Here’s a situation you might be familiar with: you create or stock up on merchandise that you think your customers will love, only to find out that the product’s a dud. Months later, you’re left with aging stock that you’re forced to liquidate.
It’s not a great position to be in, and if you’re always in that situation, you need to ask yourself: is there a disconnect between what you think your customers want and what they actually want?
If the answer is yes, keep reading.
We caught up with Chad Rubin, the founder of Skubana, an order, inventory, and analytics software for merchants. He is also the President at Think Crucial (TC), an online retailer that sells replacement parts for appliances, tools, and other things for your home. TC surpassed $10 million in revenue in 2017, selling their own product portfolio of nearly 1,000 SKUs.
How did they accomplish that? Well, the folks at TC do an amazing job at giving their customers products that they want and need. They’ve mastered the task of researching and developing products, and they’re able to effectively get in front of their target customers.
Read on to learn more about TC’s process and use the insights below to improve your product sourcing, marketing, and sales.
Francesca: Congrats on surpassing $10 million in revenue! Can you tell me more about how you’ve achieved that?
Chad: I think primarily what we try to focus on is solving problems. If we solve a customer’s problem, then we’re creating value in the ecosystem.
So, in terms of steps, we do a lot of research. We find where those problems and where those inefficiencies are, and then we solve for those inefficiencies.
An example would be, on a vacuum filter; you can pay an original equipment manufacturer $25 with no free shipping on a traditional manufacturer site. Or, you can buy it for half the cost at Think Crucial, with free shipping, free returns, and live chat experts to help you install it if you ever need it.
And we also plant trees for every filter that sells. For every thousand filters that are sold, we plant one tree. So there is a social sense to it as well.
Francesca: Tell me more about your research phase. How do you identify those problems?
Chad: That’s a great question. I’ll put the question back to you. Where is the one place that you can go online to find social proof and find reviews on every product imaginable?
Chad: Exactly. I use Amazon as a database to solve for their problems.
You can sort by one star and see where people are having problems. For example, there are coffee filters that are traditionally bleached. So they essentially take this bleached paper and now you’re drinking bleached paper, and in some reviews, people say things like “Hey, I just wish I didn’t have to constantly replace this filter. I wish there was a reusable filter,” so we’ll make a reusable filter. Or, “Hey, I wish that this wasn’t bleached. I wish that this was a natural brown paper.”
You can solve for those problems very quickly and get a lot of sales velocity because of it.
Francesca: Very clever. My next question is how do you test products before rolling them out to a wider audience? How do you mitigate that risk in terms of whether or not a product is going to be a success?
Chad: You can’t always create a home run. I can’t say that we have a home run with every product, but we do take capital and deploy it appropriately so that we can have more wins than losses.
Francesca: What happens if you don’t have a home run?
Chad: You can liquidate it. Maybe we have a couple of duds, I would say, but for the most part we’ll either liquidate it or just sunset it and never make that product again.
Francesca: Can you tell me more about any marketing strategies that you use to get the product out there?
Chad: I look at e-commerce like playing the game of Monopoly. Have you ever played Monopoly?
Chad: Great game, right? It’s a capitalist game. How do you win in Monopoly?
Francesca: I usually just try to buy as many properties as I can.
Chad: Exactly. Same strategy for me in e-commerce. I want to be on every single piece of the board to win. Wherever eyeballs are going, that’s where I want to be.
When people have a problem, they search on Google, they find us in AdWords, they find us on Amazon. Wherever they prefer to be, where they’re putting their eyeballs, that’s where they’re putting their wallets and that’s where we really kill it.
Francesca: What is one piece of advice that you would like to share with other retailers?
Chad: One piece of advice to other retailers? The first piece of advice I shared with you earlier was solving for problems. Finding inefficiencies is a very important one. That would probably be the first place that I would focus on.
Now, when you identify problems, it’s very important to look at where there’s structural inefficiencies of large incumbents. Incumbents meaning large retailers, traditional retailers that have been around for multi-generations that have no one-to-one relationship with their customers. That’s where we can be most nimble. And understanding, with intuition and empathy of the person that’s using the product, and then solve for those problems.
Over to you
How do you ensure that you’re creating or sourcing products that your customers want and need? Let us know in the comments.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.