A product are goods or services that are sold to customers or other businesses. Customers buy a product to meet a need. This means the business must concentrate on making products that best meet customer requirements.
A business needs to choose the function, appearance and cost most likely to make a product appeal to the target market and ideally stand out from the competition. This is called product differentiation.
We will just focus on actual physical products for now - the first questions you need to ask is - if you have a particular product in mind..is it all ready out there in the market? If it is you need to work out how you can sell it better than a competitor as well as make a profit or at least break even from selling it. You may not think break-even is very good (and we would agree mostly) but sometimes people will buy a certain product from you and others with that product...so you can make profits from the other products you sell. A good example would be something like milk from a supermarket where you may sell this at a loss even to get people in your store and make profits from the other items they buy from you.
Let's leave that kind of product behind for a while - let's think more about products that you are interested in selling on their own and trying to make a business from just selling one product.
If you have a new invention then you will be the only one's selling it unless you are going to wholesale the product and license it out to a big company. If you are the only one selling it - then you can charge big money for your product if it serves a good purpose and solves a problem.
What if the product is a more mundane product - the question you need to ask, is, can you create the product yourself? Can you make the product better, or cheaper or both? Is the product you are up against so heavily entrenched that you have no chance of entering the market...something like Coca-Cola springs to mind. Virgin Cola for instance tried it a few years back - but Coca-Cola just batted them off - lesson learnt!
Creating your own product is difficult to do effectively - you might require specialist equipment, you will need skilled people, you will have to make enough of the product in order to make it cost-effective. Do you have the capital requirement to pull this off?
What about drop-shipping products - with drop shipping you don't even have to touch the product yourself or store it - you just have to sell it at a higher price than what you buy it for. This clearly is the big advantage for this method.
There are always negatives to every positive. With dropshipping, retailers hold far less physical merchandise, if any. As a result, their customers have no way of seeing the physical items before they purchase. This can be problematic, as it can lead to a high percentage of returns. Another disadvantage is the time involved in handling customer service. If a customer is dissatisfied, they will contact you, rather than the company who shipped their product. You will have to contact the shipper, delaying customer service time, which may anger the customer. Also, by relying on a third party shipper, you will be responsible for any mistakes they make. If they delay shipping, or have a problem with the order, it will be you who is held accountable. A customer may avoid buying from you because of a mistake on the part of your shipper. Competition is also a large factor. Dropshippers sell indiscriminately to anyone, meaning that there will be a lot of places offering the same products you are selling. You may not be able to afford to compete with their prices. There are also scams involved with drop shipping - where you can end up if you are not careful in paying for the products and then the customers getting refunded on them all which can lead you massively out of pocket.
Some simple ways to avoid drop shipping scams are:
When researching a company put in their name and the word scam - if you find lots of complaints about them - avoid at all cost.