E-commerce Market Research for Business Model Validation
· Understanding the industry outlook
· What is the market size?
· Major market trends
· Competitor analysis
· Charting out buyer persona
· What are the segments of the market?
· Which are the best target segments
· Competitor market share
· Product pricing
· Product marketing needs
Now the question is, How to validate the business model or idea we have?
Three key steps
· Product Demand Analysis
Let’s start with the basics. Why would you want to analyse the demand? – To understand:
· Are there buyers for the idea that we have?
· If there are buyers – how much is the demand?
· If there is demand, where is it originating from? Which country, state, city, region?
To gauge this demand, you need to find out which keywords are associated with this idea. Today generically, any search starts from Google/Amazon (35% of product searches start from Google). When you search in Google/Amazon or any other marketplace, any product or service, they capture what is written and store it in the backend as a keyword. Identifying which keywords are used to identify your product is pivotal to estimate the demand.
There are some e-commerce market research platforms/tools available free of cost, for example, Google trends. It allows you to enter the keyword with a lot of filters options like –
a. Which country or worldwide scope of search
b. Period of searches
c. Segments or categories where it is searched
d. Where do you want to see it used (web search, images, news, shopping, Youtube)
It gives the top regions where the demand is. Apart from that, it gives related topics and queries. It also allows you to compare two keywords. You can change and tweak the keywords to analyse them better.
Another tool is Google ads. You could go into the keyword planner and enter the keyword. It would let you know how many searches have happened in a month. It also shows you alternately related searches.
There is an alternate tool called keyword tool dominator – which you could use for marketplaces like Amazon.
· Competition Analysis
37% of e-commerce start-ups fail because they are unable to compete. A simple trick to find your competitors – type the keyword in Google – and see the sellers’ list that pops up on the first page. They are your major competitors. Analysing these competitors mainly includes
a. How many visitors do they have?
b. Which products do they sell?
c. What is their marketing strategy?
d. How are they attracting traffic to their website?
e. Which keywords are getting the most visitors?
These are very micro-level analysis – which could lead to various useful insights. A freemium tool that can be used is Ubersuggest.com. Key in the competitor website link on Ubersuggest.com. The free feature results will pop up. Things like monthly traffic, keyword ranking status, which keywords are driving traffic to their website, which are the top-visited pages of that website. Analysing this set of data, can you help you understand where the consumer is going into their website, what are they actually searching for on the website, which keywords should target.
Another freemium tool that can be used is similarweb.com. It shows you results like traffic, bounce rate (people logging off the website immediately post-landing), average duration a person is spending on the website, and the traffic coming from. A key insight that Similarweb.com throws up is how the competitor is getting the traffic. Is it Direct, referrals, searches, social media, mail etc.? This is an excellent insight to gauge their marketing strategy. It also gives you a break up of the traffic which is routed through paid mediums and through the organic listing. For the paid traffic – it also gives for which keywords they are using ads. That is a powerful insight to have and understand your competitor strategy. Social Media is a powerful tool now. Thus, it is imperative now through which social media channels are they getting traffic. Similarweb.com also gives you a breakup of the social media traffic for you to analyse the strong and weak areas of the competitors.
Another fully paid useful tool is semrush.com.
The tools mentioned in product demand analysis and competitor analysis, in short, give you e-commerce market research reports ( https://www.yourretailcoach.in/online-market-research-companies-pune/ ) that can be used to gauge the business idea.
· Financial Feasibility
Understanding numbers. Is important to
a. Peg sales projection for five years
b. Identify your breakeven sales point
c. Identify recurring and non-recurring expenses
d. Identify capital required
e Calculating ROIs and Margins
f. Apportion and budget adequate capital to important tasks like Digital Marketing
Identifying and putting your numbers in place will ensure that you do go bust soon. The most important aspect of financial feasibility in e-commerce business ( https://www.yourretailcoach.in/ecommerce-business-consulting-service/ ) has a fairly sufficient digital marketing budget. Because without online visibility – an eCommerce business is bound to fail. Creating that online buzz needs funds and that digital marketing spends, in turn, gets us more sales. So, it is a cycle.
With these tools at hand, validating an eCommerce business model ( https://www.yourretailcoach.in/business-model-development/ ) is possible. It is important to choose an expert like YRC to assist you with this critical initial step.
Get advise for Retail Business Consulting : https://www.yourretailcoach.in/contact/
YRC is a Management Consulting Company, especially for the B-C Sector.
Our expertise lies into designing of Standard Operating Procedures (SOPs), Franchise Development, Strategy & Operations services, Process Audits & Training.
We help companies to organise their operations and expand through best management practices.
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