for E-Commerce Sellers

How to become a Category Creator in a Saturated E-Commerce Space

Category creation requires, above all, a breakthrough product and exceptional business model. In this interview, Rainforest’s VP Brands Christine Ng provides aspiring entrepreneurs advice on how they can get there.

Nov 18, 2021
Rainforest Life

Rainforest is a consumer brand platform with a strategic focus on acquiring micro brands and building them into exceptional brands of tomorrow.

What are the strategies you would recommend when it comes to identifying market niches and choosing the right business model?

To identify a market niche, a mixture of research utilising the right marketplaces and brand leader sites and retail channels can get you pretty far.For instance, the “data mining” of Amazon’s customer reviews can be a great start. Amazon has a huge amount of information available to identify unfilled market gaps, and if you’re familiar with that ecosystem, coupling it with innovative product development and you can become a category champion.

People grossly underestimate some of the most niche products. There are tons of market gaps and though some of these products aren’t the sexiest, they can be incredibly valuable to consumers. One of our brands that sells wheel chocks is such an example.

As for how to vet business models, there are many ways to approach why you build a product and how you go to market. You’ve got many famous frameworks out here such as Simon Sinek’s Why and Ashley Black’s From Passion andPurpose to Product and Prosperity, but we’ve tried to come up with our own internal views based on our collective experiences, to define our own secret sauce and ways of thinking.

Our favourite here at Rainforest is still the lean framework, which is ounded on insights gathered on our own and by customer co-creation—we love asking questions and getting feedback. Knowing our customer is key, and if you can figure out something that lets them participate in the shaping of your product, you’ll get something that will ultimately be connected to your newly formed community.

It's also important to identify angles of destabilisation or fragmentation in your model. This will give you a strong sense of how to build, what to build, and who to build it for. We believe that you're never quite done at MVP stage(always be building, but within reason). Most businesses require multiple moats and various channels to be successful. From TikTok to Whole Foods, figuring out how your product will live in these different worlds will be a key to success.We constantly think about how consumers touch, experience, and understand our products in these different modes, and we always seek to achieve that connection between customers and brands.


What are important considerations when building a brand on Amazon, in comparison to the D2C space?

We often look at margins—who doesn’t?—and understanding how to price your products is a start. If you’re thinking of Amazon, most consumers who arrive on the site are spoiled for choice, so when you decide to this for Amazon, you definitely should do the math on what works in that world, what competition you have, and what existing sellers are active in the same vertical. You’ll also want to consider how to differentiate yourself, figure out which countries you’re selling in, and also what fees—marketing and others—you’re willing to pay to get your products launched.

When going direct to consumer, we would look—aside from margin and pricing—at products that haven’t been disrupted yet, or have remained stagnant.The adult diapers market for instance, was shaken up after one visionary founder walked down a supermarket aisle and realised how incredibly under served that category was, and we’d like to think we try to adopt similar approaches to thinking.

The next thought would be: can you own a category through product development or international expansion? Many people think international markets can be compared apples-to-apples, but that’s not the case. At Away, we saw that suitcase sizes vary between Europe and the US due to airline overhead cabin space differences. Additionally, just because people speak English in a given country doesn’t mean they’ll also perceive your product in the same way.Familiarise yourself with the markets you want to be in and the needs that consumers could have in these markets, and you’ll find yourself making decisions differently.

If you have competition, think how you can differentiate yourself through your values. How does your brand’s pricing and performance sit in your identified whitespace? As a challenger brand—which you probably are—you need to figure out how to do it differently from the status quo. Allbirds invented a sneaker that was washable, comfortable, resilient, and durable. It was generic and offered enough colorways to attract a wide range of people who were looking for functional footwear.

Finally, you should keep in mind that in the D2C space, it’s difficult to survive with low margins and high shipping costs. I joke with the team constantly that the ultimate product to buy is small, expensive, and high margin. If you don’t pay attention to these variables,  LTV:CAC (customer lifetime value to customer acquisition cost) will ultimately be difficult to balance if you’re spending tons of dollars on marketing for an item that costs less than US$30.


How does one test demand for a product while keeping costs at bay?

There are many affordable consumer panel testing options available nowadays on the internet. Of course, nothing quite beats having your own panel, but the business has to be sizeable to support that.

PickFu is a great tool for products that will be on the Amazon platform in a saturated vertical. Other possible ways are conducting surveys with your VIP customers, content seeding on social media and analysing the responses, or asking customers for pre-orders of a new product to see if it generates demand.

 

What are effective marketing tips for category creators, especially when it comes to the 4 Ps?

With regards to product, you have to offer differences that stand out, if you don't want to sell at a ridiculously competitive price. These features must pave the path toward a purchase, so it’s essential for category creators to understand what they build their products for. Oftentimes, we see Amazon products just being created to be price competitive, while D2C products excel with a strong brand, price, and utility. That combination allows marketers to position it at a more premium level which will assure consumer interest and engagement in the long term.

Prices have become even more sensitive and customers love to compare across different marketplaces and beyond. It's best not to fight that price war and develop a product that’s worth something to the consumer. If you create an emotional response, you’ll get them to spend where it counts. In Asia, you often see players compete around specific events such as 11/11. The most successful brands are able to perform without discount pricing, but that isn’t easy. You get what you pay for. Both the heart and the wallet matter, and products ultimately should cater to both.

As for the right placement: Channels have shifted with a change in media consumption. Nothing new there, you just need to go where the consumers are. Therefore it’s important to know where they are. Right place and the right time, along with the right fit.

Promotion: Livestream shopping, influencer marketing, and social recommendations are going to be more important. Consumers demand more real time feedback and you get it from everywhere, whether it's Reddit or TikTok. Anyone can poll their friends on Instagram to get an instant response, and if you collate that with the wisdom of experts, you get all the information you need. I joke constantly about developing products that appeal to the social media audience, but I’m probably not that far from the truth today.

 

What are emerging categories you recommend looking into based on your observations while working with e-commerce businesses?

There are wellness products that might have potential, and we still see self-care being hash-tagged. They can extend across various categories, from CBD products, to supplements, and self-watering plant systems. We’ve experienced two years of pandemic stress together, so we’re all looking for means to cope, slowly but surely.

 Then there is the resurgence of Home DIY. Since we’ve all stayed in our homes through lockdowns, we’ve definitely seen seismic shifts towards turning inward, both personally and physically, as well as aesthetically and functionally.

Finally, what are some factors potential category creators should consider before starting out?

It takes a lot of investment to command a conversation in a category, or to create perception of a sub-category. Look for the most underserved pain points, which could be what your competitor cannot deliver, create it for your customer, grow your unreasonably loyal audience who will then shift the category for you.

At Rainforest, we try to look for brands across different spectrums.Category performance can be important, but we also look at products within the category to see how well they perform against competition. We further aim to develop brands that can extend our product lines in the best way possible. We want to have our consumers declare: “yes, this is a product I’d buy with this or that,” and end up filling their homes with all our products because they are best in class!

 

Written by

Rainforest Life

Rainforest is a consumer brand platform with a strategic focus on acquiring micro brands and building them into exceptional brands of tomorrow.

Written by

Rainforest Life

Rainforest is a consumer brand platform with a strategic focus on acquiring micro brands and building them into exceptional brands of tomorrow.

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