Don’t Worry, There’s Still Money In Selling Physical Products

Got an great idea for a physical product?  As a rebuttal to my previous article You’ll Make More Money If You’re In The Software Business, I thought it’d be worth stressing that there is still a lot of money to be made selling physical products.

The start up costs are higher and unlike selling digital products you may end up being left with a garage full of unsold stock as a reminder of your failed attempt.  However, if you find the right niche and manage to structure your business to run hands off, you’ll be onto a winner.

Sell a hot seasonal product

Food businesses can sometimes be the most successful small businesses.  In fact, I’ve heard of some Fish ‘n Chip shops in holiday towns in my home country that are so successful in the busy holiday months they can bascially close up shop for the other months of the year and still enjoy annual incomes in the low to mid 6 figure range (with the majority of it earned in 2 or 3 months).

Sell a product with high markup

Selling a product with low profit margins is no fun (unless it sells for millions).  If you can sell products with 6-8x markup however, you can break even a lot sooner and sell a lot less product.  Gelato shops are one example of this.  They often sell nothing more than a single product which is sold for a premium price even though it’s made up of ice more than anything else.

Sell accessories

Selling accessories to hot selling products can be very successful.  People buy their new iPhone, or new HDTV and all of a sudden they’re looking for accessories they ‘need’ to go with it.  Cases, brackets, screen protectors – all of these are able to be sold at high markups, especially after someones spent hundreds or thousands buying the main product.

Patrick Buckley is one guy who used the buzz of Apple’s new iPad product to create his own million dollar business:

How An iPad Case Generated Close To $1 Mil In Revenue Within 3 Months

Test market demand using eBay or Google AdWords

Although testing physical products can be expensive, there are ways to test market demand without risking your entire savings.  Getting a small lot of products and selling them on eBaby is one method, then there’s the tactic made famous by Tim Ferriss in the 4 Hour Work Week where you set up a simple ecommerce website, put ads up on Google and then see how many people clicking on the ad will go ahead and buy the product (you can show a ‘Sorry, out of stock’ message to avoid having to actually ship the product).

Justin D’Angelo managed to avoid getting a ‘real job’ by selling items on eBay and eventually tapping into a growing market of selling poof chairs:

24-year-old takes in $150,000 annually selling poof chairs (note, this article was published back in 2005)

Should you sell a physical product?

Sure, if you’ve got an idea that you’re passionate about.  These days there are ways to test demand and viability without spending all your money.  Just be aware you’ll be dealing with ongoing costs that sellers of digital products are avoiding – shipping, stock insurance, product returns, warehousing costs (as you get bigger) to name a few.

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