In this article, we take a look at the top 12 high margin products to sell online. For more such products, go to the 5 High Margin Products to Sell Online.
Global Retail Landscape
The year 2022 marked the year of decades-high inflation, closing in at approximately 9% around the globe, notes The Economist. Households have been facing an intense squeeze in personal finances, with 80% of consumers changing their spending habits to grapple with the effects of inflation. Tips on an anticipated recession coupled with spiking interest rates have further shaken consumer-confidence hard.
Shopify notes that, on average, cart sizes are shrinking by 35%, whereby 50% of online sellers are witnessing less traffic and conversion rates. With a tightening grip on monetary policy, coupled with the rising interest rate, central banks have been struggling to extinguish inflationary flames and bring back financial stability.
However, the onset of 2023 reflects a change in the projected recession, which was believed to have begun with the year, with many economists believing it’ll probably start a little later this year, with others suggesting a soft landing. A striking 517,000 job gains, coupled with a 54-year low unemployment rate of 3.4%, are responsible for this moderated forecast.
These flourishing job gains, in turn, highlight an increase in income and spending, making up almost 70% of economic activity in the U.S. As a result, consumption rates have also jumped up by 1.8% to mark a two-year high. Overall, the global retail landscape doesn’t look unfavorable, with e-commerce playing a prominent role in online retail.
Insider Intelligence forecasts the global e-commerce growth rate to increase by 10.4% and worldwide sales to reach $6.3 trillion worldwide in 2023. While this growth driver in retail is less impressive in comparison to historical growth rates, the share of e-commerce sales in overall retail has increased, growing to 20.8% in 2023 and 24% by 2026.
Key Players
Alibaba Group Holding Limited (NYSE:BABA) is the leading online retailer in gross merchandise value, with estimated online sales of $780 billion as of 2022. Amazon.com, Inc. (NASDAQ:AMZN) trails close behind with $690 billion in online sales, making up 37.8% of total e-commerce sales.
Amazon.com, Inc. (NASDAQ:AMZN) is the go-to e-commerce website for customers and is considered a household name. Walmart (6.3%), eBay (3.5%), and Target Corporation (NYSE:TGT) (2.1%) follow the lead in online stores in the U.S. and are the most visited e-commerce platforms after Amazon.com, Inc. (NASDAQ:AMZN). Target Corporation (NYSE:TGT) is the go-to place for significantly discounted prices in the US. In the Asian marketplace and beyond, Alibaba Group Holding Limited (NYSE:BABA) is the market leader in e-commerce sales in both wholesale and retail.
Seasoned e-commerce veterans, entrepreneurs, agencies, as well as brand managers are also leveraging the massive reach of e-commerce to sell their products. Apart from these established players, there are many startups emerging globally and targeting gaps found in the market. For example, the Chinese startup company – Shein – is a fast-fashion brand with an estimated valuation of $100 billion.
All in all, sellers are using different products to make money. Some craft their products by hand, others use popular products from existing brand categories, and others create private labels and brands. The prime motive is to sell products that are in demand, offer less competition, yet have high-profit margins. E-commerce platforms such as Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA) and Target Corporation (NYSE:TGT) are helping these sellers in this regard.
Profitable Product Categories
While inflation has drastically impacted customer spending, many product categories are trending based on customer needs. Popular categories since Q4 2022 include cleaning supplies, grocery, vitamins, and dietary supplements, according to a report by JungleScout.
As such, it should be noted here that profitability isn’t determined by product category only. It also depends on the niche chosen, price, product competitiveness, and cost of goods sold, to name a few. Even if a product category is less competitive, sellers can have more opportunities to make sales within the sub-niches.
While a specific product category can be lucrative, sub-categories in other categories can be profitable too, and vice versa. For instance, Home & Kitchen is a profitable product category, with 2% sellers having as high as 51-100% net profit. On the other hand, Arts and Crafts is a less popular category, but 10% of sellers report the same profit levels.
Other profitable product categories include beauty and care, clothing and jewelry, toys and games, arts and crafts, and grocery and gourmet, to name a few. Many sellers report a net profit margin of 21% and above in these product categories.
Overall, sellers have been experiencing growing profitability in the retail e-commerce market. 73% of Amazon.com, Inc. (NASDAQ:AMZN) sellers report a profit margin of above 10%, while 35% report it above 20%. Seller profitability has also increased amidst rising inflation, with 37% of sellers reporting increased profitability in the year 2022. This promising outlook for e-commerce means there are plenty of products that can help sellers make big money online.
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Methodology
In order to identify the top 12 high-margin products to sell online, we have chosen products based on their average net profit margins. In this regard, we have relied on Shopify and AMZ Scout, amongst others, to derive the margins. Next, we have ranked the products in ascending order with the highest profitability.
With this backdrop, let’s look at 12 high-margin products to sell online:
12. Laptop Batteries/Accessories
Average Profit Margin: 25%
Sales in the personal computer market have exceeded $302 million in the year 2020, marking a 13% increase from the previous year, according to Research and Markets. Pandemic-related shutdowns boosted online learning and work-from-home, which has given rise to this industry. As a result, laptop accessories are also growing in demand.
Accessories such as wireless mouse and keyboards are particularly increasing to complement work with laptops. Particularly, Asia is likely to witness the highest CAGR since China and Japan are the primary markets for laptop accessories. Moreover, Shopify notes that the YoY growth for laptop batteries is 8,305%, and sellers can make an average profit margin of about 25%.
11. Children’s Toys
Average Profit Margin: 30%
Allied Market Research notes that the global market size for kid’s toys was valued at $65.8 billion in 2021. It is expected to grow at a CAGR of 3% from 2022 to 2031, reaching $89.5 billion by the year 2031. Children’s toys are an evergreen product as parents tend to buy them for their kids all year long. While larger brands dominate the toy market landscape, small e-commerce brands are also leveraging unique toys to garner profits.
On average, an online seller can make about 25-30% profit margin selling kids’ toys. Top-selling toys in the year 2022 have been Legos, drones, stuffed animals, video games, and electronic devices. Another popular kids’ toy that is easy to pack and deliver is a kids’ play tent. With an average margin of 66%, sellers can make good money selling this toy.
10. Dietary Supplements
Average Profit Margin: 38%
Dietary supplements are known to benefit overall well-being with minimal risks involved. With the growing trend towards health and fitness, it’s not a surprise that these products are gaining popularity. These products can help sellers make an average profit margin of 38%, Gitnux states. On average, a supplement store generates over $100,000 in income annually.
In-store sales at health stores have been growing steadily at a rate of 4.5% annually. On the other hand, online sales for vitamins and supplements are witnessing a growth of around 12%. At a CAGR of 7.3%, the global market for dietary supplements is forecasted to grow to $220.8 billion in 2027 from $155.2 billion in 2022.
9. Beauty Products
Average Profit Margin: 40%
It is estimated that shoppers are likely to spend over $24.5 billion online on beauty and cosmetics products, Shopify notes. The product category is the fastest-growing one on Amazon, growing by 24.4%. Moreover, worldwide e-commerce beauty purchases are expected to make up 25% of total beauty retail in the year 2023.
Despite the rising inflation and looming recession trends, this category has been resilient and facing double-digit growth. To get the most sales, sellers must work for personalized beauty offerings, offer loyalty programs, and partner with authentic influencers to win over customers.
8. Baby Products
Average Profit Margin: 40%
If you’re starting a baby store online, baby products can help generate an average profit margin of about 40%. The global baby products market size has been valued at USD 214.13 billion as of 2021, reports Grand View Research. It is expected to grow at a CAGR of 5.7% from 2022 to 2030.
Not only is baby products a lucrative business with decent margins, but this product category will also always remain in demand as people have babies all the time. With the growing trend towards sustainability, market growth is especially being witnessed in sustainable rubber pacifiers, organic cloth diapers, and even organic skincare products.
7. Pet Care
Average Profit Margin: 40%
Thanks to the pet humanization trend, people are increasingly focused on taking care of their furry friends. Pet care products are a popular category with many sub-niches that sellers can branch into. From accessories and supplies for pet owners to popular pet products such as pet beds, pet toys, feeders, and pet cleaning supplies, there are lots of products to choose from.
Grand View Research notes that the global pet care market was valued at $150.67 billion in 2021, and it will be growing at a CAGR of 5.1% from 2022 to 2030. The average profit margin for pet care products is 40%. With wholesale suppliers such as Inspirer Pet and Pet Edge, sellers can easily garner products for their stores. Moreover, people care for their pets all-year-round so it’s definitely a product that will stay lucrative the whole year.
6. Candles
Average Profit Margin: 50%
Forbes reports that a candle business can generate an average profit margin of between 25-50%. The candles business is a low-cost, high-margin venture that is a popular product to gift and even buy for oneself. Even if you use high-quality scents and oils, the costs do not become substantial.
Candles are becoming increasingly popular in home décor, thanks to the wellness trend in motion. Scented candles allow promoting feelings of tranquility and calmness, and are also known to reduce stress and anxiety. Grand View Research reports that the global candle market size is valued at $12.88 billion in 2022, growing at a CAGR of 5.7% from 2023 to 2030.
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Disclosure: none. 12 High Margin Products to Sell Online is originally published on Insider Monkey.