If you start a business online you will find that if you have too few products your sales are going to be lackluster. There is a points where a threshold is reached and your sales improve exponentially. It isn't just a one for one correlation but more of a reason why people continue to visit a site and the other products they come in contact with. Where is that threshold is somewhere around 500 products.
Look around Amazon and Ebay and you will find that the biggest sellers have thousands of products. They do so because they have an opportunity to increase sales. Unless you are selling something unique that you invented chances are you will need to meet a threshold.
Consider that consumers often look for one product but see something else they want and purchase that. They are shopping because they have some money in their pocket. Browsing your store with many products gives them a chance to purchase something.
More products also means more sales. There are more listings, more ways of connecting with the store, and more people viewing the products.
You may also find that people will return to a site that has enough products to keep them interested. If you only have a few products then they will not come back unless they are interested in that specific product.