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.
There are so many great nuggets in Chad’s answer. Any retailer (brick-and-mortar or ecommerce) can learn from his focus on solving inefficiencies and differentiating TC from other stores.
Here are some takeaways and action steps to consider:
- Think about any pain points your customers have. Can you create, source, or sell products that solve those issues?
- Also look at your competitors and identify inefficiencies in their shopping process, then make sure you offer a better experience.
- For example, at TC, shoppers can not only buy products at better prices, but they enjoy free shipping as well as live chat with product experts.
- TC also differentiates itself through corporate social responsibility. Each filter that they sell helps plant trees.
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.
Can you use Amazon for your product and customer research? It’s obviously a goldmine for consumer insights.
The next time you’re trying to figure out your customers, swing by Amazon.com, read reviews for products related to what you’re selling, and then use the info you get to source your next batch of merchandise.
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.
Don’t sweat the duds. If you have a lot of excess stock, know that there are ways to move and liquidate it. You could:
- Refresh, re-merchandise, or remarket your merchandise
- Run promotions
- Bundle slow-movers with better-selling items
- Offer them as freebies or incentives
- See if returning or exchanging the product is an option
- Sell on online marketplaces
- Use liquidation companies
- Donate the merchandise and take advantage of tax benefits
For more info, check out our guide on liquidating surplus stock.
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.
Ask yourself: are you selling in the places that matter most to your customers? Evaluate the various sales channels out there (i.e. physical retail, ecommerce, online marketplaces, social media) and then see if it makes sense for you to sell on those channels.
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.
You’ll uncover plenty of opportunities by looking at inefficiencies that your customers are experiencing — particularly when it comes to large incumbents such as the big, traditional players in your industry.
As Chad puts it, that’s the area where you can be the most nimble. When you successfully solve your customers’ problems, you can leapfrog your competitors and grab a good chunk of the market.
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+.