It seems that when most folks think about starting a new business, they consider what product or service they might sell to the consumer.
Everyone is familiar with consumer goods and most of us relate to them because we use them in our everyday lives.
We see and hear about these products in TV ads, radio spots, in the newspaper, and on signs and billboards. We hear about them from family, friends, neighbors, and even strangers at times.
We naturally begin to think about the products we use and how we might be able to come up with a better version or maybe we think we can sell consumer goods in a more effective way than they are being offered to us.
It might pay for you to change your thinking slightly and begin to contemplate what you might have to offer other businesses rather than consumers.
There are some advantages to avoiding consumers and simply dealing with businesses in your niche.
Consider these facts related to business-to-business niches:
1- There most likely is less competition among product developers than there would be among consumers for a similar product. Imagine a supply chain looking like a triangle with the product owner at the top by himself and the consumers spread out across the bottom (base of the triangle.)
2- Typically the orders from businesses will be much more substantial than from consumers.
You will be able to sell 1,000 units to 10 businesses instead of having to deal with 1,000 different consumers. Of course this is a hypothetical example – but the concept holds true that you will probably be able to sell larger quantities, and often with higher prices, when you deal with established businesses.
3- It is often said that most of the money made during the California gold rush was by the suppliers of picks and shovels rather than by the gold diggers.
You can often avoid the ups and downs of the consumer buying patterns by focusing on supplying other businesses with what they need. Of course, you must understand what businesses need before you can supply them with a product or service. This holds true regardless of what you sell or who you sell it to.
4- Consumers are always in a hurry, fickle, and often delay making needed purchases. Business purchasing tends to be more rational, steady, and based upon quality products when they are required.
You can gear your marketing around these traits and concentrate on the business buyers that you develop a with a relationship over time.
5- By selling to businesses you will undoubtedly increase the exposure and distribution of your products. Smart businesses always have an eye on the competition. Often business owners talk to each other (in different marketplaces) and make suggestions on products and services that they use and like.
Often these businesses will already be established in markets that you aren’t. They will have channels and affiliates working for them that you don’t. Increased exposure could mean the opportunity to expand your product line and add new revenue streams.
6- Chances are good that your time spent on customer service (to the consumer) will be less if you deal with other businesses.
They will know all the specifications and details of your product before they buy. They will know how to use it since they will have to work with their purchasers as the retailer. That should leave you with more time to spend on developing new products and expanding your reach among niche businesses.
Some businesses may only be able to be profitable through a direct sales model, especially those that don’t offer a wholesale component.
Whatever group you decide to sell to, be sure to understand the advantages and disadvantages of your selling and marketing model prior to getting too far down the business creation path. There are significant differences in how you approach and deal with businesses as opposed to consumers. Be sure that you understand these differences so that the right methods and strategies are applied to each audience.
To your online business success!