generally similar to the pattern presented by the number of reviews.