How To Validate A Product Idea With Little $$$

This post is a continuation of How To Pick The Perfect Niche For Your Brand, please read that first if you haven’t.

So you have a niche picked out and you have an idea for a killer product line. Depending on where you’re at in your DTC e-commerce career, the idea of spending beaucoup amounts of dinero on inventory before even knowing if the market responds well to your product is probably not the greatest idea.

So how do we validate an idea for a product line with minimal capital? Let’s use a case study I did from earlier this year. I wanted to test a product line for an idea I had for an apparel brand. It sounded like a promising venture in my head, but I’ve had many instances where I thought the product idea I had in my head seemed like it would go gangbusters in terms of sales but actually flopped miserably.

So I basically had several mockups of the fashion line made that I planned to release. I hired a designer from onlinejobs.ph and paid her $20 per mockup for a total of 3 initial designs. You can sign up for 1 month and cancel after you find the VAs you need. You can also do this with other industries besides apparel: consumables, gadgets, jewelry, you name it.

I put up said mockups on Facebook ads. 3 campaigns, 5 ad sets each. I chose a good variety of different audiences as well as 1 broad audience. Say you’re selling dog couture fashion products. You could target each one of these as an ad set:

• dogs

• dog collar

• fashion

• designer clothing

• broad

Use these settings at the ad set level:

• $20 budget a day per ad set

• Purchase conversion event

• Leave age/gender alone

• US targeting (assuming you’re main market is the US)

• 12am start time the following day

• 1 day click/view

• Advantage+

For creatives, use one image ad and one carousel ad. You can use the mock ups from your designer. For the copy, simply go to the Facebook Ad Library and look up your top competitors and get inspiration from what they’re doing. Pretty easy.

Let the ads run for 5-7 days. Cut any adsets that have over $1 CPC after $10 spend. Cut adsets that have no ATC after $20 spend. Depending on the cost of your product, cut adsets with no purchases after $50 spend (for a product around $50 cost).

The main metric to look for is at least a breakeven ROAs over a 5 day period. If you can breakeven on the front-end, you should be able to make bank on the back-end given that you provide a stellar product experience and rockstar customer service. Plus your ad creatives will be better and your site more optimized after your idea is more concrete, allowing for a better upfront ROAs.

The breakeven ROAs will probably be around 1.5-2 ROAs for you. It’s important to focus on LTV (lifetime value) as FB ads has gotten harder over the years. A long-term customer can mean hundreds or even thousands of dollars revenue over time. So don’t fret if you aren’t printing money initially.

Once 5+ days have passed and the number look good, then you can start looking for a solid supplier (let me know if you want a newsletter on this) and ordering a bulk amount of inventory after your idea has been validated. This is way better than ordering inventory and trying to validate your product idea since it will prevent you from getting caught with your pants down and expose you from unneeded financial risk.

If the number don’t look good and you’re not at least break-even, you can try tweaking the copy/targeting/image mockup/landing page. Again, look at the top competitors in your industry and emulate what they’re doing, but don’t blatantly rip them off. If that doesn’t work, then your product idea or niche probably sucks and it’s back to the drawing board. Repeat the above steps until you find something viable. No worries, it happens to the best of us.

“But Bill, what do I do with the customers who ordered products from the mockup ads? I have nothing to ship them 😱 !”

Easy. Just send them a personalized, friendly email explaining how you ran into production issues and the item they wanted is backordered 2 months. Emphasize that you a small business ran only by a very small group of individuals. Ask if they are willing to wait the 2 months or offer a refund and say that you’ll notify them when their item is ready to ship. If you’re cordial about it, the customer will be understanding and will be willing to wait the 2 months.

And voila. You just validated your product for only a couple hundred dollars.

Hope you got some value from this, feel free to send me a DM if you have any questions.

-Bill

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